Taiwan plans to launch a US$250 billion credit guarantee program to support domestic companies investing in the US, part of a broader effort to deepen supply chain cooperation with Washington following conclusion of tariff negotiations earlier this year, National Development Council Minister Yeh Chun-hsien (葉俊顯) said yesterday.
The government would provide guarantees covering up to 50 percent of loans extended by participating financial institutions, with the program designed to encourage investment in sectors including semiconductors, and information and communications technology, Yeh said.
The initiative follows a memorandum of understanding between the two nations in which Taiwan committed to US$250 billion in direct investment in the US, alongside the credit guarantee program intended to mobilize additional private-sector funding.
Photo courtesy of the National Development Council
The NDC briefed representatives from 38 public and private financial institutions on the proposed financing mechanism.
Under the plan, the government would guarantee loans with a leverage ratio of up to 20 times, with the dedicated funding required for the program estimated at about US$6.25 billion.
The program would be rolled out in five phases. In the first phase, the government aims to raise more than US$1.2 billion, with the National Development Fund contributing about US$800 million to take a leading role in launching the initiative. Over time, the government’s share would gradually decline, with the long-term goal of achieving a one-to-one funding ratio with private financial institutions.
Companies would use the funds primarily for productive investments such as building manufacturing facilities, purchasing machinery and equipment, supporting operating capital and establishing industrial clusters in the US, Yeh said, adding that a cap would be set on borrowing by a single company to prevent crowding out other firms.
As participating financial institutions vary in asset size and lending capacity, the program would offer three participation tiers — US$25 million, US$50 million and US$75 million — allowing lenders to choose commitments aligned with their financial capacity, he said.
To ease pressure on banks’ capital adequacy ratios, institutions would initially contribute only one-fifth of their pledged funds, similar to a deposit, with the remaining four-fifths provided gradually as loan projects are approved, Yeh said.
Following the briefing, the NDC plans to gather feedback from financial institutions and submit the proposal to the Executive Yuan by the end of next month.
Companies could start applying for financing and signing loan agreements before the end of June if the boards of participating financial institutions approve the initiative, Yeh said.
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