Thanks, US! Taiwan gets its WHA invite as the economy keeps tanking....

Richard Kagan sent me this nice poster he made of Tsai making Taiwan green.

Taiwan finally got its invite to observe the World Health Assembly. The Taipei Times noted the problem:

The Ministry of Foreign Affairs yesterday announced that the long-expected WHA invitation has finally arrived, yet, for the first time in history, UN Resolution 2758 and the “one China” principle are reported to have been specially noted on the invitation. This looks like manipulation by China to force president-elect Tsai Ing-wen’s (蔡英文) administration to recognize the so-called “1992 consensus.”

The Taipei Times and others are noting that these seemed aimed at Tsai Ing-wen: force Tsai to acknowledge that Taiwan is part of China. There were those who had been saying that Beijing would not even let an invite get sent out.

However, creatively exploited, Beijing is giving her an out. UN Resolution 2758 says nothing about the status of Taiwan. Tsai could probably find some language to leverage that.

It is also a very small thing, withal, and Taiwan can easily do without, if necessary. Note that if Beijing is punishing Taiwan, the punishments are not very severe.

The US led a push by several major western democracies to get this done. Great job, guys. Many thanks.

More ominous than the WHA is the evolving situation of Taiwan businessmen in China, who are facing increased hostility to their presence in China and falling levels of success, along with Taiwan bank exposure if China's economy seriously falters. The Yuan devaluation hit Taiwan's banking system hard, since so many punters were believing -- no, I kid you not -- that the Yuan would always go up...

The product causing the angst is a derivative called a target redemption forward (TRF). It pays the holder a monthly income so long as the yuan remains above a trigger price against the dollar. If the yuan falls, the investor has to payout.

For years, they seemed a sure bet to a steady income as the value of the yuan rose steadily against the dollar. The yuan's devaluation and subsequent slide have wiped away those assumptions and left many investors regretting the day they bought the product.

Banking industry analysts say the worst of the TRF crisis has passed, but Taiwan's banking industry is still vulnerable to swings in the Yuan. To use the TRF instrument, gamblers investors must make a refundable deposit with the bank which banks are liable for -- which means that they are exposed when their investors lose money.

 Taiwan's banks were seriously overexposed in China and began reducing exposure last year. 2015 was in fact the first year the industry as a whole in Taiwan experienced a loss (see Mathew Fulco's excellent piece on the shift from China towards ASEAN).

Will China use this instrument to punish Taiwan? With the economy now in recession (slowed even more than expected in Q1) and vulnerable banks, Tsai could well inherit a serious economic and financial crisis.

UPDATE: WHA invite (source)
Dr. Been-Huang Chiang 　　Minister 　　Ministry of Health and Welfare 10F. No. 488, Sec. 6, Zhongxiao E. Rd Nangang Dist., Taipei City 11558

6 May 2016

Dear Dr Chiang,

Recalling the United Nations General Assembly Resolution 2758 （XXVI） and WHA Resolution 25.1, and in line with the One-China principle as reflected therein, I wish to invite you to head a delegation from the Ministry of Health and Welfare, Chinese Taipei, to attend the Sixty-ninth World Health Assembly as an observer. The Assembly will be convened at 9:30 on Monday, 23 May 2016, at the Palais des Nations, Geneva, Switzerland and will close no later than Saturday, 28 May 2016.

I would appreciate it if you could confirm to me your attendance and the names of attendees from the Ministry of Health and Welfare, Chinese Taipei, at your earliest convenience. Registration should be completed by9 May 2016.

Upon receipt of your confirmation, the Secretariat will forward to you the relevant documentation.

Yours sincerely, Dr Margaret Chan Director-General
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Daily Links:

• Taiwan: Leading the world in sustainable pork production
• China buys links on Facebook. LOLOL
• Vietnam police break up demonstration against Taiwanese firm in Vietnam for poisoning fish
• Jerome Keating reflects on the failed Ma Administration
• A really excellent feature article in TT on the 19th century limits of Qing control

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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums!

Double Ten Day: Ma's speech =UPDATED=

UPDATED: Jon Sullivan has a great analysis of this speech

Quote from the snoozefest of speakery today:

"My fellow citizens: The people of both sides of the Taiwan Strait are all Chinese by ethnicity. Cross-strait relations are not international relations."

