October 27, 2006
Several keynote speeches made at the Taiwan Business Alliance Conference earlier this month underlined favorable prospects for the economy and investment opportunities in Taiwan.
The speakers were Edward King, co-head of the Asia-Pacific Mergers, Acquisitions and Restructuring Department at Morgan Stanley and the Hon. Warwick Smith, Executive Director of Macquarie Bank.
In his remarks, King said that a merger between a foreign and Taiwan bank represents a win-win situation: the foreign bank will be able to expand its scope in Asia, while the local banks benefit from an international management team and diversified products.
King mentioned Standard Chartered's recent purchase of the Hsinchu International Bank, noting that the acquisition has made the British bank the fourth largest in Asia while the Hsinchu International Bank is moving towards internationalization.
As a result, more foreign banks will seek to engage in M&A with Taiwanese banks, particularly Citigroup and HSBC, said King.
King further touted mergers and acquisitions as an effective way to increase a company's scale, raise productivity, and diversify products.
He cited as an example Cathay Pacific's purchase of Dragon Air -- the merger not only helped Cathay expand into the Beijing, Shanghai and Hong Kong markets -- it gave Cathay more flexibility in scheduling and arranging flights.
Several important considerations in conducting an M&A with another company include local culture, consumer habits, and the history of a company, according to King, who believes that these factors can ensure better success with a merger.
In his remarks, Warwick Smith offered an upbeat assessment of Taiwan's economy and investment prospects. He noted that Taiwan's foreign reserves were the world's third largest, and that in Q4 last year, exports soared, offsetting weaker demand in the domestic market.
Smith estimated that exports will continue to be strong for the remainder of the year, and that domestic demand would also rise. Macquarie Securities estimates that Taiwan's
GDP in '06 and '07 will surpass 4% -- all reasons for foreign investors to hold confidence in Taiwan's economy, Smith said.
Smith cited the Macquarie Group's purchase of Taiwan Broadband for
NTD 1.35 billion as an example, saying that Taiwan holds a number of technology and manufacturing companies with high entrance thresholds and important positions in the market, making them highly attractive to a foreign investment, he said.
Smith also noted that the government is offering competitive policies that make for a good investment environment, while Taiwan's nanotechnology and biotechnology sectors are quite attractive to investors.
(Central News Agency, China Post)
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