Economics Ministry to Publicize Relaxations on Investments in China in July

The Ministry of Economic Affairs (MOEA) is scheduled to announce relaxation of the existing restrictions on investments by local enterprises in China in July, including the exclusion of the acquisition of Chinese enterprises from the calculation of their Chinese investment value, said Yiin Chii-min, economics minister yesterday (June 23).

Yiin noted that domestic enterprises with book value exceeding NT$20 billion now can invest only up to 27.5% of that value in China, reflecting the need to relax the existing restrictions. Presently, the Chinese investment ceilings for domestic enterprises are set in three tiers, 20% for book value under NT$5 billion, 30% for book value between NT$5-10 billion, and 40% for book value over NT$10 billion.

An official of the Ministry of Economic Affairs (MOEA) noted that the exclusion of acquisition of Chinese enterprises from the calculation of Chinese investments is in line with the ministry`s policy of relaxing the restrictions on Chinese investments. The decision will be applied to the recent acquisition of a Finnish mobile-phone case manufacturing company in China by Lite-On Technology.

The official revealed that the ministry is considering raising the three-tier investment ceilings by 10 percentage points, to 30%, 40%, or 50%, or to a uniform ceiling of 50%. The ministry, though, is unlikely to scrap the restrictions altogether, in order to prevent the hollowing out of domestic industries. In addition, Taiwanese enterprises have repatriated only 7% of their investments in China back to Taiwan up to now, according to the official.

In a related story, the Executive Yuan (the Cabinet) is scheduled to publicize first-round liberalization measures for cross-Taiwan Strait financial exchanges in a couple of weeks, including indirect Chinese investments in Taiwan, the mutual listing of ETF (exchange trade fund) between Taiwan and Hon Kong, the relaxation of investments by domestic and offshore mutual funds in Chinese stocks, indirect investments by domestic securities in China, and permission for Hong Kong-listed Taiwanese enterprises to issue TDR (Taiwan depository receipts) in Taiwan.

These liberalization measures were approved by a cross-ministry meeting convened by the Mainland Affairs Council yesterday (June 23) and are expected to be ratified in regular Cabinet meeting this or next week.

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Economics Ministry to Publicize Relaxations on Investments in China in July