Mon, Dec 13, 2004 - Page 10 News List

Reconciliation urged for economy's sake

POLITICAL IMPERATIVE Analysts say the nation's economic competitiveness will be seriously affected if the next legislature remains as deadlocked as the current one


Industry watchers yesterday called for reconciliation between the ruling and opposition parties in the next legislature in order to boost the nation's weakening economic competitiveness.

The opposition victory led by the Chinese Nationalist Party (KMT) has fueled renewed concerns that prolonging the long-term standoff in the lawmaking body will stall crucial economic-stimulus packages and imperil the nation's competitiveness.

"Wrestling in the legislature could continue as it has been in the current term," said Hsieh Chin-ho (謝金河), president of the Chinese-language Win-Win Weekly (今周刊).

"We really hope to see the two sides make concessions in order to make the lawmaking body work well," Hsieh said.

To open the door for concessions, Hsieh suggested that the Democratic Progressive Party (DPP) consider nominating KMT Vice Chairman Chiang Pin-kun (江丙坤) to be the next premier.

Bai Win-chen (白文正), chairman of Polaris Securities Co (寶來證券), said political instability has caused a higher national risk and made the nation's stock markets less attractive to overseas fund managers.

"A political reconciliation is an imperative to regain investor's confidence now," Bai said.

Overseas fund managers hold about 20 percent of the Taiwanese shares traded on the Taiwan Stock Exchange.

They sold a net of NT$32 billion in the week ahead of the elections.

In addition, the insurance sector also needs an effective legislature to enact laws to lift restrictions on local insurers to allow them to tap overseas markets including China, as profitability weakens in the local market, Bai said.

"Overseas markets are potential cash cows for local insurance companies as stiff competition at home makes it increasingly difficult to make a profit these days," Bai said.

Local insurers are still banned from selling policies in China.

Analysts agree that the opposition's victory will likely slow the passage of an amendment to the financial restructuring fund (金融重建基金) bill and thereby undercut President Chen Shui-bian's (陳水扁) efforts to overhaul the banking sector.

However, KMT Legislator Lee Jih-chu (李紀珠), who is also an economics professor at National Chengchi University, dismissed such speculation as groundless.

"I'm quite optimistic about the passage of the amendment as our version is more of a compromise compared to that of the People First Party. I believe we can make progress on this issue soon," Lee said.

The primary difference in the amendments lies in how much compensation the government should pay after the debt-ridden lenders are auctioned off, she said.

KMT wants to use the restructuring fund to compensate banks that acquire the troubled lenders, while the People First Party wants to save all the banks, she said.

Lee said the KMT will also push for further relaxation on cross-strait investment restrictions since the pan-blue camp's victory will ease Beijing's concerns about Taiwan seeking independence.

"We'll push the government to remove the ban on high-technology companies' China-bound investments to safeguard their competitiveness," Lee said.

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