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Published: July 28, 2006
Points of Consensus
The plenary meeting of the Conference on Sustaining Taiwan's Economic Development was held from 4:40 p.m. to 7:40 p.m. on July 27, 2006, at the Taipei International Convention Center, and was co-hosted by Vincent C. Siew, Chairman of Chung Hua Institution for Economic Research, Tsai Ing-wen, Vice Premier; and Paul C.H. Chiu, Chairman of EnTie Bank.
Representatives of all five panels, namely the Social Security, Enhancing Business Competitiveness, Global Deployment and Cross-strait Economic and Trade Relations, Fiscal and Financial Reform, and Government Efficiency panels, exchanged views and discussed 127 consensual opinions presented by the Fiscal and Financial Reform panel in order to reach a consensus for the conference.
The key points of consensus and selected other opinions are as follows:
A. Infrastructure projects and private participation
1. Implement review procedures for major infrastructure projects (costing more than NT$1 billion each). Agencies with jurisdiction over said projects should enhance internal and external cost-benefit assessments before submitting their projects to the Council for Economic Planning and Development (CEPD). The CEPD should review and prioritize these projects according to economic development objectives.
2. Increase private participation in infrastructure projects.
a) Policy aspect: In response to strong domestic demand for major infrastructure projects, including facilities for transportation, the environment and sanitation, culture and education, tourism and leisure, and sports, the government should continue to encourage private participation in such projects in order to raise the standard of public services and accelerate socioeconomic development. Meanwhile, the government should review ongoing projects and propose measures for improvement.
b) Legal aspect: enhancing related laws and regulations.
(1) Revising the Act for Promotion of Private Participation in Infrastructure Projects.
(a) A mechanism to examine construction and operations should be included. All government agencies are required to examine items listed in contracts so as to provide timely and high-quality public service.
(b) A mediation or binding arbitration mechanism to resolve disputes over the contract performance should be created in order to quickly resolve contract disputes between government agencies and private institutions. By doing so, a partnership can be established.
(c) The professionalism, fairness, and impartiality of current selection mechanisms should be strengthened, so that superior applicants from the private sector can be chosen.
(d) A market exit mechanism should be established for the government and the private sector to follow. The following should be provided for in such a mechanism:
i) Dealing with cases of failing to sign contracts on time between the most outstanding applicants and government agencies.
ii) Dealing with cases in which construction has fallen seriously behind schedule, the quality of construction is seriously compromised, management is poor, and other critical issues.
iii) Dealing with emergencies, such as delays on the part of the contractor that may seriously jeopardize the public interest or lead to disasters. Regulations related to the government's taking over of operations should be clear and definite, and provide for contract termination, appraisals and transfers of assets and equipment, appointments of those involved in the takeover, and invitations to tender for new contracts.
(2) In order to ensure the stability of contract fulfillment for special and important projects, reduce the risks for private institutions of engaging in construction and operation, as well as to attract foreign investment, the government should, when necessary, consider the possibility of enacting legislation for special cases to reach a consensus on executing such cases.
c) Execution aspect.
(1) To prevent different projects or agencies from repeatedly facing the same types of disputes, a special center to deal with promoting private participation in infrastructure projects should be established. Such a center could allow experiences to be effectively accumulated, professional knowledge and techniques to be strengthened, and quality of contract performance to be enhanced.
(2) To avoid having a poor royalty design and to encourage the private sector's creativity and managerial efficiency, a method of setting up royalties that accords with international practice should be established. This will allow private institutions to benefit from their hard work; avoid overcharging, as this would be unfavorable for the allocation of private funds; and attract foreign investment.
(3) The guidelines concerning the capital-raising of participating private institutions should be enhanced. Relevant rights and obligations should be clearly stated in the investment contract.
3. Enhance the fairness and efficiency of the government's procurement system.
a) A system, such as electronic bidding, should be established to strengthen precautionary and problem-solving mechanisms and to prevent bid collusion and rigging.
b) The lowest tender and most favorable tender should be determined by governing agencies based on the features of each project. But agencies should consider the nature of each project (the same or a different type of procurement) and select the lowest or most favorable tender. In addition, governing agencies should establish selection regulations and standards, as well as review the fairness, professionalism, and transparency of evaluation committees and strengthen the mechanism for selecting committee members.
B. A balance between the efficiency of using public land and social justice
1. Given that state-owned land is an asset that belongs to the people, a framework of state-owned land planning should be established, based on the principle of sustainable use and taking into consideration more than simply increasing government revenue.
