Minister pressures firms

Minister of Economic Affairs Lin Hsin-yi (林信義) called for debt-ridden state-owned enterprises to accelerate their internal reforms in order to survive competition.

"Otherwise," Lin noted, "I do not exclude the possibility that they may face possible layoffs, salary cuts and even closures as a result of their business failures."

The economics minister made the remarks at the Legislative Yuan at a Budget and Final Accounts Committee hearing, where legislators reviewed the budgets of state-owned enterprises for this fiscal year.

In addition to Lin, who is chairman of the Commission of National Corporations (CNC, 國營會), CNC Vice Chairman Lin Wen-yuan (林文淵) and chairmen and executive directors of the 12 state-run enterprises under the Ministry of Economic Affairs were also present at the budget review session.

In response to criticism lodged by New Party Legislator Lai Shyh-bao (賴士葆) on Sunday that 90 percent of state-run enterprises have become a drain on government coffers, CNC Vice Chairman Lin Wen-yuan said most of the 36 state-owned enterprises have begun their respective rejuvenation plans.

For example, he noted, staff and employees of China Shipbuilding Corp (中船) have agreed to have their salaries cut and also to have some workers laid off, while Taiwan Machinery Manufacturing Corp (台機) has agreed to be merged with money-making China Steel Corp (中鋼). Under the merger plan, China Steel will take in about 170 Taiwan Machinery employees, according to Lin.

He said personnel salaries and payments are the major cost of every state-owned business in Taiwan, noting that China Shipbuilding spends twice as much in this area than its privately-run counterparts and eight to 10 times more than its Chinese counterparts.

Lowering personnel costs is the first step for China Shipbuilding in sharpening its competitive edge, he noted.

In a budget review meeting held on Sunday, Lai said state-owned enterprises used to be a major source of government funds but have turned from cash cows into money pits in recent years.

Lai said that state-owned enterprises have accumulated unpaid debts of nearly NT$700 billion (US$21.27 billion) and that their operational losses have surpassed NT$100 billion (US$3.04 billion). Of Taiwan's 36 state-owned firms, 19 recorded a profitability of less than 5 percent, he added.