The National Development Council is studying the special law on sovereign funds. Ye Junxian: The draft will be submitted before the end of the year at the earliest.

National Development Council. (Photo by reporter Wu Xintian)

[Reporter Wu Xintian/Taipei Report] Ye Junxian, chairman of the National Development Council, revealed today that the National Development Council is currently studying the draft provisions on the special law for sovereign funds, and a consensus can be reached by the end of this year at the earliest. He also said that in the future, if the funds of sovereign funds are allocated from the central bank's foreign exchange deposits or the four major funds, consider studying non-gratuitous ways to obtain them.

Ye Junxian, chairman of the National Development Council, went to the Economic Committee of the Legislative Yuan to make a special report and prepare for questioning on two major topics: the implementation effectiveness of various investment businesses of the National Development Fund (including entrepreneurial angel investment plans), the review of the co-investment mechanism, investment review and conflict of interest avoidance mechanisms, and the review of the risk control and supervision and management mechanism of joint investment between the National Development Fund and public and pan-public financial institutions.

President Lai Ching-te delivered his inauguration anniversary speech on May 20 last year, announcing that he would establish a "national sovereign fund" and create a national-level investment platform. Subsequently, the Executive Yuan designated the National Development Council to lead the initial planning. One and a half years have passed since May last year. Legislator Qiu Zhiwei is concerned about the overall progress of the promotion.

In this regard, Ye Jun-hsien said that the establishment of sovereign funds in Taiwan is different from that of Singapore or South Korea. It is necessary to formulate a special law for the establishment of national sovereign funds. Currently, the National Development Council is actively conducting internal discussions on the draft provisions and hopes to formulate specific directions before the end of this year.

Qiu Zhiwei believes that sovereign funds should be based on the principle of "better than quick" and must be able to operate for a long time. He also agrees with the policy direction of strategic sovereign funds proposed by the National Development Council to strengthen national competitiveness and economic resilience. He hopes that the National Development Council will speed up inter-ministerial coordination with the Ministry of Finance, the Financial Supervisory Commission and the Central Bank.

Ye Jun-hsien promised that the draft will be discussed with relevant agencies when it comes out. He also mentioned that although Taiwan’s sovereign funds refer to South Korea, Singapore’s Temasek and GIC basically do not need to go through special laws and have been given such status in the constitution. South Korea has special laws but the governance structure is completely different from other sovereign funds, so it will refer to KIC but it may not go in that direction.

In response to Yang Jinlong, the president of the central bank, who advocated that the central bank’s foreign exchange reserves cannot be used free of charge and must be obtained with compensation, Ye Junxian said that if the funds of sovereign funds in the future are allocated from the central bank’s foreign exchange reserves or the four major funds, consider studying non-free acquisition methods.

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