The much-awaited set of new regulations governing cross-strait market access for the banking, securities brokerage and insurance sectors announced by the Financial Supervisory Commission on Tuesday showed that the financial regulator has taken public concerns to heart.
However, as any market-access deal takes two to tango, there is bound to be uncertainty over whether President Ma Ying-jeou’s (馬英九) administration will stick to its bottom line and refrain from making concessions in the upcoming negotiations over a proposed economic cooperation framework agreement (ECFA) with China, during which further relaxations of financial rules may be agreed upon.
From the Taiwanese side, to ease concerns that the Taiwanese banking sector may use local deposits to fund its loan businesses in China, the commission’s new regulations stipulate that half of the loans to be granted by the banks’ to-be-established outlets in China will have to come from Chinese depositors. The commission has also placed a cap on each Taiwanese bank’s China-bound investment at less than 15 percent of a bank’s net worth or 10 percent of a financial service provider’s net worth.
All of this means that the capital outflow of 14 Taiwanese banks to China will be capped at NT$25 billion (US$785 million), while that of 13 financial service providers will not exceed NT$50 billion.
To a certain degree, both rules aim to put a brake on the acceleration of China-bound capital flight within the banking sector, which was previously barred from branching into China.
This contrasts with earlier estimates by China Development Industrial Bank president Simon Dzeng (曾垂紀), at the time executive vice president at Mega Financial Holding Co, that once the government gave the green light, most domestic banks would move into the Chinese market “within three months,” resulting in a fund outflow of as much as NT$300 billion.
However, we shouldn’t expect the banking sector to be satisfied with the new regulations. It is very likely that it will push for more open policies before the government sits down with its Chinese counterparts.
Meanwhile, the commission has opened the door just a little for Chinese banks wishing to branch into Taiwan. Chinese banks will remain barred from setting up subsidiaries here and will have to wait two years before they can upgrade their representative offices into branches.
In terms of share investments, Chinese financial institutions will not be allowed to own more than 10 percent of a Taiwanese rival’s stock, although the regulator has said it would further relax, “in a progressive manner,” such rules after — and if — an ECFA is signed.
Many Chinese banks have made it clear they have no interest in single-digit holdings in Taiwanese banks, as Taiwanese banks are already allowed to take up stakes of up to 20 percent in Chinese banks via overseas outlets.
It does appear that the new regulations were baby steps that will please nobody. This said, we must hope the government will remain steadfast and refrain from making careless moves when it negotiates with the Chinese government on further market access. When dealing with Beijing, baby steps might just be advisable.
Two weeks ago, Malaysian actress Michelle Yeoh (楊紫瓊) raised hackles in Taiwan by posting to her 2.6 million Instagram followers that she was visiting “Taipei, China.” Yeoh’s post continues a long-standing trend of Chinese propaganda that spreads disinformation about Taiwan’s political status and geography, aimed at deceiving the world into supporting its illegitimate claims to Taiwan, which is not and has never been part of China. Taiwan must respond to this blatant act of cognitive warfare. Failure to respond merely cedes ground to China to continue its efforts to conquer Taiwan in the global consciousness to justify an invasion. Taiwan’s government
“If you do not work in semiconductors, you are nothing in this country.” That is what an 18-year-old told me after my speech at the Kaohsiung International Youth Forum. It was a heartbreaking comment — one that highlights how Taiwan ignores the potential of the creative industry and the soft power that it generates. We all know what an Asian nation can achieve in that field. Japan led the way decades ago. South Korea followed with the enormous success of “hallyu” — also known as the Korean wave, referring to the global rise and spread of South Korean culture. Now Thailand
This month’s news that Taiwan ranks as Asia’s happiest place according to this year’s World Happiness Report deserves both celebration and reflection. Moving up from 31st to 27th globally and surpassing Singapore as Asia’s happiness leader is gratifying, but the true significance lies deeper than these statistics. As a society at the crossroads of Eastern tradition and Western influence, Taiwan embodies a distinctive approach to happiness worth examining more closely. The report highlights Taiwan’s exceptional habit of sharing meals — 10.1 shared meals out of 14 weekly opportunities, ranking eighth globally. This practice is not merely about food, but represents something more
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