Taiwan to Launch Sovereign Wealth Fund to Promote Industry Restructuring and Upgrading

To promote restructuring and upgrading of domestic industries, the Taiwanese government will set up the first sovereign wealth fund of at least NT$20 billion (about US$666.67 million) to enable domestic listed firms to engage in  mergers and acquisitions, according to Ministry of Economic Affairs (MOEA).

MOEA indicated that the rise of state capitalism has motivated many nations, such as Singapore, China and S. Korea, to establish sovereign wealth funds to nurture domestic industries, except so far Taiwan.

M.J. Wu, director-general of Bureau of Industrial Development under MOEA, emphasized that it is time for Taiwan to start up the planned fund, given that Taiwanese listed enterprises are mostly small in size and prone to high division of labor and fierce competition, and so generally lack adequate resources to upgrade and compete against large international rivals.

To help upgrade domestic industries, MOEA  plans to propose an industry-restructuring fund of over NT$20 billion to the National Development Fund (NDF) under the Cabinet, to finance locally listed firms to merge and acquire well-established companies.

Wu emphasized that the fund will invite private investments in the future, and that so far a couple of venture capital firms have shown high interest. The planned fund, Wu said, will target domestic firms in not just electronic sectors, but traditional manufacturing industries with strong global competitiveness. Details of the fund will be further discussed between MOEA and NDF.

Additionally, MOEA and NDF also plan to expand policy-based lending to NT$100 billion (US$3.33 billion), and have mapped out an investment-enhancing project to accelerate upgrades and transformation of manufacturing industries, aiming to help domestic small and medium-size enterprises to expand to compete well in the increasingly challenging global market. (SC)