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Upbeat Outlook for Taiwan's Economy - 2002-07-29


An upbeat outlook for Taiwan's economy and a new computer system for one of Japan's leading banks.

UFJ Holdings, one of Japan's four largest banks, has chosen electronics giant Hitachi to develop and operate a key computer system for its commercial banking arm.

Hitachi will purchase a stake in UFJ, transforming the project into a joint venture.

Masato Nakamura, managing director at UFJ Bank, told reporters that both companies will contribute strengths to the alliance. He also says the goal of the pact is to cut costs and keep pace with new technology.

Japan's banking industry has become increasingly concerned about computer system stability. The nation's largest banking group, Mizuho Holdings, experienced computer problems in April, with millions of transactions going awry.

In South Korea, regulators have launched an investigation of the country's six biggest conglomerates. The Fair Trade Commission is examining internal financial transactions within each group. In the past, the conglomerates, also knows as chaebol, would prop up failing divisions with funds from their from successful units.

The government is pressing them to reduce such transactions, which it says inhibit the growth of the country's free-market economy and deter global investors.

But some South Korean investors are said to be concerned that news of the government probe could dampen stock market enthusiasm. Korea's share markets, like others in Asia, have already taken a beating in the wake of recent accounting scandals in the United States.

Taiwanese Prime Minister Yu Shyi-kun says his nation's economy is set for a recovery after suffering its deepest recession ever.

In an interview with Reuters news agency, Mr. Yu, the island's number-two official after President Chen Shui-bian, said that growth for 2002 will exceed the government's 2.5 percent forecast. Last year it contracted one-point-nine percent.

He also pledged to tackle problems in Taiwan's overcrowded banking sector, including a growing portfolio of bad debts.

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