By Chen Cheng-hui / Staff reporter
Taiwan’s financial industry should seize the opportunity to work with local firms seeking to set up operations overseas, especially in ASEAN countries, as that would help them pursue further internationalization and expand the capacity of their overseas operations, central bank Governor Yang Chin-long (???) said on Saturday.
Speaking at a forum about the latest developments in globalization and Taiwan’s responses to it, hosted by National Cheng Chi University, Yang said that by providing services to Taiwanese businesses relocating their overseas bases, local financial institutions can bring financial services to various countries and develop more new frontier markets.
With the collaboration and support of their domestic banking units and offshore banking units, Taiwan’s financial institutions can develop into a trade settlement and fund management center for overseas Taiwanese businesses, Yang said.
Photo: Chen Mei-ying, Taipei Times
Based on central bank statistics, Taiwanese banks’ loans extended to customers in the ASEAN region, mainly Taiwanese businesses with operations there, had increased to 22.9 percent of total lending at the end of last year, up from 8.1 percent in 2017.
The ASEAN countries have become a key area for Taiwanese banks’ overseas expansion in recent years, with the banks setting up more overseas branches in this region than elsewhere, Yang said.
By the end of March, Taiwanese banks had established a total of 174 overseas branches, with ASEAN accounting for the most at 51, an increase of 12 from 2015, followed by mainland China with 30, the US with 27 and Hong Kong with 20, the central bank’s statistics showed.
The assets of Taiwanese banks’ ASEAN branches have also grown rapidly recently, reaching NT$1.55 trillion (US$49.4 billion) at the end of March, second only to the NT$1.81 trillion of the Hong Kong branches, but higher than the NT$1.15 trillion of those in mainland China, the data showed.
As the number of branches and operations have expanded, the profits of ASEAN branches have increased significantly, according to the central bank.
Last year, ASEAN branches’ combined profit reached a new high of NT$14.7 billion, accounting for 25.8 percent of banks’ total overseas profits, second only to the NT$21.5 billion profit made by their Hong Kong branches, but higher than the NT$5.5 billion profit contributed from branches in mainland China, the central bank’s data indicated.
“The asset scale and profit of Taiwanese banks’ ASEAN branches have surpassed those in mainland China, being second only to Hong Kong, reflecting that banks have followed Taiwanese businesses to ASEAN members to increase their overall operating capacity and profitability,” Yang said.
As Taiwanese firms continue to adjust their overseas production bases in response to US-China confrontations and the challenges of globalization, the realignment of supply chains has resulted in changes in Taiwan’s foreign investment and trade development, as well as changes in the flow of cross-border funds for firms, Yang said.
“On the one hand, it has expanded Taiwan’s economic hinterland, but on the other it has also helped improve the situation of highly concentrated investment and production in China seen in the past,” he said.
However, the governor warned that US-China tensions have led to an increase in Taiwan’s trade surplus in recent years, which could trigger sanctions against Taiwan by Washington if the issue is left unresolved.
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