The Cabinet yesterday delighted Taiwanese businesspeople by announcing that the Chinese yuan can now be exchanged directly into New Taiwan dollars at banks in Kinmen and Matsu.
According to Premier Frank Hsieh's (謝長廷) announcement at the weekly Cabinet meeting yesterday morning, starting from Oct. 3, Chinese visitors and Taiwanese residents who qualify to participate in the "small three links" will be allowed to exchange yuan for New Taiwan dollars in cash at local banks in Kinmen and Matsu counties, such as the Bank of Taiwan (台灣銀行), Fuhwa Bank (復華銀行), the Kinmen Credit Cooperative (金門信用合作社) and the Land Bank of Taiwan (土地銀行).
The maximum amount that can be exchanged will be 20,000 yuan (US$2,477), in accordance with China's currency laws.
The "small three links" allow for a special permit to travel directly between China and Taiwan from Kinmen and Matsu. Persons eligible for the permit are passengers whose households have been registered in Kinmen or Matsu for more than six months; Taiwanese investors or busi-nesspeople in China and their family members; or those who need to travel urgently because of natural disasters, severe illness or "special occasions or purposes."
`A mess'
"We will begin exchanging yuan at banks in Kinmen and Matsu only, because it will be a mess if we do it in the rest of Taiwan right now since we do not have an exchange rate mechanism," the premier said.
According to the premier, the government is planning to gradually make it easier to exchange yuan directly into New Taiwan dollars. Its next move will be to increase exchange locations, such as local airports, hotels and duty-free stores.
In addition, starting from Saturday and effective for three months, taxes on gasoline and diesel will be lowered by 25 percent, which will amount to between NT$1 and NT$1.5 in real terms.
"As for lowering the taxes on gasoline and diesel, we hope that it will help stabilize potential inflation in the light of soaring fuel prices. We will see whether we need to make more adjustments in three months' time," he said.
Hsieh said that this policy has been adopted to counter the rising cost of living when the local gas companies, Formosa and the state-run Chinese Petroleum Corp (CPC), raise their gas prices in the near future, as expected.
"I have promised that CPC's gas prices will remain as are for the next three months. But, if the global price of oil keeps soaring, the Cabinet will then approve CPC's request to raise its prices," Hsieh said.
Formosa had previously announced that it would lower its gasoline prices on Saturday. Unleaded gasoline will then be NT$1.7 cheaper per liter and diesel will be NT$0.99 less per liter.
In related news, while the Chinese yuan will soon be allowed to be converted into New Taiwan dollars in Kinmen and Matsu, it is still illegal to use the yuan as legal tender in the region, Fu Don-cheng (
Confiscated
In accordance with regulations, Chinese yuan will be confiscated by the government if it is found being used inside Taiwan proper. However, according to Fu, it often happens that Chinese yuan is used and accepted as legal tender in Kinmen and Matsu.
"After the conversion of Chinese yuan directly into New Taiwan dollar comes into effect on Oct. 3, the government will enforce regulations to restrict illegal transactions," Fu said.
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