US embassy cable - 05TAIPEI3316

UNCLAS SECTION 01 OF 03 TAIPEI 003316 
 
SIPDIS 
 
DEPT FOR EAP/TC, 
PLEASE PASS AIT/W 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON, TW, Finance 
SUBJECT: Taiwan Financial Services, Personnel Key 
 
 
1.   (U) SUMMARY: Taiwan's financial services sector is 
expanding quickly and experiencing high turnover.  Senior 
staff at a number of American banks and holding companies 
expressed general satisfaction with the quality of local 
staff, saying skills are improving as the sector grows. 
Bringing PRC national staff to Taiwan for events and 
training is still a difficult and time-consuming process. 
Companies also have problems hiring foreign interns, due to 
labor regulations.  AmCham and government agencies plan to 
hold a roundtable discussion on these issues soon.  AmCham 
hopes to resolve some of the simpler issues quickly after 
the meeting.  End summary. 
 
2. (SBU) Taiwan's financial services sector is young, and 
its pool of experienced workers is still developing. 
Beginning in 2000, when the government first permitted the 
formation of financial holding companies, financial services 
firms began to expand quickly.  Over the past several years, 
the sector has experienced extensive consolidation, and 
annual turnover rates as high as twenty percent in its 
staff.  In 2003, the financial services sector employed 
376,000 people.  Demand for qualified staff is predicted to 
outstrip supply for the next several years.  The Council for 
Economic Planning and Development (CEPD) has forecasted that 
the sector will experience shortages in professionals of 
2250 people in 2005, 1900 in 2006, and 1850 in 2007.  In 
interviews and communications with AIT, senior staff at 
Citibank, Bank of America, MetLife, American Express, and 
the American Chamber of Commerce (AmCham) in Taipei gave 
their perspectives on the quality of local staff, and 
expressed concerns about restrictions on bringing PRC 
national staff and interns to work in Taiwan. 
 
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Local Staff Get Mostly Rave Reviews 
----------------------------------- 
3. (SBU) Overall, contacts were satisfied with the quality 
of staff they have hired over the past few years.  Isabell 
Yen, vice president and country human resources director for 
Citibank, told AIT she has noticed an upgrading in skills 
and quality of experienced staff in the sector.  She 
ascribed it to the improvement of local financial holding 
companies, and said that while in the past it was difficult 
to find experienced foreign exchange traders, it is no 
longer a problem.  Ten years ago, there was a strong 
distinction between the quality of the staffs at local and 
foreign banks, so foreign banks would only recruit from each 
other.  Now, consolidation has created strong local players 
like Chinatrust and Fubon, so there is movement of staff 
among local and foreign banks.  Eric Ngiam, Managing 
Director and CEO of Bank of America, said, "The quality of 
local staff has improved significantly as compared to a few 
years ago. They are more hard working and language level has 
improved too."  Phee Boon Kang, senior vice president and 
area manager of American Express, was also positive about 
Taiwan's human resources.  He said, "Generally, Taiwan 
staffs are responsive to performance incentives and are a 
productive lot."  However, he noted that Taiwan finance 
professionals are also being drawn to the PRC job market. 
Kang said, "Recently, a trend has emerged with more and more 
competition for talent and experienced retail banking/cards 
managers coming from the PRC banks." 
 
4. (SBU) Not all respondents were entirely satisfied with 
the quality of workers.  Lee Tang, executive vice president 
and CFO of MetLife, said locally educated staff tend to be 
good learners, but are not as creative or innovative as 
staff educated in North America.  Tang also said MetLife 
wasn't getting the top graduates from elite Taiwan 
universities, as they tend to go to high-tech rather than 
financial services companies.  Tang told AIT that MetLife 
has recently experienced a shortage of qualified personnel, 
especially actuaries and financial engineers.  Additionally, 
AmCham publications director Don Shapiro reported that other 
contacts in the sector had expressed dissatisfaction with 
the caliber of staff they are hiring, especially in terms of 
"international perspective." 
 
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Bringing PRC Staff to Taiwan a Problem 
-------------------------------------- 
5. (U) The May 2005 AmCham White Paper, which focused on HR 
issues, highlighted the problems that many companies 
experience bringing staff from the PRC to Taiwan for 
training or events.  Financial services companies are no 
exception.  While restrictions on business travel of PRC 
nationals to Taiwan have been liberalized to some degree in 
recent years, they are still cumbersome.  Applications 
require extensive paperwork and long processing times, due 
to security background checks on applicants.  Currently, an 
applicant requires a local Taiwan guarantor, typically a 
staff member who has never met the applicant, but must visit 
the local police station to vouch for them.  Additionally, 
the regulations themselves are not always clear, because 
some government agencies are not up to date on the latest 
changes - causing confusion for both companies and 
government.  AmCham has argued that these problems in 
bringing in PRC staff may lead companies to hold conferences 
and other events outside Taiwan, and even to increase their 
operations in other countries rather than expand in Taiwan. 
 
