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Moody’s Global
Credit Analysis Sovereign
September 2008

Table of Contents: Taiwan

Macro-economic Developments: 2
Political Developments 4
Government Finance and Debt 5
Taiwan’s government bond ratings and country ceiling are both Aa3 with a stable
External Vulnerability and Liquidity 6
outlook. The government’s ratings are supported by the island’s strong external
Rating History 8
Annual Statistics 9 payments position, the absence of foreign currency borrowing to finance budget
Moody’s Related Research 11 deficits, a moderately high income level, and a maturing democratic and
constitutional system. Cross-strait geopolitics constrain the country ceiling.

Institutional strengths and governance indicators are also well positioned among
Analyst Contacts: rating peers, in the Aa- and A-rating range.

Singapore 65.6398.8300 Taiwan's economic prosperity has been achieved under regional geopolitical
0 Aninda Mitra stability, with the US acting as a balancer of power. China remains opposed to
Vice President/Senior Analyst changes in Taiwan's de facto independence status and has threatened to militarily
enforce its claim of sovereignty. Despite this situation, cross-strait trade and
Thomas J. Byrne
Taiwan's investment in China have continued to expand, benefiting both sides.
Senior Vice President/Regional Credit Officer

London 44.20.7621.9068 The legacy of geopolitical constraints and the rise of mainland China’s
manufacturing potential, however, have been hollowing out Taiwan’s industrial
0 Pierre Cailleteau
Team Managing Director base and may have also slowed the opening up of its services sector to
internationalization and global competition. As a result, its investment and
economic growth rates have slowed relative to its global rated peers, as well as in
relation to regional competitors, such as Hong Kong, Singapore and South Korea.

Expansionary fiscal policies, political disagreements on fiscal reforms since the

beginning of this decade and the earthquake in 1999 have added to government
debt. Although the fiscal position has shown some cyclical improvement in the
past two years, Taiwan’s general government credit metrics remain weaker than
for most Aa- and A-rated countries. With both the administration and the
legislature now under the control of the Kuomintang party (KMT), an expected
improvement in fiscal policy implementation amidst supply-side reforms also
supports the stable outlook.

A reduction in cross-strait political tensions under the new KMT government could
bring economic pay-offs. However, these are not likely to be sufficient enough to
materially improve Taiwan's credit fundamentals in the near term.

This Credit Analysis provides an in-depth

discussion of credit rating(s) for Taiwan and
should be read in conjunction with Moody’s
most recent Credit Opinion and rating
information available on Moody's website.
Click here to link.
 Moody’s Global Sovereign
Credit Analysis

Taiwan

Macro-economic Developments:
Relatively stable performance
After growing at an average of 4.9% in the past three years on account of stronger cyclical conditions at home
and abroad, Taiwan’s real GDP growth is expected to slow to around 4.4% this year and the next.

In the next few quarters, softening global growth and inventory accumulation in Taiwan’s technology sector is
expected to weigh on its exports, as well as investment and industrial activity. Concurrently, the rise in
domestic interest rates and pass-through of higher fuel and electricity prices will inhibit domestic private
consumption, and squeeze the margins of domestic manufacturing companies. However, sizable increases in
public spending on infrastructure -- and potentially the changing dynamics of closer economic relations with
China -- should put a floor on Taiwan’s GDP growth rates in 2009.

The pick-up in domestic demand, typhoon-related food shortages and high global commodity prices led to an
increase in core and headline prices since mid-2007. However, as with many other countries, food and
commodity price pressures have since intensified. In particular, the pass-through of higher retail fuel prices
(12-16%) and hikes in electricity tariffs (13%) in May-June ’08, coupled with rising imported price pressures
pushed year/year inflation to 5.9% in July ’08.

If global commodity prices stabilize, headline consumer prices may recede to 4% by the end of 2008. While
this is moderate by regional and global standards, it will still have reached its highest level in more than a
decade.

Monetary policy, which balances inflation as well as growth objectives, will likely have a tightening bias to
anchor price expectations, by precluding excessive narrowing of the expected (one-year-ahead) real policy
rate. The intermediate policy target of maintaining broad money growth between 2% and 6% is also likely to
be adhered to near the lower end of the referenced range. Reliance on a stable-to-stronger Taiwanese Dollar
(NT$) to restrain import prices may, however, face its limits.

Taiwanese exporters face a slackening external environment and the Central Bank of the Republic of China
(CBROC, Taiwan’s central bank) will come under pressure to accommodate a more competitive foreign
exchange rate.

