Pilot free trade zone in Shanghai to host 18 ROC companies
By Ted Chen , The China Post
January 10, 2014, 12:17 am TWN
TAIPEI, Taiwan -- The Shanghai Taiwan Affairs Office of the State Council, PRC (STAO, 海市台灣事務辦攻室) yesterday announced that 18 Taiwanese companies are poised to participate in the city's pilot free trade zone program.
According to STAO Director Lee Wen-hui (李文輝), 18 Taiwanese companies have completed the registration process to participate in the China (Shanghai) Pilot Free Trade Zone (上海自由貿易實驗區), pledging total investments of about US$4.7556 million. 13 of the companies are trading companies and 3 are consulting firms, while 2 are electronic parts manufacturers, said Lee.
Last year marked the beginning of sweeping structural reforms in China, and the reaching of an important milestone in cross-strait relations, said Lee. In illustrating Taiwan's growing ties with China, in particular the city of Shanghai, Lee stated that throughout 2013, over 500 enterprise projects from Taiwanese companies were approved, drawing US$2 billion in contractual agreements. Lee added that Shanghai's imports from Taiwan reached the US$30 billion benchmark, up 10 percent year-on-year. In addition, Lee mentioned that in recent years, over 9,500 enterprise projects from Taiwanese companies were approved to commence in Shanghai, accumulating US$30 billion in contracted agreements. Shanghai is also home to the headquarters and research centers of more than 50 Taiwanese companies, of which 6 out of 11 Taiwanese banks who have received the city's approval elected to establish branch offices in the city.
First Bank Set to Establish Branch in Shanghai FTZ
Meanwhile, First Bank (第一銀行) yesterday announced that it may become the first Taiwanese bank to establish a branch in the China (Shanghai) Free Trade Zone, in hopes of matching progress made in tapping into the vast mainland markets by Cathay United Bank (國泰世華銀行).
First Bank stated that once a branch office is established in the free trade zone, it will be able to initiate offshore interbank lending at lower interest rate costs than domestic Chinese banks operating outside the free trade zone. In addition, as banking branches approved to operate in the free trade zone are not limited to only servicing Taiwanese companies, potential banking revenues are much greater than simply establishing a conventional branch in Shanghai outside the zone, said First Bank.
Most notably, among the list of 30 advisory guidelines set by the People's Bank of China in regards to the free trade zone, the most pivotal change is the clauses relating to the lending of funds denominated in renminbi by financial institutions operating in the zone. According to First Bank, the change may greatly ease capital requirements imposed on Taiwanese banks operating in China, as they may now initiate interbank loans at much reduced interest rates from its own branches situated in Hong Kong.