Taiwan could develop a futures market in Greater Kaohsiung after Kaohsiung Port becomes a hub for the London Metal Exchange (LME), the world’s largest non-ferrous metals exchange market, Minister of Transportation and Communications Mao Chi-kuo (毛治國) said yesterday.
LME-certified ports in Asia also include those in South Korea, Singapore and Malaysia.
Mao made the comments at a meeting of the legislature’s Transportation Committee for a review of amendments to the Act for the Establishment and Management of Free Trade Zones (自由貿易港區設置管理條例).
The main for reason the amendments was to enable Kaohsiung to become a storage and shipping warehouse for the LME in Asia.
Mao said that the ministry had been trying to turn Kaohsiung Port into an LME-certified port since 2010 and that the consulting firm representing the LME has inspected the infrastructure at the port, listing several requirements that the port must fulfill.
Mao said the only requirement left unfulfilled is the amendment to the nation’s regulations.
Mao added that the nation has free-trade zones at the Greater Kaohsiung, Greater Taichung, Keelung and Taipei ports, as well as at Taiwan Taoyuan International Airport.
Some of them have developed their own specific characteristics. For example, Taipei Port has become a logistics center for the automobile industry and Taichung Port is now a value-added center for oil products.
“Kaohsiung Port will be an international non-ferrous metal trading hub, and it will attract other relevant industries and professionals to Kaohsiung,” Mao said.
Mao said that the ministry plans to expand the hinterland of Kaohsiung Port by building Freeway No. 7, which would connect the port to land created by the South Star Plan, a massive land reclamation project.
The amendment secured bipartisan support, particularly from legislators representing districts in Greater Kaohsiung.
They said the amendment could revitalize Kaohsiung Port and greatly benefit manufacturers of metal screws in Kaohsiung’s Gangshan District (岡山).
However, Democratic Progressive Party Legislator Kuan Bi-ling (管碧玲) and Chinese Nationalist Party (KMT) Legislator Lin Kuo-cheng (林國正) questioned if Taiwan could still secure LME certification after the metals exchange was acquired by Hong Kong Exchanges and Clearing (HKEx).
The legislators said all the efforts made to have the amendment passed could be in vain if the LME decides to base itself in China instead. Lin said that HKEx was able to buy LME with loans from Chinese banks.
He quoted HKEx chairman Chow Chung Kong (周松崗) as saying it would establish warehouses in China after the transaction is complete.
Ports such as Ningbo, Dalien and Shanghai have also applied for LME membership, and Kaohsiung may have lost out on a golden opportunity, Lin said.
In response, Mao said that the LME had informed the minsitry that it did not consider Shanghai or other Chinese ports suitable because they lacked transparent regulations.
“Even if it [LME] is bought by HKEx, it is unlikely to change its standards in its selection of LME-certified ports,” Mao said, adding that South Korea spent five years securing LME membership.
The approval of the amendment could attract other, similar organizations to Taiwan even if the port fails in its application for LME membership, Mao said.