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Wed, Mar 06, 2002 - Page 18 News List

Foreign exchange rules may be relaxed

LIBERALIZATION If the PFP legislative caucus gets its way, limits on the amount of money individuals and businesses can remove from the country will be eliminated

By Stanley Chou  /  STAFF REPORTER

The PFP's legislative caucus will soon propose eliminating 50-year-old regulations on foreign exchange controls, according to Chinese-language media report yesterday.

The regulations and other laws restrict the general public from taking money out of the country.

A PFP legislator said the move would be welcomed by foreign investors.

"We want to prevent the central bank from regulating foreign exchange held by private businesses and the general public. Instead, the central bank would only regulate foreign exchange reserves held by the central bank itself. Foreign investors would welcome the move, since it represents further liberalization of this country, which could attract more foreign investors to Taiwan," PFP legislator Norman Yin (殷乃平) told the Taipei Times.

Meanwhile, a central bank official declined to comment.

"Since the proposal is [going to be] made by legislators, the central bank declines to make any comment," said Chou A-ting (周阿定), director general of central bank, according to the report.

The regulations regulating foreign exchange (管理外匯條例) were promulgated in 1949. However, after an amendment on July 1, 1987, a number of articles in the regulations were suspended.

"Since Taiwan has become a member of World Trade Organization (WTO), any future measures controlling the movement of capital in and out of the country would violate WTO rules and regulations," said Yin. "The PFP is ready to make a proposal to scrap the outdated regulations and to prevent any [central bank] misuse in the future," said Yin.

Yin is confident that the move will win support from most legislators.

"There is no reason for legislators from other political parties not to support the proposal. I think the proposal would secure a majority vote," said Yin.

Currently, the central bank sets an annual ceiling of US$5 million for individuals and US$50 million for businesses to remit money out of the country. Any amount beyond the ceiling must be approved by the central bank. Were the regulations scrapped, the current ceilings would be abolished unless a national crisis occurred, according to Yin.

"After scrapping the regulations, the central bank would only be able to regulate foreign exchange reserves controlled by the central bank. The central bank would no longer be able to put its hands on foreign exchange held by individuals and businesses," said Yin.

"In addition, part of the current Central Bank Law (中央銀行法) should be amended, which would authorize the central bank to control foreign exchange only under emergency situations," said Yin.

However, whether the said regulations will actually be abolished remains to be seen.

"The question of whether to abolish the regulations for foreign exchange is a big one. The administration might have a different point of view on this matter. However, there is a huge space to amend related laws, which could encourage more financial derivatives [introduced in this country] and other benefits," Lawrence Liu (劉紹樑), a partner at Lee & Li Attorneys-at-Law (理律法律事務所) was quoted by the report as saying.

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