A weekly snapshot of Taiwan business news stories brought to you by CommonWealth and AmCham Taiwan’s TOPICS
Central Bank raises Taiwan’s GDP forecast
The Central Bank announced on June 17 that it would leave current key interest rates unchanged. Its discount rate would remain at the historic low of 1.125%, while the rate on accommodations with collateral would stay at 1.50% and accommodations without collateral would be kept at 3.375%. It also raised its GDP growth forecast for Taiwan to 5.08%. Central Bank Governor Yang Ching-long said that despite the impact of COVID-19 on domestic consumption, Taiwan’s economy remains stable, experiencing only moderate inflation.
The V-shaped recovery anticipated by the bank could occur in Q4 due to the local outbreak in Taiwan, said Governor Yang. Nonetheless, the bank took into account global economic recovery and the island’s strong exports and investments in increasing its GDP growth forecast. The pandemic remains the largest variable in Taiwan’s recovery.
In addition, climate-induced shortages of water and electricity continue to put strains on economic activity in Taiwan. Other external factors including uneven COVID recovery, monetary policy changes in major economies, global financial fragility, and the U.S.-China rivalry also add uncertainty regarding economic recovery in Taiwan.
Korean bank to set up first overseas branch in Taiwan
The Financial Supervisory Committee (FSC) on June 17 approved KEB Hana Bank’s application to set up a branch office in Taiwan, the first expansion of a South Korean bank into the Taiwan market. KEB Hana Bank will be given eight months to open its office before next year’s Lunar New Year holiday.
Taiwan is one of South Korea’s top-10 trading partners and maintains a close economic relationship with the country. According to FSC officials, KEB Hana Bank first reach out to the Taiwan authorities in 2019. It seeks to provide financial services in Taiwan with a focus on Korean corporate clients such as Samsung and LG, said the officials.
KEB Hana Bank will become the 30th foreign bank to establish a presence in Taiwan and the first Korean bank to do so. Founded in 1971, KEB Hana Bank has the largest overseas footprint of any other bank in South Korea, operating 195 branch offices globally.
Hon Hai acquires Malaysian tech company DNex
Taiwanese electronics manufacturing giant Hon Hai Precision announced on June 10 that it would acquire a 5.03% stake in Malaysian technology company Dagang Nexchange (DNex) for NT$780 million. The acquisition, which will be handled by Hon Hai’s Singapore subsidiary, Foxconn Singapore Pte Ltd, is expected to strengthen the company’s electronic vehicles manufacturing capabilities by expanding its 8-inch wafer production line.
In February, Hon Hai entered a bid for SilTerra Malaysia’s 8-inch wafer foundry. However, following an intervention by the Malaysian government, the foundry was awarded to a consortium including DNex and Prosperity Investment from Beijing. Hon Hai said it would not give up the opportunity to acquire wafer fabs in Southeast Asia and will continue to develop a working relationship with SilTerra.