As of Monday, a total of NT$38 billion (US$1.1 billion) in consumer vouchers had been cashed, or 46.7 percent of the amount distributed by the government, and 97 percent of the nation’s population had already collected their vouchers, Council for Economic Planning and Development (CEPD) Chairman Chen Tian-jy (陳添枝) said in a keynote speech to a business group yesterday.
“Within a month, nearly half of the vouchers have been cashed, which proves that the policy works pretty well,” he said, expressing his satisfaction over the program.
It is too early to tell how effectively the vouchers have spurred domestic demand by the so-called “multiplier effect” since consumers have until the end of September to spend the remaining NT$47 billion.
But Chen said the council was happy to learn of “good signs,” such as 70 percent of the revenues Grand Formosa Taroko Hotel (天祥晶華) in Hualien received during the Lunar New Year vacation were paid by vouchers.
The vouchers seem to have been effective in boosting domestic tourism, Chen said.
The government started distributing NT$85.7 billion in consumer vouchers — or NT$3,600 per qualified individual — on Jan. 18, hoping the program could add 0.66 percentage points to the GDP this year.
The economist-turned-government official said there was little the government could do to fix the nation’s export-dependent economy since externally, “the world has stopped buying with the collapse in demand.”
Other than domestic consumption, private investment is also crucial to lifting the local economy, Chen said.
However, private investment will be hard pressed to rise until there are signs that the economy is beginning to recover.
Chen expressed concern over a huge decline of between 30 percent and 40 percent in private investment last quarter, which spelled bad news for the economy, he said.
Chen did not specify in his speech whether the decline was on a quarterly or annual basis.
The Directorate-General of Budget, Accounting and Statistics reported yesterday evening that private investment in the fourth quarter dropped 32.2 percent from a year earlier.
Against this backdrop, Chen called on the nation’s private banking sector to refrain from tightening credit to businesses, especially as the government has already provided a blanket deposit guarantee to help ease the sector’s liquidity crisis.
In response, Charles Lo (羅聯福), chairman of Chinatrust Commercial Bank (中國信託商銀), said the government should shoulder more responsibility to tend to the credit risks that the sector may be facing given the global economic crisis.
It is impossible for the nation’s 15 financial holding companies, which only reported more than NT$10 billion in profits last year, to help meet the government’s goal of granting NT$600 billion in loans to businesses, Lo said.
Instead, Lo urged the government to be “more aggressive” and establish a credit fund of at least NT$100 billion, which he believed would create a multiplier effect of 10 times for domestic banks to release NT$1 trillion in loans to the business sector.