Lunch with FSC Chairman Wellington Koo
The ECCT arranged a Premium Event lunch on the topic "Harnessing financial innovation to support economic development" featuring guest speaker Wellington Koo, Chairman of the Financial Supervisory Commission (FSC). In his presentation, the speaker gave an overview of the FSC’s most recent actions to help the financial sector meet industrial needs, enable FinTech innovations and encourage cross-border cooperation.
Looking at figures for the past 12 years, as of June 2019, domestic banks have lent almost NT$6.6 trillion to small and medium-sized enterprises, which accounted for over 60% of loans to corporations. Moreover, it is one of the government’s goals to help meet the financing needs of companies in the so-called “5+2 innovative industry sectors” (intelligent machinery, Asia Silicon Valley, green energy, biomedicine, national defence and aerospace, new agriculture and the circular economy).
In terms of raising funds for green technology, in order to encourage both foreign and domestic banks to provide funding to companies engaged in green technology, the FSC has relaxed loan requirements and regulations by, among other measures, increasing credit limits to single customers and allowing foreign banks to issue NT-dollar denominated bonds.
To assist companies to obtain funds for business development in South-East Asian countries (to facilitate the government’s South-bound policy), the FSC has been encouraging local banks to give loans to these corporations. This has clearly been successful as the total amount of loans for this purpose has increased from NT$575 billion to over NT$1.13 trillion over the past five years.
In terms of developing capital markets, the FSC has established a multi-level capital market structure to provide optimal financing channels for companies with different operating modes and scales to help them expand their operations, including those preparing for over-the-counter listings or IPOs.
In order to make it easier for companies to float and raise funds by listing on the stock exchange, the IPO schedule has been shortened, the process has been opened to e-commerce companies and capital requirements were reduced, among other measures.
In December 2017, restrictions were loosened to allow banks to invest in the government’s “5+2 innovative industries” and culture and creative industries as long as the investment does not exceed 3% of the bank’s net asset value.
Following the government’s relaxation of lending restrictions to promote green bonds, as of 31 July 2019, the green bond market had 29 listings, for a total amount of NT$61.5 billion.
In order to encourage the insurance industry to diversify its investments, the FSC has relaxed restrictions to allow insurance companies to invest in shares of public utilities, public infrastructure projects, the elderly care industry (retirement residence buildings and villages) and the “5+2 innovative industries”.
The speaker went on to outline some ways the FSC is supporting the development of emerging business models for the banking sector including digital finance (FinTech) and cloud technology.
In terms of FinTech, rules have been relaxed to allow consumers to apply for personal credit cards and loans through telecommunication companies, to ease the process of cross-border remittances for foreign labourers, use block chain for interbank transfers, allow cooperation between insurance companies and travel agencies to provide travel insurance products, and eased rules on mutual fund trading on the internet.
After his presentation, Chairman Koo answered a number of questions from members representing the financial, healthcare and renewable energy industries, among others.