Gov't still studying steps to woo Chinese investment

Responding to criticism by Legislator Ting Shou-chung of the ruling Kuomintang that the government has been slow to draw Chinese investment, Economics Minister Shih Yen-shiang said the first phase of investment liberalization that began June 30, 2009 was experimental in nature.

“We are reviewing the results of our initial market-opening measures and will continue to open our door wider to prospective Chinese investors,” Shih said at a hearing of the legislature's Economics Committee.

But no definite timetable has been set for a second round of liberalization, Shih said.

Taiwan lifted a decades-old ban on Chinese investment last June, and the policy attracted NT$2.2 billion (US$68.75 million) in Chinese capital as of the end of February this year.

In the first stage, Taiwan opened one-third of its manufacturing industries well as selected service industries to Chinese investors, including textile and computer services.

Minister Shih said the MOEA's Industrial Development Bureau is studying which manufacturing sectors should be opened to Chinese investment in the second stage.

“We are also consulting relevant government agencies about further liberalization of Chinese investment in our service sector,” Shih told lawmakers.

Asked whether the second stage of liberalization would start in three months, Shih said it remains uncertain as public agencies are still assessing the issue.

“We'll have a clearer goal for a further market opening after a thorough review of the outcome of the first phase of liberalization,” Shih said.

In addition to encouraging Chinese investment, Shih said the ministry will also step up efforts to woo more China-based Taiwanese enterprises to return and invest in the home market.

The target for luring Taiwan firms' capital back from China is set at NT$38 billion (US$1.19 billion) for this year.

On lawmakers' complaints about imbalances in cross-strait investment in China's favor, Shih said that as most Taiwan companies still rely on the business model of exporting their capital abroad to develop the Chinese market, it was only natural that Taiwan's investment in China outstrips Chinese investment in Taiwan.

Meanwhile, China's top negotiator with Taiwan and President Chen Yunlin of Beijing-based Association for Relations Across the Taiwan Straits (ARATS), said Beijing will step up financial assistance to Taiwan's small and medium enterprises (SMEs) operating in China with the same treatment received by China's own SMEs.

Chen said that 11 companies from Taiwan have been able to raise capital from China's A-share stock market and more applications are still under review.

But getting adequate funds is a common problem faced by all SMEs and those from Taiwan are no exception, he pointed out.

Leading financial institutions in China offered more than 200 billion yuan in renminbi in terms of business loans to Taiwan SMEs every year in recent years.

Such lending operations will be expanded, Chen said in an interview in Beijing.

In addition, following the signing of a cross-strait memorandum of understanding (MOU) for cooperation on financial regulation and supervision, Beijing will support Taiwan's financial institutions to launch operations in China, including providing lending services to help more investors from Taiwan, he added.

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