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.
Monday was the 37th anniversary of former president Chiang Ching-kuo’s (蔣經國) death. Chiang — a son of former president Chiang Kai-shek (蔣介石), who had implemented party-state rule and martial law in Taiwan — has a complicated legacy. Whether one looks at his time in power in a positive or negative light depends very much on who they are, and what their relationship with the Chinese Nationalist Party (KMT) is. Although toward the end of his life Chiang Ching-kuo lifted martial law and steered Taiwan onto the path of democratization, these changes were forced upon him by internal and external pressures,
Chinese Nationalist Party (KMT) caucus whip Fu Kun-chi (傅?萁) has caused havoc with his attempts to overturn the democratic and constitutional order in the legislature. If we look at this devolution from the context of a transition to democracy from authoritarianism in a culturally Chinese sense — that of zhonghua (中華) — then we are playing witness to a servile spirit from a millennia-old form of totalitarianism that is intent on damaging the nation’s hard-won democracy. This servile spirit is ingrained in Chinese culture. About a century ago, Chinese satirist and author Lu Xun (魯迅) saw through the servile nature of
In their New York Times bestseller How Democracies Die, Harvard political scientists Steven Levitsky and Daniel Ziblatt said that democracies today “may die at the hands not of generals but of elected leaders. Many government efforts to subvert democracy are ‘legal,’ in the sense that they are approved by the legislature or accepted by the courts. They may even be portrayed as efforts to improve democracy — making the judiciary more efficient, combating corruption, or cleaning up the electoral process.” Moreover, the two authors observe that those who denounce such legal threats to democracy are often “dismissed as exaggerating or
The National Development Council (NDC) on Wednesday last week launched a six-month “digital nomad visitor visa” program, the Central News Agency (CNA) reported on Monday. The new visa is for foreign nationals from Taiwan’s list of visa-exempt countries who meet financial eligibility criteria and provide proof of work contracts, but it is not clear how it differs from other visitor visas for nationals of those countries, CNA wrote. The NDC last year said that it hoped to attract 100,000 “digital nomads,” according to the report. Interest in working remotely from abroad has significantly increased in recent years following improvements in
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