Sat, Jan 20, 2001 - Page 8 News List

KMT must solve its assets problem

By Liu Kuan-teh 劉冠德

While the KMT has made numerous attempts recently to entice back some of its wayward members, as well as to distant itself from the so-called "Lee Teng-hui line,"(李登輝路線) it has thus far failed to focus on the real problems that contributed to it losing power. For the KMT to rejuvenate itself, it will have to try harder to improve its structural reform. Also, in order to eradicate the popular impression of a decades-old association with the notorious "black gold," or money politics, one other crucial task for the KMT leaders is to change the way they handle party-owned enterprises.

During the last presidential election, Lien Chan (連戰), the KMT's presidential candidate and now its party chairman, pledged that the party would place all the assets of the party-owned enterprises in trusts. Lien's move generated surprise and suspicion as to the extent to which this promise could actually be carried out. Subsequent opinion polls, in fact, showed that most voters considered Lien's announcement as nothing but an election ploy. So far, no concrete actions have been taken to implement Lien's promise, either.

To what degree have the KMT's enterprises caused Taiwan's political and economic structure to deteriorate? The KMT is the only political party in Taiwan that owns and runs a huge business empire. It is also the richest political party in the world. Possession of the assets in itself may not be a sin, but there are many questions surrounding the way these assets were acquired. They involved, for instance, the illegal transfer of money, property or commercial interests from the party to the government or vice versa.

When the KMT moved to Taiwan in 1949 it had only one party-owned enterprise and less than US$1 million in cash. But after nearly 55 years ruling Taiwan, the KMT now owns seven stock-holding companies, 27 party-owned enterprises and more than 400 party-invested companies. The value of the KMT's assets is estimated to be between US$6 billion and US$15 billion.

How did the party accumulate these assets? First, the party simply took over the properties formerly owned by the Japanese government during the colonial period or purchased these assets at artificially low prices. In later years it benefited from the symbiosis between the government, the source of lucrative development contracts, and KMT companies, the recipient of such contracts. Furthermore, it has used its own financial power, along with its connections as the former government, to manipulate Taiwan's financial markets via insider trading and rumor-mongering accomplished through the media. It is ironic that in its government role, the KMT stresses financial market stability, whereas in its business dealings the KMT generates market instability -- sudden rises, sudden plunges -- through which it can earn huge profits as well as launder payouts for various favors.

What are the major implications of the KMT's possessing such vast wealth? For a start, it creates an unequal base for party competition. Since the KMT owns a far higher proportion of political and economic resources than other parties, it is easy for it to use its financial power to engage in illegal activities such as vote-buying. Also, the KMT's business empire undermines Taiwan's political and economic base by enabling "crony capitalism," the corrupt collusion between government, party and local factions. Taiwan's black gold politics is entirely the product of the KMT's 55-year ownership of party-run-businesses.

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