Sat, Feb 02, 2002 page17

• Lee Yung-san unveils plans

  • By Joyce Huang / STAFF REPORTER
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  Outlining a blueprint for his tenure, Minister of Finance Lee Yung-san (李庸三) yesterday vowed "to balance the government's budget within five to 10 years."

  "[The ministry] will thoroughly revise income tax laws, canceling inappropriate tax breaks and exemptions," Lee said at the ministry's hand-over ceremony yesterday morning.

  While he did not elaborate on what he meant by tax breaks, Lee's remarks yesterday were interpreted by the local media as an indication that Lee intends to call off the preferential duty-free treatment for military servicemen, civil servants and school faculties.

  Analysts, however, said that it will be a tough task for Lee to expand the government's income in order to balance the budget as President Chen Shui-bian (陳水扁) has pledged not to raise taxes while in office.

  "[The ministry] can start by levying land value taxes to increase local governments' incomes," said Steve Lin (林祖嘉), professor of economics at National Chengchi University.

  Hsu Chen-ming (許振明), an economics professor at National Taiwan University, suggested Lee speed up privatization of state-run enterprises, whose deficits have been a burden to national coffers.

  In his inaugural speech, Lee said that he plans to ameliorate the country's increasing ratio of non-performing loans (NPL) and to speed up the securitization of financial assets -- a move to consolidate the country's financial reform.

  "While managing financial institutions, [the ministry] will be loose on [their] administrative affairs but firm on [their] financial management," he said, adding that the ministry plans to establish a national agriculture bank while encouraging twelve credit cooperatives to merge into a commercial bank.

  But Lee will have to work with the justice ministry to investigate and weed out "moral hazards," in which financial institutions take on high risks in the expectation that the government will come to their rescue, Hsu said while commenting on improving the NPL ratio.

  "A structural reform has to be initiated to clear up corruption."

  Lee also said yesterday that he will maintain policies that have been promulgated by former minister Yen Ching-chang (顏慶章) including the establishment of financial holding companies (FHCs) to solve the over-banking debacle.

  To achieve this goal, Lee may also have to accelerate the formation of the financial supervisory board, which is designed to oversee FHCs' future operations, Lin said, adding that "the new premier has to stick to the principle of not allowing politicians' involvement in the board so as to maintain its independence."

  Meanwhile, Lee said the ministry has agreed to allow eight banks to set up offices in China, including the Bank of Taiwan (台灣銀行), Taiwan Cooperative Bank (合作金庫), Hua Nan Commercial Bank (華南銀行), United World Chinese Commercial Bank (世華商銀), International Commercial Bank of China (中國商銀) and Chinatrust Commercial Bank (中國信託商銀).
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