Government property plan comes under fire

The Cabinet plans to implement a series of property-boosting measures which include between NT$200 billion and NT$300 billion in subsidized loans to developers at interest rates of around 5.5 percent.

Premier Tang Fei (唐飛) will hold Cabinet discussions with finance and economics ministers Monday to finalize the measures before a formal announcement is made.

The Cabinet also intends to reduce by 10 percent downpayments on land for young buyers between the ages 20 and 40. In addition, housing loans for 10,000 young home buyers at a 3 percent interest rate have been proposed.

The China Times, citing unidentified officials, reported yesterday that the order to implement these measures came directly from President Chen Shui-bian (陳水扁), who had called a meeting with Tang and Central Bank Governor Perng Fai-nan (彭淮南). The purpose was to avoid a chain reaction of corporate failures resulting from the slump in the real estate market.

The Cabinet's new financial measures, however, worry economists and legislators across the party divide.

New Party legislative whip Lai Shyh-bao (賴士葆) said that the new government was in danger of making the same mistakes the former government made last year and said the plan would mainly benefit developers.

The former Cabinet led by Vincent Siew (蕭萬長) introduced a similar subsidized loan scheme providing NT$150 billion to developers to revive the sluggish real estate market before Lunar New Year 1999. The proposal immediately came under fire from opposition parties, scholars and investors -- but not property developers.

Siew's plan then became a political controversy in which DPP lawmakers Chou Po-lun (周伯倫) and Lin Chung-cheng (林忠正) formally asked three financial ministers including Paul Chiu (邱正雄), to step down. They declined to do so.

The DPP's legislative whip Hsu Tain-Tsair (許添財) said that now the DPP is in power the party has the same mentality as its KMT predecessor when it comes to handling financial matters.

Hsu said that he was not optimistic about Tang's preferential loans and suggested that a better idea would be to persuade banks to loosen their credit lending policies.

That would stimulate demand, lead industrial enterprises to create more jobs and eliminate old housing communities in favor of new ones.

The aim is to solve the long-term glut of vacant houses in the real estate market.