TAIPEI, Taiwan (AP) _ Taiwan will cautiously move ahead with plans to deregulate its financial sector following the turmoil in Southeast Asian economies, a Finance Ministry official said Tuesday.

Sean Chen, director of the ministry's Bureau of Monetary Affairs, said the crises in Thailand, Malaysia and Indonesia were precipitated by lax banking regulation and prematurely throwing open financial markets to outside investors.

``Financial liberalization should be preceded by, at least, prudent banking supervision and solid economic fundamentals,'' Chen told a conference.

The region's troubles have prompted renewed caution in Taiwan. Central Bank Governor Perng Fai-nan has hinted that plans to eliminate all restrictions on capital movements in and out of Taiwan by 2000 may be postponed.

Chen said Taiwan ``supports open and free markets, but we don't support premature opening of financial markets.''

Armed with more than $80 billion in foreign currency holdings, Taiwan has emerged largely unscathed from the regional crisis that began with the depreciation of Thailand's currency last July.

Although the Taiwan dollar has fallen 14 percent against the U.S. dollar since last fall, the stock market has climbed back to pre-crisis levels, and inflation and unemployment remain low.

Despite the regional turbulence, Taiwan has followed through on its commitment to open the economy further. It agreed with the United States last month to permit foreign companies to operate the full range of financial services on the island after its entry into the World Trade Organization.

No timetable has been given for entry, but Taiwan is reportedly close to clinching agreements with the European Union and Switzerland, its last two negotiating partners.

In recent years, Taiwan has gradually allowed foreign investment in the stock market, deregulated interest rates and foreign exchange rates, and let in new categories of foreign financial institutions.