Financial authorities on both sides of the Taiwan Straits have
given permission to banks to open direct remittance links, a move
analysts hailed as conducive to cross-Straits economic exchanges
even though the move is belated.
The policy loosening, which Taiwanese banks and their corporate
clients with investments on the mainland started to lobby early
last decade, is being celebrated by investors and banks now that
lower operational costs and fresh business opportunities will be
more widely available.
"It's a welcome move as the cross-Straits flow of funds has been
frequent," said Qin Chijiang, deputy secretary-general of the China
Society of Finance. "Investors from Taiwan are the biggest
beneficiaries."
Taiwanese investors had poured US$60 billion of investment in more
than 40,000 businesses on the mainland, but had to make remittances
and account settlements through third parties, mostly banks in Hong
Kong or the United States, due to political barriers.
Although the central bank, the
(PBOC), has not officially announced the decision, mainland banks
have already been racing to build on their lists of partners on the
island.
"It has been approved," said a PBOC spokesman Thursday. Declining
to give details, he said an announcement will take place next week.
Media reports earlier this week quoted PBOC Governor Dai Xianglong
as saying the decision had been made.
Among the earliest to respond, the Industrial and Commercial
Bank of China (ICBC), the mainland's biggest commercial bank,
announced yesterday the start to its remittance and settlement
services with Taiwan.
The bank said it had signed up 22 banks of Taiwan and 12 foreign
banks operating on the island as its correspondent banks, enabling
it to handle remittances, letters of credit and settlements across
the Straits. "And the numbers are growing rapidly," said Gao Ming,
a senior international operations manager with the ICBC.
"Now the route for business exchanges has been straightened," she
said, "and we are now able to provide better services to our
clients." The shortened routes will save bank clients an average of
US$15-25 per remittance, which they had to pay before, and the
duration will be almost halved to within one day.
But analysts were not satisfied with the pace of progress. "It was
not at all a surprise to me," Qin said. "There were no technical
difficulties, nor was it economically controversial. If the Taiwan
authorities had the correct attitude towards the direct links, it
could have been fairly easy."
Qin also expressed concerns over a lack of uniform arrangements
governing all banks, calling the current approach, where individual
banks seem to be working on their own, as unstable and vulnerable
to political uncertainties.
He
said there needs to be procedural rules for the new operation and
agreements on settlements of possible disputes and mistakes, which
may cause trouble without the legal guidance previously available
through the third party.
Instead, Qin said an overall agreement should be worked out by
leading banking associations on both sides.
(China
Daily July 12, 2002)