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Thursday July 17, 11:07 PMTaiwan raises ceiling on China-bound investment
Ministers said in a statement they will revise regulations to implement the new measure on August 1. The change means Taiwan companies can invest however much they want as long as they have government-approved "operations headquarters" on the island and annual revenue of at least 500 million Taiwan dollars (16.45 million US). They must also have annual expenses of at least 25 million Taiwan dollars, more than 50 employees and at least two overseas units. Official data show 577 companies, including food producer Uni-President Enterprises Corp., chip giant Taiwan Semiconductor Manufacturing Co. (TSMC) and bicycle maker Giant Manufacturing Co., qualify under the new measures. Units of foreign companies operating in Taiwan will also be free of restrictions. For other companies, the ceiling on investments in China will rise to 60 percent of their net worth. "The (previous) restrictions have hurt Taiwan's competitiveness" and easing them would allow multinational companies to team up with local companies in investing in China, economic minister Yiin Chii-min told reporters. Analysts hailed the move -- the latest in a string of measures adopted by the government to facilitate exchanges across the Taiwan Strait. "It may not bring quick benefits to the Taiwan economy which has been held back by the structural issues," Cheng Cheng-mount, chief economist of the Citigroup in Taipei, told AFP. "But it would no doubt be a plus to the domestic economy over a long term as more corporates, both Taiwanese businesses (who invest via a third country) in the mainland and multinational enterprises, could be drawn to Taiwan," he told AFP. Sebastian Barbe, Hong Kong-based senior economist with Calyon Credit Agricole CIB, said: "There will be more investments from Taiwan to China, but there will also be more foreign direct investments into Taiwan." Under current rules, local firms with net worth of less than five billion Taiwan dollars are allowed to invest up to 40 percent of that in China. Companies with net worth between five and ten billion Taiwan dollars can invest up to 30 percent, depending on their size. The move is part of President Ma Ying-jeou's plan to boost the island's flagging economy and is part of a promise to boost ties with its giant neighbour. Local companies with big operations in China rose on the news which, along with Wall Street's overnight gains, sent the Taipei shares up 3.9 percent at the close to 6974.51. Index heavyweight TSMC rose by the daily limit of 6.9 percent to 57.50 Taiwan dollars. Uni-President rose 2.6 percent to 40.20 Taiwan dollars and Giant Manufacturing Co. advanced 2.8 percent to 93. However, the proposal sparked criticism from the opposition Democratic Progressive Party, which warned it could trigger excessive capital flow from the island. Despite lingering hostility between China and Taiwan, local businesses have channelled about 150 billion US dollars into China since Taipei eased an investment ban in the early 1990s. China took some 41 percent of the island's total exports in the first 11 months of last year. - Dow Jones Newswires contributed to this story - |
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