6. (U) When AIT asked CEPD for a summary of the latest 
regulations, CEPD responded that companies wishing to bring 
staff with PRC passports to Taiwan must fall in one of the 
following categories:  a) multinational companies 
transferring a professional staff member to work in Taiwan, 
for less than three years.  b) Companies with either annual 
revenue over US$330,000 or R&D capabilities, to bring staff 
with industrial or technological skills to work for periods 
between two months and six years.  c) Companies with annual 
revenue over US$330,000 (US$166,000 for newly established 
companies) bringing staff to work as managers or technical 
personnel, or attend training or exhibitions.  For short- 
term work, the limit is 14 days; for long-term work 3 
months.  CEPD said that processing time is around one month 
for first-time applications, but for emergency situations as 
short as five days.  The Ministry of Economic Affairs (MOEA) 
reports that there are more than 1,000 applications approved 
per month.  According to the MOEA data, average monthly 
approval applications have been increased some 40 percent, 
growing from 1,118 in 2003, to 1,433 in 2004, to 1,593 in 
2005 (based on the first six-month data of 2005).  The 
significant rise is a result of Taiwan's continuous 
simplification of procedures.  While we can expect more 
Mainland China professionals to work in Taiwan as 
restrictions are lifted, the number is likely to remain only 
a small fraction of the number of Taiwanese business people 
residing in China.  A MOEA contact told AIT that in 
principle, MOEA tries to review all applications and approve 
or deny to applicants in 5-10 days if all required 
documentations are provided. 
 
7. (SBU) Isabell Yen of Citibank told AIT the visa process 
is one of the most important HR issues facing Citibank.  Yen 
said currently they have few PRC staff coming to Taiwan 
because entry permits are so difficult to get.  She said 
Citibank more frequently brings staff from Hong Kong and 
Macau, but that they also require a local guarantor, which 
is an unwanted responsibility for her staff.  Yen reported 
that in her experience, the typical processing time is 
several months, not one month but said Citibank had not had 
trouble bringing in other foreigners.  Yen explained that 
the PRC is due to open up its financial services sector in 
2007 and that colleagues in Taiwan are now discussing how to 
gear up for expansion into China.  She noted that Taiwan is 
best positioned to be the training ground for PRC national 
staff, so it would be in Taiwan's interest to open up 
further to short-term visits by PRC national staff. 
 
8. (SBU) MetLife's Tang said MetLife has many PRC-born staff 
with US green cards working in New York, and that is 
difficult to get them to Taiwan for events.  He said MetLife 
is more likely to hold regional meetings and conferences in 
Beijing than Taipei, because it is much easier to get 
participants to Beijing.  Kang of American Express noted 
that the lead times for bringing Indian nationals especially 
is generally more problematic for him than PRC nationals. 
When asked whether he had noticed any changes in policy or 
procedures, Kang said, "There are improvements in terms of 
official attitude and case-by-case flexibility, but I still 
do not see a systematic, pro-active policy to be competitive 
in attracting foreign talents." 
 
9. (SBU) AmCham's Shapiro said the main obstacle to change 
in Taiwan government is the Council of Labor Affairs, which 
fears an increase in competition from Mainland and foreign 
professionals.  Shapiro said the Council is stuck in an 
outdated manufacturing mentality, and still believes that 
bringing in one foreigner costs one local person a job -- 
they have yet to embrace the reality that bringing one 
foreigner into Taiwan may create two new jobs.  Shapiro said 
contacts at CEPD were mostly in agreement with AmCham's 
perspective but that AmCham has had limited discussions with 
the Council of Labor Affairs so far. 
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Would-be Interns Turned Away From Taipei 
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10. (SBU) A second problem that financial services companies 
face is the restriction against paying foreign interns. 
Currently, Taiwan labor law requires paid foreign interns to 
get work permits, and requires two years' relevant work 
experience to get a work permit.  Because many interns do 
not meet this requirement, companies have problems hiring 
interns, and students who are interested in working in 
Taiwan are often driven to work elsewhere in the region, 
especially the PRC.  In the long run, this regulation 
discourages professionals from getting Taiwan work 
experience and returning to Taiwan in the future.  American 
Express' Kang said that due to the work experience 
requirement, "it has been impossible for us to consider 
[internships] so long as the students concerned are not ROC 
ID holders . Even if no compensation is involved, it will 
still be risky from compliance perspective for an employer 
to accommodate such short term internships."  Kang noted 
that due to the regulations, his son, a Taipei American 
School graduate and Harvard student, was unable to find a 
legitimate internship while spending summers at home in 
Taipei - a common experience in expat families in Taiwan. 
 
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AmCham-Government Roundtable Could Make Progress 
--------------------------------------------- --- 
11. (SBU) The recent high profile of human resources 
problems has led to some movement to make changes.  AmCham 
is planning to hold a CEO roundtable discussion on HR issues 
in late August or early September, with participants from 
both AmCham members and government agencies including CEPD 
and the Council of Labor Affairs.  AmCham's Shapiro said 
their goal for the roundtable is to promote quick progress 
on some of the easier issues to solve, notably waiving the 
two-year work experience requirement for intern work 
permits, and making it easier for companies to offer paid 
internships.  Shapiro told AIT that once some of the easier 
problems were solved, larger-scale issues like PRC national 
staff could be tackled.  He said changes will have to come 
at the Executive Yuan level, and that help for problems on a 
case-by-case basis is not a long-term solution. 
 
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Comment 
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12. (U) Financial services is a growing part of the service 
sector, which the Taiwan government has recently emphasized 
as the future of its economy.  Many observers have suggested 
that Taiwan is well positioned to market itself as an entry 
point and training center for companies operating in the 
Asia-Pacific region, especially the PRC.  In order for this 
to happen, it will have to be easier for companies to bring 
their PRC staff to Taiwan for short-term visits.  The need 
for liberalization of immigration regulations has received 
much attention recently from both the business community and 
government agencies, especially CEPD.  It is possible that 
the upcoming AmCham - government roundtable meeting will 
yield some steps in the right direction.  Given the speed 
with which the PRC is moving and U.S. companies are 
expanding there, Taiwan will need to move quickly.  Given 
Taiwan's track record in recent years that will be a major 
challenge.  End comment. (Cable prepared by AIT Econ intern 
Anne Bilby.) 
 
PAAL