2. Improve the management and planning of state-owned land and the decision-making mechanism.
a) The government should establish an agency exclusively responsible for state-owned land planning.
b) Unregistered land should be surveyed and registered within the shortest possible period of time.
c) A platform providing information on state-owned land should be established for the private sector and government agencies.
d) Idle assets of public enterprises should be reported to the National Assets Operation and Management Committee so that they may be reviewed and put to efficient use. On issues like the identification and reporting of idle assets, plans and opinions of said public enterprises should be respected.
e) State-owned land should be managed by the National Property Bureau (NPB) according to the responsibilities and methods stipulated in regulations. Cases involving other agencies may be submitted to the National Assets Operation and Management Committee to be discussed and decided upon.
3. Review the policy regarding the transfer of development rights in urban areas, which involves the Cultural Heritage Preservation Act and the Urban Planning Act, to uphold the spirit of fairness and avoid jeopardizing the integrity of urban planning.
C. Reforming the management mechanism for state shareholdings
1. The purposes of state shareholdings.
a) Excepting reasons associated with having special policy goals, businesses with shares owned by the state should improve their corporate governance. Prior to selling all state-owned shares, consideration should be given to the effects such an act would have on state interests, and a comprehensive financial evaluation should be conducted.
b) Also prior to selling all state-owned shares, consideration must be given to the business entity's share structure. If the government is the largest or second-largest shareholder, it could participate in corporate management in the short term through acquiring proxy votes.
c) Agencies responsible for policy goals should consider corporatizing.
2. In principle, variable remuneration for board members and supervisors who represent the government should not exceed fixed remunerations. However, adjustments to remuneration could be made by referring to the going market price in various business sectors.
3. The sale of shares and the mergers of businesses in which the state holds an ownership stake should be reexamined:
a) In carrying out mergers or the sale of shares of businesses in which the state holds an ownership stake, a transparent mechanism must be established to be consistent with the principles of fairness, justice, and openness.
b) Outstanding foreign financial institutions should be brought in to participate in operations via a fair, just, open, and transparent mechanism in order to ease doubts about conglomeration.
c) Corporate governance, employee rights protection, and the extent to which unions can exercise their rights should be regulated and implemented in the following ways:
(1) Ensure that managers or responsible personnel of businesses disclose relevant or important information in the spirit of good corporate governance. Those who violate legal provisions should not be allowed to represent the government on company boards, or other necessary punishments should be meted out to them.
(2) While promoting privatization or carrying out mergers, the government should follow the Statute for the Privatization of Public Enterprises and the Rules Governing Reinvestment by State-Owned Enterprises Before Privatization and Management of State-Owned Shares After Privatization. In addition, it must take into consideration the balance between the rights of the state as a shareholder and employee rights, and foster the signing of a group accord between the enterprises and labor unions. Meanwhile, it should also respect the corporate governance of the business entity in order to enhance management efficiency.
D. Reexamining the timetable for privatization, establish open and transparent mechanisms, and ensure social justice
1. Review the definition of public enterprises.
a) The definition of what is a public or state-run businesses is of little consequence; what is important is to achieve good enterprization. Relevant laws and regulations should be examined based on this principle, and public financial institutions must in particular pay attention to Article 10 of the Additional Articles of the Constitution when conducting such a reexamination.
b) The government should continue to hold its shares in those businesses whose operations are important to policy. It could also consider delegating its managerial powers or allowing the private sector to manage these enterprises in order to improve corporate governance and management efficiency.
2. Improve the privatization of state-owned enterprises.
a) Enterprization is more important than privatization.
b) Among the 14 state-run enterprises undergoing privatization, those no longer used to pursue public policy goals should establish appropriate supplementary measures prior to being privatized. State-run and public enterprises being used to pursue public policy goals could consider delegating their managerial powers or allowing the private sector to manage these enterprises.
3. Increase the competitiveness of state-run and public enterprises.
a) With regard to state-run financial institutions, restrictions should be eased by enacting laws based on Article 10 of the Additional Articles of the Constitution to foster entrepreneurial-style management. State-run non-financial institutions should do likewise.
b) The competent authorities should examine all public enterprises under their authority by considering closely the laws relevant to them in order to define policy responsibilities, financial support, and management responsibilities as laid out in these laws before carrying out the necessary loosening of laws and regulations.
