Restrictions Eased on Investment in Mainland China
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As part of its effort to carry through
with the principle of ¡§cultivating Taiwan and linking with the
world,¡¨ the Executive Yuan recently passed the ¡§Relaxation of the
Cap on Investment in Mainland China, and Simplification of Examination
Procedures¡¨ program proposed by the Ministry of Economic Affairs. As a
result, limits on investment in China by the Taiwan subsidiaries of
multinational enterprises were eliminated and the ratio of such
investment to net worth was boosted to 60% for companies in general,
effective August 1.
Under the relaxed rules, the ceiling on
investment in China by Taiwanese individuals has been increased to US$5
million per year (from the original NT$80 million). For small and medium
enterprises the ceiling is raised to NT$80 million or a uniform 60% of
net worth or consolidated net worth (up from the original 20%, 30%, or
40%). Enterprises that have obtained operations headquarters
certification from the Industrial Development Bureau, and the Taiwan
subsidiaries of multinational enterprises, are not subject to any
limitation at all.
Following the simplification of
examination procedures, investments in China that do not exceed US$1
million need only be reported within six months of the investment. Only
those investments with an accumulated value of US$50 million or more are
now subject to case-by-case examination; for lesser investments, only
simple examination is required. For investment involving key
technologies with an important influence on domestic economic and
industrial development, an examination mechanism will be set up to
assure that such technologies remain on Taiwan to maintain the
island¡¦s industrial competitiveness.
Premier Liu Chao-shiuan points out that
that the relaxation of the ceiling on investment in China is an
important factor in the improvement of cross-strait economic relations,
allowing enterprises that have set up operations headquarters in Taiwan
to use their funds more flexibly and thus encouraging them to keep their
¡§roots¡¨ on the island. The elimination of restrictions on China
investment by the Taiwan subsidiaries of multinationals will make it
easier for the island to serve as a gateway to Asia and China for
multinational enterprises, and will upgrade Taiwan¡¦s position in the
international economic system.
Relaxation of Caps on China Investment
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