Taiwan Unveils Plan to Boost Growth as Ma Popularity SlumpsChinmei Sung
Taiwan will let insurers invest in infrastructure projects and create a NT$1 billion ($33 million) fund to channel money to companies as President Ma Ying-jeou bids to boost growth and revive his flagging popularity.
The island also plans to revise capital-gains tax rules, give cash incentives to trade in old cars for new ones, simplify visa procedures for Chinese visitors and set aside NT$400 million to subsidize energy-saving home appliances including gas stoves and heaters, Premier Jiang Yi-huah said in Taipei today.
Ma, whose disapproval rating of 70 percent this month is at its highest since he took office in May 2008, joins policy makers from Australia to South Korea in moving to aid their economies as the global recovery falters. The island’s statistics bureau last week cut its forecast for gross domestic product growth this year to 2.4 percent from 3.59 percent.
“President Ma is under pressure to deliver some solutions after economic growth slowed in the first quarter,” said Yang Tai-Shuenn, a political scientist at Chinese Culture University in Taipei. “But I don’t think this would help lift his approval rating or bring real benefits to the economy.”
The Taiwan dollar rose 0.2 percent to NT$29.914 as of 3 p.m. local time. The benchmark Taiex stock index fell 0.2 percent at the close today.
Proposed revisions to capital-gains tax rules include removing the condition that investors will be taxed when the stock index closes at 8,500 points or higher, and reducing the tax rate on investors with NT$1 billion or more in trading volume to 0.1 percent from 2.25 percent. The measures are awaiting legislative approval, and may be passed in the current session without further delays, Jiang said.
The economy grew 1.67 percent in the three months through March from a year earlier, after expanding 3.97 percent in the fourth quarter, a report showed last week, while exports fell for a second time in four months in April.
Ma has simplified investment procedures, reshuffled the government’s top posts, resumed trade talks with the U.S. and sought closer ties with China to revive his economic agenda. China and Taiwan have signed 18 agreements since Ma took office in 2008, and will finalize a service-trade deal in the “near future,” Wang Yu-chi, Minister of Taiwan’s Mainland Affairs Council, said yesterday.
“We are introducing measures to bolster the economy as recent economic data failed to meet expectations,” Cabinet spokeswoman Cheng Li-wun said today.
Life insurers will be permitted to invest in public infrastructure projects totaling NT$100 billion, said Financial Supervisory Commission Chairman Chen Yuh-Chang. Also, visa rules for visitors from China, Hong Kong and Macau will be eased, with arrivals from the mainland, excluding tour groups, estimated to rise to 540,000 this year from 190,000 last year.
“Given that the measures are coming just days after the government’s GDP downgrade and given the still-sizeable challenges ahead for Taiwan exporters, I think growth is the overriding concern right now,” said Donna Kwok, a Hong Kong-based economist at HSBC Holdings Plc.