4. Establish a mechanism for labor-management negotiations in line with procedural justice during the privatization process.
a) Procedural justice is very important with regard to employee rights. It is necessary to communicate with labor unions and carry out collective bargaining. The competent authorities and relevant business entities should assist employees in receiving priority training in a second professional skill and for moving on to another line of work. A collective agreement should pay particular attention to the rights and interests of middle-aged and elderly workers. Other items touched on in such an agreement would differ based on the characteristics of each business entity.
b) The government fully understands the importance of having a collective agreement between a business entity and a labor union. It has repeatedly encouraged business enterprises to sign such agreements with unions prior to privatization in order to define labor conditions. This would help investors to assess the value of an enterprise and thus make them willing to invest in its privatization. However, provisions in the agreement concerning post-privatization labor conditions should respect new management's opinions to avoid making the enterprise uncompetitive.
E. A sound financial structure (including carrying out mergers and establishing market exit mechanisms) needs to be established
1. Establish an environment for fair competition.
a) Set up an exchange rate for shares between the existing institution or newly established institution and the exiting institution. Besides issuing new shares, the former may also buy out shares owned by shareholders of the latter in an equivalent amount of cash or other property.
b) Ease the restriction stipulated in the Banking Act that except for shares owned by financial holding companies and the government, and for the need to handle troubled financial institutions, the amount of a bank's shares held by one party may not exceed 25 percent of the total amount of the bank's issued shares.
c) Formulate and examine package measures for banks for applying to set up new branches and financial holding companies (limited to US-style financial holding companies that are a combination of banking, securities, and financial insurance businesses).
(1) With regard to the standards for applying to establish financial holding companies, the competent authorities should provide past operating experience, and ask for opinions from the Financial Services Roundtable and relevant business associations about such issues as the soundness of the applicant's current and future financial and business operations, management and operations capabilities, capital adequacy ratio (including minimal paid-in capital), its influence on financial market competitiveness, and its contribution to the public interest and corporate governance. Policy should only be formulated after opinions from the said concerned parties are sought for examination and review.
(2) Regarding the establishment of more bank branches, the policy should be relaxed in a limited way at this stage. Simply equipped small branches should be allowed to transform and be merged into ordinary branches, and an appropriate maximum number for newly established bank branches should be set. In the future, this measure should be reviewed regularly in light of overall economic and financial development.
2. Prevent the use of unfair tactics by parties seeking to gain control over the management of financial institutions.
a) With regard to the transparency of financial and business information: A supervisory mechanism to ensure market fairness should be put in place. In accordance with the law, the government should require that relevant procedures be open and transparent, and that the largest shareholders be suitable. Meanwhile, the government should also conduct strict supervision of financial institutions, by requiring them to establish a reasonable level of firewall protection to avoid improper use of personnel, information, and capital.
b) The source of investment capital should be investigated carefully and the debt ratio limited.
c) Regulations concerning insurance sector investments in financial businesses and securities should be integrated.
d) Regarding corporate governance:
(1) Good corporate governance should be promoted. According to the Securities and Exchange Act, banks and financial holding companies will be required to appoint independent board directors beginning from 2007, a move that aims to help improve corporate governance.
(2) In consideration of practical needs and the need to adjust to the new system, at the present stage, financial holding companies should only be encouraged to volunteer to gradually establish an audit committee.
3. In the process of the merging of financial institutions, the rights and interests of the institutions' employees, of people living in remote areas, and of small and medium-sized enterprises should be considered.
a) Protecting the rights and interests of employees of public banks or banks in which the government is a shareholder: Financial institutions should be supervised and guided to ensure that they follow regulations according to the principles of honesty and trust. As the merging of financial institutions involves the integration of personnel as well as of different corporate cultures, both labor and management should emphasize communication to reach a consensus and agree on a set of regulations to be followed.
b) Studying the possibility of giving preferential treatment to financial institutions that offer service in remote areas: While keeping in mind the space needed for operating branches of local financial institutions in remote areas, the Financial Supervisory Commission may adopt a differentiated management style by taking into consideration the performance of financial institutions serving remote areas when evaluating their suitability to receive preferential treatment.
c) The relocation of bank branches in a manner that leaves them clustered in one particular area should be avoided.
4. Strengthen the international competitiveness of financial institutions by:
a) Encouraging financial innovation and diversified services.
b) Encouraging financial institutions to bring in professional know-how and financial products from abroad.
c) Encouraging foreign investors to invest in or form strategic alliances with local financial institutions.
d) Continuing to implement financial globalization to raise local banks' level of service to international standards, and strengthen the cultivation and training of qualified financial personnel for global operations so as to enhance financial expertise.
e) Creating a strategy for the development of non-banking financial services and hastening the passage of laws governing loan companies.
