The Conference on Sustainable Economic Development yesterday passed an array of financial reform proposals, but ran into heated debate over cross-strait issues.
The finance and banking panel at the conference reached agreement on proposals to reopen licensing for new banks and financial holding firms coupled with a supporting exit mechanism. The panel also proposed requirements for financial transparency, reviewing fund sources and corporate governance in mergers and acquisitions activities, and management of proxy vote solicitation.
Participants at the meeting also reached consensus on the proposed relaxation of derivatives trading to facilitate the nation's development into a regional asset management hub and possible revocation of the so-called "revolving door" regulation that restricts retired government officials from serving in financial institutions previously under their authority.
The conference consented to allow local mutual funds and discretionary funds, excluding government funds like pension funds, to invest part of their assets in stock markets in China, Hong Kong and Macau, and securities issued by the Chinese government or companies. It was the only consensus involving relaxation of cross-strait regulations reached at the conference.
Other cross-strait opening measures, such as the establishment of bank branches and subsidiaries and investment in Chinese banks, the trading of yuan in Taiwan and easing of the ceiling on Chinese investment, currently capped at 40 percent of a listed firm's net worth, were listed under "other opinions."
"The whole conference is like a show, in which we do not expect any substantial relaxation of cross-strait restrictions or impressive changes in economic policy and environment," said Jeff Chang (
The proposed easing may not materialize until the second half of next year as the ruling party seeks credit and support in the presidential election in 2008, Chang said.
The discussion on investments in China sparked heavy debate in the the conference in the face of strong opposition from Taiwan Solidarity Union (TSU) lawmakers.
TSU caucus whip David Huang (
Taiwan Electrical and Electronic Manufacturers' Association chairman Rock
Hsu (許勝雄) argued that investment in China was a crucial part of Taiwanese
companies' global development plan. Closer economic ties were the foundation
for peaceful cross-strait relations as both governments would exert more
caution in dealing with bilateral relations without resorting to armed force
easily, he added.
Supporters like Chinese Nationalist Party (KMT) Legislator Lee Jih-chu (李紀珠) said that banning banks from investing in China could damage their competitiveness and lead to a liquidity crisis in light of a shrinking home market.
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