SOVEREIGN WEALTH FUND TO BE USED TO DEVELOP ECONOMY: TAIWAN VP

TAIPEI, Oct 15, 2008 (AsiaPulse via COMTEX) -- SOVW | Quote | Chart | News | PowerRating -- Taiwan Vice President Vincent Siew said Tuesday that a sovereign wealth fund run by Taiwan would integrate government capital and be used to launch construction projects, develop new industries, and provide temporary assistance to local businesses.

Revisiting an issue that sparked controversy when first suggested by the government on Oct. 1 as a way to stimulate the economy, Siew said at a Rotary International gathering that if a fund were launched by Taiwan, it would differ from those run by other countries.

Taiwan's fund, as described by Siew, would focus more on domestic development while funds run by other countries tend to emphasize strategic investments around the globe to promote their national or economic interests.

Siew acknowledged that the present global financial turmoil would inevitably affect Taiwan, but insisted the country did not face serious capital liquidity problems.

He believed, however, that if the government's various assets, such as equities, land, capital from public-run companies and foreign exchange reserves could be integrated, the government would have more chips at its disposal to boost the economy.

The fund, he said, would serve as an expanded national development fund that could invest in developing new industries, carrying out public construction projects or assisting soundly-structured companies in tiding over temporary financial difficulties.

In fact, Siew said, it would not even have to be called a "sovereign wealth fund."

During his speech, Siew also proposed a reduction in the inheritance and gift taxes as incentives to draw more overseas capital back to Taiwan.

That would generate more job opportunities and improved business prospects, leading to increases in tax revenues and growth in domestic economic development.

Siew said that with the government's short-term provisional measures to combat the current financial crisis and its long-term package of systemic reforms, he was cautiously optimistic about Taiwan's economic future.

(CNA)

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