A regulation allowing Taiwanese banks to invest in China passed preliminary review in the legislature yesterday amid a chaotic session in which pan-green lawmakers refused to recognize the result.
The legislators said the committee convener had handled proceedings unfairly.
The regulatory relaxation appears to open a door for Taiwanese banks to make inroads into China's financial market through the establishment of subsidiaries, since opening branches is not possible under Taiwanese law because there is no bilateral supervisory agreement.
Eighty four lawmakers endorsed the proposed amendment to Article 36 of the Statute Governing Relations Between Peoples of the Taiwan Area and the Mainland Area (
After passage in yesterday's Home and Nations Committee, the amended article promoted by Chinese Nationalist Party (KMT) Legislator Lee Jih-chu (李紀珠) would be referred to cross-party negotiation before being introduced to the legislature for a second reading.
Lee expected the amendment to finish its third reading within the current legislative session ending in December. Yet the timetable could be delayed for four more months if the pan-green camp demands partisan negotiations before further review, she said.
The amended article allows local banks to set up branches and subsidiaries in China directly or indirectly via a third country and to invest in Chinese rivals.
In addition, the finance sector would be removed from the "prohibited items" for investment in China, and responsibility for the matter would be shifted from the Ministry of Finance to the Finance Supervisory Commission (FSC).
Banks would be required to apply for permission from the FSC before establishing a branch in China, but the FSC would have few discretionary powers. Applicants fulfilling all the relevant criteria would be automatically granted permission, Lee said.
Lee added that it was imperative to pass the amendment if the government really takes the goal of enhancing the competitiveness of Taiwan's banks seriously.
"According to China's WTO commitments, foreign banks can establish wholly foreign-owned branches in any Chinese city and provide local and foreign currency to Chinese individuals. It's time to lift [Taiwan's] restrictions," Lee said.
Taiwanese banks are only allowed to establish representative offices in China, with government officials saying that the ban on opening branches in China is due to a lack of a "memorandum of understanding" (MOU) concerning financial supervision.
Although some pan-green politicians including Democratic Progressive Party Legislator Tsai Chi-chang (
Taiwan Solidarity Union Legislator David Huang (
"Furthermore, it would be a great risk for financial businesses to invest in China without the protection of a MOU and the public would have to shoulder the consequences," Huang said.
Meanwhile, Mainland Affairs Council (MAC) Vice Chairman Johnnason Liu (
He said the amendment would not resolve the MOU problem, on the contrary, loosening restrictions would only cause greater disorder in bank management, Liu added.
The FSC said, according to current international practice, signing a formal bilateral MOU is not necessarily a matter of high politics and sovereignty.
"It can be done as long as there are communication conduits and cooperation mechanisms between the home and host countries," the commission's spokesperson Susan Chang (
Local financial institutions said they welcomed the plan.
"We do hope for opportunities to develop in China's financial market where Taiwanese banks enjoy advantages of language and culture [in competing with foreign rivals]," said Lee Chang-ken, chief strategy officer of Cathay Financial Holding Co (國泰金控), the nation's largest financial group by assets.
Additional reporting by Jewel Huang
NO VIRUS BLUES: A SEMI Taiwan official said that the virus does not slow down the global semiconductor industry’s investment in manufacturing equipment The production value of the nation’s semiconductor industry is expected to grow 16.7 percent this year from last year, outpacing the global industry’s 3.3 percent growth, industry association SEMI said yesterday. That would help Taiwan safeguard its second spot in the global semiconductor market with a production value of more than NT$3 trillion (US$102.73 billion), SEMI Taiwan president Terry Tsao (曹世綸) told a media briefing in Taipei for the Semicon Taiwan trade show beginning today. The global semiconductor industry’s production value is expected to increase to US$426 billion this year, SEMI said. In terms of semiconductor equipment investment, equipment billings from Taiwanese firms
Intel Corp has received licenses from US authorities to continue supplying certain products to Huawei Technologies Co (華為), a company spokesman said yesterday. Washington has been pushing governments around to world to squeeze out Huawei, saying that the telecom giant would hand data to Beijing for espionage. From Monday last week, new curbs have barred US companies from supplying or servicing Huawei. This week, the state-backed China Securities Journal reported that Intel had received permission to supply Huawei. China’s Semiconductor Manufacturing International Corp (SMIC, 中芯國際), which uses US-origin equipment to make chips for Huawei and other companies, last week confirmed that it had sought
Taipei Times: When do you think the hospitality industry can return to how it was before the COVID-19 pandemic? How does Formosa International Hotels Group (FIH, 晶華酒店集團) fare this quarter and beyond? FIH chairman Steve Pan (潘思亮): The virus outbreak will have a serious impact on business travel, driven mainly by meetings, incentive travel, conferences and exhibitions over the past three decades. For the past six months, many businesspeople have grown used to exchanging information on the Internet, where more people can participate. The trend might sustain for three to five years until people are vaccinated and it is safe to
DIGITAL COMMERCE: In 2016, only 2 percent of orders were delivered in Taiwan, but that has risen to 10 percent, Foodpanda Taiwan Co operations director Nick Yu said Online food delivery platforms have seen explosive growth in Taiwan this year, helped by business opportunities related to the COVID-19 pandemic, company executives said at a digital commerce conference in Taipei yesterday. When the threat of COVID-19 kept people from going out to eat, more people experimented with ordering food deliveries online, Foodpanda Taiwan Co Ltd (富胖達) operations director Nick Yu (余岳勳) said. Foodpanda started operations in Taiwan in 2012. “We experienced 5,000 percent growth in the past 24 months,” Yu said. “That’s more than the previous six years combined.” In 2016, only 2 percent of food orders were delivered in Taiwan, but that
RSS