Wed, Oct 13, 2010 - Page 1 News List

Premier pledges to turn ‘hot money’ into investments

By Flora Wang and Shih Hsiu-chuan  /  Staff Reporters

Premier Wu Den-yih (吳敦義) and top financial officials yesterday vowed to encourage foreign hot money to make long-term investments in local construction projects to prevent swing trading.

Asked for comment by Chinese Nationalist Party (KMT) Legislator Ting Shou-chung (丁守中) in the legislature, Wu said the government would strive to keep “hot money” in Taiwan by attracting investments that could contribute to the nation’s economic development.

Council for Economic Planning and Development Minister Christina Liu (劉憶如), who also attended the session, said he would help investors understand the positive aspects of Taiwan’s investment environment.

The premier and Liu did not propose specific measures, nor did they comment on the possibility of levying a “hot money tax” to prevent investors from flipping property, a term that refers to the purchase of a revenue-generating asset that is quickly resold for profit.

Wu also confirmed that Taiwan and Indonesia were in talks on the possibility of jointly developing Indonesia’s Morotai Island, a small island located between the Philippines and New Guinea, with a population of 50,000.

Wu said the two sides had not finalized the details of the Morotai plan, adding that regardless of whether the deal comes through, Taiwanese offshore islands would continue to receive top priority in terms of investment.

A delegation of foreign and economic affairs ministry officials, fisheries experts and economic development experts, left today on an inspection tour of Morotai, a government official said.

Asked why Taiwanese investors were interested in such a project, Minister of Economic Affairs Shih Yen-shiang (施顏祥) said some Taiwanese businesspeople in China were seeking to move their investments to Southeast Asia because “the investment environment in China has changed” and they believed Indonesia would be a good choice.

Amid news of the project, President Ma Ying-jeou (馬英九) yesterday said this was proof that the positive effects of the Economic Cooperation Framework Agreement (ECFA) were beginning to emerge, with more countries showing interest in working with Taiwan economically.

Ma said that since the ECFA was signed, Southeast Asia, Europe, New Zealand and Australia had “looked at Taiwan with new eyes.”

Wu also referred to the joint investment initiative as one of many that have emerged after the implementation of the trade deal.

The Indonesian trade office refused to comment on whether there was any link between the Morotai project and the ECFA.

Academics, for their part, offered different views.

Tu Jenn-hwa (杜震華), an associate professor of international trade at the Graduate Institute of National Development at National Taiwan University (NTU), said the EFCA sent a signal to other countries that they could now pursue economic relationships with Taiwan.

Tu said the offer to develop the island and the manner in which the Indonesian side received the Shih-led delegation were deviations from the diplomatic cold shoulder it had given Taiwan in recent years.

Kenneth Lin (林向愷), a professor of economics also at NTU, had a different opinion, saying the offer was for Indonesian self-interest and had nothing to do with the ECFA.

“The Indonesian government made the offer as it needed capital and technology from Taiwan to develop the island,” Lin said.

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