Taiwan Will Introduce Feeder Funds For Offshore Investments

by Carla Johnson, Investors Offshore.com

16 July 2001

Taiwan has begun the process of introducing new regulations that will allow access to offshore funds through local feeder funds in the hope of encouraging Taiwan's fledgling fund industry to expand upon its current estimated size of US$39 billion. It is estimated that as many as three out of every four investors opt for a foreign fund.

According to reports from fundXchange, an independent service for online exchange and execution facility for offshore funds, under the new rules Securities Investment Trust Enterprise (Site) companies would be permitted to set up local funds in Taiwan as feeders into offshore funds domiciled overseas.

At present the Central Bank of Taiwan is powerless to prevent capital outflows from the country but the reforms will fully engage the Bank in the process due to the legal requirement that Site funds will have to secure feeder fund approval from the Central Bank as well as the Taiwan Securities and Futures Commission (SFC)'

'Whichever way this matter plays out,' states fundXchange, 'one thing is certain: the banks' monopoly in the offshore funds arena is being broken. The competition that follows, as fierce as it may be, could also prove to be the catalyst for the growth of the fund industry in Taiwan.'

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