The KMT's presidential candidate Lien Chan (
Why is it a good solution? We know that political parties are not supposed to engage in profit-making. The reason is simple.
According to the seventh article of the "Public Functionary Assets Disclosure Law (
The article is aimed at preventing policy-makers from profiting from insider trading. As the ruling party has more direct power in policy-making than the legislature, it certainly should be prevented from operating its own businesses.
Over the past decades, this simple question has been raised from time to time, but the answer has always been: the party-run businesses are privately-owned so they are supposed to be protected by the country, and political parties' financial resources are not controlled by conglomerates and so on.
But in fact party-run businesses have hindered the KMT from adopting the best financial policy (a free market policy is contradicted by the privileges given to party-run busi-nesses); the large profits of party-owned businesses are the major obstacle obstructing democratic politics and fair competition between political parties; and they are also at the core of "black gold" politics (
In short, party-run businesses are the cancer damaging Taiwan's politics and economy.
From this viewpoint, by his declaration Lien is identifying himself with the notion that "political parties should not engage in profit-making." Such an announcement is a milestone in the search for a solution to Taiwan's party-run businesses.
But the bigger question is whether putting the party's property into a trust will really resolve the problem.
A trusteeship does not resolve every problem. Nor is it easy to carry out. The "Public Functionary Assets Disclosure Law" went into effect in July 1993. Up til now, assets reports have been made public but the regulation about compulsory trusts has never been carried out.
Why can't the trust regulation be implemented? Some say it is because we do not have related laws to follow. Then why not pass some?
The answer is the legislature. Who will pound his or her own feet with a brick? If Lien is elected the next president, do you believe legislators will agree to pound their feet with bricks?
Putting a party's assets into trust won't solve all the prob-lems, as there are other issues.
First, what is a "party business?" If the China Development Industrial Bank (
It is not likely that the KMT will admit the bank is a party-run business, especially when the party is still in power.
Second, even if the KMT actually put its assets into a trust, not many people believe the party will not intervene in the entrusted business or halt insider trading.
Third, if putting the party property in trust is the right move, why not do it right now?
Fourth, even if the above-mentioned problems didn't exist, then a trusteeship is just the first step in solving the problems of the party businesses.
Why can't a real "trust" completely solve the party's problem? Because the KMT's assets do not belong to the party. Evidence? Take one simple example: the KMT sold the Broadcasting Corporation of China (BCC,
Besides, ever since retrocession, the KMT has subsidized its party-run businesses from the government budget. Whenever one of them suffered big losses, the KMT immediately handed it off to the government and got the people to shoulder the deficits -- as happened with the Central News Agency and the BCC's overseas department.
What businesses did the KMT bring to Taiwan in 1949 after the civil war? What entitled it to the use of hundreds of billions of dollars worth of property?
Frankly speaking, I think Lien has shown courage by proposing to put the party's property in trust. We know there are many problems, but the first step is for the KMT to face the truth -- political parties should not engage in profit-making.
We don't want the trust to be turned into an excuse. Nor do people believe a trust is the final solution.
Chang Ching-hsi is a professor of economics at the National Taiwan University.
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