The cancer of financial corruption has become so deep-rooted that it now requires surgery. Estimates from the financial authorities show that a NT$1.05-trillion Financial Restructuring Fund is required to reorganize and revamp the financial sector. Finance is to the economy as blood is to the human body; the body becomes susceptible to all kinds of ailments if the circulation of blood is impeded.
Since last year President Chen Shui-bian (陳水扁) has repeatedly stressed the importance of financial reform. Indeed, it is truly one of the most pressing issues at the moment, because it will have a great and profound impact on the nation's overall economic development. It will also be a key factor in Taiwan's continued ability to attract foreign investment to its financial market. Financial reform cannot afford to fail. That such reform efforts led to a mass demonstration by farmers and fishermen last Saturday and prompted the minister of finance and the chairman of the Council of Agriculture to resign is unfortunate.
The administration would do well to review its shortcomings. What lesson can it learn from the demonstration? The farmers and fishermen wore white headbands bearing the slogan, "Coexist with Farmers." They held banners with slogans like "We want a livelihood. We want dignity" and "Support reform, oppose elimination."
Clearly, it is not financial reform that they oppose, but the means and methods by which the government seeks to achieve it. It may have been the impact of WTO entry on the agricultural industry that ultimately prompted them to take to the streets. The earnings of farmers have decreased tremendously as agricultural produce prices have dropped. Non-agricultural incomes of farmers have also declined sharply because of the rise in unemployment resulting from economic recession and industrial migration to China. The reorganization of farmers' and fishermen's cooperatives was really just the straw that broke the camel's back.
As both Chen and Premier Yu Shyi-kun are from farming families, there is no need to question the motives behind grassroots financial reform; it is intended to boost the nation's economic development and to protect the cooperatives' depositors. But, the reform methods need to be more detailed and the reform measures must be accompanied by complementary mechanisms. Financial reform will gain general acceptance from farmers and fishermen if it prevents corruption without making it difficult for farmers and fishermen to apply for loans from the cooperatives.
The DPP government was elected precisely in the hope of reform. If reform is held back in its initial stage, the government's supporters will be disappointed and Taiwan will continue to decline.
Two months ago, nine repre-sentatives of the Taipei Society met Yu and offered suggestions. Yu's deep sincerity and concern was obvious. I hope he will remain committed to reform, including financial reform. Such a great undertaking must not be given up halfway. Opinion polls in the wake of the demonstration show that most people think the premier should stay on and that they also support reform. Let's hope that Yu can now deliver.
Reform is unquestionably a painful ordeal, susceptible to resistance and counterattack from vested interests. It requires not only a legitimate reason but also a comprehensive tactical approach if success is to be achieved. It must be thoroughly planned in advance. Government officials were unable to reach a consensus when financial reform began to unfold. The lack of consensus, of course, led to failures of communication and coordination when the policies were made public.
It is therefore worth reflecting upon the decision-making mechanism of the former KMT admin-istration, despite the criticism it used to receive. Under the KMT, the party factions in the Legislative Yuan would defend the policies proposed by the Presidential Office, the other branches of the government or the party once they were approved by the party's central committee. The Executive Yuan would then encounter no disturbance, indeed no hindrance whatsoever, in implementing its policies. The central committee was like an arena for debate, the purpose of which was to establish a consensus.
The DPP should follow the KMT's example and establish a mechanism for the range of opinion within the party to be discussed and communicated. In addition, a full airing and discussion of all the contending views of government officials must be undertaken before decisions on reform are taken. Once the decision has been finalized, officials must not insist on their individual views or the reform will fail. The DPP administration should at least draw some inspiration from the farmers' and fishermen's protest.
Wang To-far is a professor of economics at National Taipei University and a member of the Taipei Society.
Translated by Grace Shaw
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