Taiwan’s government announced on June 30th that 192 local business categories are now open to mainland Chinese capital – starting a new era of mutual investment across the Taiwan Strait.
The Ministry of Economic Affairs will begin accepting applications for inbound investment from mainland Chinese and complete application reviews within one month of receiving them, according to the United Daily News. Among the 192 sectors are 64 in manufacturing, excluding silicon wafer and TFT-LCD production, 117 in the service industry excluding legal services, accounting and construction engineering, and 11 in the infrastructure sector. Considered a trial period, the new policy will be reviewed in six months.
From the start, there are restrictions placed on inbound investment. Foreign ownership cannot be more than 50% and must be less than the biggest Taiwanese shareholder, and investments over US$50 million would need to be examined on a case-by-case basis.
After the announcement, the Mainland Affairs Council, the Interior Ministry and the Financial Supervision Commission (FSC) also unveiled several related procedures to make it possible for mainland investors to apply to establish companies, invest in infrastructure projects and purchase real estate in Taiwan.
The FSC on July 9th eased restrictions on the amount of capital that insurers can invest in a single real estate transaction. Previous regulations restricted this amount to 35 percent of equity owned by insurers. With the new regulations, the limit placed on a single property investment will be based on the insurer’s investment funds. The FSC announced that restrictions on remittances from Taiwan to the mainland are now relaxed to US$5 million per person per year, but the transaction must be made in US dollars, not in Chinese RMB.
Business leaders welcome these new steps, but the Liberty Times reported that the opposition Democratic Progressive Party (DPP) warned that once Chinese capital begins to take over some business sectors, there will be political fallout to follow. The party cited Hong Kong as an example and urged the government to reconsider the new policy.
President Ma Ying-jeou responded by saying, that there are a limited number of categories of business available in the first phase of opening Taiwan’s market to Chinese investment. The government will watch closely and review carefully as the situation progresses. As a rebuttal, Ma said his administration has not yet opened anything in the agricultural sector while the previous DPP government opened 800 – 900 items at one time. And, his government has not yet considered opening the market to Chinese labor, he stressed.
Lin Chien-fu, professor of economics at National Taiwan University, commented in the United Daily News that Taiwanese investment in China started in the 1990s but has gone in a one-way direction ever since. As of May 2009, Taiwanese investment in China totaled US$77.1 billion. Lin noted that the new policy will rectify the imbalanced outflow of the island’s capital and consolidate its capital market.
- The Press Division of the Taipei Economic and Cultural Office (TECO) in San Francisco represents the Government Information Office (GIO), Executive Yuan, Republic of China (Taiwan). GIO maintains nine Press Divisions in the United States, including the San Francisco office. The Press Divisions are in charge of promoting Taiwan's public relations and cultural exchanges. This blog is updated by the Press Division, TECO in San Francisco.
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