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Home-Coming Taiwan Businessmen from the M’land, Tsai Gov’t’s Ecstasy

icon2019/06/10
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 Home-Coming Taiwan Businessmen from the M’land, Tsai Gov’t’s Ecstasy

 

China Times Editorial (Taipei, Taiwan)

June 5, 2019

 Translation of an Excerpt

The DPP government considers home-coming Taiwanese investments from the Mainland as an important accomplishment of governance, splashing publicity. President Tsai even set up an index, saying home-coming Taiwanese investments from the Mainland would reach NT$500 billion this year; Economics Minister Shen Jong-chin indicated that there would be an opportunity to go to NT$600 billion. It looks like this would bring massive investments and job opportunities to Taiwan, with bright economic prospects looming. The problem is, is this really the case?

First look at the latest financial statements issued by the Central Bank; with regard to the amount of foreign direct investments (FDI), geared up by the home-coming Taiwanese investments from the Mainland, in the words of the government, they decreased instead of increased in the first quarter of this year, coming in at only US$840 million, or about half of the preceding quarter, US$1.51 billion. If compared to the same period prior to the US-China trade war last year, it sharply dropped by 57%. If home-coming Taiwanese investments from the Mainland truly exceeded NT$300 billion, as the government had said, why did a negative growth occur in FDI?

According to the “Guidelines on Ad Hoc Credit Extensions in Connection with Taiwanese Investments from the Mainland” issued by the National Development Fund (NDF), in order to attract home-coming Taiwanese investments for the purpose of stimulating Taiwan investments, the National Development Fund will offer ad hoc credit extensions, commissioning commercial banks to execute this plan and paying a fee to these banks calculated on the basis of an annual interest rate of 1.5% on the actual average balance of the credit extension. At the same time, the NDF requires that the interest rate charged on the credit by the operating banks shall not exceed 0.5 percentage points over the interest paid by the postal savings for its 2-year term deposit; the amount of total credit extension will be eased from the original NT$20 billion to no upper limit. Faced with these preferential terms for financing, smart Taiwanese businessmen will of course opt to invest locally, shifting the risks of business operations to the banks, while offshore capital will continue to remain overseas to earn relatively higher returns for investment. Therefore, it is not surprising that foreign direct investment in financial statements cannot present the phenomenon of home-coming Taiwanese businessmen.

Viewed from the perspective of resource allocation, when the government uses ad hoc credit extensions with ultra-low interest rates to attract Taiwanese businessmen to come home, in actuality, it is giving resources to targets that are the least needy at the time, especially to those who had already intended to return to Taiwan, and enterprises of relatively larger scales. This kind of subsidy is fundamentally robbing the poor to help the rich. Translated into the vernacular, when small and medium businesses in dire necessity to borrow money from banks, or have to borrow money from banks with higher interest rates, the Tsai Ing-wen government, which has always stressed that it stands on the side of the underprivileged, however, has decided to up the ante to subsidize bigger enterprises. Speaking bluntly, it is nothing but a hypocrite that says one thing and does another. Is this truly the core value of the DPP government?

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