The legislature’s proposed bill to cap revolving interest rates on credit-card and cash-card loans will undercut Taiwan’s attractiveness to foreign investors and hurt the nation’s economy, two foreign trade organizations said in a joint statement yesterday.
The legislature last month passed the first reading of a bill to lower the interest rates that banks can charge on late credit card payments to 12.5 percent from current 20 percent stipulated by the Civil Code.
The bill still needs to pass two more readings by lawmakers.
The American Chamber of Commerce in Taipei (AmCham) and the European Chamber of Commerce Taipei (ECCT) said that lowering the cap on revolving credit would do more harm than good.
The two trade organizations said Taiwan was the only developed market in Asia aside from Japan with a statutory cap on interest rate. The 20 percent ceiling on revolving credit is not the highest in the region, they said, but lower than many other markets.
The AmCham-ECCT’s joint banking committee said the bill appeared to be “a sudden and arbitrary shift in regulatory policy” and had been criticized by many industry watchers as being influenced by political factors rather than economic considerations.
If the bill is passed, it “would raise serious doubts about the attractiveness of Taiwan’s investment climate and undermine Taiwan’s chances for ever developing into a regional financial hub,” the committee said.
It said the government must show leadership by preventing the bill from becoming “an ill-considered piece of legislation.”