Banking industry in particular will gain most after ECFA is inked

TAIPEI: The service sector, particularly the banking industry, would be the biggest beneficiary of a proposed economic cooperation framework agreement (ECFA) between Taiwan and the mainland because of its ability to serve as a bridge to the mainland for overseas companies, an economist said Sunday.

Lin Chien-fu, an economics professor at National Taiwan University and a member of Taiwan leader Ma Ying-jeou's economic advisory council, said the memorandums of understanding (MOUs) on financial regulatory cooperation signed by the two sides late last year have given Taiwan's banks a ticket to the mainland's fast-growing market.

If the proposed ECFA is signed, it would be like upgrading the banking sector's ticket to a VIP pass, Lin said.

In assessing the overall impact of the trade pact, Lin noted that the Chung-Hua Institution for Economic Research (CIER) has estimated Taiwan would enjoy a net gain of 263,000 jobs if the ECFA is signed.

But because the pact will include an early harvest list of items given immediate tariff concessions and will be implemented gradually, Lin believes it might initially have less of an adverse impact on vulnerable sectors and mitigate job losses, pushing net job gains higher.

The agreement would also help attract an inflow of funds, as many overseas companies see Taiwan as an ideal springboard into the mainland market, according to Lin.

For instance, Japanese, US and European enterprises that have had trouble doing business on the mainland might seek the cooperation of companies on Taiwan and take advantage of their understanding and knowledge of the mainland to venture into its market, Lin said.

He insisted that the opportunity for Taiwan to act as a bridge between the mainland and those countries should not be underestimated.

Lin predicted Taiwan's economy would turn for the better because of the ECFA and achieve Taiwan leader Ma Ying-jeou's "6-3-3" campaign promise goals - an annual economic growth rate of 6 percent, a 3 percent unemployment rate and per capita GDP of $30,000 by 2016.

China Daily/CNA

(HK Edition 02/02/2010 page2)