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Taiwan's financial officials reject sovereign wealth fund plan
Taiwan News, Staff Writer
Page 2
2008-10-02 01:01 AM
A meeting of top government finance officials failed yesterday to reach an agreement on a proposal to set up a sovereign wealth fund to boost the economy.

The idea for a sovereign wealth fund came out of an economic panel meeting chaired by Vice President Vincent Siew (蕭萬長) on Tuesday.

The project received new impetus when Vice Premier Paul Chiu (邱正雄) said yesterday morning that such a fund would benefit Taiwan's economy, though he cautioned that it was even more important to find a transparent way of managing it.

However, a meeting hosted by the cabinet-level Council for Economic Planning and Development yesterday afternoon came to the conclusion that it was not necessary yet to come up with such a fund.

Sovereign wealth funds are usually owned by a government to invest overseas. They are composed of stocks, bonds, gold, real estate, and other financial assets.

Yesterday's meeting at the CEPD included officials from the Ministry of Finance, the Financial Supervisory Commission, and the Central Bank, as well as prominent experts.

During the day, diverging opinions came to light about the use and structure of a sovereign wealth fund.

The Central Bank issued a statement denying that its governor had agreed to provide some of Taiwan's US$282 billion in foreign reserves for the fund.

The CEPD estimated NT$450 billion would be necessary for the fund, and Taiwan's foreign reserves were the most likely place to go and look for that money, the Chinese-language United Evening News reported yesterday. Converting the existing National Development Fund would not work because its current NT$100 billion was not enough, the paper quoted the CEPD as saying.

Opposition politicians said they saw no need for a sovereign wealth fund, doubting the contributions it could make to boosting Taiwan's economy.

Globally, experts' opinions on the benefits of such funds are divided, with skeptics charging they could serve as a vehicle for state intervention in market mechanisms, or for interference by foreign governments holding a controlling stake.

Singapore's Temasek Holdings was reportedly mentioned as a model to consider, though China and several small but wealthy states in the Persian Gulf also manage sovereign wealth funds.

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