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Updated Tuesday, July 29, 2008 0:00 am TWN, CNA

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China investment policy change seen for August

TAIPEI, Taiwan -- Policies further opening Taiwan to investment from China, including allowing Chinese investors to put money in the local stock and property markets, could be in place by as early as late August, the country’s top economic planner said yesterday.

Government agencies have been working on the new initiatives, and those beneficial to Taiwan that do not require negotiations with Beijing will be submitted by late next month, said Council for Economic Planning and Development (CEPD) Chairman Chen Tain-jy.

“Measures unlikely to bring about serious risks would be implemented first in a piecemeal fashion,” he said.

The planned measures are mainly directed at permitting Chinese investment in Taiwan’s real estate and stock markets as well as in the manufacturing sector and services, such as banks, restaurants and shops, he said.

Among the measures, restrictions on overseas Taiwanese companies and foreign enterprises listing in Taiwan would be relaxed.

Foreign-based Taiwanese enterprises and companies in which Chinese investors have more than a 20 percent stake would also be able to raise funds in Taiwan to finance their investment projects in China.

Such moves would make Taiwan’s fund-raising markets more competitive, the CEPD contended.

These new measures follow proposals made by the Ministry of Economic Affairs in mid-July relaxing restrictions on China-bound investment from Taiwan.

Beginning Aug. 1, local companies will be able to invest up to 60 percent of their net worth in China — up from the current 40 percent — while large companies headquartered in Taiwan will be exempt from any investment caps.

The Kuomintang administration hopes these measures will help lure Taiwanese companies based overseas back home to raise capital or invest here, despite fierce opposition to the policies from the Taiwan-centric Democratic Progressive Party and Taiwan Solidarity Union.

The ruling KMT, which came to power on May 20 when Ma Ying-jeou was elected president, contends that an open and flexible investment environment will help convince Taiwanese businessmen who have expanded their interests abroad to invest at home or set up their headquarters here.

As a result of the existing investment restrictions, many Taiwanese companies based in China have been forced to list publicly in Hong Kong or China to raise capital.

Taiwan’s government imposes penalties on companies that violate the investment restrictions.

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