In Our View, Opposition Alliance Is A Source Of Taiwan Chaos, When New Government Start Work In Administration That Opposition Parties Try It Best To Attack Chen's Government With Nonsense.

In Our View, Opposition Alliance Is A Source Of Taiwan Chaos, When New Government Start Work In Administration That Opposition Parties Try It Best To Attack Chen's Government With Nonsense.

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Nov. 19, 2000 ---
The government of President Chen Shui-bian must act swiftly to prevent a feared financial crisis as Taiwan’s bank struggle to recoup loans amid dwindling equity markets.

“The situation is worrisome … falling stock and property markets, expanding capital outflow … and bank’s lending and growth have dipped by half,” said former finance minister Paul Chiu.

“There is a possibility that a small-scale financial crisis may happen in Taiwan if the government fails to check current problems,” he added.

Banking professor Norman Yin said current financial woes had stemmed mainly from lax government supervision and irregular lendings over influence peddling by politicians, power groups and conglomerates.

He feared that in the coming months many companies would collapse as banks tightened credit facilities.

Their concerns followed a report in the November 11 issue of the Britain-based Economist magazine.

The articles titled “Too Many Debts to Settle” said the island might “suffer its own (belated) version of the Asian crisis --- perhaps even before the Chinese New Year in January.”

It said analysts thought bad loans could rise to two to three times the government estimate of 5.0 percent, and “many fear there is a fully-fledged banking crisis in the offing …”

“Taiwan’s credit crunch is serious. Many local companies may not be able to survive until the Lunar New Year” under the burden of high demand for liquidity ahead of the major holiday, said Yin, of National Chengchi University.

Banks have tightened credit due to high lending risks amid plunging stock and real estate markets, despite sufficient liquidity from the central bank, Yin said.

Yin urged authorities to take effective steps to correct loopholes in banking laws, enforce supervision and weed out non-performing banks.

Many local enterprises were under financial stress as lending to the private sector by local banks last year shrank by more than 60 percent, said Chen Po-chieh, chairman of the Council for Economic Planning and Development.

Finance Minister Yen Ching-chang, however, dismissed fears of a financial storm saying it was “unlikely” as local banks’ non-performing loan (NPLs) ratios were controlled to within a safe range.

The NPL ratios posted a record 6.25 percent, or some 950 billion Taiwan dollars (US$29.6 billion), at the end of September.

Chiu, meanwhile, proposed a rescue package urging authorities to speed up consolidation of local banks, set up asset management firms to liquidate unhealthy banks, and form a unit to check banking operations.

The Commercial Times said the number of local banks needed to be consolidated by about a third to ease overbanking and irregularities and a supervisory agency was needed to uncover wrongdoings and supervise banking reforms.

Taiwan’s stock market has plunged some 40 percent since Chen took office on May 20.

In fact, past experience has demonstrated that restriction have had only limited effects, as investors can bypass the government in sending their funds out of the country.