Taiwan Financial, Defense Heads Leave Amid Cabinet Reshuffle

Taiwan’s government replaced the defense minister and named a new financial-markets regulator, as President Ma Ying-jeou seeks to stem a decline in his popularity rating since winning re-election last year.

Deputy Finance Minister Tseng Ming-chung will become minister of the Financial Supervisory Commission, replacing Chen Yuh-chang, who was appointed in 2010, Premier Jiang Yi-huah announced in a briefing in Taipei today. Deputy Defense Minister Andrew Yang will take over from Kao Hua-chu, Jiang said. The two should take office Aug. 1, cabinet spokeswoman Cheng Li-wun told Bloomberg.

The leadership changes were made in close discussions with Ma and are in response to public demand, the cabinet said in a statement released today.

Ma, 63, is battling a 70 percent disapproval rating, according to cable news network TVBS. The shuffle removes two ministers who had been at the center of public controversy. Chen’s opposition to allowing third-party payments prompted complaints from the online shopping industry, while Kao’s ministry faced criticism over the death of a 24-year-old soldier this month, according to the Central News Agency.

Chen’s stance contributed to the view he was anti-reform, said Michael On, president of Taipei-based Beyond Asset Management.

‘Strict Rules’

“Chen stepped down probably because he was conservative,” On said by phone in Taipei. “Taiwan’s financial sector changes very slowly; the rules are very strict. It’s a structural problem.”

Chen defended his record in an e-mailed statement today, saying he acted to safeguard financial markets and consumers.

“Financial stability is the foundation stone of economic development, which shouldn’t risk financial stability.”

Kao came under fire when conscript Hung Chung-chiu died after being placed in solitary confinement for carrying an illicit mobile phone into his barrack. The incident prompted calls for an independent investigation into the military’s disciplinary proceedings and also into potential abuse, the Central News Agency reported on July 20. Yang will be Taiwan’s third defense head since Ma first took office in May 2008.

“Yang’s imminent task is to investigate Hung’s death,” Herman Shuai, a retired general, said by phone today.

Restructuring the military could be a challenge for a civilian minister, Shuai said. He has to meet the government’s target of forming an all-volunteer military force from the current conscripted army by the end of 2014, while coming up with the resources to fund the new system, he said.

New ministers were also appointed to lead the Overseas Chinese Affairs Council, Veterans Affairs Commission, Council of Indigenous Peoples and the Public Construction Commission, according to the cabinet statement today.

Before it's here, it's on the Bloomberg Terminal.