Stock fund bill passes first reading

In the midst of brawling lawmakers and despite disagreement with opposition parties, the legis-lature's finance committee yesterday passed its review of the establishment and operation of the NT$500 billion National Stability Fund (國家安定基金).

The bill is expected to go to the legislature next week for passage of the second reading, and to be implemented by the summer.

The fund is intended to curb any excessive fluctuations in the stock, futures and other financial markets caused by major economic or non-economic factors which could damage national interests.

But the hasty passage of the bill has sparked speculation that its main purpose is to win support for the ruling party's ticket in the March presidential election.

"It's purely political," said DPP legislator Hong Chi-chang (洪奇昌). "It's just like another version of the agricultural act. I don't see any absolute urgency to pass it before the election."

In June last year, Premier Vincent Siew (蕭萬長) told the finance ministry to draft the relevant regulations for the establishment of the fund. President Lee Teng-hui (李登輝) had proposed such a fund days earlier.

In July, the Cabinet approved the proposal prepared by the finance ministry, and in August, Vice President Lien Chan (連戰) declared his support for the fund. Since then the finance ministry has been putting pressure on the legislature to pass the bill during the current session.

"The bill has become a political issue rather than a legal or economic one," said Hsu Tain-tsair (許添財), a legislator with the New Nation Alliance. "It simply violates the law of economics and is unfair to taxpayers."

The government already has four government-linked funds to stabilize the stock market, said New Party lawmaker Lai Shyh-bao (賴士葆). The bullish stock market doesn't need any further unnatural stimulus to rise, he said.

"It seems that the government sees only two kinds of people existing in Taiwan -- those who play stock markets, and those who don't. When people lose money on the stock market, the government takes the money from taxpayers to make up for their losses," said Lai.

Lawmakers also questioned whether the establishment of the fund was sending a message of insecurity to the public and China. "It's a joke," said Hsu.

"The proposal of the bill is like prescribing a sedative to the public, and shows a lack of confidence in the country's stability," Hsu said.

"It's like we're telling China that we have a cure-all medicine, so if they make any military moves that might affect us, we have the ability to treat our illness. But, if unfortunately a war were to break out, I don't think NT$500 billion would be enough."

Vice President Lien Chan has said that the fund may be effective in helping maintain national stability in times of war. The first stock market stabilization fund effectively helped stabilize the local bourse in 1995 when China waged war games and test-fired missiles, he said.