AmCham sees 40 percent rule’s negative impact

In its Vol. 36 - No. 12 issue of its official publication Topics, AmCham expresses concern over the level of restrictions the government imposes on investments in China by Taiwan enterprises under the so-called “40 percent rule.”

The ceiling does have a substantial impact on the health of Taiwan’s capital markets, which has a major bearing on those in the financial sector, as well as on the overall vibrancy of the economy, affecting everyone doing business here.

The article explains that the rule sets an investment cap of 40 percent of the net worth up to NT$5 billion, 30 percent of the net worth from NT$5 billion to NT$10 billion, and 20 percent of the net worth exceeding NT$10 billion. Small and medium enterprises face an absolute ceiling of NT$80 million.

Considering the rapid economic growth occurring in China and the substantial business opportunities that it has created for Taiwanese investors, an increasing number of companies are bumping up against the investment ceiling.

That is not deterring their continued expansion on the mainland, however, since the globalized economy offers a variety of channels for carrying on business activity.

Instead, many companies have been spinning off divisions that concentrate on China operations and listing them on the Hong Kong stock exchange. Others are delisting in Taiwan altogether. “The main result is to sap the strength of Taiwan’s financial markets — thus undermining the government’s own avowed objective of building the island into a regional center for fund raising and asset management,” says the article.

It says the recent bid by the Carlyle Group to take over Advanced Semiconductor Engineering (ASE) has brought to light another dimension of the problem.

The AmCham expresses regret over conditions that day by day are draining Taiwan’s economic vigor.

Without naming any political party by name, AmCham once again urges that the narrow political agenda of minor parties not be allowed to block an important step to relax the rules investments across the Taiwan Strait so as to ensure Taiwan’s continued economic relevance.

Subscribe to The China Post and save 25%. Click here

SharePrintEmail

Write a Comment

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos Respond to this email