MOF allow DBUs to handle OBU businesses

Taipei, Dec. 25, 2003 (CENS)--The Ministry of Finance (MOF) recently announced allowing foreign exchange (forex) designated domestic banking units (DBUs) to operate the businesses of offshore banking units (OBU).

To realize the policy, MOF has drafted a set of revisions to the statute governing international financial businesses operated by banks in Taiwan. Under the revisions, DBUs can operate OBU businesses, and such services would be available to domestic clients as well. In addition, the businesses of OBUs will be expanded to include granting foreign-currency loans to domestic clients. Moreover, overseas Taiwanese manufacturers will be allowed to withdraw their foreign currency deposits from their accounts at OBUs.

The revisions are designed to boost the efficiency of domestic banks and encourage overseas Taiwanese manufacturers to remit back their capital through OBUs.

The MOF will discuss the revisions with the Central Bank of China (CBC) here and will submit them to the Executive Yuan (Cabinet) later if CBC agrees to the revisions. Finally, the revised statute have to clear the legislative floor for legalization.

The MOF said that DBUs should distinguish their domestic clients from offshore clients after being allowed to operate OBU businesses. The difference is that the revenue from services to domestic clients should be taxed, and the revenue from services to offshore clients won't be taxed. In the future the MOF will gradually allow OBUs to offer more financial services to clients across the Taiwan Strait and to operate such services as non-delivery forward (NDF) and non-delivery option (NDO) of U.S. dollar against Renminbi.

The MOF hoped that after DBUs are allowed to handle OBU businesses, the latter could be transformed to booking and capital transfer units, particularly for Taiwanese clients with operations in mainland China.