Putting stress on long-term macroeconomics rather than short-term stimulus, Premier Vincent Siew said it was "really necessary" to improve financial management -- calling this an essential mechanism to ensure Taiwan's economic health.

"We must maintain a healthy financial operation and management system in Taiwan, or we will run into risks," Siew said said at the close of the gathering of officials, business leaders and scholars. He did not elaborate. A spate of corporate woes and bad loan problems in recent months has hobbled some banks in Taiwan and forced others to adopt conservative policies, making them particularly cautious in their lending. Taiwan has been enduring a belated hit from Asia's economic crisis, having largely avoided impact when the region's stocks and currencies were first hit in the second half of 1997. With exports to Asia downdrastically, 1998 economic growth slowed to what for Taiwan was an anaemic 4.83 per cent -- the worst in 16 years and nearly two percentage points below the more characteristic 1997 rise of 6.77 per cent.

A number of companies have reported financial problems since August, many due to highly speculative stock and property investments that failed as the economy slowed and exports fell. Siew said banks must make funds available for firms, calling this "necessary to maintain normal business operations". Siew said the cabinet would revise Taiwan's tax regulations in ways that would facilitate bank mergers. Several smaller banks are reported to be at serious risk due to imprudent overlending to certain individuals or their failure to recover huge loans from some financially weak companies.