Relations with Mainland China
5. Bilateral talks on regulating civilian exchanges were held in The mainland city of Xiamen, opposite Taiwan. Broad consensus was reached on several issues, including handling disputes between fishing boats, and repatriating Chinese illegal immigrants, but the talks ended with no written
no written agreements signed. In effect, bilateral relations have made little progress since the ground- breaking "Koo-Wang" talks held in Singapore in April. If anything, they have been soured by repeated hijackings of Chinese airliners to Taiwan, of which there were three within 7 days in November. The next round of talks is scheduled to be held in Taipei in mid-December.
Financial
6. After resisting the temptation for many months, Taiwan's Central Bank of China cut the rediscount rate on 4 November from 5.625 per cent to 5.5 per cent, and the rate for secured loans to banks from 6.125 per cent to 5.875 per cent. The CBC said that a loose credit policy had to be maintained to release more capital for industrial investments and keep the economy turning over. A noted economist at a government think-tank called the move a ploy to buy votes in the election.
7. The Finance Ministry announced on 25 November, yet another set of "planned measures" to improve foreign access to the Taipei stock market. One planned measure was to abolish all restrictions on the inward and outward remittance of funds by foreign institutional investors. At present, investment capital can only be remitted out three months after remittance into Taiwan, and profits and dividends can only be remitted out after one year. And in future, investors will have nine months from the date of approval to remit their capital in, up from six months.
8. In addition, limits on foreign holdings in Taiwanese listed companies were to be raised, although the idea of abolishing them, to allow 100 per cent foreign ownership (noted in our October report), seems to have been dropped. The 5 per cent limit on holdings by individual institutions in a stock would be raised to 10 per cent or 15 per cent, and the aggregate ceiling of foreign holdings in a stock would go from 10 per cent to 20 per cent or 30 per cent.
9. As usual, no firm dates for introducing these measures were set. Some of them needed minor revisions of regulations,
regulations, others require cabinet and parliamentary approval, and could therefore take months. However, foreign stockbrokers say they believe that the Finance Ministry means business.
10. The Securities and Exchange Commission approved applications from 14 Taiwanese financial institutions to set up futures brokerages, which may place orders on overseas futures exchanges. Ten are leading stockbrokers, some of which have minority foreign
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