DPP and TSU block easing of investments

Legislator Lai Shyh-bao of the opposition Kuomintang (KMT) and 37 colleagues from the opposition “pan-blue alliance” of the KMT and the People First Party proposed a statute revision.

The lawmakers said the government’s current “active management, effective opening” policy regarding trade and investment across the Taiwan Strait runs counter to the principle of market forces and restricts the investment strategies of Taiwan businessmen.

Lai proposed that investments in China meeting the criteria set by the Ministry of Economic Affairs (MOEA) and defined as “general investment or cooperation projects” should be allowed to be implemented by investors without the requirement of prior approval from the government.

Taiwan enterprises that take such moves could report just their investment projects in China to the MOEA for reference and future checking after six months, he suggested.

Lai said the present limit on companies’ capital investment in China should be raised.

Local businesses that have paid-in capital of NT$80 million and a net worth of over NT$10 billion should have their investment cap for investment in China eased from the present 40 percent to 50 percent so that they may have greater resources for carrying out global business and investment strategies, he said.

But the proposal ran into stiff opposition from the ruling coalition once again. Legislator Chao Yung-ching of the ruling Democratic Progressive Party (DPP) and Legislator David Huang of the Taiwan Solidarity Union (TSU) opposed vehemently to any change of the existing rules, claiming that it would “hollow out” Taiwan’s economy.

With the views so diverse, Nonpartisan Solidarity Union Legislator Tsai Hao, who chaired the meeting, tried in vain to smooth out the differences. But due to the heated bickering, Tsai ruled to leave the matter for later discussion.

Responding to the latest blocking of easing the restrictive measures concerning Taiwan investments in China, Vice Chairman Liu Teh-shun of the policy-formulating MAC, said relaxing the rules and raising the capital investment ratio will not solve the problems faced by Taiwan.

Instead, he said, the government should consider and come up with a more effective management mechanism to ameliorate the negative impact on Taiwan.

Liu explained that the current limits on investments in China are designed to ensure that corporations “keep their business roots” in Taiwan and avoid over reliance on the market in China, which still holds hostile policies toward Taiwan.

He explained that Taiwan enterprises’ investments in China reached US$53.1 billion as of October, accounting for 52.8 percent of Taiwan’s overall investments abroad.

Unofficial figures show the real amount could be twice or thrice the official figure, Liu said.

The increasing investments in China already induced negative effects on Taiwan, including squeezing capital for domestic investment, exacerbating unemployment in Taiwan, increasing Taiwan’s reliance on the market in China, beefing up competitiveness of Chinese enterprises to win away the overseas markets of Taiwan companies, and widening the income gap on the island, he said.

The public opinion polls carried out by the MAC consistently show that more than 50 percent of people in Taiwan think the government should maintain tight restrictions on local investments in China, said Liu.

He said the controversial issue should not be solved by reckless relaxation of the investment restrictions because Taiwan’s economy will sustain even greater impact and forcing the island to rely more on the Chinese market.

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