Sun, Nov 05, 2017 - Page 3 News List

Subsidies for southbound loans allocated

BUSINESS HELP:Under the program, the government is to approve infrastructure proposals from target nations and subsidize interests on loans given by local banks

Staff writer, with CNA

The government plans to spend NT$1.5 billion (US$49.7 million) next year to subsidize interest payments for loans of up to US$3.5 billion for development projects in allied and New Southbound Policy nations.

The government is to spend a total of NT$3 billion on the program, Minister Without Portfolio John Deng (鄧振中) said yesterday, adding that half of the sum is already listed in next year’s budget.

The nation’s commercial banks are to manage US$3.5 billion for a “finance facility” under the government’s Official Development Assistance program, which aims to help Taiwanese businesses win contracts to build public infrastructure in targeted nations, Deng said.

That differs from the regular definition of “official development assistance,” in which governments provide aid through grants or soft loans to promote the welfare of developing nations.

However, under the program, countries are to propose public infrastructure projects for Taiwan to review. Once a plan has been approved, Taiwanese commercial banks are to make low-interest loans to the nation’s government to finance the project.

Foreign governments would have to supply a repayment guarantee, as well as contract the projects to Taiwanese businesses, Deng said.

The nations are to pay the contractors at various intervals, and once the project is completed and businesses have been paid, their governments are to pay back the loans along a previously agreed upon schedule.

The government would be responsible for two tasks in the program: to review and approve plans, and to subsidize interest on disbursed loans, Deng said.

This model has been used by both Japan and South Korea, Deng said, adding that it would help remove entrance barriers for Taiwanese businesses in these emerging markets.

The New Southbound Policy focuses on South and Southeast Asian markets that offer many attractive opportunities for developed nations, Deng said, adding that the plan would make it easier for local businesses and commercial banks to invest their resources.

The NT$1.5 billion allocated to the project in next year’s budget consists of NT$1 billion from the Ministry of Economic Affairs and NT$500 million from the Ministry of Foreign Affairs.

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