Institutional strengths lag those of regional peers

Taiwan’s economic structure and its long-term growth prospects face growing challenges. The manufacturing
base has hollowed out considerably, as firms in the tradable sector have by and large relocated operations to
China.

Unlike the smaller and more dynamic economy of Hong Kong, however, Taiwan has been unable to deftly
adapt to changes in circumstances by finding new areas of competitive advantage that could sustainably boost
productivity and employment. This disadvantage is particularly acute for Taiwan’s domestically-oriented
companies and small- and medium-sized enterprises (SMEs).

Alongside the risk of prolonged stagnation in total factor productivity, the long-term challenge of an aging
population could also structurally add to fiscal pressures.

Lower trend GDP growth, relative to Aa- and A-rated countries, has implied slower growth in per-capita
incomes. At US$18,000 in 2008, Taiwan’s per-capita income is near the median for Aa- and A-rated countries
but well short of the average per-capita incomes of Korea, Hong Kong, and Singapore. On a purchasing-
power-parity basis, however, Taiwan’s per-capita income is higher than Korea’s, but still well short of that of
Aaa- and Aa-rated advanced industrialized countries.

2 September 2008 „ Credit Analysis „ Moody’s Global Sovereign - Moody’s Investor’s Service: Annual Report on Taiwan
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Taiwan
Exhibit 1: Taiwan's institutional strengths are stagnating…

World Bank's Government Effectiveness Index World Bank's Regulatory Quality Index
105 105
Percentile Rankings Percentile Rankings
100 100

95 95

90 90

85 85

80 80

75 75

70 70
2002 2003 2004 2005 2006 2007 2002 2003 2004 2005 2006 2007

Hong Kong South Korea Singapore Taiwan Hong Kong South Korea Singapore Taiwan

Source: World Bank, Moody’s

Indicators of institutional strength also indicate a trend of stagnation (Exhibit 1). The percentile ranking of the
World Bank’s government effectiveness index for Taiwan deteriorated to 82% in 2007 from its peak of 88% in
2004. Concurrently, the percentile ranking of the World Bank’s regulatory quality index for Taiwan has also
stagnated at around 80%. These measures place Taiwan’s institutional strength above those of most other
Aa- and A-rated emerging economies, but a good bit lower than advanced industrialized economies.

Sustained economic opening with China and financial sector reforms

could re-invigorate Taiwan
More effective utilization of China’s long-term growth potential may result in enhanced specialization and higher
investment and productivity. However, this would require more than a piecemeal ‘opening of direct links,’ as
proposed by President Ma, and involve a sustained transformation of Taiwan’s relationship with China.

For instance, a free trade agreement -- under the aegis of their respective WTO memberships -- could form
the basis of an institutionalized, mutually preferential cross-strait trade regime. This could take place either
within a bilateral or a multilateral framework and involve ASEAN. At a minimum, this would serve to boost
productivity gains in the tradable sector, and encourage more investment and employment generation in
Taiwan’s moribund domestic non-tradable sector.

If financial sector reform initiatives are complemented with closer relations with the mainland, it could raise
productivity and result in faster services-sector growth. However, ongoing efforts to de-regulate the
overcrowded banking system, spur more competition as well as market discipline, and improve governance
are not going to be easy to implement in a sector that has fallen behind most regional competitors.

The importance of regulatory support is borne out by the ratings uplift that it provides to Moody’s-rated
domestic banks. The stand-alone Bank Financial Strength Rating (BFSR) for Taiwanese banks is a D+, which
approximates to only a Ba1 to Baa3 foreign currency bank deposit rating. However, a track record of
extensive regulatory support has enabled an up-lift of Taiwanese banks’ average foreign currency bank
deposit ratings to A2.

Medium-term efforts to turn Taiwan into a regional financial center or asset management hub would require
more sector-wide consolidation, better supervision and transparency, and market access to China and other
regional markets.

3 September 2008 „ Credit Analysis „ Moody’s Global Sovereign - Moody’s Investor’s Service: Annual Report on Taiwan
 Moody’s Global Sovereign
Credit Analysis

Taiwan

Political Developments
Following this year’s elections, both principal branches of government, the Legislative Yuan and Executive
Yuan, have come under the control of one party, the Kuomintang (KMT). President Ma’s pragmatic stance
toward enhancing Taiwan’s economic relations with China, amidst an unprecedented weakening of the main
opposition party, the Democratic People’s Party (DPP), has raised popular expectations about a better
economic future.

