On June 30 the Ministry of Economic Affairs (MOEA) announced the first group of items open to investment from mainland China, including 64 items in the manufacturing industry, 117 in the service industry, and 11 in public construction, for a total of 192 items. The Ministry began accepting mainland Chinese investment applications that same day.

The 64 items in the manufacturing industry include automobiles and auto parts, telephones, and mobile phones, which are key items in the “Cross-strait Industrial Bridging Plan”; textiles, rubber products, and plastic products, which have complete industry chain; electronic parts and components, computers, and electronic products, which enjoy competitiveness in the international market; optical products; machinery; other manufacturing industries; and furniture manufacturing, in which Taiwan enjoys strong design and marketing capability. Other manufacturing items, such as TFT-LCDs and silicon wafers, are not yet opened to mainland investment.

Service items are being opened up mainly in accordance with Taiwan’s WTO commitments. The 117 items include wholesale and retail sales, which facilitate commercial activities and marketing channels; tourist hotels and restaurants, which are related to travel activities; marine shipping and civil air transportation, in line with cross-strait transportation agreements; waste-water treatment, recycling, and waste disposal, all related to environmental services; general Type II telecommunications businesses (with shareholding limited to 50%); and industries related to commercial activities, such as information, design, and conference services. The opening of financial services to mainland Chinese investment will be handled in accordance with the results of cross-strait financial MOU negotiations. Also not included in the first wave of investment opening are items involving academic and professional accreditation such as doctors, lawyers, accountants, architects, engineers, and technicians, and businesses involving a complex scope or having a sensitive nature, such as audiovisual services, education, social welfare, and Type I telecoms services.

In the field of public construction, mainland investors will be allowed to invest in the 11 items that are being opened to them through private participation in infrastructure investment; construction contracting, however, is excluded. The main items encompass three categories: civil airports and facilities, harbors and facilities, and major tourism and recreational facilities; mainland investment in the first two categories, however, must be less than 50% of total shareholding.

The MOEA has set up the “Regulations Governing Permission for People from the Mainland Area to Invest in Taiwan” to provide rules for mainland Chinese investment. Under the regulations, individuals, juristic persons, organizations, or other institutions of the Mainland area, or companies in third areas in which they have invested, either directly or indirectly, more than 30% of total shares or capitalization or they have control over, that wish to establish a branch, sole proprietorship, or partnership, or to hold shares or capital in a company or enterprise in the Taiwan area, must first obtain permission from the MOEA so as to facilitate follow-up administration. To prevent mainland investors from avoiding the restrictions through reinvestment, reinvestment by Taiwanese enterprises in which mainland Chinese investment accounts for more than one-third of the total shares or capital is also subject to this limitation. The Taiwan government may also prohibit or restrict investment from mainland Chinese enterprises that have military shareholders or that have a military purpose, that would be of a monopolistic nature, that would influence national security, or that would do harm to domestic economic development. The regulations also call for the establishment of an inspection mechanism, with a provision that mainland Chinese-invested enterprises with paid-in capital in excess of NT$80 million must submit annual financial reports, be inspected by the competent authority, and provide data that will give the government sufficient information about mainland Chinese investment in Taiwan.