The effects of six financial reforms bills currently under consideration in a two-day special session of the Legislative Yuan should be felt within six months of their implementation, Premier Chang Chun-hsiung (
Still, Chang declined to promise that the bills will stimulate economic growth or reduce unemployment, as was demanded of him by opposition lawmakers.
Instead, the premier said the economic medicine should begin to take effect within six months, and noted that Taiwan's woes are due to the global economic downturn.
Chang made the remarks in response to lawmakers' questions yesterday, during the first day of the special session.
Lawmakers had invited him to deliver a report on the urgency and importance of the six reform measures and accept lawmakers' interpellation before review of the legislation got underway.
Chang, who earlier said it would be "improper" for him to attend the session, said he accepted the invitation to "show respect for the legislature" and ensure a peaceful interaction with the opposition.
Two of six measures passed last night. Amendments to the Insurance Law allow insurers to invest in other financial companies such as banks and securities firms.
Amendments to the Statutes for Deposit Insurance also passed, which will help create a NT$140 billion fund similar to the Resolution Trust Corp in the US.
Chang emphasized yesterday the reform package was necessary to boost the economy, and that Taiwan must prevent a crisis from developing in its financial system.
In addition, he said, as Taiwan prepares to join the WTO and the nation's financial markets become more liberalized, the reforms are necessary if domestic companies are to compete with their global counterparts.
"If we don't offer financial institutions a broader space to operate and a higher degree of flexibility, even a financial institution that is operating normally now won't be able to adapt to the drastic environmental change," Chang said.
Among the six bills, there's a piece of legislation that would create the NT$140 billion fund to help address the nation's bad loan problem.
The fund will be partly paid for by a 2 percent business tax on banks, for which amendments to the Business Tax Law are needed.
Citing numbers from the Ministry of Finance, Chang said roughly NT$200 billion would be needed to clear up the financial industry's bad debt problem, and the cost would increase by NT$10 billion if the problem is delayed for a year.
The enactment of the Financial Holding Company Law would offer a legal basis for financial groups to offer banking, insurance, securities and finance services as one entity, Chang noted. That would improve their operating efficiency.
In addition, he said, the Securities Finance Management Law would allow the government to better monitor the operations of securities firms.
Lawmakers also agreed yesterday that the Financial Holding Company Law, once passed, will not take effect until the proposed Financial Supervisory Board is created to provide oversight of the financial industry.
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