National Development Fund to top NT$1 tril.
The China Post news staff
October 24, 2008, 9:39 am TWN
TAIPEI, Taiwan -- Chen Tain-jy, chairman of the Council for Economic Planning and Development (CEPD), announced yesterday the National Development Fund (NDF) would top NT$1 trillion (US$30 billion).
Altogether, NT$800 billion would be raised to expand the NDF, which has intervened in the Taipei stock market to stop the bear in the impending financial crisis.
Part of the additional funds would come from postal savings, which totaled NT$4.3 trillion (US$130 billion) as of the end of last month.
"For the time being," Chen said, "we'll borrow NT$200 billion from the Chunghwa Post Co., Ltd." He did not say how the remaining NT$600 billion would be raised.
Most likely, a CEPD source said, all the rest of the additional funds would come from the postal service.
"As far as we know," a veteran Kuomintang lawmaker said, "the CEPD wants to get all the additional money to expand the NDF from the postal savings."
Lu Hsiu-yen said Chen does not want to recommend floating national bonds to expand the NDF. Where else can it acquire that much money? she asked.
Hu Hsueh-yun, Chunghwa Post general manager, was surprised to find the CEPD wanted to borrow postal savings to expand the NDF. "I've heard nothing about any such arrangements," she pointed out.
But Hu said she would lend the money if the CEPD asked. "Everything will be done in full accordance with the laws and regulations," she added.
Currently, she said, the Chunghwa Post has NT$2 trillion of the postal savings deposited with the Central Bank. In other words, the postal service would be able to finance the expansion of the NDF.
Financing industry sources said the expansion of the NDF may be part of the effort on the part of the Ministry of Finance effort to create a sovereign wealth fund.
Vice President Vincent Siew has proposed the creation of the sovereign wealth fund to cope with the financial as well as economic crisis in what is known as the silent tsunami.
The money in the NDF as well as the sovereign wealth fund will be used to bail out ailing banks, purchase bad housing loans and make investments to stimulate the economy.
"But the problem is," one financing industry source said, "another Tuntex scandal will be created, if the NDF should be infused with lots of money."
Chen Yu-hao headed the Tuntex group, which went under in 2003 after a huge infusion of NDF money.
The administration needs a huge budget to implement President Ma Ying-jeou's 12 "I-Taiwan" economic development projects.
Government budgeting isn't enough, and additional sources of investment have to be located, now that foreign direct investment in Taiwan has dwindled.
"We fear the government is trying to borrow the money of postal savers to finance those projects," the industry source said. "If projects failed," he added, "the loss has to be borne by millions of petty savers."