Fubon Group (富邦集團) chairman Daniel Tsai (蔡明忠) yesterday expressed pessimism about the build-operate-transfer (BOT) development model in Taiwan.
The comments were Tsai’s first in public on the BOT issue after the latest controversies over the group’s BOT contract with the Taipei City Government involving the capital’s Songshan Cultural and Creative Park (松山文創園區).
“I foresee the BOT business showing even more miserable development than the financial sector,” Tsai said during a speech at a conference examining issues related to mergers and acquisitions.
It might be very difficult to initiate major BOT projects in Taiwan in the future, as political headwinds could make local firms hesitant to take on projects, and the absence of significant BOT projects could slow the growth of domestic lending.
If the financial sector is unable to utilize liquidity by financing BOT projects, it could lead to a more inflexible liquidity adjustment facility, he added.
The outstanding balance of deposits in Taiwan totaled more than NT$37 trillion (US$1.2 billion), but most players in the financial sector may adjust liquidity only by buying negotiable certificates of deposit and government bonds, which offer a low return on capital, Tsai said.
Regarding Songshan Cultural and Creative Park, Tsai said Taipei New Horizon Co Ltd (臺北文創) — created by the group to execute the project — is still in talks with the city government and might adjust the contract at the government’s request.
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