Fri, Dec 31, 1999 page20

• Review I: Clock ticks for financial reforms

  With just two weeks left in the current legislative session, bills vital to the government's liberalization agenda run the risk of being held hostage or `hijacked' by opponents

  • By Thomas Ker / STAFF REPORTER
  • • 
    • 
    • 

  In this season of giving, Taiwan's legislators have had a good Christmas -- and the festivities look set to go on.

  The current session at the legislature ends in two weeks; the next one is not due to start until after the presidential election in March. Time for the passage of any pressing bills that the government wants passed before the election is running out.

  Meanwhile, according to many of Taiwan's top officials, the country's expected entry into the WTO is slated at around spring time. And while the debacle of the WTO Third Ministerial Conference in Seattle earlier this month is not likely to have affected Taiwan's chances of entry, it may have strengthened the hand of those in Taiwan who believe too much has being conceded to gain entry.

  It also so happens that Taiwan's presidential election is turning out to be a particularly hard and closely fought race. Any one of the three leading candidates has a good chance of winning.

  Bargaining

  Together, these events, timetables and uncertainties have transpired to put many legislators in a strong bargaining position with the government.

  "Right now, the government is doing all it can to pass laws to benefit its election hopes," says Lai Shy-bao (賴?h葆), a New Party legislator and member of the legislature's finance committee.

  Such an approach raises concerns over the priorities of the government and the extent to which the economy -- and in the long term the electorate -- will pay for it. These laws "are only good for the short term," Lai says.

  They are also good for legislators to benefit from the government's desire to win the election. According to one industrial analyst, most interests of the legislators can be met as long as they don't affect the interests of the KMT.

  "This time is very favorable for legislators to ask for what they need," says Eric Chen, a legislative analyst.

  But while the legislators bay for extra concessions, and the government focuses ever more on the election, the WTO-related laws, and the laws that require passage to further liberalize Taiwan's financial markets, face the prospect of being left on the back-burner or being "hijacked" by legislators.

  "It's possible legislators could take a bill hostage," says Chen. "Right now, with the laws that the Executive Yuan requires passing, they can take this opportunity."

  But even the financial market liberalization bills required to better equip Taiwan for the increased competition following WTO entry are becoming politicized.

  "Already Taiwan's financial markets are prepared [for WTO entry], but my concern is there's a much bigger political influence going into the financial market," says Lai Shy-bao.

  Opposition

  According to Lai, both the New Party and the DPP are opposed to the passage of the National Stabilization Fund (國家|w定基金) bill because of its clear political connotations.

  The fund was originally announced by President Lee Teng-hui in June this year to help cope with the impact of abnormal inflows and outflows of foreign funds into the stock market following Taiwan's entry into the WTO.

  Meanwhile, the main purpose of the Financial Institutions Merger Law (金融機構|X併法) is to "resolve the problem of the financial departments of agricultural associations," says Lai.

  It is also designed to unclutter an overcrowded banking market, according to the Ministry of Finance (財政3?/CHINESE>). Its passage is therefore considered very important, and is being strongly pushed by the finance ministry.

  But as well as the sound reasoning of having the law passed quickly to strengthen Taiwan's financial institutions, another reason for the urgency is the uncertainty of the election.

  As Eric Chen points out: "The competitiveness of local banks will not be upgraded immediately even if the bill is passed. It will take three to five years to integrate two different banks. During that time, the law will definitely pass."

  Also during that time, a new president will also have been elected. So even if its passage "is not urgent," says Chen, political reasons require it face no delay. "As long as it passes in the first quarter before the new president, that's fine, because you never know who the next president is going to be," says Eddy Chang, a banking industry analyst at Credit Suisse First Boston.

  However, while the current climate may have allowed for laws to be more politicized than usual, the legislature has, over the years, already passed the majority of WTO required bills.

  In October, it passed the Telecommunications Act (1q信法); and in June this year, it passed the Tobacco and Wine Management Law (菸酒?THORN>2z法). This bill breaks open the monopoly on tobacco and alcoholic drinks controlled by the Taiwan Tobacco & Wine Monopoly Bureau.

  Other bills, including the Civil Aviation Law (民用航空法) and Shipping Law (航業法), were passed earlier this year. Last year, the legislature passed the Government Procurement Law (政?採購法) and the Audit Law (審-p法).

  WTO doubts

  But even at this late stage, when bills such as the Tobacco and Wine Taxation Law (菸酒稅法) and various finance-related laws have yet to be passed, some legislators are having second thoughts about Taiwan's entry into the WTO, and the concessions Taiwan has made to reach this point.

  "We should support the [government's] efforts to accede to the WTO. But we should put our own economic interests on top," says Lai Shy-bao, who attended the WTO meeting in Seattle.

  "Most of the countries [in the WTO] are only concerned about their own economic interests," he says.

  In terms of Taiwan's economic interests, the WTO will force the deregulation of many markets protected by local politics, according to an industrial analyst, and may just end, or reduce at least, political interference in Taiwan's economy.
• Most Popular

  • 1

    For Bangladesh, just playing is a win

  • 2

    PSG beaten by Monaco before Chelsea game

  • 3

    Yamal bends Barcelona past Athletic Bilbao

  • 4

    Liverpool rocked by last-gasp defeat at Wolves

  • 5

    Taiwan fans roar for their team at WBC