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TAIPEI - TAIWAN announced an economic stimulus package on Thursday worth US$5.6 billion (S$8 billion) less than four months since the president took office, as growth flags and the stock market struggles.
The package, worth NT$180 billion, would help the island achieve the government's target of 4.3 per cent economic growth this year and shore up the ailing stock market, officials said.
'The package aims to stimulate spending, boost investment and infrastructure, and stabilise financial markets,' said Mr Chen Tian-jy, the chairman of the Council for Economic Planning and Development.
But Taiwan's stock market tumbled just over three per cent on Thursday to a 33-month low, even though the package includes a provision of NT$30 billion to halve the stock transaction tax to 0.15 per cent for six months.
The stimulus measures also include other tax breaks, financial incentives for businesses and steps to boost investment and expand exports, according to a cabinet statement.
But the initiative would do little to help the stock market, which is down about 25 per cent this year, amid the global economic and financial downturn, said President Securities analyst Vickie Hsieh.
'The market continued to fall despite the government's latest move. This is really not good timing. Foreign investors kept reducing their holdings here to remit money back to their countries,' she said.
Under the package, NT$58.3 billion are to be spent on infrastructure projects, while NT$37.5 billion have been allotted to a five-year tax break on new investments.
The cabinet said NT$20.5 billion would be spent on financial incentives for small to medium-sized firms, and NT$13.5 billion on subsidies for low-income families.
The government is targeting second-half growth of 10 per cent in exports, which are key to Taiwan's economic health, and has allocated NT$1.5 billion dollars to boost shipments to new markets such as the Middle East, Brazil and Russia.
Taiwan's economy will likely grow by 4.3 per cent this year, sharply lower than 2007's 5.7 per cent due to the global economic downturn, Fitch Ratings said on Thursday.
The agency said the Taiwanese economy had become much more open in recent years and more exposed to economic conditions in China, where growth is also slowing. --AFP
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