The Presidential Office’s economic advisory panel held an extraordinary meeting on Tuesday after US legislators dealt a blow to the planned bank bailout, sparking renewed jitters among investors worldwide. At the meeting, led by Vice President Vincent Siew (蕭萬長), it was suggested that the inheritance and gift taxes be lowered and a sovereign wealth fund established. These moves would not be very useful in dealing with the crisis, while the fund proposal in particular has set off heated debate.
Sovereign wealth funds are increasingly common. Singapore, China, South Korea, the Middle East and US states including Alaska are among those that have created such funds. Taiwan can learn from the experience of Singapore’s Temasek Holdings, which established such a fund to attract international investment to boost GDP. Now, with the difficulties faced by international investment companies and lenders, a sovereign wealth fund could be a way to secure valuable assets.
But establishing the fund is still in the brainstorming phase. Details such as the fund’s goals, capital sources, structure, operation and regulation have barely been mentioned. It is therefore no wonder that the Council for Economic Planning and Development made clear on Wednesday that it was still too early to establish a sovereign wealth fund, although it said it was an option to consider further down the road.
Taiwan has two national funds — a National Stabilization Fund aimed at stabilizing the stock market and a National Development Fund aimed at funding venture capital companies. Further discussion is required to decide how these two funds and a sovereign wealth fund would interact and what purpose each would serve.
A sovereign wealth fund is composed of assets such as foreign exchange reserves, stocks, bonds and other financial instruments. If the government diverts funds from its foreign reserves to establish the fund, there would be a conflict between the conservative management of foreign reserves and the fund’s goal of making a profit, making management quite difficult. Raising private capital would restrict the scope of the fund, as would the investment targets and potential profits.
The international community is wary of state-owned investment funds. Considering the unique diplomatic challenges the nation faces, it could very well encounter difficulties in buying strategic resources such as petroleum and minerals because of pressure from China. Taiwan could also face problems in large corporate mergers and business acquisitions. These potential obstacles deserve consideration.
A government-managed sovereign wealth fund, like a state-run business, would be unable to free itself from government conservativeness, legal restrictions and personnel issues. In addition, a set of detailed regulations must be crafted to ensure transparent management, prevent political intervention and insider trading, and build internal and external supervisory mechanisms. Otherwise, disputes could ensue over the fund when too many people want a piece of the action. This would greatly undermine the benefits of the process.
There are many problems associated with establishing the fund that have yet to be broached. The key to remember is that this issue has nothing to do with solving the financial crisis: There is no incentive to rush. Let’s first solve the problems at hand and give due consideration to Siew’s concepts for Taiwan’s future when the immediate crisis is behind us.
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
In an article published on this page on Tuesday, Kaohsiung-based journalist Julien Oeuillet wrote that “legions of people worldwide would care if a disaster occurred in South Korea or Japan, but the same people would not bat an eyelid if Taiwan disappeared.” That is quite a statement. We are constantly reading about the importance of Taiwan Semiconductor Manufacturing Co (TSMC), hailed in Taiwan as the nation’s “silicon shield” protecting it from hostile foreign forces such as the Chinese Communist Party (CCP), and so crucial to the global supply chain for semiconductors that its loss would cost the global economy US$1
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
Sasha B. Chhabra’s column (“Michelle Yeoh should no longer be welcome,” March 26, page 8) lamented an Instagram post by renowned actress Michelle Yeoh (楊紫瓊) about her recent visit to “Taipei, China.” It is Chhabra’s opinion that, in response to parroting Beijing’s propaganda about the status of Taiwan, Yeoh should be banned from entering this nation and her films cut off from funding by government-backed agencies, as well as disqualified from competing in the Golden Horse Awards. She and other celebrities, he wrote, must be made to understand “that there are consequences for their actions if they become political pawns of
RSS