Former president Lee Teng-hui (
The ex-president's views echoed, for once, those of opposition leaders, who have claimed the reform measures proposed by the Ministry of Finance were aimed at wiping out these institutions.
PHOTO: GEORGE TSORNG, TAIPEI TIMES
Lee's stern position on the issue may strain the relationship between the DPP and its tiny ally, the TSU, which considers Lee its spiritual leader, when the proposals are reviewed in the legislature.
"Polices should be corrected if they appear to be wrong, otherwise how can you call it democratic politics?" Lee said. "A government should work for the people, not for the party. The government has to take good care of the farmers, or it might run the risk of losing its power.
"I don't speak for politics; I speak for farmers, for the farmers' communities and for national stability."
Lee was referring to the DPP's apparent belief that eliminating the cooperatives would undermine the KMT's power base in communities where they operate.
The farmers' cooperatives were created in the 1960s by the KMT to offer loans to help farmers buy seeds and agricultural machinery.
But after many cases of corruption involving these associations during the past decade, farmers' credit institutions now have a non-performing-loan (NPL) ratio of 21.5 percent. The ratio at fishermen's associations is also high, at 17.5 percent, compared to 7.5 percent at banks.
To improve the bad-loan ratios of these institutions, Lee -- who holds a doctorate in agricultural economics -- said that the government should listen to the opinions of specialists, but that nobody in the finance ministry had any professional knowledge in the field.
"I often get incensed when hearing laymen trying to offer advice to experts," he said.
To lower the nation's NPL ratio, the ministry announced on Sept. 9 its three-tier risk-control mechanism that prohibits credit cooperatives with an NPL ratio of more than 10 percent from taking new savings from non-members.
The mechanism also bans these cooperatives from offering interest rates on savings that are higher than that of Taiwan Cooperative Bank (
The mechanism also forbids credit units whose NPL ratio is between 15 and 25 percent from granting new loans of more than NT$5 million, while those with an NPL ratio of more than 25 percent will not be allowed to provide extensions on old loans or establish new branches.
Many of the associations' managers, however, have complained that the new mechanism would make their survival more difficult.
Lee said the issue had to be handled with extreme care, because it related to the welfare of 1.7 million of farmers.
He suggested that the government create a national farmers' bank with a starting capital of NT$40 billion, to coordinate all the financial institutions of the farmers associations. He said these financial institutions should not be turned into a business bank.
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