However, political relations with the mainland needs to become more institutionalized before prospects for
further improvements can be regarded as sustainable.

Ongoing economic opening with China may yield some short-term

benefits
The opening of Taiwan’s economy to the mainland may ease some of the downside cyclical risks posed by a
slowing global economy. In particular, Taiwan’s hospitality, construction and financial services sectors could
receive a boost from:

„ The establishment of direct air-links with the mainland, and gradual increases in the allowable daily travel
quota for visitors from the mainland to 10,000 visitors per day

„ The allowance of property holdings and investment rights for PRC residents in Taiwan, along with
concessions for establishing manufacturing businesses in Taiwan

„ An increase in the allowable limit of Taiwanese companies’ investments in mainland China companies
from the current 20% equity cap.

The potential benefits from these measures may help to improve the atmosphere of the cross-strait dialog.
However, they may not alone be sufficient enough to realize President Ma’s “6-3-3” medium-term vision -- of
6% average annual GDP growth, 3% unemployment, and US$30,000 of per-capita income.

But medium-term outcomes depend on China’s reaction

Much also depends on China’s (post-Olympics) behavior. An expansive gesture -- such as reduction in the
number of missiles pointed at Taiwan, or more accommodation towards Taiwan in international forums, such
as not opposing its WHO membership bid -- could form the basis for further reconciliation.

However, the geopolitical reality is that Taiwan continues to suffer from an ambiguous international status. As
a result, President Ma’s efforts to expand economic relations without jeopardizing the de facto sovereignty of
Taiwan has become critically dependent on: (1) the ability to carefully maintain his “three no’s” pledges… “no
to independence, no to re-unification, and no to armed conflict,” and (2) China’s receptivity to a near-term
expansion of economic relations, but without a concomitant alteration of the political status-quo.

The main difficulty in institutionalizing the recent thaw in Taiwan’s relations with the mainland stems from the
PRC’s claim of sovereignty over Taiwan, even though the communist government has never ruled the island,
and its unwillingness to relinquish the threat of war for enforcing its long-standing claim.

Nonetheless, the downside risks to China-Taiwan relations are contained; first, by the improved political
rhetoric of both sides and second, by their continuing adherence to the creatively ambiguous “1992
consensus.” This is underwritten by the US, and has long formed the bedrock of cross-strait relations, even
through the tense years of the Chen Shui-bian-led DPP administration.

4 September 2008 „ Credit Analysis „ Moody’s Global Sovereign - Moody’s Investor’s Service: Annual Report on Taiwan
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Government Finance and Debt

Taiwan’s government debt is higher than most Aa- and A-rated governments. However, features of its
structure are better than most of its peers, thereby supporting the Aa3 rating.

Fiscal position and debt dynamics have improved recently, but policy
pressures remain
Taiwan’s fiscal performance has improved noticeably in the past two years, with the budget deficit shrinking
from over 3% of GDP, on average, since the beginning of the decade to under 1% of GDP in 2006 and 2007.
This was on account of a cyclical upswing in the economy, improvements in tax collections, and more-than-
expected expenditure restraint. However, a renewed spending emphasis on infrastructure upgrades is
expected to widen the fiscal deficit back to 2% of GDP this year

The Taiwanese authorities expect the ongoing incremental increases in supply-side spending to be growth
oriented and still hope to achieve their long-term target of budget balance by 2011. Moreover, the impact of a
slight widening of the budget deficit this year will not be very great on Taiwan’s debt ratios. This is on account
of the small positive shift in the GDP deflator. In earlier years, the government’s debt-to-GDP ratio rose
because of larger fiscal imbalances amidst a mildly negative GDP deflator that had the effect of depressing
nominal GDP growth.

Relatively high debt is partly offset by a favorable structure

With government debt at 36% of GDP, down from a peak of 38% in 2005, Taiwan’s debt is broadly sustainable
at its current level, which is consistent with a year-on-year real GDP growth rate of 4-5%, and a fiscal deficit of
around 2%.

Nonetheless, the government’s credit profile benefits from the absence of any foreign currency borrowing.
Additionally, virtually all government debt is held by domestic banks and pension funds. Furthermore, the
short-term debt and maturing long-term obligations of the general government amount to only 3-4% of GDP.

These factors considerably mitigate foreign currency, liquidity and rollover risks associated with a debt position
that is nominally weaker than at many peers. In comparison, several eastern European countries and a few
Gulf Arab states that have lower debt-to-GDP ratios than Taiwan have a far larger proportion of foreign
currency debt exposure.

