Sat, Jul 12, 2003 - Page 8 News List

Editorial: An extraordinary jumbled mess

Most reform measures in recent years have been half-baked. Shackled by political differences, compromises have to be made in any type of reform -- political, economic, social, educational. The effects of many reforms have been undercut by the lack of complementary packages or resources. The result is the nation pays a lot, but gets little in return. The reforms do not win praise from the international community, and the people don't acknowledge the government's determination to undertake reforms or their results.

The Legislative Yuan held a three-day extraordinary session this week to review six financial bills related to the government's two major policy aims -- financial reforms and cross-strait economic rela-tions. Four bills passed -- the Real Estate Securitization Statute (不動產證券化條例), the Statute Governing the Establishment and Management of Free Ports (自由貿易港區設置管理條例), the Agricultural Financial Law (農業金融法) and the Organic Law of the Executive Yuan's Financial Monitoring and Management Committee (金融監督管理委員會組織條例).

This outcome may look good at first sight, but the failure to pass the other two bills -- amendments to the Statute Governing Relations between the People of the Taiwan Area and the Mainland Area (兩岸人民關係條例) and the statute governing the establishment and management of the financial reconstruction fund (金融重建基金設置及管理條例) -- basically negated the progress made by passing the other four.

The financial-committee law establishes a mechanism for financial monitoring and management. The Agricultural Finance Law is aimed at fixing the grassroots level financial institutions whose operations have been distorted by political factionalism and which are sinking under the weight of bad loans.

The proposed financial reconstruction fund was aimed at resolving problems posed by financial institutions' bad assets and improving the bad-loan situation, in order to revitalize the economy and prevent Taiwan from copying Japan's economic decline. So the government is ready to launch its financial reforms, but the programs have not been given the drive they need to kick off. The steep fall in financial stocks yesterday was proof that the financial sector and the public were disappointed by the legislature's ineptitude.

The establishment of free-trade ports is a revised version of the Asia-Pacific operations center and Asia-Pacific logistics center programs drawn up by the KMT government. These free-trade ports, which will be customs-free areas, will allow Taiwanese businesses to combine manufacturing in China with processing and marketing in Taiwan. This country will be able to flexibly use Chinese and Taiwanese raw materials to raise the added value of China-made materials and semi-finished products. This is supposed to help redirect capital that has flowed out to China and was to be new strategy for cross-strait economic and trade relations.

However, due to the heightened cross-strait frictions caused by the SARS epidemic, President Chen Shui-bian (陳水扁) put the brakes on amendments to the cross-strait relations law by announcing that he would not discuss direct flights under a "one China" principle. Without the loosening of restrictions on direct links, businesses will have to continue to use third-country links and the effect of the free-trade ports law will be greatly reduced. So basically the new law is already a dead duck.

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