The government will boost the state-owned venture capital fund five-fold to NT$1 trillion (US$29.95 billion) to give local enterprises a leg up amid the global financial crisis, Council for Economic Planning and Development Chairman Chen Tian-jy (陳添枝) said yesterday.
The National Development Fund (國發基金) is a NT$200 billion public venture capital fund formed in 1972 to assist companies in strategic industries to develop.
Companies suffering from tight credit as a result of falling asset prices and sluggish sales in the wake of the global financial meltdown need help in restructuring their business, either through a capital increase or via an acquisition, Chen told a press conference after the weekly Cabinet meeting where the proposal was approved.
Chen said the government would offer financial assistance to companies in strategic industries that are vital to the nation’s long-term economic development. These mainly include companies in the manufacturing sector and some service and financial industries, he said.
To enlarge the National Development Fund, the government will borrow up to NT$800 billion from the postal savings fund owned by stated-owned Chunghwa Post Co (中華郵政), which had NT$4.13 trillion in assets as of last year.
Getting a loan from the postal savings fund shouldn’t be a problem as the National Development Fund has NT$200 billion in capital and is not in debt, Chen said.
“I believe the National Development Fund would get a good credit rating,” Chen said.
Chen assured Chunghwa Post depositors that the National Development Fund would bear full liability for the loan, saying the borrowing would not impair their interests.
Chen said the government would not “compete with the public sector for profit” as it would use the fund for investment in projects that are experiencing difficulties in luring private capital at home or abroad because of the financial crisis.
Asked to comment on Argentina’s debt crisis, Chen said there was little chance that Taiwan would have any problem relating to US dollar liquidity risks.
“We don’t need to worry about the problem at all as we have several advantages. First, Taiwan still has sizeable foreign exchange reserves despite the recent outflow of foreign capital. Second, the nation’s foreign debt remains low,” Chen said.
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