Pilot reform program for currency settlement

It may still take time for a direct shipping route to open between Taiwan and Xiamen, but the financial sector is expected to take the lead in carrying out direct deals.

"The State Council has approved Xiamen to do so and we are now doing it," Xiamen Mayor Liu Keqing said during a recent meeting with a Taiwan delegation led by Lee Kun-yao, chairman of BenQ Group.

"The development plan for the Western Coast Economic Zone approved by the State Council in March is creating a number of positive conditions for Xiamen, including the establishment of a cross-Straits regional finance center and a pilot program for currency settlement between the mainland and Taiwan," Liu said.

"As a special economic zone, Xiamen has always been one of the pioneers in the country's reform and opening-up programs," Liu said.

Taiwan enterprises including BenQ are currently settling their transactions mainly through a third currency because there is no direct convertibility between the renminbi and the Taiwan dollar. The current process increases costs and risks due to fluctuating exchange rates.

The mayor said that once direct currency settlement with Taiwan begins, capital flows between Xiamen and Taiwan can avoid the roundabout.

To facilitate the breakthrough, Liu said Xiamen is now implementing a trial program by selecting qualified financial institutions from both Taiwan and Xiamen as settlement agencies.

Lee said BenQ is optimistic about the business environment in Xiamen, noting that there is a great potential for the company's development.

"Our operations in Xiamen are still expanding and we will continue to move forward," he said.

Lee said BenQ is in discussion with the Xiamen government for further cooperation under existing conditions.

"A new big investment is on the way," he said.

(China Daily 06/01/2011 page41)