Modest contingent liabilities, but lack of fiscal transparency may

understate fiscal risks
Taiwan’s debt position faces modest fiscal risks from contingent liabilities. The Taiwanese banking system’s
asset quality and capital position has continued to improve following the recent credit card difficulties of 2005-
06. The NPL ratio declined to 1.6% (equivalent to 2% of GDP) by mid-2008, from 2% at the end of 2007.

As a result, potential contingent liabilities embedded within the banking sector are quite low. Meanwhile, the
government’s exposure to direct debt guarantees extends only to the Taiwan High Speed Railway Corporation
(THSRC) in the amount of NT$330 billion, or 2.5% of 2008 GDP.

Additional sources of contingent fiscal liabilities may arise from under-funding of medical insurance and
pension debt. Moreover, special schemes for investing in un-productive SMEs, and the resolution of un-
profitable banks may have also led to some off-budget activity. The quality of fiscal data is somewhat opaque
and fragmented, with central and general government finances, and budget operations reported in general,
special, and supplementary accounts.

5 September 2008 „ Credit Analysis „ Moody’s Global Sovereign - Moody’s Investor’s Service: Annual Report on Taiwan
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Credit Analysis

Taiwan
Peer comparison: Fiscal and debt positions are weaker than peers, but
structure is more favorable
Taiwan’s budget deficit is slightly wider than the median budget balance of Aa- and A-rated emerging market
economies, which Moody’s forecast at -0.4% of GDP this year and around -1% in 2009. Only a handful of
peers -- such as A2-rated Poland and Hungary, both of which are EU accession countries, and A3-rated
Malaysia -- are expected to run larger fiscal deficits than Taiwan in 2008.

Government debt-to-GDP and debt-to-revenue ratios of 36% and around 180%, respectively, are higher than
the A- and Aa-rated medians of 15% and 50% for 2008. The relatively high level of debt is reflected in an
interest-to-revenue ratio of 7%, much higher than at peer medians of only 2%. On the other hand, Taiwan has
zero foreign currency-denominated government debt, while the A- to Aa-rated peer median is 31%.

External Vulnerability and Liquidity

Taiwan’s strong balance of payments position and low external indebtedness are a lynchpin for its
government’s Aa3 rating. The island’s strong external creditor position also reduces risks to the private sector
from unforeseen external financial shocks, and ensures ample access to liquidity.

The structural current account surplus underpins Taiwan’s external

position…
The current account position -- which has averaged 6.5% of GDP from 2000-07 -- is in a structural surplus with
net interest income accounting for nearly 40% of this external surplus. Large and growing income credits in
the balance of payments are derived from the central bank’s large reserves as well as the growing stock of
outward foreign direct investment, most of which is in China.

The current account surplus is further supported by a competitive export base that is well diversified across a range of
electronics and IT products, and well integrated with existing global supply chains. Greater geographical diversity in
exports has also ensured reduced product dependence on US markets and given greater exposure to China and
other emerging Asian countries. These trends may have reduced cyclical volatility in Taiwan’s export base.

Taiwan’s large current account surplus has adequately offset the trend of outward portfolio investments in the
past few years. However, with onshore monetary tightening and rising prospects for domestic financial
reforms, such flows have reversed course and contributed to a sharp increase in foreign exchange reserves.
At US$290 billion in 3Q’08, these reserves are nearly three times as large as the total stock of outstanding
external debt, none of which is owed by the government (Exhibit 2).

Exhibit 2: Taiwan’s external solvency and liquidity are well positioned…

400
Total External Debt / Official FX Reserves %

350 Poland, A2
Chile, A2
300
Israel, A1
250
Czech, A1
200
U.A.E., Aa2
150 Korea, A2
Saudi Arabia, A1
100
Malaysia, A3
50 China, A1 Taiwan, Aa3
0
0 20 40 60 80 100 120 140 160

External Vulnerability Indicator %*

Source: Moody’s

6 September 2008 „ Credit Analysis „ Moody’s Global Sovereign - Moody’s Investor’s Service: Annual Report on Taiwan
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Large stock and prudent management of foreign currency reserves
offsets short-term financial risks…
The stock of short-term debt has risen in the past few years, reaching $83 billion at the end of 2007, up from
$73 billion two years a year ago. According to central bank authorities, most of the increase in contracted
short-term external debt is on account of the financing constraints faced by Taiwanese businesses operating in
China and which have led to more foreign currency lending by the offshore-banking units of Taiwanese banks.

