To prevent land hoarding that could slow investment by companies returning home from China, the central bank on Thursday convened a meeting with 16 financial institutions to press for stricter review of industrial land financing.
Thursday’s meeting with eight private lenders, four life insurers and four payment companies came just two days after the nation’s top monetary policymaker sat down with eight state-run banks to convey the same message.
The central bank said that it urged the financial institutions to practice self-discipline and to demand concrete property development plans from borrowers seeking land financing.
Photo: Tu Chien-jung, Taipei Times
In the absence of development plans, borrowers should produce affidavits showing that they would begin construction by a certain time, the bank said.
Lenders should call in loans or charge higher interest rates if borrowers, mainly developers and contractors, fail to follow their construction schedules, it said.
Local trade groups have urged the government to step in and address soaring industrial land prices, as companies seeking to move production lines home have had difficulty finding industrial plots for factories.
However, there are areas in the nation that have idle plots of industrial land.
Several local development companies have told investors’ conferences that they have secured sufficient stocks of land to develop for years to come, and that selling land generates greater profits than developing residential complexes.
Businesses such as banks, life insurers and payment companies should adopt stricter standards when processing financing applications for land, the central bank said, adding that the businesses should also seek to prevent loans from contributing to land hoarding and price gouging.
The price of industrial land has noticeably picked up over the past few years due to limited supply and growing demand from companies returning from abroad, the central bank said.
Rising land prices would increase the cost of supply chain realignment and slow investment, it said, as it requested the cooperation of lenders.
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