Rules eased for credit guarantee fund under New Southbound Policy

Taipei, Rules on how the Small- and Medium-sized Enterprises Credit Guarantee Fund provides loan guarantee have been eased to make it easier for local investment overseas under the government’s New Southbound Policy, the Ministry of Economic Affairs (MOEA) said Monday.

Starting with immediate effect, local small- and medium-sized enterprises (SMEs) are eligible to apply for a guarantee from the SME Credit Guarantee Fund when they are planning to raise investment in their overseas subsidiaries in which they own a 20 percent stake, as long as the units are located in 18 countries targeted by the New Southbound Policy and the applicants present documents to show that the investment is critical to their operations.

Before the rules were revised, the threshold stood at 50 percent. The eased rules mean local smaller investors can more easily obtain funds for their investment in the 18 countries under the New Southbound Policy.

The New Southbound Policy is aimed at forging closer economic ties with the 10 nations of the Association of Southeast Asian Nations (ASEAN) bloc along with India, Pakistan, Bangladesh, Nepal, Sri Lanka, Bhutan, Australia and New Zealand.

The policy, one of the ruling Democratic Progressive Party government’s priorities, is aimed at helping Taiwan to reduce its economic dependence on China.

The MOEA said local SMEs are allowed to obtain the fund guarantees when they make mergers and acquisitions. In the past, the fund only provided guarantees to SMEs that planned to make capital expenditure, such as investment in building production facilities.

However, some rules remain unchanged, the MOEA said. For example, an investment plan that tops NT$1.5 billion (US$50 million) still requires approval from the Investment Commission.

Tsai Hsien-hao, chairman of the fund, said that the fund will study the feasibility of further easing the rules to cover Taiwanese investors operating in China who plan to relocate their funds into the 18 countries under the New Southbound Policy.

Source: Overseas Community Affairs Council