Financial sector urges eased lending rules for long term care

2017/08/08 21:02:37 fontsize-small fontsize-default fontsize-big
Financial sector urges eased lending rules for long term care

Taipei, Aug. 8 (CNA) The local financial sector has expressed hope that the government will ease rules on lending in a bid to facilitate the local long term care business in an aging society, according to a white paper from the sector.

In the white paper, in which suggestions are made to the government for the development of the financial sector, the Taiwan Financial Services Roundtable (TFSR), which was founded by local financial associations and related organizations, said that the government should allow banks to extend more loans to the local long term care industry.

The TFSR said that the banking sector should be granted an exemption from the restrictions imposed by the Banking Act in their lending to the local property market if the money is to be used in the country's long term care business such as the construction of long term care villages for the elderly.

Article 72-2 of the Banking Act stipulates that the total amount of loans extended for residential construction and to the property business by commercial banks are not allowed to exceed 30 percent of the combination of the bank's deposits and bonds issued at the time the loans are extended.

In addition, the TFSR said that to encourage the public to buy long term care insurance policies, the government should consider allowing consumers to have a deduction of up to NT$24,000 (US$794) on their insurance expenses in their personal income tax each year.

The TFSR said that an exemption from the lending ceiling in the Banking Act's Article 72-2 should also apply to loans extended to urban renewal projects by commercial banks, a move that is expected to speed up the pace of urban renewal development, which the government is pushing for.

The financial group has also urged the government to hold discussions with financial firms on tax deductions for them on costs arising when they are engaged in financial technology research and development for future growth.

According to the white paper, the government should set a deadline for a levying of the 5 percent business tax for the financial sector, in a bid to strengthen the sector's operations and boost its profitability.

Since July 2014, the government has raised the business tax rate to 5 percent from 2 percent for the financial sector, which sparked an outcry among financial firms, which urged a cut in the tax to the previous 2 percent as soon as possible.

The TFSR said that the size of Taiwanese financial firms is small compared with their foreign counterparts, which has made the local financial sector less competitive in the global market.

Faced with rising operating difficulties, the sector's return on equity (ROE) and return on assets (ROA) fell to recent lows this year, indicating falling efficiency in the sector's ability to profit on their equity and assets, the TFSR said.

The ROA for 2017 stood at 0.67 percent, a low since 2012, and an ROE of 9.24 percent, a low since 2011, according to the TFSR.

(By Tsai Yi-chu and Frances Huang)

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