The Executive Yuan and the Examination Yuan jointly convened a task force meeting today on improving governmental funds' operational effectiveness.
Ministers and representatives from the Central Bank, Ministry of the Interior, Ministry of Civil Service, Ministry of Finance, Council of Labor Affairs, Ministry of Transportation and Communications, and Directorate-General of Budget, Accounting and Statistics, as well as the Public Service Pension Fund Management Board, Labor Pension Fund Supervisory Committee and Bureau of Labor Insurance all participated in the forum on how the governmental funds should operate and related issues that have recently drawn public attention. The attendees reached the following consensus:
1. It is not appropriate to combine all governmental funds for investment purposes at this time. However, the Council for Economic Planning and Development will evaluate the feasibility of such an approach as part of mid- to long-term planning. A working group shall be established to launch studies on improving recruitment, personnel quotas and wages of fund employees with a view to raising the funds' efficacy in the short term.
2. Investments the funds make should be long-term in nature. Over-emphasis on short-term profits or guaranteed payoffs is harmful to the funds' stability. Agencies will increase public awareness of governmental funds' long-term performance.
3. Following a thorough review of the Labor Insurance and Labor Pension funds' collective losses of more than NT$100 million (US$3.4 million) due to a manager's investments in shares of Ablerex Electronics Co., Ltd. through dummy accounts, supervising agencies of governmental funds will strengthen their notification mechanisms in close cooperation with the Financial Supervisory Commission (FSC). Moreover, to rebuild investors' confidence, the FSC will urge investment trust businesses to strengthen their self-discipline and internal control. Additionally, the task force appealed that the overall efforts and contribution of the asset management industry should not be discounted due to a few staff members' wrongdoing.
4. Investors' focus should be on a stock's performance rather than its origins or capitalization size. Hence, governmental funds should not be restricted from investing in "F shares" (shares of companies based in foreign countries or the mainland whose primary listing is on a Taiwanese exchange) or small-cap stocks (stocks of companies with relatively small market capitalization). The Taiwan Stock Exchange Corporation and GreTai Security Market will be requested to offer information on the aforementioned stocks to governmental funds for reference. Meanwhile, to avoid destabilizing the stock market, the governmental funds shall be instructed not to clear their shares within a short amount of time.
5. In keeping with its goals of developing Taiwan's financial industry and talent, the Executive Yuan will continue to supervise the FSC's promotion of a Taiwan-centric wealth management platform for domestic consumers.