Fri, Mar 06, 2009 page12

• MasterCard envisions second round of shopping vouchers, this time electronic

  • By Joyce Huang / STAFF REPORTER
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  The government’s consumer voucher program may have helped spur growth for domestic retailers, but it has hurt the electronic payment sector, which saw a 20.85 percent year-on-year drop in January sales, a MasterCard Worldwide executive said yesterday.

  The government should issue electronic vouchers via debit cards if it considers a second voucher scheme, Tina Chiang (江威娜), MasterCard’s vice president and business manager in Greater China, told a media briefing.

  Citing figures from the Financial Supervisory Commission (FSC), Chiang said the nation’s total spending via credit cards fell 16.46 percent to NT$102.5 billion (US$2.93 billion) in January from the previous month’s NT$122.5 billion. This was far below the monthly average last year of NT$120 billion, she said.

  Chiang attributed the decline in January, which is usually a peak month because of the Lunar New Year holidays, to the NT$85.7 billion in vouchers issued by the government, nearly half of which were spent or cashed within a month of being distributed on Jan. 18.

  She said the paper-based vouchers were environmentally unfriendly and could go missing, as was seen at some distribution centers.

  By contrast, Chiang said, an electronic voucher scheme operated by banks would save the government on implementation costs and create multifold benefits.

  The money the government would save — for example, the NT$2 billion in operating costs it shelled out in the first voucher plan — could be spent on subsidies to retailers to have them install PC-based point of sales (POS) terminals, Chiang said.

  If each retailer received a NT$5,000 subsidy, another 400,000 shops could be upgraded with electronic payment systems, making shopping with electronic purses easier nationwide, Chiang said.

  About 180,000 of the nation’s 500,000 registered retail shops are equipped with electronic payment systems.

  Improving the nation’s electronic payment infrastructure would not only benefit the domestic PC industry, but also smooth the way for boosting tourism in Taiwan, she said.

  Chiang said electronic vouchers issued via debit cards would work like paper-based vouchers in that banks could set an expiry date for the voucher and prohibit holders from cashing the voucher instead of spending it.

  In any rural areas where debit cards are not popular, Chiang said the government could authorize banks to issue paper-based vouchers.

  The plan might not be popular with retailers, however, since they have to pay card issuers a 1.5 percent fee out of every transaction. But Chiang said the government could resolve that problem by cutting the 5 percent value-added tax by 2 percentage points. This, she said, would provide another incentive for businesses to install POS terminals.

  In the short run, the tax cut could hit the national coffers, she said, but in the long run, it would improve the nation’s taxation efficiency by reducing the risk of tax evasion, since the transactions would be recorded electronically, she said.

  FSC Chairman Sean Chen (陳冲) advocated an electronic voucher scheme when he was chairman of SinoPac Financial Holding Co (永豐金控).

  Also, business leaders such as Chinatrust Financial Holding Co (中信金控) chairman Jeffrey Koo (辜濂松) and Kinpo Group (金仁寶集團) chairman Rock Hsu (�?�) have recently called on the government to dole out another round of vouchers.

  But Kevin Hsiao (蕭正義), head of UBS Wealth Management Research in Taiwan, said he suspected the government would consider whether to repeat the voucher program based on economic performance figures for the first quarter.

  Hsiao, whose company projected the economy would contract 4.5 percent this year, said the government would adopt more aggressive stimulus measures if GDP deteriorated faster than expected in the first quarter.

  “If the recession turns out more severe than forecast, the government may adopt more drastic stimulus measures, and issuing consumer vouchers for the second time is one option,” Hsiao said yesterday.

  The Directorate-General of Budget, Accounting and Statistics forecast the economy would contract 6.51 percent in the first three months. The agency will release the final figure in May and update its forecast for the year.

  Hsiao voiced skepticism, however, that distributing vouchers was a remedy for the economy.

  “It may help relieve the pain of retailers and other service providers, but it will not reverse the downturn,” he said.

  Also, Hsiao said it remained to be seen whether the vouchers had boosted consumption or were used to pay for regular expenditures.

  ADDITIONAL REPORTING BY CRYSTAL HSU
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