5. Strengthen the regulations concerning financial holding companies' applications for equity investment approval.
a) When a financial holding company intends to merge with or acquire another, the shareholding ratio can be kept at the present 5 percent-and not the full 25 percent-in the initial equity investment application, but the following complementary measures should be adopted:
(1) Avoid the re-use of capital.
(2) When, in future, a financial holding company applies for equity investment approval, it should at the same time submit a program detailing the purchase of 25 percent of all shares, which should include a plan for funding, as well as a plan concerning the merger.
(3) Before a financial holding company has carried out its plan for purchasing 25 percent of shares or has obtained a majority of the seats on the board of directors, the government should require that anyone belonging to the company that applied for equity investment approval not sit concurrently on the board of directors or be a supervisor of the invested financial holding company. These requirements should be stated clearly on the application approval document as additional conditions.
(4) Instill the concept of a legal obligation of loyalty to the invested company: Directors and supervisors assigned by investing financial companies to invested companies should be loyal to the latter. If this obligation is not fulfilled, the offenders should bear the legal responsibility.
b) Regarding regulations governing the period required for the automatic approval of an equity investment application: Restore the requirement of a 15-day review period as stipulated in Article 36 of the Financial Holding Company Act, as such a move will allow for the discontinuation of the policy of giving high-caliber financial holding companies preferential regulatory treatment.
c) To bolster regulation of equity investments, when a financial holding company applies for equity investment approval, if major shareholders, such as directors, supervisors, or other relevant parties, are involved in the trading of derivative financial products that are connected to the shareholding rights of the invested company, the applying company should submit for review all details relevant to such transactions.
d) If a bank owns financial products related to the shares of a single company, said shares should be regarded as part of the 5 percent maximum for an ownership stake in a single company, as prescribed by law.
6. Regulate the percentage of stock-collateral loans held by the major shareholders of financial institutions-such as directors or supervisors-to keep them from obtaining management rights in other financial institutions through leveraging.
7. Prevent proxy votes from becoming instruments used to fight over management rights.
a) Study the possibility of requiring the person acquiring the proxy vote to have certain qualifications.
b) Have the competent authorities study the possibility of amending relevant regulations governing the use of proxy votes.
c) As a long-term project, consider the possibility of lowering the legally required number of attendees at a shareholders' meeting.
d) Research regulating the handing out of mementos at shareholders' meetings.
8. Strengthen the financial safety net.
a) Amend the Banking Act to establish a system for the immediate correction of errors, and revise the Deposit Insurance Act to strengthen the mechanism for dealing with problematic banks and reinforce the country's financial safety net.
b) Differential premium rates should be charged for deposit insurance to reflect the financial situation and performance of each insured institution.
c) Review the business tax imposed on the financial industry and the rationality behind continuing to use the business tax to support the market-exit fund.
d) Encourage banks to use Tier 2 capital efficiently so as to strengthen their capital structures, and guide local financial institutions to adopt diversified capital instruments.
9. Strengthen the mechanism for supervising and dealing with financial institutions in poor financial health-namely, those that may be dealt with by the Resolution Trust Corporation (RTC).
a) Financial improvement schemes for institutions in poor financial health implemented prior to their exit from the market should be reasonable, and if they show a visible improvement, the scope of businesses they may be allowed to engage in may be expanded.
b) Monthly inspections should be conducted to see whether financial institutions being monitored have implemented their own programs to better their situation.
c) Priority should be given to those financial institutions that have experienced bank runs and cannot solve their financial problems themselves. Second priority should be given to those institutions that are unable to implement their own programs to better their situation.
d) When the RTC cleans up a troubled financial institution it should, as a way of preventing "moral hazards," provide the public with a list of the institution's bad loans, showing the dollar amount thereof.
10. Expand the National Stability Fund.
a) Study the feasibility of adjusting the contribution ratio of the National Stability Fund, taking out loans from external sources, and raising funds in other ways.
b) Review the justifiability of using business taxes to fund market-exit mechanisms.
11. Explore the feasibility of establishing a new agency or commissioning an existing agency to implement market-exit mechanisms.
