Mr. Daniel I. Wu (吳一揆), Chairman of the Asian Bankers Association;
Dr. Jih-Chu Lee (李紀珠), Chairperson of the Bankers Association of the Republic of China;
Honored guests;
Friends from the media:
Ladies and gentlemen,
Good morning!
It's really an honor, and a pleasure, to be here today for the opening ceremonies of the 32nd Asian Bankers Association (ABA) General Meeting and Conference on behalf of the government and people of the Republic of China.
The ABA is an important forum for banks throughout the Asia-Pacific Region to exchange ideas, and explore business opportunities. Since it was organized in Taipei in 1981, the ABA has been dedicated to providing members with business opportunities, and the latest business intelligence about banking in the Asia-Pacific Region. It has thus made an outstanding contribution to regional economic and financial cooperation and development. One such contribution is the conference that the ABA sponsors each year, which provides an excellent channel for dialogue between the public and government agencies about important financial issues. The ABA's occasional publications are also a valuable reference for the financial sector, and people implementing government policies in countries throughout the region.
This is the fifth time the ABA has convened its General Meeting and Conference in Taiwan. And under the theme of this year's conference, "Asian Bankers: Growing Beyond Borders," plenary sessions will be held to explore topics like: "Regional Integration: Implications for Asian Banks," "Managing a Multi-Cultural and Multi-Generational Customer Base," and "Going Digital: Pursuing Global Opportunities Through Technology." And I trust that those discussions will be full of fresh insights for bankers from all of the countries represented here today. So I want to extend my sincere thanks to the ABA for organizing this event, and our hosts--CTBC, the China Trust Commercial Bank, and the Bankers Association of the Republic of China.
In our globalized world today, highly interconnected global markets can foster efficiency and growth. But they also carry significant risks.
Those risks were apparent when I first became president back in 2008, and Taiwan was feeling the impact of the global financial tsunami. That crisis was a serious challenge to our economy overall, and our economic performance.
To respond to the tsunami, we quickly adopted crisis management measures known as our "Three Supports Policy." That policy called for: first, the government to support banks; second, the banks in turn to support enterprises by providing financing; and third, enterprises to support employees by keeping them on the payroll. That program included the Central Bank reducing interest rates 7 times. The government also fully guaranteed all bank deposits, so depositors would always be able to withdraw funds. At that time, we were the first country in all of Asia to do that. So there was no fear of a run on banks, and banks were able to maintain adequate capital adequacy ratios and liquidity. So in Taiwan, not a single bank went under as a result of the global financial tsunami, and the domestic financial situation stabilized. At the same time, to stimulate consumption and revitalize the domestic economy, the government distributed US$2.7 billion worth of consumer shopping vouchers to every one of the country. Taken together, all of these policies allowed Taiwan to weather the global financial crisis. So although in 2009 our economic growth rate was a negative 1.57%, in the following year, 2010, economic growth reached a 24-year high of 10.63%. That was an extraordinary economic turnaround.
Turning to this year, 2015, growth has certainly been lower than expected, and the IMF has indicated that global economic growth this year will be the weakest since 2009. So we just may be facing what the IMF warned us about in October of last year—the beginning of a new era in economics: The New Mediocre. So avoiding an extended period of slow growth—and any resulting economic crisis—is a serious challenge for policy makers in every country. And that makes international cooperation the key to future economic growth and development.
So over the past few years, Taiwan saw the impact of the global financial crisis slow economic growth in 2008 and 2009. But thanks to an effective response by the government, it recovered quickly. As a result, Taiwan's growth rate last year was 3.77%, the highest in the last three years. That was also the first time in 16 years that our growth rate was the highest among Asia's Four Little Dragons. In the first quarter of this year, our growth rate was 3.37%, also the highest among the Four Little Dragons. But since the second quarter began, growth has slowed, and Taiwan's Directorate-General of Budget, Accounting and Statistics projected an annual growth rate of 1.56% only. The government reacted quickly, and in July we proposed countermeasures to strengthen the economy and ensure that Taiwan's economy will keep moving in a positive direction.
So as we have seen, the Taiwan economy has faced many challenges, some global in nature, and some purely domestic. But we can also see that Taiwan's economic fundamentals are good. For many years, the World Bank's "Doing Business Project" has ranked countries based on the "ease of doing business" there. When I first took office, Taiwan was ranked No. 61 in that category, but by last year we had climbed all the way up to No. 19. This year, we jumped another eight spots to No. 11, so over the last seven years we have moved up a total of 50 places. And in the IMD World Competitiveness Yearbook 2015, Taiwan also moved up two spots to No. 11, and was ranked No. 3 in the Asia-Pacific Region.
At the same time, profits in Taiwan's financial sector set a historic high last year, topping NT$500 billion. In fact, our financial sector set a lot of records last year: the non-performing loan (NPL) percentage at Taiwan's banks dropped to 0.25%; the NPL coverage ratio was over 500%; and the capital adequacy ratio was over 12%, which is higher than the international standard of 8%.
As Taiwan's Central Bank Governor Fai-Nan Perng (彭淮南) often reminds us, Taiwan is a small, open economy, and our economic growth is driven by external demand. As Governor Perng has said, Taiwan's level of participation in the Global Value Chain (GVC) is 67%, which is much higher than other developed countries. That makes Taiwan an essential link in the global value supply chain.
The rise of Asia's emerging economies shows that in terms of economics, the global center of gravity has moved eastward. Taiwan's financial industry should thus take advantage of emerging business opportunities, and facilitate the deployment of Taiwan businesses and industries. After cultivating the domestic market, the most capable members of Taiwan's financial industry should look to expand their markets, and compete on the larger playing field of Asia. The government has thus made strengthening Taiwan's financial institutions and expanding their asset base to enhance competitiveness an important policy direction.
We are therefore continuing to liberalize financial laws and deregulate the industry. Taiwan's Financial Supervisory Commission (FSC) has also been visiting financial authorities in Southeast Asian countries to strengthen cooperative exchanges with their regulatory counterparts. This should create opportunities for the Taiwan financial industry to enter Southeast Asian markets.
The rise of the Internet and mobile communications has also spurred innovation in business and financial models. To take advantage of this new environment, Taiwan's Executive Yuan, our Cabinet, published a policy white paper on the "Intelligent Internet." Based on that white paper, the FSC then created e-business environments in four important areas: business flow; financial flow; logistics flow; and information flow. It also set out policies to enhance the competitiveness of Taiwan's financial industry in the Digital Age, including a "Bank 3.0" policy, and policies promoting internet services for securities and futures merchants, internet insurance applications, and a platform to handle financial services for small- and medium-sized enterprises.
As the landscape of the financial industry changes, and the industry's center of gravity shifts to the Asia-Pacific Region, Taiwan will continue to forge a sound legal framework, and strengthen the corporate governance, risk management, and liquidity of financial institutions, as well as enhancing regional economic and financial cooperation.
I firmly believe that through our collective efforts, we can create a brighter tomorrow for one and all. I also trust that you will all come away from this year's ABA gathering with valuable knowledge, and I hope you will also take with you fond memories of Taiwan.
Thank you very much!