Taiwan, China should sign investment guarantee pact: SEF

SEF Deputy Secretary-General Ma Shao-chang made the appeal at a seminar on promoting cooperation between Taiwanese and Chinese small and medium-sized enterprises (SMEs), which took place in Taipei Sunday.

Noting that cross-strait investment is now a two-way flow since Taiwan has opened its doors to Chinese capital, Ma said the two sides should negotiate and sign an investment guarantee agreement soon to provide better protection for investors from both sides.

By providing a legal framework that clearly sets out investment norms and protections on each side, a cross-strait investment guarantee accord will be help to encourage greater bilateral investment flows, Ma said.

Such an agreement usually includes principles of equitable treatment and non-discrimination, compensation in the event of expropriation, free transfer of funds, and mechanisms for settling disputes between investors and the state.

In his keynote speech, Ma also mentioned barriers and bottlenecks faced by Taiwanese companies operating in China.

"One of the obstacles is the difficulty for Taiwanese companies to obtain working capital," said the official from the SEF -- a quasi-official intermediary body authorized to handle cross-strait negotiations in the absence of formal ties.

Small and medium-sized enterprises form the backbone of the Taiwan economy, accounting for 98 percent of all companies.

Taiwanese SMEs in China tend to be denied access to bank loans because Chinese banks have a hard time verifying their credit status, Ma said.

"We hope this problem can be resolved after a bilateral memorandum of understanding (MOU) on financial supervisory cooperation is signed," Ma said.

Another problem Taiwanese companies face is the myriad kinds of taxes levied on them by Chinese governments at various levels, Ma noted, adding that China should offer more tax incentives to Taiwan companies through cross-strait negotiations.

The seminar brought together officials and business executives from the two sides to discuss measures to promote cross-strait cooperation in SME development and joint marketing efforts.

Among the participants were Lai Shan-kuei, director of the Ministry of Economic Affairs' Small and Medium Enterprise Administration and He Zuoxien, director of the SME Bureau of China's Guangdong Province.

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