A Control Yuan hearing on Wed-nesday, convened to solicit opinions from interested parties, found about as much common ground between the government and the farmers' and fishermen's associations on reform as it found between the two government departments responsible for reform, the Ministry of Finance, (MOF) and the Council of Agriculture (COA).
The associations reiterated their strong resistance to the MOF's proposal to merge their credit departments with regional banks but voiced support for the COA's proposal to establish a special national agricultural bank, as long as it left the associations intact.
Quoting former president Lee Teng-hui's (李登輝) remark of late September that the government's proposed reforms were aimed at eliminating the associations altogether, Lin Chin-hung (林錦洪), director-general of ROC Farmers' Group Cadre Training Association (中華民國農民團體幹部聯合訓練協會), said the Ministry of Finance "knows nothing about agriculture."
Lin also stated his opposition to a proposal from the government to merge those credit departments into regional banks.
"Farmers and fishermen are relatively disadvantaged groups in society, but they are important. General commercial banks are reluctant to allow them to use agricultural lands as collateral for loans." Lin said.
Siding with Lin, Liu Sung-ling (劉松齡), chief-secretary of the Ta-chia town farmers' association (大甲鎮農會) in Taichung County, said that ordinary commercial banks can't perform the multiple functions of non-profit credit units which usually exist in remote areas and provide financial support to poor farmers and fishermen. Liu added commercial banks tend to shy away from these farmers and fishermen for commercial reasons.
"Among those 36 credit departments of farmers' and fishermen's associations that were taken over by the government in the past two years, local farmers and fishermen in these areas had complained that they have no way to finance or convert loans at the banks that are taking over," Liu said.
Vice Minister of Finance Susan Chang (
According to official statistics, by June of this year, the average overdue loan ratio stood at 21.5 percent in farmers' associations and 17.5 percent in fishermen's -- almost three times the figure in 1996. Moreover, 98 percent of such credit departments have a negative net worth.
In the past several years, runs on some of the credit departments had occurred due to media reports about bad loans and charges that leading members of farmers' and fishermen's associations had embezzled money and made illegal profits.
Chang said that credit departments should be separated from farmers' and fishermen's associations and professional bank personnel be allowed to handle their finances.
The problems of such credit units, according to Chang, mostly results from a lack of internal control, especially with regard to interference from local factions whose members serve as leading members of these associations. Chang thus claimed a special agriculture bank is not needed because ordinary banks can handle these businesses.
However, the Council of Agriculture suggests forming a national-level agricultural bank to oversee the credit departments, hold contingency capital reserves and provide managerial advice.
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