Taiwan joins rush to establish Gulf fund

PUBLISHED : Friday, 28 December, 2007, 12:00am
UPDATED : Friday, 28 December, 2007, 12:00am

Taiwan is planning to set up a sovereign fund to invest in the Gulf region before it is too late.

The sovereign fund, which will combine government and private-sector money of about NT$2 billion (HK$479.4 million), initially would set sights on oil and other energy investments in Gulf countries, economic officials said yesterday.

'It is necessary for us to expand our business opportunities in the Middle East, especially in the field of basic infrastructure or petrochemical projects,' said Hsieh Fa-dah, a vice-economics minister.

To achieve this, the government saw the need to set up a fund to investigate potential business opportunities estimated to be more than US$6.6 trillion, Mr Hsieh said.

His comments came after Vice-Premier Chiou I-jen said on Wednesday the government should consider setting up a sovereign fund before similar funds from the mainland and other countries grabbed business opportunities in the Gulf region.

Mr Chiou said the mainland sovereign fund and the Dubai fund had been aggressive in various buyout projects recently.

Under the plan, the government's National Development Fund would contribute 40 per cent of the capital and the private sector, the balance, Mr Hsieh said.

He would not reveal the total sovereign fund size, but economic officials estimated it at NT$2 billion, with the National Development Fund contributing NT$800 million.

Taiwan Fertilizer, China Steel and Taiwan Motors were among private-sector firms interested in the fund, economic officials said, adding that if everything went smoothly, the fund would be formed early next year.

Hung Chen-chien, the chief consultant of the Middle East Investment Team under the Council of Economic Planning and Development, said countries such as South Korea, Japan, Singapore and the mainland had sought actively to explore business opportunities in the region. If Taiwan lags behind, it will face problems getting low-priced petrochemicals five years from now.

A Middle East envoy in Taiwan said that if the island was not able to set up the fund in the next six months, it would have little chance to expand business opportunities in the Gulf.

He said Hong Kong was one of the markets keen to board the Middle East investment bandwagon, having recently declared its plan to develop the city into an Islamic wealth management centre.