The debate over whether to set up a sovereign wealth fund continued yesterday as academics and government officials disagreed on whether it was necessary, but all agreed on the need to create an institution to oversee and act to stabilize financial markets.
Thomas Lee (李桐豪), who lectures in banking and finance at National Chengchi University, said he opposed the idea of creating a sovereign wealth fund with the nation’s foreign exchange reserves to buoy the stock market. He said the government should explain more clearly why it wants to create the fund, which is normally used to invest overseas rather than domestically.
“Some countries use the funds to restructure their domestic industry and others use them to secure strategic resources overseas,” Lee said by telephone. “The government has yet to spell out its plans. It cannot set up a fund simply because it has become a popular thing to do.”
Vice President Vincent Siew (蕭萬長) on Tuesday asked the Cabinet to look into the idea after the local bourse plunged 210.35 points, or 3.55 percent, on the back of Wall Street’s woes.
On Wednesday, central bank Governor Perng Fai-nan (彭淮南) voiced reservations about creating the fund using the nation’s foreign currency reserves, while the Council for Economic Planning and Development said later the same day that there was no urgent need to address the matter.
Lee said he failed to see how Taiwan could avoid the financial unrest caused by international factors by creating a sovereign wealth fund.
What the country really needed was a regular government-owned corporation, such as Singapore’s Temasek Holdings, to better manage state assets and enterprises and ease the impact of overseas investors on the local financial markets, Lee said.
He said the government should establish an investment institution using NT$1 trillion (US$31 billion) from the postal savings fund, which has NT$3 trillion in assets.
However, Norman Yin (殷乃平), another banking and finance professor from National Chengchi University, supported the creation of a sovereign wealth fund.
Yin said a sovereign wealth fund was a state-owned financial instrument that could be used to advance domestic or overseas ambitions, but that it should not be funded from foreign exchange reserves. Yin said such a fund was desirable when looking to stabilize local markets and building the nation into a regional asset management center.
“Small and shallow, our financial markets are susceptible to unexpected flows of foreign capital,” Yin said in a telephone interview. “The fund would provide the government with a means to control the exchange rate and market liquidity.”
The academic said the NT$500 billion National Stabilization Fund was an ad hoc measure intended to be used in emergencies and that the central bank was insufficiently equipped to play a stabilizing role.
Earlier in the day, Minister of Finance Lee Sush-der (李述德) told a legislative hearing that he supported setting up a sovereign wealth fund that would draw its funding from surplus budgets or other medium and long-term state funds.
Financial Supervisory Commission Vice Chairwoman Lee Jih-chu (李紀珠) echoed Lee’s views, saying it was advisable for a small and democratic country like Taiwan to create a sovereign wealth fund to benefit its economy and oversee investments.
Also See: EDITORIAL: A good idea for another day
Quanta Computer Inc (廣達) chairman Barry Lam (林百里) is expected to share his views about the artificial intelligence (AI) industry’s prospects during his speech at the company’s 37th anniversary ceremony, as AI servers have become a new growth engine for the equipment manufacturing service provider. Lam’s speech is much anticipated, as Quanta has risen as one of the world’s major AI server suppliers. The company reported a 30 percent year-on-year growth in consolidated revenue to NT$1.41 trillion (US$43.35 billion) last year, thanks to fast-growing demand for servers, especially those with AI capabilities. The company told investors in November last year that
Taiwanese suppliers to Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) are expected to follow the contract chipmaker’s step to invest in the US, but their relocation may be seven to eight years away, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. When asked by opposition Chinese Nationalist Party (KMT) Legislator Niu Hsu-ting (牛煦庭) in the legislature about growing concerns that TSMC’s huge investments in the US will prompt its suppliers to follow suit, Kuo said based on the chipmaker’s current limited production volume, it is unlikely to lead its supply chain to go there for now. “Unless TSMC completes its planned six
Intel Corp has named Tasha Chuang (莊蓓瑜) to lead Intel Taiwan in a bid to reinforce relations between the company and its Taiwanese partners. The appointment of Chuang as general manager for Intel Taiwan takes effect on Thursday, the firm said in a statement yesterday. Chuang is to lead her team in Taiwan to pursue product development and sales growth in an effort to reinforce the company’s ties with its partners and clients, Intel said. Chuang was previously in charge of managing Intel’s ties with leading Taiwanese PC brand Asustek Computer Inc (華碩), which included helping Asustek strengthen its global businesses, the company
TikTok abounds with viral videos accusing prestigious brands of secretly manufacturing luxury goods in China so they can be sold at cut prices. However, while these “revelations” are spurious, behind them lurks a well-oiled machine for selling counterfeit goods that is making the most of the confusion surrounding trade tariffs. Chinese content creators who portray themselves as workers or subcontractors in the luxury goods business claim that Beijing has lifted confidentiality clauses on local subcontractors as a way to respond to the huge hike in customs duties imposed on China by US President Donald Trump. They say this Chinese decision, of which Agence
RSS