The Ministry of Economic Affairs has come up with a plan outlining 101 types of investment that would be permitted from Chinese businesses, including 11 types of infrastructure projects, 25 in the service industry and 65 in the manufacturing sector.
Although the Cabinet has passed a set of regulations governing Chinese investment, it has yet to pass the plan defining permissible types of investment. While waiting for the Cabinet to pass the proposal and draw up complementary regulations, the ministry has said it expects the new regulations to come into effect this month.
Of the proposed investment categories, major projects such as the opening of Taiwan’s airports and docks and related facilities as well as major facilities at scenic and recreational areas to Chinese investment have proved to be the most contestable.
At the same time, the pan-blue camp has been strongly pushing draft amendments to the Act for Promotion of Private Participation in Infrastructure Projects (促進民間參與公共建設法部分條文修正草案) in the legislature that would loosen restrictions on investment in build-operate-transfer (BOT) infrastructure projects to remove obstructions and pave the way for Chinese investment.
This move would squeeze out Taiwanese companies, compromise Taiwanese national security and dictate the direction of political developments — unwise given the fact that China is still an enemy that has refused to renounce the use of military force against Taiwan.
Since coming to power, President Ma Ying-jeou’s (馬英九) administration has opened Taiwan to China. Allowing Chinese nationals to invest in the stock market, real estate or BOT infrastructure projects would be a grave mistake.
Chinese tourists only bring minor profits and crowd out tourists with more spending power from the US, EU and Japan — thus costing more than they bring in — but it could still be argued that allowing more Chinese tourists is aimed at expanding Taiwan’s domestic tourist market. Allowing Chinese investment brings no benefit at all.
Even though Taiwan’s economy is in serious decline, the last thing we lack is capital. Foreign reserves exceed US$300 billion and there is a high level of private savings. Domestic capital is abundant and there is no need for the injection of foreign funds. If the government wants to breathe life into the economy, the primary goal should be improving the investment environment and instilling confidence in the public.
If we look closely at the proposed investment categories, it is easy to see that argument for opening to China is flawed and designed to sell out Taiwan. One of the proposed categories for Chinese investment is the manufacturing sector. However, based on China’s advantage in manufacturing because of its low wage levels, Chinese businesses would earn nothing by setting up factories here. It is obvious the real motive behind investment would be to enter financial and real estate markets and bid on BOT infrastructure projects.
Chinese investment is mostly motivated by politics and over the past few years, Beijing has engaged in overseas investment and takeovers not for business, but because of strategic demands. Once the government allows Chinese investors in, the stock market and real estate market will be controlled by China. A financial bubble will be created and the gap between the rich and poor will widen, planting the seeds of serious social division and conflict.
Apart from these issues, if China buys out leading companies in major industries — for example telecommunications, finance and science and technology — not only will the foundations for the development of China’s industries be strengthened, Taiwan’s industries will be milked dry.
As for BOT infrastructure, each such project represents large numbers of business and employment opportunities. The motivation for the government to issue public debt of several hundred billion New Taiwan dollars to expand infrastructure should be aimed at ensuring that domestic businesses have work during the current economic downturn, which would increase employment.
However, the government wants to allow Chinese to invest in BOT infrastructure projects, effectively giving away business and employment opportunities. Taiwanese businesses have no technical difficulties when it comes to public works such as development of mountainous areas, land reclamation, developing tunnels, building airports and the development of commercial ports, nor do they suffer from a lack of funds. So why would the government want to allow Chinese businesses to invest in such projects?
More importantly, airports and docks are crucial to national security and once Chinese investment is involved in BOT projects of this nature, China will have Taiwan by the throat. Also, given the current influx of Chinese tourists, once Chinese businesses start investing in facilities at scenic and recreational areas in Taiwan, it is only inevitable that Chinese travel agencies will control the entire market. Chinese tourists will come to Taiwan on Chinese airplanes and stay in Chinese-run hotels.
The Ma administration’s reliance on China is outright wrong and its policies aimed at attracting Chinese investment are absurd. If the government continues to refuse to realize their errors, Taiwanese contempt for Ma and his government will continue to grow.
TRANSLATED BY DREW CAMERON
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