Tue, May 21, 2013 - Page 14 News List

Outflow of net capital is ‘normal trend,’ bank says

CHARTING FIGURES:Central bank statistics showed that direct and portfolio investment registered net outflows of US$3.22 billion and US$11.85 billion in the first quarter

By Amy Su  /  Staff reporter

The financial account of the nation’s balance of payment (BOP) last quarter showed the longest period of net capital outflows in the nation’s history, after the insurance sector and certain other companies continued to increase their overseas investments, the central bank’s latest data showed.

However, the bank said the trend of capital outflows still indicated a balance between the BOP’s financial account and current account, which helps prevent savings from becoming excessive and keeps the scale of the current account surplus under control.

The BOP, which includes the current, financial and capital accounts, summarizes the net amount of money paid or received by a nation in a certain period.

REPORT

Based on the bank’s quarterly report, the financial account recorded a net outflow of US$9.5 billion in the January-to-March quarter, the 11th consecutive quarter that it has posted a net outflow and the longest period in history.

Lin Shu-hua (林淑華), a deputy chief of the bank’s economic research department, attributed the continuous outflow to greater investment abroad by local insurance companies, while some Taiwanese firms continued their investments to expand their overseas operations.

Overall, direct and portfolio investment registered net outflows of US$3.22 billion and US$11.85 billion in the first quarter respectively, bank data showed.

Despite the financial account showing continuous net outflows over the past 11 quarters, central bank Deputy Governor Yen Tzung-ta (嚴宗大) said it should not been seen as capital flight.

On the contrary, the net outflow shows the nation’s capability to invest overseas on the back of a strong current account surplus, which helps to balance it, Yen said.

“It is a normal trend,” Yen added.

Taiwan had a BOP surplus of US$2.15 billion in the first three months, down from the NT$3.38 billion recorded in the fourth quarter of last year, the report said.

SURPLUS

The report also showed the current account surplus totaled US$11.09 billion in the first three months, down from the US$15.96 billion recorded three months ago.

The surplus of trade in goods stood at US$4.94 billion in the first quarter, with the surplus for services at US$2.19 billion, according to the bank’s data.

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