In this week’s episode of Looking South on ICRT, Eric Gau speaks with Frank Shih, Chief Strategy Officer of CTBC, about the New Southbound Policy’s impact on the finance industry.
Transcript:
Eric: Good morning everyone! I’m Eric Gau, and welcome to another episode of “Looking South” here on ICRT. In today’s installment, we’re looking at the impact of the New Southbound Policy on Taiwan’s financial sector. Here to chat with us about that is Frank Shih, chief strategy officer at CTBC Bank. Mr. Shih, welcome to the program.
Frank: Morning Eric, very welcome.
Eric: Mr. Shih, the Tsai Administration—it has made improving trade and economic ties a very big part of the New Southbound Policy. What part does the financial industry play in that?
Frank: I believe that the bank will continue to do what we are most good at, this will include primarily providing funding and information to facilitate the bilateral trade and investment with South Asian countries. And preferably, through this, Taiwanese banks can have more presence in South Asia in order for us to be able to provide our service more effectively on-site.
Eric: So what measures have been put in place under the policy to promote the financial sector in Southeast Asian countries, and how have these affected CTBC specifically?
Frank: As far as I understand, I think there are primarily two directions that the government is helping. One is that the government is more proactively seeking to negotiate bilateral financial supervision MOUs with South Asian countries that can help to promote more various forms of participation from Taiwanese banks into this market. And secondly, the government has also made it a bit more flexible for financial holding companies with life insurance arms to allow their banking subsidiaries to use the capital and money from life insurance companies to strengthen the financial muscle to do more meaningful investments and acquisitions in Southeast Asian countries. I think these two definitely also helps CTBC. More specifically, to some extent, I think that the policy helps us smoothen the application process for our most recent investment in a bank in Thailand.
Eric: Do you have any other examples of how the policy has helped other Taiwan finance firms make inroads into the Southeast Asian markets?
Frank: I’ll take one of our peer banks for example. Cathay Bank, they make good use of this policy, and they also make good use of their life insurance fund to help them make investments into Mayapada Bank in Indonesia and also the RCBC bank in the Philippines. I think that this is a good example of how this policy helps Taiwanese banks to expedite investment inroads in Southeast Asia.
Eric: Now obviously CTBC and Cathay, like you just mentioned, you are very large companies. But how will these changes benefit smaller firms in improving their business or expanding their operations? Most Taiwanese companies are in the small or medium category.
Frank: As I understand from visiting some of these companies, smaller companies operating in South Asia, in general, cannot obtain sufficient banking support from local banks because of their size and some cultural language barriers, and because of their lack of good understanding about their business and background. So, I believe with more Taiwanese banks coming into this market, that will definitely help them obtain needed banking support in time to develop and expand their business.
Eric: So, the government’s already helping out in the financial sector. What suggestions do you have for the administration going forward? On how it can further benefit the finance industry.
Frank: I think other than this policy promotion, I believe, we would be very happy to see if the government can take more lead to invest in this country, in areas where Taiwan has more relative advantage; such as the infrastructure buildings, low cost power plants, and MRTs—in the areas where we are good at and also the areas that are very much needed by many of these Southeast Asian countries. I think not only can this project get more banks to lend, to get more project financing opportunities, it will also help Taiwan to export more of its local products and services. In addition, I believe that if we are really investing and creating good projects for this company, that will make a good impression with this government and its people. That will help create a more friendly and sentiment toward Taiwan businesses. Eventually, I think that will encourage more companies to go. That will also benefit us as banks because our natural customer-base will be growing.
Eric: Are there any areas that you feel may have been left out or are currently overlooked under the New Southbound Policy that perhaps deserve more government attention?
Frank: I think that this policy is now already very well-known. I think that it is about time that we talk less and act more with real money. So I think that it’s best for the policy to fully take effect.
Eric: So you’re saying that they’re doing plenty now, they’ve done enough spreading the word and now it’s time for people to step up and take advantage of what’s there.
Frank: Yeah, I think that the government has to really seriously consider using government investment funds to take the lead.
Eric: I see. We’ve been chatting today with Mr. Frank Shih, the CSO at CTBC Bank, Mr. Shih, and thank you so much for taking the time to speak with us today.
Frank: My pleasure, thank you Eric.
Eric: And that’s it for today’s episode of Looking South. For this and past episodes, visit the ICRT website podcast section or the “Looking South” Blog. I’m Eric Gau, and thank you all for tuning in!