President Ma Ying-jeou made the pledge of continuing to relax economic regulations to enable enterprises to expand international operations with sustainable development and growth.

He made the remarks in an address delivered to the annual conference of the Asia Taiwanese Chambers of Commerce, a trade union for Taiwan businesses based and operating around the Asia-Pacific region, yesterday.

"Open and relaxed economic policies are the key strategies in making Taiwan an operations hub for local enterprises based in China and all other parts of the world," the president said.

He explained that his policy of easy restrictions on economic interchange with China is never intended to encourage Taiwan enterprises to increase investments in China, but rather to give them a large space for greater success.

"The current framework of economic regulations, tax system and tax rates must all be eased to a level at which local companies can become more competitive internationally," Ma said.

Reaffirming his determination to stick to his liberalization policy, Ma said his administration will not intervene in the decisions made by local businesses concerning operating overseas or where to invest.

"When making sound and profitable investment decisions, you (business stakeholders) know better than us (the government)," he told the business and industry leaders at the meeting.

Ma indicated that the government's role in promoting economic development is mainly to improve the investment environment for companies to help them compete with their counterparts around the world.

To improve business conditions for Taiwan's companies based in China, the president said future negotiations with China will address new and improved direct cross-strait transportation services.

Following the launch of the weekend direct charter flights on July 4 and the opening of up to 3,000 inbound Chinese tourists per day on July 18, Ma indicated that those charter flights will be made more efficient by flying the shortest possible distance across the Taiwan Strait.

Agreements on direct cargo flights and marine transport links also need to be achieved soon, he said.

At present, nonstop cross-strait charters must still take a detour through Hong Kong airspace before heading to their final destinations.

The president said that after the flight routes and travel times are further shortened, Taiwan and the coastal Chinese provinces would together form a "one-day life circle," a community where people can get all things they need and do all things they want within 24 hours.

This will offer Taiwan's China-based companies more freedom to locate their operations in Taiwan, he said.

But weekend direct charter flights (Friday through Monday) would not be enough on their own to create such an environment, Ma said.

The deregulation of cross-strait investment constraints, which could encourage local overseas-based companies to allocate capital back to the island for reinvestments, are equally important.

Because of isolationist policies and restrictions, Taiwan's economy has suffered capital outflows of NT$4.5 trillion (US$148 billion) over the past eight years, he added.

The Cabinet decided July 17 to raise the ceiling on China-bound capital investment by Taiwan enterprises to 60 percent of their net worth from 40 percent.

There are no restrictions on foreign business groups or their subsidiaries established in Taiwan.

President Ma also rejected criticism that the deregulation would further encourage Taiwan's capital and enterprises to move offshore, saying the moves would make it easier for local businesses to freely manage their capital in making global investment decisions.

Ma urged business and industry leaders to work together with the government to help speed up the investment and business operations amid signs of global economic slowdown.

He expressed the confidence that his administration's policies will help enterprises continue expanding, so Taiwan's overall economy will soon "take off again" when the global economic conditions take a turn for the better.