Minister of Finance Lee Yung-san (李庸三) said yesterday that the most appropriate size of a financial restricting fund will be NT$600 billion (US$17.34 billion), or 6 percent of the GDP.
The minister made the remarks in a report to the Finance Committee of the Legislative Yuan on the operations of the fund, modeled on the Restriction Trust Corporation to write off bad debts of financial institutions.
The fund is currently at NT$140 billion and the ministry is studying the feasibility of extending the period of imposing business tax on financial institutions to increase the revenue by NT$180 billion, boosting the size of the fund to NT$320 billion.
The ministry started to impose a 2 percent business tax on financial institutions last year and while it will continue to do so until 2005, it is now mulling the possibility of extending the measure until 2011 to replenish the fast-diminishing fund.
Legislator Pang Chien-kuo (
The finance minister agreed with him, but said that to avoid complicating the matter, the size will be first expanded to the NT$320 billion figure.
The ministry will also solicit support for the issuance of bonds and try to replenish the fund through other channels, Lee went on.
He noted that the size of the fund has to expand, pointing out that the current NT$140 billion accounts for only 1.4 percent of Taiwan's GDP. The figure compares with 12 percent in Japan, 18 percent in South Korea, 18 percent in Malaysia, 29 percent in Indonesia and 32 percent in Thailand.
According to Lee, it would be "more reasonable" if the size of the fund could be about half that of Japan's, or 6 percent.
He said that the ministry is hoping that the overdue loans can be cut to below 5 percent within two years.
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