This is the same language that Ma used in his 2008 inaugural address where he not only brought out the ethnic links but also said sovereignty was not important in cross-strait issues. As I noted:

...the English text says "our common Chinese heritage" but the Chinese is explicit -- the people on the two sides of the Strait both belong to the Chinese race" (兩岸人民同屬中華民族).The second translation issue is even more interesting. Entirely dropped from the English text is the very next sentence, which says 中華民族智慧之高 which translates "the great intelligence/wisdom" of the Chinese race." 

It seems impossible to me that there could be anyone following events here who sees Ma as other than the ideologue he truly is, but humanity's capacity for self-delusion does seem rather infinite.

Far more interesting than Ma's ideological fantasies is his review of the New Economic Order:

In addition, the free economic pilot zones (FEPZs) have already entered the launch phase. The Executive Yuan has relaxed 12 regulations to dramatically streamline customs procedures applying to pilot zone firms when they outsource processing operations, so that new operating models based on smart logistics can be gradually established in these zones. The Shanghai Free Trade Zone officially opened recently, giving us yet another competitor. Therefore, we must step up efforts to open up our market. The Executive Yuan is actively deliberating on whether to allow other industrial activities in the FEPZs, such as the financial sector’s wealth and asset management services. This is the right direction. We should expand the scope of liberalization for both domestic and international financial and economic activities. This will help Taiwan to advance more quickly toward the goal of becoming a “free economic island.” We hope these liberalization measures, along with other industrial development plans, will generate at least NT$300 billion worth of private-sector investment and create more than 45,000 jobs in the next two years.

The bolded sentence is worth considering. Ma is essentially arguing that the financial industry come under the same rules and regs regarding taxation and labor as manufacturing firms in these 1960s style labor intensive industrial zones. As I have noted innumerable times, Ma was put into office with the backing of the financial industry (anyone noticed the housing bubble? Verily, the purpose of housing bubbles is to skim off middle class wealth) and I'm feeling a payback moment here in the President's assertion that such firms should have special exemptions from regulations....
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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums!

Next Media Mess

Last month the big deal went through: publisher Jimmy Lai of Hong Kong decided to sell off his NextMedia's print and television operations in Taiwan. The buyer at that time was Jeffrey Koo, Jr. The sale was widely seen as a blow to media independence in Taiwan, since Next Media does a great job throwing light in dark places, and Apple Daily, despite its front pages splashed with sex and gore, did manage to establish itself as a relatively non-partisan news source.

New wrinkle emerged this week: the Financial Supervisory Commission (FSC) is balking at the sale to Jeffrey Koo, Jr. The China Post observes:

The Financial Supervisory Commission (FSC, 金管會) yesterday ruled that Chinatrust Charity Foundation Chairman (中信慈善基金) Jeffrey Koo Jr. (辜仲諒) is not eligible to run Next Media or be the representative of signatories to buy the group.

Although Koo has only 7 percent of the shares of Chinatrust Financial Holding Co. (中國信託), the FSC ruled that his position as director of that company, and his father Jeffrey Koo Sr.'s (辜濂松) position as chairman, means he is prohibited by law from running Next Media.

FSC regulations stipulate that financial institutions cannot step into the operation of companies in other industries.

According to the report, another prominent Taiwan magazine, Wealth Magazine, reported that Tsai Eng-meng (Robert Tsai), the fanatically pro-China owner of the WantWant Group, is one of the backers of the purchased. Tsai denies this, but many media reports have put his name on this purchase. Wealth Magazine said that Tsai would put an end to Next Media's habit of investigative reporting. Koo has stated publicly that he would respect the magazine's editorial independence (take cynical comment as read). In response to the FSC's disapproval of Koo, Formosa Plastics, also allegedly part of the deal, is alleged to have raised its stake in the deal.

Some of you may be scratching your head over Koo. That's the same Koo who was on the lam from authorities. Hilarity will ensure when this Taipei Times report reminds you....

One of the financial scandals in which Koo was involved was Chinatrust Financial’s flawed bid for rival Mega Financial Holdings Co (兆豐金控) in 2006 — known as the Red Fire Case (紅火案), after the name of the offshore company used to conduct the illegal transaction. He had evaded an arrest warrant and hid in Japan for two years before returning to Taiwan in 2008. He was the vice chairman of Chinatrust Financial at the time.

