The incorporation of the financial business into the free economic pilot zones (FEPZs) has already reaped evident results, Premier Jiang Yi-huah stated today after a briefing by the Financial Supervisory Committee (FSC) on the progress of this effort.
The FEPZ program is a very important policy aimed at Taiwan's integration with the regional economy, and the government has already implemented the relevant first-phase tasks—which require neither new laws nor statutory changes—to incorporate the financial business into the FEPZs, Jiang said.
During this phase, the FSC has allowed the establishment of offshore securities units (OSUs). These overseas financial entities have adopted negative listings under which they can handle all business operations other than New-Taiwan-dollar-denominated or sophisticated derivative products. This deregulation has greatly broadened the scope of investment for foreign as well as domestic professional financial institutions.
The premier noted domestic banks' pretax profits totaled NT$179.4 billion (US$5.97 billion) in the first six months of this year and are expected to surpass NT$300 billion (US$9.98 billion) for the whole year—a historic high. These earnings are a shot in the arm for the domestic financial sector as well as the overall economy; moreover, the financial sector is estimated to hire an additional 20,000 workers this year, he said.
Jiang commended FSC Minister Tseng Ming-chung and FSC staff for their hard work. He also encouraged the agency, under the premises of financial stability and consumer rights, to persist in re-examining and liberalizing financial operations and to encourage relevant firms to innovate so as to broaden the scope of the financial market and galvanize the sector to compete in the Asian market.
In the half-year since the first-phase tasks were implemented, profits from offshore banking units (OBUs) greatly increased, the FSC stated. January-to-June earnings soared from NT$30 billion (US$998.47 million) in 2013 to NT$46.1 billion (US$1.53 billion) in 2014, growth of 53.67 percent.
According to the FSC, prospective results within five years of incorporating the financial business into the FEPZs include business revenues from banks and securities increasing by NT$70 billion (US$2.33 billion)—NT $14 billion (US$465.95 million) per year—and revenues from consolidated income tax climbing by an additional NT$2.7 billion (US$89.86 million), or NT$540 million (US$17.97 million) each year. It is estimated 1,200 to 1,250 employees will be added to the work force thanks to the liberalization of OBU and OSU businesses.
The CBC, short for the Central Bank of the Republic of China (Taiwan), stated that developing financial services is a never-ending task and that it has been unceasingly improving the financial services groundwork to enhance efficiency. These efforts include signing a monetary clearance collaboration memorandum with mainland China's People's Bank of China in August 2012 and granting renminbi (RMB)-denominated businesses permission to operate in Taiwan in February 2013. Presently, global offshore RMB deposits total 1.5 trillion RMB, and 300 billion of these RMB are held by Taiwan alone.
In addition, the CBC has been successively setting up onshore foreign currency clearance platforms. Currently, U.S.-dollar- and RMB-clearance businesses are in operation, and yen-denominated clearance businesses are expected to be implemented in early 2015.