OFFICIAL PROPOSES PRIVATIZATION OF TAIWAN TOBACCO & LIQUOR CO

The only way for the state-run (TTL) to maintain stable operational growth and achieve sustainable development is to privatize the company, Vice Minister of Finance Liu Teng-cheng said Tuesday.

Liu made the remarks at a ceremony marking a change over of new and outgoing TTC chairmen and general managers. He mentioned that the company has found it increasingly harder to survive since Taiwan opened its doors to foreign breweries and tobacco companies in 2002.

Prior to 2002, the Taiwan Tobacco and Wine Monopoly Bureau, as it was called then, had a monopoly on the production and and sale of liquor and tobacco products in the country.

In those days, the operations of the bureau were very profitable, and its profits, when taxed, accounted for a large percentage of the country's tax revenue.

The monopoly system was abolished after Taiwan gained entry to the World Trade Organization (WTO) in 2002, an international body devoted to eliminating trade barriers between individual economic entities around the world.

On July 1, 2002, the name of the bureau was changed to the Taiwan Tobacco and Liquor Corp. Since then, it has being a challenge for the enterprise to generate profits.

Nevertheless, Liu pointed out, the company still managed to achieve an Earnings Per Share of more than $2NT on average in 2006 and 2007, and a return on assets of nearly 8 per cent -- higher than that of the two leading Taiwanese beverage manufacturers, Uni-President Enterprises Corp. and Wei-Chuan Foods Corp.

However, as it is bound by the laws regulating state-run enterprises' personnel structure, accounting and procurement, TTL cannot be managed in a more feasible and flexible way, Liu said. This has pushed the company into a bottleneck, making it difficult to improve its operations, he added.

But TTL Workers Union Chairman Tsai Teng-shun said the union is opposed to the privatization proposal, and he asked why the government would want to sell a money-making company to a private consortium.

"Can a private company pay as much taxes as the TTL does?" he asked.

(CNA)