Chunghwa Post’s proposal to use its postal savings fund to invest in public infrastructure projects was rejected by the Financial Supervisory Commission (FSC), which said the postal service operator is not authorized by law to do so.
The postal company said it had approximately NT$470 billion (US$15.6 billion) in its savings fund as of last month. The postal fund is increasing at a rate of NT$11 billion per month and could exceed NT$500 billion next month.
Chunghwa currently offers an average interest rate of 1 percent to savings account holders. Should the amount of account holders continue to grow, the company could have to pay NT$50 billion in interest per month,
Chunghwa Post chairman Oliver Yu (游芳來) said that if the fund was used to support public infrastructure projects, it would simultaneously help increase revenue to the postal savings fund.
However, according to the Postal Savings and Remittances Act (郵政儲金匯兌法), Chunghwa is not allowed to provide loans to any party, the commission said.
The commission added that the nation’s financial institutions are not short of funding and that the postal company does not have the capital adequacy ratio required to be an investor in public infrastructure. It also added that there are hardly any postal firms in the world that offer lending services.
However, Chunghwa said that the Postal Act (郵政法) permits it to operate businesses if approved by the Ministry of Transportation and Communications. If the postal fund was used to sponsor transportation projects, it could serve as a low-risk and stable source of funding for the government and save it having to pay interest to banks.
Chunghwa vice president Wu I-hua (吳倚華) said that all the company can do now is either deposit the fund money into the Central Bank, or use it to purchase government debt. The company must not only avoid high-risk investments, but is explicitly banned by law from making certain investments regardless of risk.
Savings account holders in the postal company are paid the interest rate issued by the central nank, which is about 1.3 percent. Chunghwa makes a profit from the difference between the interest rates of savings accounts and checking accounts, which is about 0.9 percent.