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Cross-border loan pilot Taiwanese companies enjoy financing convenience

Time: 2015-11-30         Source: Economic Daily         Author: Wen Jicong

“Cross-border loan” is a pilot of cross-border RMB loan business in Kunshan and Taiwan (hereinafter referred to as “cross-border loan”). It was approved by the People’s Bank of China in July this year, which allows Taiwan-funded enterprises in the Kunshan Experimental Zone to operate from Taiwan. The banking institutions of the RMB business borrowed RMB funds.

“At present, Jiangsu Kunshan has become one of the most active Taiwanese investment companies in mainland China, one of the most intensive areas for Taiwan-funded enterprises and a cross-strait economic and cultural exchange. As of the end of September this year, Kunshan has approved 4,574 Taiwan-funded enterprises with a total investment of 559.5. US$100 million; Kunshan attracts about 1/4 of Jiangsu’s capital and about 1/9 of the country, respectively.” Chen Jun, head of the Kunshan Branch of the People’s Bank of China, said that the demand for Taiwanese enterprises in the Kunshan pilot area is strong, but Small and medium-sized Taiwan enterprises, “rootless” Taiwan enterprises, and listed companies on the market cannot fully utilize the Group's two-way borrowing policy to obtain cross-border low-cost RMB funds. Therefore, it is especially necessary to carry out “cross-border loans”.

In Chen Jun’s view, the pilot of “cross-border lending” business pilots can further play the role of demonstration and leading role in the financial innovation business of Kunshan Experimental Zone, meet the needs of Taiwanese-funded enterprises’ production and operation financing, and promote the fullness of Taiwanese enterprises in the region. The use of "two markets, two kinds of resources" to accelerate industrial development and economic transformation; on the other hand, it is also conducive to promoting the cross-border flow of RMB funds between Kunming and Taiwan, and injecting new vitality into deepening economic and trade exchanges between Kun and Taiwan. Since the launch of the pilot business, a total of 30 Taiwan-funded enterprises have signed cooperation agreements with local banks, with an intention amount of 370 million yuan. Up to now, the “cross-border loan” business pilot has registered a total of 80 million yuan for contract registration and 69.94 million yuan for withdrawal registration.

“In the past, Taiwanese enterprises could lend to local banks, and they could borrow foreign debts to borrow money from relevant overseas banks. 'Cross-border loans' broadened the financing channels for Taiwan-funded enterprises in Kunshan, and the financing costs were reduced, especially for many small and medium-sized enterprises. Taiwan enterprises." Chen Shiqin, financial manager of Taiwan Enterprise Association Technology Co., Ltd. said.

Through the pilot of “cross-border lending” business, many companies have obtained tangible benefits. Dingying Electronics (Kunshan) Co., Ltd. is a Taiwan-funded enterprise established by Taiwan-listed company Dingying Electronics Co., Ltd. with full authority. The enterprise is the first batch of enterprises to conduct the “cross-border loan” business pilot project in Kunshan Experimental Zone. The first loan from the Yushan Bank of Taiwan was RMB 6 million, and the interest rate was reduced by about 1% compared with the average domestic bank.

"Financing channels for front-end enterprises in the mainland, first, with the results of the operation and the Chinese or foreign banks in the mainland to obtain RMB or foreign currency financing, and second, with the difference between the total foreign investment and registered capital, to obtain foreign currency financing." Zhang Qin, deputy manager of Finance Department of Ying Electronics (Kunshan), for example, assumes that the company's total investment in Kunshan is 220 million US dollars, the registered capital is 80 million US dollars, and the middle gap is 140 million US dollars. The overseas parent company can obtain financing from overseas and then remit it. .

Zhang Qin said that its parent company is a listed company in Taiwan. If it borrows through the group, according to the relevant laws of Taiwan and the management regulations of listed companies, the situation of “funding loans” of related companies requires the approval of the board of directors and the general meeting of shareholders, and needs to be announced. The procedure is relatively cumbersome. Through the “cross-border loan” pilot, the company can directly lend to Taiwan-funded banks. From signing a contract to a loan for about a week or more, it can be solved in one day.

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