MOEA to ease rules on incoming Chinese investments

Economic Affairs Minister Shih Yen-shiang, said it is time to review the opening on direct Chinese investments in Taiwan, which began four months ago, to readjust the supervision mechanism. An overall review will be carried out before the end of the year.

Shih acknowledged the limited capital inflow from China in the past four months, arising mainly from rather narrow opening and restrictions imposed on the inflow of Chinese capital.

But the government will maintain the liberalization policy and continue opening the doors to Chinese capital, he said. "We would welcome big-ticket Chinese investment in Taiwan."

Concerning Taiwan's outbound investments in China, Shih said he understands the concern raised by companies of thin film transistor-liquid crystal display (TFT-LCD) panels over the existing restrictions on their investment in China.

Companies here have felt the rising competitive pressure from South Korea's TFT-LCD panel suppliers.

Shih said his ministry will help air the opinions of the companies at coordination meetings with other government agencies. The MOEA will make sure that companies keep their competitive edge in technology.

On the possible impact from Taiwan's plan to sign an economic cooperation framework agreement (ECFA) with China, Shih said the MOEA will set up a fund of NT$3 billion to help Taiwanese industries that will be most adversely affected by the trade deal.

The fund will be used to upgrade their manufacturing capabilities or help them make the transition to other business lines.

On Taiwan's economic prospects for 2010, Shih painted a rosy picture on the improved expectations of benchmark companies and increasingly diversified export markets.

Shih anticipated that the domestic economy will grow four percent next year due to factors such as the rebounding of the global economy, expectations that leading manufacturers will expand their investments, and the continued improvement of cross-Taiwan Strait relations.

"The prospects are looking rosy," Shih said.

Citing forecasts made by international organizations, including the International Monetary Fund and Global Insight, Shih said the global economy is likely to expand by 2-3 percent in 2010, while Taiwan will post growth of 3 to 4 percent.

His optimism stems in part from statements at recent investors conferences by top executives that their businesses will improve in 2010.

Morris Chang, chairman of Taiwan Semiconductor Manufacturing Co., has pledged to shareholders that TSMC will increase capital expenditure next year.

Other factors underlying Shih's optimism included the fourth-phase expansion of the Central Taiwan Science Park, which will begin soon after it passed an environmental impact assessment, and a potential breakthrough in Guoguang Petrochemical's NT$400 billion investment project in the second quarter next year.

Meanwhile, Shih said the "New Zheng He Project" that the MOEA devised in 2008 to help diversify Taiwan's export markets around the world has begun to bear fruit.

"While efforts in the U.S. and European markets have begun to show positive returns, achievements have also been reported from the emerging BRIC markets including Brazil, India and China," he said.

The minister remained concerned, however, about the country's unemployment rate, which stayed above 6 percent in September with some 661,000 people out of work.

Shih said his ministry will work to facilitate further development of certain industries which can generate more job openings.

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