The Financial Supervisory Commission yesterday called on banks to refrain from tightening loans to businesses following the implementation of a new accounting rule that could affect businesses＊ balance sheets.
Financial Supervisory Commission (FSC) Chairman Sean Chen (?喳) said yesterday that the commission had talked to banks about the implementation on Jan. 1 of the International Accounting Standard Statement No. 10, which includes a requirement that businesses book inventory losses on a quarterly rather than an annual basis.
Businesses had expressed concern that booking losses on a quarterly basis could reflect badly on their financial statements and affect banks＊ willingness to extend credit.
PHOTO: CHIEN JUNG-FONG, TAIPEI TIMES
Although the government will not penalize banks if they do tighten credit controls, Chen told a press conference after the weekly Cabinet meeting that a majority of the banks had understood the need for banks to continue supporting businesses.
Asked if the new accounting rule would also affect booking of idle equipment writeoffs, Chen said: ※It is the economic downturn 〞 not the rule 〞 that is driving down inventory prices.§
The commission said on Tuesday that the new accounting rule only requires companies to list idle equipment as operating costs, but makes no mention of when and how often they should file such costs.
The Cabinet yesterday agreed that businesses can book the writeoffs on idle equipment at the end of the year.
It also approved an amendment to the Company Act (鼠侗楊), which proposed lifting the minimum capital requirement in establishing a corporation.
Wang Pai-por (卼窫疏), the director general of the Department of Commerce, said that scrapping the capital requirement of NT$500,000 (US$15,000) to set up a limited company and NT$250,000 for an incorporated limited company could be a boost to business sentiment.
Taiwan ranked low on ease of doing business by the World Bank because of those restrictions, Wang said, adding that the revision could help the country move up the list.
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Garment maker Makalot Industrial Co (聚陽) yesterday reported lower-than-expected fourth-quarter revenue of NT$7.93 billion (US$251.44 million), down 9.48 percent from NT$8.76 billion a year earlier. On a quarterly basis, revenue fell 10.83 percent from NT$8.89 billion, company data showed. The figure was also lower than market expectations of NT$8.05 billion, according to data compiled by Yuanta Securities Investment and Consulting Co (元大投顧), which had projected NT$8.22 billion. Makalot’s revenue this quarter would likely increase by a mid-teens percentage as the industry is entering its high season, Yuanta said. Overall, Makalot’s revenue last year totaled NT$34.43 billion, down 3.08 percent from its record NT$35.52
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