But even with a higher stock of short-term debt, estimated by Moody’s to rise to $100 billion in 2008, Taiwan’s
external vulnerability indicator (EVI) -- which measures all residual external obligations maturing within one
year as a percentage of available foreign exchange reserves -- rises to only 32%, up from 29% two years ago
(Exhibit 2).

In light of Taiwan’s potentially precarious geopolitical position, and notwithstanding the incipient thaw in
relations with the mainland, we consider the strategy of maintaining large holdings of foreign exchange
reserves as prudent. To ensure domestic monetary stability, large balance of payments surpluses are usually
sterilized by the issuance of certificates of deposits and acceptance of re-deposits.

Peer comparison: External Debt and liquidity position compares

favorably to rated peers
Even after increases in its short-term debt, Taiwan’s EVI of 32% is easily a source of credit comfort and
compares well with a median peer EVI of 102%. Taiwan’s ample foreign exchange reserves also enhance its
net external creditor position. As a result, with an External-Debt/Reserve ratio of only 35%, Taiwan compares
favorably with a peer median of 227%. Similarly, its overall External-Debt/GDP ratio of 24% is far lower than
the peer median of 48%.

7 September 2008 „ Credit Analysis „ Moody’s Global Sovereign - Moody’s Investor’s Service: Annual Report on Taiwan
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Rating History

Taiwan
Foreign Currency Ceilings Government Bonds Outlook Date
Foreign Local
Bonds & Notes Bank Deposit Currency Currency

Long-term Short-term Long-term Short-term

Rating Assigned -- -- -- -- -- Aa3 -- December-98
Outlook Changed -- -- -- -- -- -- Stable March-97
Rating Assigned Aa3 -- Aa3 -- Aa3 -- -- March-94
Rating Assigned -- P-1 -- P-1 -- -- -- May-92

8 September 2008 „ Credit Analysis „ Moody’s Global Sovereign - Moody’s Investor’s Service: Annual Report on Taiwan
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Annual Statistics

2002 2003 2004 2005 2006 2007 2008F 2009F

Economic Structure and Performance
Nominal GDP (US$ Bil.) 297.7 305.6 331.1 356.1 365.5 387.1 419.4 475.2
Population (Mil.) 22.5 22.6 22.7 22.8 22.9 22.9 23.0 23.2
GDP per capita (US$) 13,231 13,523 14,617 15,618 15,959 16,903 18,234 20,528
GDP per capita (PPP basis, US$) 23,022 24,130 25,983 27,000 28,290 -- -- --
Nominal GDP (% change, local currency) 4.4 2.2 5.2 3.5 3.8 5.9 4.9 5.3
Real GDP (% change) 4.3 3.4 6.1 4.0 4.9 5.7 4.4 4.4
Inflation (CPI, % change Dec/Dec) 0.8 -0.1 1.6 2.3 0.7 1.8 3.9 3.1
Gross Investment/GDP 17.3 17.1 20.9 19.7 19.7 19.5 19.8 19.7
Gross Domestic Saving/GDP 25.9 26.6 26.5 24.2 26.5 27.6 26.0 24.7
Nominal Exports of G & S (% change, US$ basis) 6.6 11.3 21.1 8.8 10.0 11.0 9.0 11.0
Nominal Imports of G & S (% change, US$ basis) 2.8 13.2 32.2 8.6 13.0 14.0 11.4 12.0
Openness of the Economy [1] 95.0 102.0 117.2 118.1 122.0 119.4 121.4 119.5
Government Effectiveness 1.03 1.11 1.24 1.12 1.11 1.05 -- --

Government Finance
Gen. Gov. Revenue/GDP 17.4 17.6 17.8 18.5 18.1 19.6 19.2 18.6
Gen. Gov. Expenditures/GDP 20.8 21.0 20.2 20.2 18.9 19.9 21.0 20.5
Gen. Gov. Financial Balance/GDP -3.5 -3.4 -2.4 -1.7 -0.8 -0.3 -1.8 -1.9
Gen. Gov. Primary Balance/GDP -1.8 -1.9 -1.2 -0.4 0.5 1.0 -0.6 -0.6
Gen. Gov. Debt (US$Bil) 98.7 109.7 117.0 136.6 136.6 138.6 150.9 171.3
Gen. Gov. Debt/GDP 33.2 35.9 35.3 38.4 37.4 35.8 36.0 36.1
Gen. Gov. Debt/Gen. Gov. Revenue 191.0 204.3 198.4 207.7 206.4 183.0 187.6 193.5
Gen. Gov. Int. Pymt/Gen. Gov. Revenue 9.6 8.6 7.1 7.0 7.2 6.7 6.7 6.9
Gen. Gov. FC & FC-indexed Debt/Gen. Gov. Debt 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

