Thu, Feb 21, 2008 page12

• Nation sets record account surplus

  HIGHS Overall balance of payments registered a surplus of US$5.24 billion in the fourth quarter last year, while the current account posted a surplus of US$11.59 billion

  • By Judy Lin / STAFF REPORTER
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  Taiwan set several records last year, including an account surplus of US$31.7 billion, a financial account net outflow of US$38.93 billion and a deficit of US$4.02 billion in the overall balance of payments, central bank statistics showed.

  The deficit on the overall balance of payments was the highest since the US$3.93 billion posted in 1995, when cross-strait relations were marked by heightened tension.

  Taiwan's previous record in net capital outflow was the US$15.15 billion registered in 1990.

  Last year's current account surplus, meanwhile, broke the US$29.23 billion record set in 2003.

  However, net outflow of capital began to show signs of slowing in the fourth quarter of last year, said Yeh Rong-tzao (葉榮造), deputy chief of the economic research division at the central bank, who attributed the reversal to the US subprime crisis.

  He also expected continued improvement in the first quarter of this year.

  The overall balance of payments registered a surplus of US$5.24 billion in the fourth quarter last year, while the current account posted a surplus of US$11.59 billion. The financial account showed a net outflow of US$7.13 billion.

  Portfolio investment by non-residents turned from a net outflow of US$5.31 billion in the previous quarter to a net inflow of US$0.93 billion.

  Residents' portfolio investment registered a net outflow of US$7.15 billion in the fourth quarter, mainly over an increase in residents' investment in foreign mutual funds, which contributed to a net outflow of US$9.58 billion in equity securities investment abroad, the central bank said.

  The press release nevertheless showed that external claims on debt securities investment recorded a net inflow of US$1.49 billion, reversing the net outflow in the previous quarter.

  Meanwhile, Financial Supervisory Commission Chairman Hu Sheng-cheng (胡勝正) said the government will continue to encourage bank mergers and to invite major local and foreign banks to take over struggling ones.

  "UBS and Japan's Mizuho Bank are among the foreign banks that expressed an interest in setting up more branches in Taiwan, and there are more to come," Hu said.

  "We encourage foreign banks to take a greater share of the local market," Hu said, adding that foreign banks had introduced new operating models, created new products and new businesses, which has helped relieve the over-banking problem in the local market.

  He said that banks in Taiwan were too small in scale and too focused on the local market, while their operations are too similar, giving inevitable rise to cut-throat competition.

  Commission statistics showed that the number of banks in Taiwan has decreased from 53 in 2001 to 39 as of the end of last year.

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