Taiwan

Overview

Official name : Republic of China

Government : Representative democracy in the process of emerging from a one-party state

Head of State : President Tsai Ing-wen

Capital City : Taipei

Main towns : Taipei , Kaohsuing, Taichung , and Tainan

Land area : 36,000 sq. km

Population : 23.78m

Climate : Subtropical

Currency : New Taiwan dollar (ISO currency code: TWD)

Exchange rate : USD 1=TWD 29.40; (August 2020)

Measures : Metric system

Language : Mandarin, Taiwanese and Hakka

Time : 8 hours ahead of GMT

Regulatory Scheme

The regulatory authority of Taiwan is shared by three entities. First, the Bureau of Monetary Affairs, under the Ministry of Finance, is responsible for the regulation and supervision of the financial system. Second, Taiwan 's central bank, the Central Bank of China , that has the role of lender of last resort. Third, there is the Central Deposit Insurance Corporation, which provides insurance for depositors investing in its member banks, but which is also involved in the examination of both the Bureau of Monetary Affairs and the Central Bank of China , as well as of Taiwan 's credit co-operatives. Foreign companies must seek governmental approval to borrow from abroad and are barred from making local-currency bond issues. Local banks must immediately report all transactions involving the purchase of more than US$500,000 for individuals and US$1m for corporate customers. There are no limits on inward and outward remittances that are not converted into or out of New Taiwan dollars. However, the remittance ceiling for residents, for both inward and outward remittances converted into or out of New Taiwan dollars is US$5m per year, and US$50m for companies. Remittances above the limits require prior approval of the CBC. Non-resident foreigners can remit a total of NT$100,000 a year. Forex banks require two licenses operate in Taiwan , one is called DBU - for local residents and corporate, and another one is OBU - for foreign individuals and corporate entities. The derivatives markets in Taiwan are also strictly regulated. The market for non-deliverable forwards is closed to domestic institutions, and Taiwan citizens may not take part in foreign-exchange swaps. Foreign investors however, are allowed to conduct NDF trading through overseas branches of local banks or through foreign banks outside Taiwan .

Banking

The Taiwanese banking sector is fragmented and highly competitive. The biggest player in the Taiwan banking sector is the central bank, known as the Bank of Taiwan. The combined market share of the Bank of Taiwan and the next four largest players is only around a third of the market. The NPL ratio in the financial sector has been high in recent years reaching almost 20% in 2002, but ratios have been dropping steadily ever since.

Stock Exchange

The Taiwan Stock Exchange has high regulatory standards and transparency, however it is traditionally a volatile market. Total market capitalization of shares listed on the Taiwan Stock Exchange hovers around NT$10bn with a total trading value of around NT$22bn. Retail investors, make up over 80% of trading, however the futures markets remain small and immature.

Insurance

The Taiwanese insurance sector is developed, profitable and currently going through a period of consolidation. The Ministry of Finance is the sole body responsible for the regulation of insurance in Taiwan including license approval and subsequent supervision of approved entities. It is the third largest insurance market in Asia and it accounts for about 1% of world premiums. The Taiwanese insurance industry is dominated by life insurance. The domestic insurance market is comprised of close to 60 insurance companies with about 30 writing life insurance policies and 30 writing general policies. The top five insurance companies hold around 75% of the Taiwanese insurance market and the top three insurance companies combined premiums account for roughly 65% of Taiwan 's total premiums.