Taipei, Feb. 26 (CNA) The Executive Yuan on Saturday said it has drafted measures to stabilize critical material supplies and product prices amid escalating geopolitical tensions after Russia launched a full-scale invasion of Ukraine.
In a statement, the Cabinet said President Tsai Ing-wen (蔡英文) has instructed the executive branch to carefully assess economic variables resulting from Russia’s attack on Ukraine and ensure effective responsive measures are in place, so Taiwan can maintain raw material supplies, price stability and a stable financial market.
Following Tsai’s instructions, the Executive Yuan noted that Premier Su Tseng-chang (蘇貞昌) has assigned Vice Premier Shen Jong-chin (沈榮津) to discuss potential economic uncertainty with related agencies under the Cabinet amid the knock-on effects of Russia’s invasion of Ukraine.
Shen instructed the Ministry of Economic Affairs, the Council of Agriculture and the Financial Supervisory Commission to conduct inventories of critical raw materials, energy, stockpiles of industrial materials as well as domestic financial markets. The Executive Yuan said the government will also further diversify oil providers to avoid supply disruptions.
Fuels
In addition, at a time of a skyrocketing crude oil prices, the Executive Yuan said it will continue a mechanism to mitigate any increase in domestic oil prices and ensure consumer price stability.
According to the Cabinet, CPC Corp., Taiwan, the state-own oil supplier, already has a diversified list of crude purchases and a 145 day stockpile of crude oil.
Moreover, although the CPC will stop purchases of liquefied natural gas (LNG) from Russia after an agreement expires in March, the state-run company has other suppliers so LNG supplies will continue, the Executive Yuan said.
Related: Natural gas supply to Taiwan secure despite Russia-Ukraine crisis (Feb. 14)
Food
The government has also decided to place orders to buy soybeans, wheat and corn ahead of schedule and lower import tariffs and business tax to stabilize the local commodity market, according to the Executive Yuan.
Taiwanese importers did not buy soybeans and wheat from Russia and Ukraine last year, but the country has 1 million metric tons of soybeans and 540,000 metric tons of wheat stockpiled, which is enough for five months of consumption on the local market, the Executive Yuan added.
Taiwan did not buy corn from Russia and bought only a small amount from Ukraine last year, while the country has 2.59 million metric tons of corn in stockpiles and has ordered an additional 2.26 million metric tons of corn so supplies will be sufficient over the next seven months, the Executive Yuan said.
Related: Taiwan to cut tariffs on gas, corn, soy beans, wheat, powdered milk (Feb. 6)
Industrial material
The Cabinet is also looking to stabilize industrial material supplies amid the on-going geopolitical crisis, saying Ukraine was not a major steel supplier to Taiwan, but the government promised to help China Steel Corp., the largest steel maker in the country, rein in price spikes if the war pushes up global steel prices.
As for the supply of palladium, a critical ingredient in semiconductor production, the Executive Yuan said Russia and Ukraine have never been major suppliers to Taiwan.
In addition, Taiwan still has stockpiles of neon and hexafluorobutadiene, which are used by semiconductor makers and come from diverse suppliers, the Executive Yuan said.
Forex, stock markets
The Ukraine crisis has prompted many foreign investors to move their funds into U.S. dollar denominated assets, which pushed up the greenback’s value, but the Taiwan dollar still remains relatively stable against other currencies such as the euro, the Executive Yuan added.
The central bank will continue to watch closely fund flows in the foreign exchange market and unveil policies to avoid volatility in the local currency if necessary, it said
Commenting on the local equity market, the Executive Yuan noted that the Taiex, the weighted index on the Taiwan Stock market, encountered headwinds on Thursday, plunging 2.55 percent in the wake of Russia’s full scale invasion of Ukraine. However, the index staged a rebound the following session, rising 0.33 percent.
Related: Financial firms’ exposure to Russia & Ukraine tops NT$217 billion (Feb. 25)
The commission that supervises the National Stabilization Fund is likely to convene a meeting to stabilize share prices as long as the geopolitical crisis adversely impacts the market, the Executive Yuan said.
The NT$500 billion (US$17.86 billion) stabilization fund was set up in 2000 by the government to serve as a buffer against unexpected external factors that might disrupt the local bourse.
The Executive Yuan emphasized Taiwan enjoys sound economic fundamentals, which are expected to lend support to the stock market, citing a forecast that the local economy will rise 4.42 percent in 2022, an upgrade from the previous estimate of 4.15 percent.
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