05 May 2019 Taiwan Legal Update: Credit insurance fee lowered & Taiwan Assurance Act of 2019”
Credit insurance fee lowered to meet the needs of SMEs
The Ministry of Economic Affairs has urged the CIIC Fund to pass Guarantee Fee Reduction at the most recent Standing Committee meeting. The annual fee rate will be reduced by 0.125 percentage points, that is, the minimum guaranteed handling fee rate will be reduced from 0.5% to 0.375%. It is hoped that this will ease the financial burden of SMEs who use the credit guarantee mechanism, swiftly responding to their financing demands to reduce the credit insurance fee rate.
In order to assist new and micro-sized SMEs to upgrade, transform, take over and successfully obtain the funds needed for operation from financial institutions, the Sino-Singapore Fund also launched the “SMEs 100 billion financing guarantee project”, this includes “microfinance expansion”. “Guarantee Measures” and “Batch Guarantee Extended Guarantee Measures” will be available until the end of 109, providing preferential financing for small and medium-sized enterprises with a paid-in capital of fewer than 30 million yuan and a profit-making business that only handles tax registration. And speed up the guarantee of the operation, with the principle of underwriting on the same day.
The “Minimum Loan Expansion Guarantee Measures” guarantees a maximum financing amount of 6 million yuan for a single business and provides a minimum of 80% guarantee. If the total credit amount is less than 500,000 yuan, the number of guarantees will be 9.5 per cent. The financial burden is guaranteed to be charged at 0.375%. In addition, speed up the review of application cases, based on the current day’s underwriting principle.
“Batch Guarantee Extended Guarantee Measures”, providing the same financial institution with maximum financing of 6 million yuan for a single business, raising the financial institution’s compensation limit rate by 3%, and ensuring that the annual fee rate is calculated at 0.25%. The award-winning financial institution is guaranteed to receive an annual fee rate of 0.15%, and financial institutions applying for subrogation will be compensated.
In order to assist more SMEs to obtain working capital, the SME Credit Guarantee Fund has fully utilized its guarantee function since it was changed to the Ministry of Economic Affairs in 1992. It assists SMEs with insufficient collateral or lack of collateral to obtain bank financing. Approximately 1.3 trillion yuan of financing, stabilizing about 1.35 million jobs. In order to give play to the credit guarantee mechanism to promote the economic growth of the country, the Ministry of Economic Affairs actively implemented the instructions of the Executive Yuan, requiring the CIIC Fund to reduce the handling fee and increase the number of guarantees, and fully support the SMEs to improve financing issues to assist the development of SMEs.
The U.S House of Representatives unanimously passes the “Taiwan Assurance Act of 2019”
On Tuesday 7th May, the U.S House of Representatives unanimously passed the “Taiwan Assurance Act of 2019”, reaffirming its commitment to Taiwan and the implementation of the TRA. The Taiwan Assurance Act was passed with zero objections and 17 abstentions. Congress has emphasised Taiwan’s “key” role in the “Free and open Indo-Pacific Strategy” and also their commitment to strengthening Taiwan’s military capability. Additionally, Taiwan’s Minister without Portfolio told Liberty Times that the passage of Taiwan Assurance Act might “help lay the groundwork for a free-trade agreement (FTA) between Taiwan and the U.S”.
This act will advocate for Taiwan’s participation in international bodies. It is hoped that inclusion in international organisations will bolster efforts to improve global health, civilian air safety, responses to transnational crime and most notably, Taiwan’s security and its democracy. The aforementioned international bodies are the UN, the World Health Assembly, the International Civil Aviation Organization, UNESCO and Interpol.
If this legislation passes, it will require the US Secretary of State to review its current guidance regarding Taiwan and reissue any potential changes to the executive branch within 180 days of enactment. In order to foster this relationship, mutual visits between US and Taiwanese officials are encouraged, in accordance with the 2018 Travel Act.
The TRA and Six Assurances remain cornerstones of US relations with Taiwan. According to the Ministry of Foreign Affairs, the House of Representatives 273 and the H.R 2002 reaffirm U.S commitments to Taiwan and to the implementation of the Taiwan Relations Act.
As a response, China’s Foreign Ministry described the bill as a ‘gross interference” in China’s internal affairs. China has further urged the US to consider the “severe damages” to “peace and stability’ across the Taiwan Strait. The on-going trade talks could potentially impact this process; thus, it remains unclear when the Taiwan Assurance Act of 2019 might pass through the Senate.
Nonetheless, Xavier Chang, spokesman for the Taiwanese Presidential office has thanked the House for its support and states that Taiwan is committed to maintaining the “status quo” of regional peace and stability.
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