With the seriousness of the island's economic woes demonstrated both by Taipei's sagging stock market and Monday's forecast that economic growth will fall below 5 per cent for both last year and this, Taiwan policy-makers are expected to prescribe a wide range of remedies in the run-up to next week's Lunar New Year holiday. The official Directorate-General for Budget, Accounting and Statistics on Monday said inflation-adjusted expansion in gross domestic product (GDP) rose only 4.83 per cent and forecast real GDP growth of only 4.74 per cent this year. Its decision to issue the most downbeat forecasts of the island's main think-tanks had its positive side in terms of facing reality. Whether such realism will be manifested by other departments remains to be seen. Of particular interest is today's scheduled announcement by the Ministry of Finance of proposals to strengthen capital markets. The ministry, which has issued a series of 'beneficial' moves in step with the erosion of the Taiwan Securities Index in recent months, issued another three short-term measures on Sunday, including looser restrictions on cash and securities loans, publication of real-time over-the-counter market data, and a vow to crackdown on rumour-mongering in the bourse. The expectations of leading analysts cannot be described as optimistic. 'The finance ministry doesn't have any more magic weapons left and the market's performance shows that any new measures immediately lose their stimulative effect,' National Chengchi University finance professor Norman Yin Nai-ping said. 'What the monetary authorities should do is pay less attention to trying to prop up the index and more to restoring the fundamental structure of the capital market and re-establish the previously existing safety net undermined by previous policy measures.' Expectations are not much higher for the Economic Problems and Policies Conference to be convened by Premier Vincent Siew Wan-chang on Friday with government officials, business leaders and economists to deliberate a draft set of economy-boosting measures proposed by the Council for Economic Planning and Development (CEPD). 'Many of the CEPD proposals are reasonable, but most have been under discussion for a considerable time, while others, such as cutting customs levies on some products, will help little or even be counterproductive,' said Taiwan Institute for Economic Research fellow Chen Po-chih. 'What is needed is not discussion but resolution. 'It's not enough to say that companies that should go bankrupt should be allowed to fail, but the government should have a transparent and comprehensive framework covering how to deal with such events, or to demonstrate clear reasons why an enterprise should be assisted.' National Taiwan University economist Professor Wu Chung-chi said it was unlikely effective measures to cope with one of the economy's most serious problems - the pervasive links between the ruling Kuomintang and big business - would be discussed at the meeting. 'We need legislation to raise the status and clout of the Securities and Forwards Commission, ensure effective financial supervision, keep people with records as speculators from acting as corporate directors or supervisors, and establish clear legal procedures for the government's use of labour pension funds in the stock market,' said Democratic Progressive Party policy research director Yen Chien-fu.
