A planned cap on lending rates for credit-payment tools is unpopular among foreign investors and academics, who took the possible regulatory tightening measure as a regressive move that would adversely affect Taiwan's banking sector and free-market economy.
Lawmakers decided on Tuesday night to push forward a proposed amendment to the Banking Law (
Borrowers, meanwhile, would be required to repay a minimum of 20 percent of monthly payables, up from the current 2 percent to 5 percent, according to the motion.
PHOTO: KAO CHAO-FEN, TAIPEI TIMES
The proposed amendment is likely to pass the third reading in the legislature tomorrow.
"Taiwan's politicians will only increase downside investment risk if they cap the card-lending spread at 10 percent, to ease the burden of deeply indebted borrowers," Jesse Wang (
Likening the initiative to fighting fire with gasoline, Wang predicted that the possible regulatory restriction could suddenly turn all local credit and cash-advance card operations into money-losing businesses, and lead financial stocks to drop at least 10 percent.
Taiwanese retail investors would therefore suffer a loss of net worth, while consumer defaults could rise sharply as borrowers find it difficult to obtain re-financing liquidity, he said.
The nation's financial stocks slid 1.2 percent on the Taiwan Stock Exchange yesterday in the wake of lawmakers' decision.
Shares of Chinatrust Financial Holding Co (中信金控) and Taishin Financial Holding Co (台新金控), parent companies of the nation's two biggest credit-card issuers, plummeted by 5.11 percent and 5.73 percent to NT$26.95 and NT$18.10, respectively.
"This is an intervention in the pricing of the free market mechanism," said Shen Chung-hua (
The restriction would cause lenders to tighten their lending policies, which could be helpful for youngsters who borrow to shop, but would have a greater impact on adults who are in real need of funding, Shen said.
Both Shen and Wang said the biggest beneficiaries could be underground lenders -- loan sharks -- as they are not restricted by the law.
Financial regulators do not seem supportive of the proposed cap either. Financial Supervisory Commission spokesman Lin Chung-cheng (林忠正) told the USTV cable station yesterday that the credit- and cash-card business may shrink by 30 percent to 40 percent, or NT$300 billion, if the restriction takes effect.
Taiwan's lending rates are not especially high, compared with Singapore's 24 percent, Hong Kong's 26 percent, South Korea's 19 percent to 24.9 percent and Japan's 29.2 percent, the commission said last month.
To control potentially increasing costs, consumers may have to start paying annual fees or increased surcharges, and could face shrinking preferential services in the future, said one of the nation's top credit-card lenders, who asked to remain anonymous.
RUN IT BACK: A succesful first project working with hyperscalers to design chips encouraged MediaTek to start a second project, aiming to hit stride in 2028 MediaTek Inc (聯發科), the world’s biggest smartphone chip supplier, yesterday said it is engaging a second hyperscaler to help design artificial intelligence (AI) accelerators used in data centers following a similar project expected to generate revenue streams soon. The first AI accelerator project is to bring in US$1 billion revenue next year and several billion US dollars more in 2027, MediaTek chief executive officer Rick Tsai (蔡力行) told a virtual investor conference yesterday. The second AI accelerator project is expected to contribute to revenue beginning in 2028, Tsai said. MediaTek yesterday raised its revenue forecast for the global AI accelerator used
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has secured three construction permits for its plan to build a state-of-the-art A14 wafer fab in Taichung, and is likely to start construction soon, the Central Taiwan Science Park Bureau said yesterday. Speaking with CNA, Wang Chun-chieh (王俊傑), deputy director general of the science park bureau, said the world’s largest contract chipmaker has received three construction permits — one to build a fab to roll out sophisticated chips, another to build a central utility plant to provide water and electricity for the facility and the other to build three office buildings. With the three permits, TSMC
TEMPORARY TRUCE: China has made concessions to ease rare earth trade controls, among others, while Washington holds fire on a 100% tariff on all Chinese goods China is effectively suspending implementation of additional export controls on rare earth metals and terminating investigations targeting US companies in the semiconductor supply chain, the White House announced. The White House on Saturday issued a fact sheet outlining some details of the trade pact agreed to earlier in the week by US President Donald Trump and Chinese President Xi Jinping (習近平) that aimed to ease tensions between the world’s two largest economies. Under the deal, China is to issue general licenses valid for exports of rare earths, gallium, germanium, antimony and graphite “for the benefit of US end users and their suppliers
Dutch chipmaker Nexperia BV’s China unit yesterday said that it had established sufficient inventories of finished goods and works-in-progress, and that its supply chain remained secure and stable after its parent halted wafer supplies. The Dutch company suspended supplies of wafers to its Chinese assembly plant a week ago, calling it “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms,” Reuters reported on Friday last week. Its China unit called Nexperia’s suspension “unilateral” and “extremely irresponsible,” adding that the Dutch parent’s claim about contractual payment was “misleading and highly deceptive,” according to a statement
RSS