     The ceiling for foreign investment in Taiwan stock market will be 
raised to US$10 billion starting tomorrow, the Central Bank of China 
(CBC) announced yesterday.
     "The move signifies our commitment to promote financial liberali-
zation and internationalization," CBC Deputy Governor Yu Cheng told a 
news conference.  The move is expected to attract more foreign funds to 
the Taiwan bourse.
     The ceiling for total investment by foreign financial institutions, 
which gained permission to invest directly in the Taiwan bourse in early 
1991, will be raised to US$7.5 billion from US$5 billion, Yu said.
     The central bank also set a ceiling of US$2.5 billion on overseas 
fundraising by Taiwanese securities investment trust firms.  Previously, 
the firms had not faced a formal ceiling.
     Yu said the reform would allow foreign funds to account for about 
six percent of the total stock market capitalization, roughly in line with 
curbs imposed by South Korea on its market and near the proportion of 
Japanese stocks held by foreigners.
     The central bank, concerned that fund inflows could destabilize finan-
cial markets and hurt exporters by pushing up the value of the Taiwan dol-
lar, had resisted heavy political pressure to raise the investment ceiling 
for several months.
     The Securities and Exchange Commission, which wants to make Taiwan a 
regional financial center as the island prepares to join the General 
Agreement on Tariffs and Trade (Gatt), had pressed for a ceiling as high 
as US$20 billion.
     "We welcome foreign funds for long-term investment, but not those for 
short-term profit-taking," said CBC Deputy Governor Yu.
     He said capital inflows might push the annual M2 money supply growth 
up to an estimated 16.7 percent.  "The central bank is prepared to prevent 
this by absorbing liquidity in the money market to keep growth in a range 
of 10 to 15 percent," he added.
     Foreign financial institutions have so far received approval to bring 
US$4.71 billion into Taiwan, and have actually remitted US$3.36 billion.  
Domestic investment trust firms have been approved to remit US$1.53 billion 
and have brought in US$1.1 billion.  "There is still ample room for foreign 
capital to flow into the local bourse," Yu said.
     Presently, foreign funds account for about two percent of Taiwan's 
total stock market capitalization.  Securities and Exchange Commission 
Chairman Tai Li-ning said the ratio should be raised to 10 percent if Tai-
wan wanted its stock index to be incorporated into the widely known Stanley 
international stock index.
     Local fund managers and securities analysts said the reform was ex-
pected to trigger a new wave of foreign interest in the Taiwan stock mar-
ket, which soared 80 percent in the final quarter of last year although it 
has fallen back since mid-February amid heavy profit-taking.
     Some other analysts pointed out, however, that selling pressure re-
mained likely to cut short any nearterm rally sparked by the central 
bank's announcement.  The market's weighted index closed at 5,671.46 yes-
terday, and brokers expect the index to surge to 6,000 in the coming week.
     With economic growth officially forecast at 6.2 percent this year and 
corporate earnings per share expected to rise by around 20 percent, some 
analysts said the index could hit 7,000 points by year's end.
     The central bank's announcement sent the New Taiwan dollar advancing 
10.8 cents to close at an eight-month high of 26.32 to the US dollar from 
26.428 on Friday.
     Foreign exchange dealers said the New Taiwan dollar could remain un-
der upward pressure next week unless the central bank intervened in the 
market.
     Premier Lien Chan, stepping up efforts to deter election fraud, called 
yesterday for revised polling procedures and a thorough investigation of 
the bribery that marred Monday's internal elections of 21 local parlia-
ments.
     Lein ordered the Interior Ministry to study the possibility of narrow-
ing the time between the elections of councilors and the internal voting 
for speakers and vice speakers.
     Having the polling for both take place on the same day, which would 
require election law revisions, might deny candidates the time they need to 
manipulate the speaker and vice speaker races, Lien said.
     The current procedures, which schedule the internal elections of 
speakers and vice speakers about a month after the councilor polls, con-
tribute to the election fraud, Lien maintained.
     The Interior Ministry may have to propose further revisions to the 
Election and Recall Law, even though one set of revisions has already been 
submitted to the Legislative Yuan.
     Lien gave his instructions during a Cabinet meeting following a con-
demnation Wednesday by ruling Kuomintang leaders of the corrupt speaker and 
vice speaker races.
     During yesterday's meeting, Minister Without Portfolio Huang Shih-
cheng proposed a radical cut in the terms of elected officials to one year, 
giving them little time to profit, through their elected positions, from 
their campaign investments.
     Inside the Legislature, lawmakers have also stepped up efforts to de-
ter election fraud.  Many lawmakers have proposed to revise the Election 
and Recall Law in a move to prevent vote-buyers from taking office.
     Ruling Kuomintang lawmaker Huang Chu-wen yesterday asserted that 
political parties should also be punished if their members were convicted 
of election fraud.
     He said a party may be disbanded if its members are frequently involv-
ed in polling irregularities.
     The alleged vote-buying and violence in Monday's speaker and vice 
speaker elections have embarrassed the ruling party because virtually all 
of the contests were between rival KMT factions, not between the KMT and 
opposition parties.
     Shocked by the allegations, KMT leaders on Wednesday berated the party 
apparatus for either turning a blind eye to the fraud or even helping KMT 
candidates buy votes.
     But it remained doubtful yesterday whether the government and the rul-
ing party can succeed in curbing election fraud at the grassroots level.
     Regional KMT factions have been a major force and source of votes for 
the ruling party in national elections.
     KMT Secretary General Hsu Shui-teh, admitting that the factions are 
beyond the control of the party, yesterday rebuked the criticisms that the 
party apparatus had abetted the irregularities.
     In a meeting of ranking KMT officials to evaluate the elections, Hsu 
said the criticisms were unfair and a blow to the party faithful who worked 
hard to win the elections.
     Hsu, pinning the blame on what he said was a deterioration of social 
values, said winning in the elections is the first priority.
     He said the criticisms were apparently from people who had never ac-
tually participated in campaigns and thus had never known the difficult-
ies.
     Although there have been numerous allegations about vote-buying sur-
rounding Monday's elections, judicial officials said it is difficult to 
obtain evidence.
     Justice Minister Ma Ying-jeou, saying a total of 32 cases of vote-
buying in Monday's elections are currently being investigated, urged wit-
nesses to come forward.