F. Developing Taiwan into a regional fund-raising and assets management center
1. Continue to enhance the internationalization of Taiwan's capital market and broaden the scope of its financial commodities.
a) Evaluate factors such as the form and time of transactions, price flexibility, and the form of settlements, and review appropriately relaxing the existing system with regard to block transactions.
b) Examine the viability of introducing troubled debt restructuring stock for use in margin trading and short-selling.
c) Explore the possibility of developing cross-rate currency commodity futures.
d) Give priority to the establishment of an onshore US banknote market, so that Taiwan can gradually be developed into a regional currency market and center for raising funds.
e) Encourage foreign companies and overseas Taiwanese businesses to list on Taiwan's market, which would, in turn, promote the internationalization of the local capital market.
f) Increase the supply of long-term bonds, allowing securities companies to run businesses concerned with the trading of international bonds underwritten by international syndicates and beneficiary securities. Such a move aims to expand the bond market.
g) Issue treasury bonds regularly so as to establish short-term interest indices.
2. Establish a reasonable taxation environment, and bring Taiwan's system more closely in line with international practice.
a) Financial commodities taxation regulations have profound effects on the development of financial markets. The Ministry of Finance (MOF) should review and formulate a comprehensive taxation system for financial commodities, and formulate consistent taxation principles for financial commodities.
b) Taxation of hybrid financial products with unspecified ownership and rights issued by various financial institutions should be considered.
(1) In order to maintain smooth market transactions, it is suggested that a single tax base should be used for financial products being traded, regardless of at what stage in a transaction (e.g. the issue of a repurchase agreement involving asset securitization financial products) it is calculated. This would help to remove doubts that hinder transactions in the financial market.
(2) The said principle would involve revisions to legislation that would require the cooperation of the MOF. To minimize the impact on financial markets and allow more time for communication with financial organizations, revised terms should be phased in and implemented gradually.
(3) With regard to the practical issues mentioned above, before formulating laws and decrees concerning the taxation of the said financial commodities, the MOF should first consult with the Financial Supervisory Commission (FSC) and introduce the bill for discussion in the Taxation Reform Committee.
c) With regard to taxing call warrants issued by securities companies, the Executive Yuan is advised to coordinate with the MOF and FSC before drafting any solutions.
3. Transform Taiwan into an assets management center.
a) Plan the development of new exchange-traded funds (ETF).
b) Explore the possibility of relaxing restrictions on the derivatives trading activities of investment trust corporations.
c) Consider relaxing restrictions on the derivatives trading activities of discretionary investment services.
d) Plan the strengthening of independent supervisory mechanisms for and formulation of related laws and regulations concerning the management of domestic investment trust funds.
e) Formulate and promote concrete and viable plans for the establishment of futures trust enterprises and issuance of futures trust funds.
f) Explore the possibility of overseeing financial institutions according to their different functions and strengthening the regulation of how asset management enterprises launch new products, utilize marketing channels, undertake risk management and control, and engage in self-discipline.
g) Explore the possibility of holding natural persons responsible in the financial industry, and, at the same time, foster a culture of honesty in society.
h) Review the possibility of relaxing capital asset restrictions on domestic investment trust funds and discretionary investment services by allowing investment in securities issued in the People's Republic of China (PRC), in H-shares (i.e. shares issued or managed through stock markets in Hong Kong or Macau by government agencies or companies in China in component stocks of the Hang Seng China-Affiliated Corporations Index), and in red-chip companies (i.e. companies that are listed through a Hong Kong or Macau stock market and in which more than 30 percent of shares are held directly or indirectly by government agencies or companies in China) as is the case with offshore funds with the exclusion of funds established by the government.
i) Explore the viability of not pursuing further punitive measures against securities trust fund management companies that continued to hold structured products in bond funds as of the end of 2005.
4. Strengthen effective supervision and regulation of capital markets and further enhance regulation of companies.
a) The competent authorities should coordinate with the Ministry of Justice and the Ministry of Economic Affairs (MOEA), integrating financial and legal expertise in order to crack down on financial crime and improve efficiency in handling criminal cases.
b) The competent authorities should see to it that the investor protection center participates in the shareholders' meetings of listed companies and monitors company management. The center should also, in accordance with the law, be actively involved in helping investors file class-action lawsuits in order to claim compensation when their rights have been violated.
c) Strengthen investor education and guidance, so as to promote greater awareness of investment risks, to develop an environment for collective action by investors, and to encourage "legal persons" to increase their shareholdings in order to create a market-stabilizing force.
d) Strengthen cooperation with foreign supervisory organizations and, based on the principle of reciprocity and confidentiality, strengthen cross-border supervision in order to prevent international financial crime.
e) Promote, in appropriate stages, the establishment of independent directors and audit committees.