Chen Hsiao-yi (陳曉宜), organizer of the alliance, said Koo Jr was not fit to run a media business because he had been sentenced to nine years in jail by the Taipei District Court in 2010 for the illegal takeover bid for Mega Financial in violation of the Securities Exchange Act (證券交易法) and the Banking Act (銀行法).

So...the FSC thinks that a guy with a 7% stake in a firm is in violation of the rules preventing finanicial firms running media operations, but that it is perfectly ok for this same fella who has been convicted of illegal financial transactions and has been sentenced to nine years (case is on appeal) in slammer to be running a charity foundation and be a director of a ChinaTrust Financial. Probably this has nothing to do with the fact that the Koos are a powerful pro-KMT family.

Interestingly enough, the Taipei Times article did not mention that the reason Koo returned to Taiwan in 2008 was to testify in the Chen Shui-bian case (last year Koo was one of the factors in the lawsuit from 26 civic groups about the Chen case). Yes, that's right -- you can get sentenced to nine years in jail and confess to involvement in bribing the President, and the FSC will still accept you as a director of a large charity concern and a trust company and object to your owning a media firm on the grounds that you are involved in running a trust company -- not because you are a convicted crook.
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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums! Delenda est, baby.

State Funds Mess...

Fund mess: KMT-DPP wrangling is ongoing...

The Presidential Office yesterday declined former Democratic Progressive Party (DPP) chairperson Tsai Ing-wen’s (蔡英文) call for the president to hold a national affairs conference to discuss problems related to the various pension programs, saying that pension issues are being taken care of by the executive and legislative branches.

The Council of Labor Affairs has been taking heat over the management of NT$ 2 trillion in funds. For example:

After news surfaced that the labor funds would go bankrupt within the next decade, additional information was revealed suggesting that the funds had suffered multimillion-dollar losses due to deliberate manipulation of stock prices by individual operators.

and from Tuesday's China Post:

Kuomintang (KMT) Legislator Lai Shyh-bao (賴士葆) said during an interpellation session that the operation of the four largest government funds are all consigned to six investment banks. Although the profit margin was set to be 8.436 percent, the actual profit margins from 2009 to 2010 ranged from minus 7.2 percent to 3.78 percent. The weighted stock index, however, was up by 6.89 percent.

....

In response, Chang said he will ask officials to investigate whether any of the six banks have conducted certain practices such as buying stocks of companies that apparently suffered from losses. Officials will also check the accounts of investors and their family members to look for any suspicious income. Officials will also look into whether investors were bidding against each other using government funds.

Former ING fund manager Hsieh Cing-liang (謝青良) has been under investigation for allegedly purchasing a large number of stocks in Ablerex Electronics Company (盈正豫順電子) in an attempt to push up the stock price, and later used the labor pension fund and labor insurance fund to purchase these stocks. Hsieh walked away with NT$14 million, while government funds accumulated losses of NT$144 million.

KMT Legislator Lo Shu-lei (羅淑蕾) said on Nov. 10 that the labor pension fund, the labor insurance fund and the public service pension fund lost NT$300 million in total through purchasing stocks of GIGA Solar Materials Corp. (禾碩電子材料) at NT$900 per share and selling these stocks at between NT$400 to NT$600 per share.

Turning over giant sums to financial firms who mismanaged them? Who could have suspected financial firms would do such a thing? That's never happened before! This mess triggered an investigation by the Financial Supervisory Commission (FSC) into the management of these funds, which in turned spurred our slothful legislature to spend a few minutes on the nation's business and look into the NT$2 trillion in other funds... yes, you guessed it, the oversight system for these funds is, well, spotty, and not managed the way it is in other countries. As the article points out, the four major funds, labor insurance, labor pension, employment insurance and national pension, cumulatively lost roughly NT$90 billion this year and if the claims are correct, their growth would have been better if they had simply been pegged to the TAIEX. The lights shining in dark corners are also prompting the city of Taipei to look into its own pension program. These funds need to be on a firm footing since the population is aging....
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Daily Links:

• The Archaeobotanist: the forgotten oil millet of Taiwan. Thanks, Kerim. 
• Imagine it: a mafiaoso involved in construction in Taiwan? [take standard cynical comment as read].
• Commentary on KMT grumbling about Ma's appointments.
• Taiwanese aborigines perform a musical about the importance of...land? family? modernization?...Michael Jackson.
• The awesome Julian Baum in the CS Monitor about China's leadership change.

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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums! Delenda est, baby.