Q. What significance does the present loosening of foreign exchange restrictions have for our economy?
A. For a long time the foreign exchange restrictions in the ROC have barred private citizens from holding foreign currency; only the Central Bank could do so. But from 1976 on, our exports have exceeded imports allowing huge foreign currency reserves to accrue. Today the Central Bank holds more than US$60 billion, creating a monetary surplus.
However now, with the relaxation of restrictions, we can balance the flow of currency better by allowing free use of it. This balance is crucial because it allows us to stabilize the economy by preventing a currency surplus which could cause inflation or an excessive appreciation of the NT dollar which hurts our trade balance.
Q. You have just spoken with respect to the national economy; what about private industry?
A. The greatest effect of the relaxation on private industry will be to render limitations on foreign investors a restriction in name only.
Previously foreign investors in Taiwan were required to undergo an audit to mail out their earnings. Now, with the relaxation, this problem will be easier to over come, resulting in greater foreign investment here.
Moreover, although some restrictions remain on bringing in foreign currency, this too, will be easier to overcome. Money can now be borrowed in Taiwan with money in U.S. banks as collateral.
All these new investment opportunities will be a challenge to Taiwan industry. But the pain is only short-term, resulting in increased productivity long-term. The competition can stimulate computerization, conversion to larger scale operations, and establishment of research divisions.
Q. Will the relaxation of restrictions be risky for Taiwan? Some think the ROC needs greater capital reserves, and that overseas investment isn't a good idea. How do you respond to this?
A. I think the new policy can only enhance the ROC's security. If mainland China should decide to invade Taiwan, there would be even more foreign incentive to support us because of the greater investment of foreign industry here.
In the past, we were reticent to loosen restrictions for fear of a drastic currency outflow. But now, the appreciation of the NT dollar and the many investment opportunities here can only bring in more capital.
Q. How will all this affect the domestic situation? And, how should our business community take advantage of this opportunity to develop?
A. The business community should take a global view. From now on, the international monetary situation is going to affect us more quickly than it did before when the controls offered some protection. So, what our manufacturers will face is international competition. But if we keep abreast of the situation, it will be a great opportunity for them to issue new stocks and bonds and borrow money abroad.
All these opportunities, especially corporate investment, Where there is usually a strong economic research contingent backing it up, can benefit and stimulate business in Taiwan. Thus, with some hard work, the good can be even better.
Per capita income in the ROC is about twenty times that on the mainland.
Professor Chiu believes that the main purpose of the "one country two systems" formula is to dupe the American government and people into gradually hal ting arms sales to the ROC （photo by Vincent Chang）
@List.jpg?w=522&h=410&mode=crop&format=webp&quality=80)
@List.jpg?w=522&h=410&mode=crop&format=webp&quality=80)