In its first year in power, the Ministry of Finance under the DPP-led government has done a poor job of handling the nation's financial affairs, academics say.
From bank reform to tax issues to intervention in the stock market, the ministry and the DPP could do no right.
"The first major mistake Yen made was intervening in the stock market," said Norman Yin (
Yin noted that the National Stabilization Fund spent roughly NT$200 billion over the past year as part of an effort to support shares, while the four government-related labor insurance and pension funds spent roughly NT$300 billion. Together, the funds are sitting on paper losses of roughly NT$150 billion, and there's no clear indication when the government will be able to recover its investment.
The finance minister's second mistake, Yin said, was pressuring banks to roll over loans to companies experiencing financial troubles. "The consequence: Banks have halted issuing new loans," Yin said, and that's hurting companies in need of credit to expand their business.
"During the KMT era, the finance ministry took similar actions. But they had restricted the rollovers to a limited number of conglomerates only," Yin said. "The DPP, on the other hand, did it comprehensively."
According to disclosure statements released by the finance ministry, banks have provided rollovers on an estimated NT$200 billion in loans.
Yin said that Yen's continuation of the KMT's high-pressure tactics would do little to address problems in the banking industry and would only make matters worse. "Not only does the problem of overdue loans go unresolved, it also creates a credit crunch for local businesses," he said.
The banking professor also took issue with the government's efforts to tackle the nation's bad loan problem. Specifically, he said efforts to establish asset management corporations (AMCs) and a US-style Resolution Trust Corp were on the right track, but the measures alone are not enough.
"The scale of the Resolution Trust Corp is too small," Yin said, noting that it would only be capitalized at NT$50 billion. The nation's bad loans, by comparison, are estimated to be more than NT$1 trillion.
As for AMCs, it's unclear whether there will be enough buyers in the market who are interested in purchasing distressed properties.
Yin also criticized the government's efforts to promote mergers in the banking industry, which he said was the right move but for the wrong reason.
"The purpose of mergers is to eliminate redundancy by laying off extra manpower," Yin said. Instead, what's happening is that stronger banks are being paired with weaker banks with high overdue loans.
And what's the point of having mergers in the banking industry if there aren't going to be any layoffs, Yin asked. For example, Yen has promised that the three-way tie up between state-owned banks the Bank of Taiwan (
Tseng Chu-wei
For example, the professor noted, Chen and the DPP promised to promote social justice through tax reform. "But one year later, what we have seen is that the DPP has compromised and has implemented many policies that contradict its campaign promise," Tseng said.
Tseng noted that the DPP had proposed removing the tax exemption for junior high school and primary school teachers -- but the plan has now been axed.
"Tax reform is a must for the administration to improve the government's debt situation," Tseng argued. "Many proposals on tax reform have been dropped. On this score, the DPP administration has performed even worse than the KMT."
And something needs to be done about the nation's debt soon, the academic said. He noted that the DPP inherited roughly NT$2 trillion in debt after it took over from the KMT. In the past year under the DPP, roughly NT$350 billion has been added to that amount -- of which NT$100 billion is new debt and NT$250 billion is interest on outstanding debt.
"But the finance minister doesn't seem to realize the seriousness of the issue," Tseng said.
Although Yen has proposed selling government-owned assets to cover the nation's budget deficit, this plan is not so simple to execute he said. "In order to sell national property such as land, it takes a long time to conduct the process, and you need to find buyers," Tseng said.
Tseng said the only ways to reduce the budget deficit are either to cut expenses by laying off civil servants or raise taxes -- both of which the DPP is also unwilling to do.
The academic also said the DPP's tax policies favored businesses over workers, citing in particular the reduction in the business tax on banks.
Under the KMT, the tax was reduced from 5 percent to 2 percent so banks could use the spare cash to write down bad loans. At the time, the DPP protested the move.
Now, under the DPP government, the business tax for banks has been reduced further, from 2 percent to nothing.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique