Fund management company executives in Taipei say the authorities continue to restrict domestic investors from accessing international assets in a bid to support the New Taiwan dollar.

Because the Central Bank of China, TaiwanÆs central bank, and the Financial Services Bureau are not issuing instructions in writing, reports out of Taiwan remain unclear and sometimes contradictory. There is as yet little clarity on exactly what fund companies can and cannot do. Executives report being brought before the FSB or called on the telephone by regulators to be updated on a quickly changing set of rules regarding international investments.

Six fund executives and other sources were interviewed for this story and they made it clear they were afraid of being punished if they were quoted as being critical of the government, or said the regulators had ordered them not to talk about this subject.

Sources report yesterday the FSB verbally told some industry executives it was introducing four rules regarding onshore funds that invest overseas. First, new fund launches are to have a maximum size of NT$10 billion allowed to invest abroad. Existing funds that apply for an increase in size to invest overseas are limited to NT$8 billion more.

(There is, according to one source, a $34 billion quota on the industry for investments overseas, parcelled differently among funds but usually with a maximum of NT$30 billion per fund. Few are said to be at or near the quota, but Allianz Global Investors is said to be applying for an increase on its Dresdner Green Energy Fund, to go from NT$30 billion to NT$50 billion, while some real-estate investment trusts are seeking to raise internationally invested assets from NT$10 billion to NT$20 billion. Allianz officials declined to comment.)

Third, applications for new international funds or increases in existing ones must also pledge to invest a portion of new monies raised into domestic assets ôwhenever appropriateö. This may be less of an issue for, say, a global tech fund, as there are plenty of investment opportunities onshore, but difficult for global Reit funds, for example. Executives could not explain how this would impact their compliance with offering documents.

Fourth, applications must be followed by a schedule outlining how funds will exchange currency, so the central bank can predict currency flows.

The New Taiwan dollar continues to depreciate against Asian units as well as the dollar. The Central Bank of China has decided to support the currency via the onshore funds market, which the government can monitor and control, and has asked the FSB to take measures, say fund executives.

In the past two weeks, it has begun to delay approval for new international funds, say industry executives. Sources have no idea how long these restrictions may last; the slowdown could go on for months. So far it does not apply to offshore funds or their distributors, but if the currency continues to weaken, some executives speculate these could also come under regulatory scrutiny.