Sat, Aug 08, 2009 - Page 8 News List

EDITORIAL: If incompetence meets stealth...

Not much has happened of late in the world of business news that could be considered amusing. Yesterday, however, the bizarre and the grimly comical combined in the story of Taiwanese travel agency ezTravel, whose president had just “discovered” that his company had been taken over by Chinese online travel agency Ctrip.com after the latter acquired a majority of shares through a coalition of investors after years of gradual acquisition.

“While we were aware that Ctrip had been buying our shares in bulk, we did not know the magnitude of Ctrip’s actual holdings until Wednesday,” ezTravel president Jack Yu (游金章) told the Central News Agency on Thursday.

It beggars belief that a company president would not be aware of the component holdings of his company, let alone be taken by surprise by a foreign takeover. Of genuine concern — and worthy of investigation — is the possibility that Yu and his aides deliberately deprived their shareholders of the details of the “actual holdings” — particularly individuals and groups masking their affiliation to Ctrip.com.

This takeover offers a sobering precedent in the ongoing tango between Chinese and Taiwanese investors and the dangers that result from a lack of transparency and accountability on the Taiwanese bourse.

It is a charade that offers real ammunition to the Democratic Progressive Party (DPP) and other voices that are demanding the administration of President Ma Ying-jeou (馬英九) exercise greater caution in formulating cross-strait economic policy.

But before caution, there must be a semblance of competence.

Yesterday, Premier Liu Chao-shiuan (劉兆玄) gave an example of just how incompetent Ma’s economic dream team can be. Speaking to Dow Jones Newswires on Thursday, Liu said that the government would consider including the Chinese currency in Taiwan’s foreign exchange (forex) reserves.

The main problem was not that Liu appeared ignorant of the convertibility limitations of the yuan (though that is problem enough), nor that subsequent merging of economic and political risk factors might make this a process fraught with uncertainty.

The main problem, instead, was that Liu spoke on the matter without due care or teamwork, disorientating his staff and sending commentators into a flurry of speculation on whether he was testing the waters or simply proving that chemistry professors-turned-premiers need better economics briefings.

It was especially embarrassing for the government to see the central bank forced to issue a rejoinder on the matter, playing down any hint that the bank was involved in negotiations to include the yuan in its forex reserve line-up.

The impression Liu leaves is one of a government in which ideology and political banalities trump sound, carefully considered policy initiatives that meet the needs of the real world.

Liu has been premier long enough: He ought to know when to sidestep questions from journalists looking to nail the next big policy development. But if he wishes to open up a new topic for consideration in the politics of practical rapprochement, he is going to have to spend a lot more time crafting strategy and learning how to deliver it.

The alternative is leaving Taiwanese vulnerable to people and companies, local and foreign, who know how to exploit incompetent policy and policymakers.

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