President Ma Ying-jeou (馬英九) has given the go-ahead to further relax cross-strait economic policies, agreeing to loosen the 40 percent ceiling on China-bound investment or to scrap it altogether if a company keeps its headquarters in Taiwan.
Presidential Office Spokesman Wang Yu-chi (王郁琦) said the measure had been proposed by the Ministry of Economic Affairs (MOEA) in response to requests by the American Chamber of Commerce in Taipei and European Chamber of Commerce Taipei. The scheme, Wang said, was aimed at encouraging more Taiwanese businesspeople to invest in Taiwan.
Ma gave the nod to the proposal on Monday night after hearing a report by the ministry, Wang said.
Ma will further discuss the issue with the Cabinet, Chinese Nationalist Party (KMT) legislators and senior party officials today before the Executive Yuan approves the policy tomorrow during its weekly meeting, he added.
Wang dismissed speculation that the government had planned to implement the measure at the end of this month, saying that he had no information regarding such an eventuality and that everything would proceed in accordance to the schedule set by the Executive Yuan.
During his meeting with Jean-Marie Le Guen, vice president of the French National Assembly, at the Presidential Office yesterday afternoon, Ma said his goal was to build Taiwan into a trade hub in the Asia-Pacific region as well as an operation headquarters for Taiwanese and international businesspeople.
Ma told his guests that he took the opinion of European businesspeople seriously and had included some of their proposals in his election platform.
Through improvements in cross-strait relations and relaxation of cross-strait trade regulations, Ma said he hoped to see Taiwan and the EU form a strategic alliance to further develop business opportunities in the region.
Vice Minister of Economic Affairs Shih Yen-hsiang (施顏祥) held a separate press conference yesterday afternoon to elaborate on the proposal.
The Guidelines Governing the Review of Investment or Technical Cooperation in the Mainland Area (在大陸地區從事投資或技術合作審查原則), which were established in accordance with Article 35 of the Statute Governing the Relations Between the Peoples of the Taiwan Area and Mainland Area (台灣地區與大陸地區人民關係條例), specifies a three-tier system to regulate China-bound investment.
Businesses with paid-in capital of more than NT$80 million (US$2.6 million) and whose net worth totals no more than NT$5 billion can invest up to 40 percent of their net asset value in China.
The cap is 30 percent of net asset value for businesses with net assets ranging between NT$5 billion and NT$10 billion, and 20 percent for businesses with net assets above NT$10 billion.
Shih said the proposal drafted by the ministry suggested replacing the “ladder ceiling” of 40, 30 and 20 percent with a cap of 60 percent for all businesses.
The rule in the Statute for Foreign Exchange Regulations stipulating that individuals may not remit more than US$5 million to China in a year will remain unchanged, Shih said.
Small and medium enterprise with paid-in capital below NT$80 million can either choose to abide by the current cap of NT$80 million or the new ceiling, he said.
Shih sidestepped questions about whether the ministry had made an estimate of capital outflows to China resulting from the relaxation.
“Lifting the cap to 60 percent won’t have a great influence on capital outflows [to China] because investments many businesses make in China are still far below their granted quotas,” Shih said.
The ministry’s proposal also suggested exempting firms with operations headquarters in Taiwan and subsidiaries of multinationals from the 60 percent cap.
“We suggested not putting the limitation [on the types of businesses] in principle, but details will not be finalized until [Thursday’s] Cabinet meeting,” Shih said.
Shih said “there is no point in worrying” that the relaxations would lead to transfer of technologies and capital outflow as the government can still regulate the flow of investments to China.
“The removal of the cap will attract more multinational corporations to invest in Taiwan, help Taiwan become a stepping-stone for foreign businesses to enter the Chinese market and assist Taiwanese businesses in reaching out to the world,” he said.
Shih said the ministry would complete necessary revisions to the bylaws within one month.
When asked for comment, KMT Legislator Lai Shyh-bao (賴士葆), a member of the legislature’s Finance Committee, lauded the president’s decision, saying that “opening up Taiwan is more important than anything else.”
Lai said the relaxation would attract more foreign investors to Taiwan and make it easier for Taiwanese capital to flow across the Taiwan Strait.
ADDITIONAL REPORTING BY FLORA WANG
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