(1) The competent government agencies should implement the procedural rules set by the Company Act concerning meetings of board directors, so as to ensure that companies are well-administered from the early stages of operation.
(2) Study making amendments to the Company Act or the Securities and Exchange Act so as to improve methods of electing and appointing independent directors and to clarify the role of audit committees.
(3) Promote, step by step, the establishment of independent directors and audit committees.
f) Continue to increase transparency of information.
(1) Continue to promote the "Appraisal of Information Disclosure System."
(2) Enhance the disclosure of information about the salaries of directors and supervisors, along with appropriate "follow-up management."
(3) Establish a team responsible for formulating complete and coordinated measures for expensing employee stock options.
g) Increase, by stages, incentives that encourage companies to participate in corporate management evaluation projects.
G. Taiwan's economic development, cross-strait relations, and the globalization of the financial industry
1. Globalization of the financial industry.
a) Relax restrictions in order to promote the globalization of the financial industry.
(1) Assist the financial industry to expand services in other countries through bilateral or multilateral talks, by respecting, to an appropriate degree, these countries' standards of supervision, and by reviewing Taiwan's related laws and decrees.
(2) Increase cooperation with foreign supervisory organizations so as to consolidate cross-border supervision.
b) Promote the cultivation of qualified interdisciplinary personnel having global perspectives who can meet the needs of globalization for the financial industry and its regulatory bodies.
(1) Discuss the necessity of abolishing "revolving door" clauses.
(2) Examine the possibility of modifying the national examination system (e.g., by reintroducing "Special Examination A").
(3) In order to nurture the qualified personnel needed in today's globalized environment, government agencies should provide adequate funding for employees to visit, and study the financial supervisory systems of, other countries.
(4) Integrate the resources of relevant financial training agencies, so as to cultivate interdisciplinary and professionals with global perspectives.
(5) When selecting members of the Financial Supervisory Commission, due consideration should be given to selecting members from a cross-section of fields.
c) Encourage international financial institutions to participate in the management of Taiwan's financial industry.
(1) Examine the possibility of bringing accounting systems in Taiwan's insurance industry into line with international standards.
(2) Examine the possibility of bringing Taiwan's liability reserve fund system into line with international standards.
(3) Consider shortening the time that it takes to examine insurance policies.
Other Opinions
1. In line with government policy and the overall development and utilization of land, large and regularly shaped parcels of state-owned land in prospering areas can either be sold or made available by granting land-use rights.
2. Set goals and principles regarding the use of state-owned land and establish a mechanism for its release.
a) The public should be allowed to participate in the formulation and alteration of urban planning.
b) After an urban development plan has been decided upon, state-owned land should be used in the most optimal way.
3. Appropriate land should be selected, either through entrustment or cooperation, to allow agencies with jurisdiction over the targeted businesses to carry out open bids such that the needs of businesses to develop land can be met.
4. No consensus was reached by representatives on whether to centralize the management of state-owned shares. Nor was there agreement on whether to establish a national holding company or a management company for said shares.
5. In addition to corporatizing state-owned and public enterprises, market liberalization should also be promoted.
6. Certain public policy objectives can be achieved by implementing social policies, rather than by using state-run and public enterprises to do so.
7. A review of Taiwanese businesses' investments in China should be conducted by taking into consideration both Taiwan's national security and local businesses' international competitiveness.
8. Financial matters related to Taiwan's financial industry investing in China.
Whilst taking national sovereignty, security, and Taiwanese enterprises in China into consideration, the government should expedite the establishment of a cross-strait financial supervisory system. Relevant government departments should propose concrete reports on business opportunities and risk assessment. The government should agree, under the principle of mutual benefit, to examine the possibility of easing restrictions on the following practices:
a) Taiwanese banks establishing branches and subsidiaries in China, or owning stock in China's banks.
b) Investment in China by overseas subsidiaries of Taiwanese securities firms in Chinese securities firms; and investment in Chinese fund management companies by such firms and their parent companies.
c) Chinese banks, securities companies, and insurance companies establishing offices in Taiwan.
d) The matter of establishing bank branches and subsidiaries should be handled under the precondition that both governments engage in reciprocal consultation on supervisory cooperation.
e) Allow the exchange of renminbi (RMB) and establish a settlement system for RMB and NT dollars.
Should discrepancies exist between the Chinese and English versions, the Chinese version takes priority.
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