Economic policy advisers to president-elect Tsai Ing-wen (蔡英文) have been discussing the possibility of setting up a state-level investment corporation to promote, manage and finance certain industrial concerns, including semiconductors.
In an interview last week with Bloomberg News, Taiwan Institute of Economic Research vice president Kung Ming-hsin (龔明鑫) — Tsai’s top adviser on industry policy — touched upon the subject, saying that Tsai’s team is considering establishing a quasi-sovereign wealth fund to finance emerging industries.
Taiwan already has a National Stabilization Fund, which is aimed at stabilizing the stock market, and a National Development Fund, which cooperates with local and foreign venture capital firms to finance Taiwanese start-ups. The government also operates four major funds — the Labor Insurance Fund, Labor Pension Fund, Public Service Pension Fund and Postal Savings Fund — that invest in local and foreign securities to increase returns and boost the national coffers.
However, according to Kung, the new fund would pay special attention to the development of five industries that Tsai highlighted during her presidential campaign — green energy, national defense, biotechnology, smart machinery and the Internet of Things — and it would also extend its focus to innovative start-ups with valuable technologies when necessary.
The term “quasi-sovereign wealth fund” refers to a fund that is defined as a semi-official organization, with capital provided partly by the government and partly from local and overseas investors. The government would be the largest shareholder in the proposed fund, but it would be run by local or foreign professionals to maximize returns and flexible management, while minimizing bureaucratic indolence and inefficiency.
The idea of such a fund is still in the brainstorming phase. Details such as investment goals, shareholder structure, sources of capital, operational model and organizational structure, as well as supervisory mechanisms and organizational regulations, have yet to be fleshed out.
So it is no wonder that some industry observers and market analysts said that it was still too early to evaluate the idea or to know what benefits the nation would gain, although they said it was an option to help rekindle growth momentum and whose returns might be used to finance social welfare spending.
Moreover, further discussion is required regarding issues such as the working relationships between the proposed quasi-sovereign wealth fund and the existing national funds. An effective mechanism would be needed to coordinate and integrate the new fund with the activities of these national funds, while avoiding overlapping with their financial operations. A set of detailed regulations will have to be drafted to address transparent management, prevent political intervention and curb insider trading. Otherwise, conflicts and disputes could ensue over the fund when various industries compete for money.
There are still other problems associated with establishing a quasi-sovereign fund and it is uncertain to what extent planners are likely to achieve their goals. Tsai’s idea of using the fund to develop Taiwan into Asia’s Silicon Valley also depends on certain conditions, such as having a huge talent pool, well-developed infrastructure, an efficient administrative system, close collaboration between the public and private sectors and the integration of related businesses and industries.
There has been no shortage of ideas over the years about how to establish a sovereign wealth fund to boost the economy, but such a fund is a medium-term investment option. In the near term, the best thing that policymakers can do is manage the capital that is sitting idle in the four national funds and channel them into real production activities to stimulate growth.
Ideas matter. They especially matter in world affairs. And in communist countries, it is communist ideas, not supreme leaders’ personality traits, that matter most. That is the reality in the People’s Republic of China. All Chinese communist leaders — from Mao Zedong (毛澤東) through Deng Xiaoping (鄧小平), from Jiang Zemin (江澤民) and Hu Jintao (胡錦濤) through to Xi Jinping (習近平) — have always held two key ideas to be sacred and self-evident: first, that the Chinese Communist Party (CCP) is infallible, and second, that the Marxist-Leninist socialist system of governance is superior to every alternative. The ideological consistency by all CCP leaders,
The US on Friday hosted the second Global COVID-19 Summit, with at least 98 countries, including Taiwan, and regional alliances such as the G7, the G20, the African Union and the Caribbean Community (CARICOM) attending. Washington is also leading a proposal to revise one of the most important documents in global health security — the International Health Regulations (IHR) — which are to be discussed during the 75th World Health Assembly (WHA) that starts on Sunday. These two actions highlight the US’ strategic move to dominate the global health agenda and return to the core of governance, with the WHA
Just as the cause of the Kursk submarine disaster remains shrouded in mystery — the nuclear-powered Russian submarine suffered an explosion during a naval exercise on Aug. 12, 2000, and sank, killing all 118 crew onboard — it is unlikely that we will ever get to the bottom of the sequence of events last month that led to the sinking of the Moskva guided missile cruiser, the flagship of the Russian navy’s Black Sea fleet. Ukraine claims it struck the vessel with two missiles, while Russia says ammunition onboard the ship exploded and the ship tipped over while being towed
The US Department of State on Thursday last week made major changes to the US-Taiwan relations fact sheet on its Web site. The update is a noticeable departure from the previous text, which had remained largely unaltered for decades. The previous fact sheet began with a summary on the US-Taiwan relationship: “The US and Taiwan enjoy a robust unofficial relationship.” The first sentence now says: “As a leading democracy and technological powerhouse, Taiwan is a key US partner in the Indo-Pacific.” The previous text continued with Beijing’s claims over Taiwan: “In the Joint Communique, the United States recognized the government of the