External Payments and Debt

Nominal Exchange Rate (local currency per US$, Dec) 34.8 34.0 31.9 32.9 32.6 32.5 30.5 28.0
Real Eff. Exchange Rate (% change) [2] -2.1 -4.6 1.6 -1.9 0.1 -1.4 -- --
Current Account Balance (US$ Bil.) 25.63 29.26 18.49 16.05 24.66 31.70 26.11 24.09
Current Account Balance/GDP 8.6 9.6 5.6 4.5 6.7 8.2 6.2 5.1
External Debt (US$ Bil.) 45.0 63.1 80.9 86.7 85.8 94.5 102.5 111.5
Short Term External Debt/Total External Debt 75.7 75.8 76.0 85.0 86.5 88.1 88.3 87.4
External Debt/GDP 15.1 20.6 24.4 24.4 23.5 24.4 24.4 23.5
External Debt/CA Receipts [3] 26.5 33.3 35.7 35.4 31.1 30.8 31.1 31.1
Interest Paid on External Debt (US$ Bil) 0.99 1.20 2.99 4.67 5.01 4.54 4.31 5.24
Amortization Paid on External Debt (US$ Bil) 1.61 2.19 3.05 6.41 2.60 2.32 2.25 2.40
Net Foreign Direct Investment/GDP -1.2 -1.7 -1.6 -1.2 0.0 -1.0 0.0 0.6
Official Forex Reserves (US$ Mil.) 161.7 206.6 241.7 253.3 266.1 270.3 290.4 326.5
Net Foreign Assets of Domestic Banks (US$ Bil) 24.2 15.8 7.0 12.8 17.4 15.5 -- --

9 September 2008 „ Credit Analysis „ Moody’s Global Sovereign - Moody’s Investor’s Service: Annual Report on Taiwan
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2002 2003 2004 2005 2006 2007 2008F 2009F

Monetary, External Vulnerability and Liquidity
Indicators
M2 (% change Dec/Dec) 2.6 5.8 7.4 6.5 5.3 0.9 -- --
Short-Term Nominal Interest Rate (% Dec 31) 1.6 1.4 1.8 2.3 2.8 3.4 -- --
Domestic Credit (% change) -2.3 2.6 9.2 8.0 5.2 2.1 -- --
Domestic Credit/GDP 148.0 148.7 154.3 160.9 163.1 157.3 -- --
M2/Official Forex Reserves 3.6 3.1 3.0 2.9 3.0 3.0 -- --
Total External Debt/Official Forex Reserves 27.9 30.5 33.5 34.2 32.2 35.0 35.3 34.2
Debt Service Ratio [4] 1.5 1.8 2.7 4.5 2.8 2.2 2.0 2.1
External Vulnerability Indicator [5] 22.1 24.2 26.7 31.6 28.9 31.7 31.9 30.6
Liquidity Ratio [6] 19.3 29.3 39.6 38.8 28.2 25.7 -- --
Total Liab. Due BIS Banks/Total Assets Held In BIS 36.1 55.5 70.3 70.2 54.6 49.4 -- --
Banks
Notes:
[1] Sum of Exports and Imports of Goods and Services/GDP
[2] JP Morgan Real Effective Exchange Rate
[3] Current Account Receipts
[4] (Interest + Current-Year Repayment of Principal)/Current Account Receipts
[5] (Short-Term External Debt + Currently Maturing Long-Term External Debt + Nonresident Foreign Currency Deposits Over One Year)/Official
Foreign Exchange Reserves
[6] Liabilities to BIS Banks Falling Due Within One Year/Total Assets Held in BIS Banks

10 September 2008 „ Credit Analysis „ Moody’s Global Sovereign - Moody’s Investor’s Service: Annual Report on Taiwan
 Moody’s Global Sovereign
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Moody’s Related Research

Banking System Outlook

„ Taiwan, April 2008 (108239)
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maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist
between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in
MCO of more than 5%, is posted annually on Moody’s website at www.moodys.com under the heading “Shareholder Relations — Corporate Governance — Director
and Shareholder Affiliation Policy.”

11 September 2008 „ Credit Analysis „ Moody’s Global Sovereign - Moody’s Investor’s Service: Annual Report on Taiwan