Taiwan to Lift Half-century Ban on Direct Investment in Mainland

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Last updated at: (Beijing Time) Monday, July 15, 2002

Taiwan to Lift Half-century Ban on Direct Investment in Mainland

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Taiwan plans to lift a half-century ban on direct investment in the Chinese mainland as the two sides inch towards closer economic ties despite a political deadlock, officials said in newspapers on Sunday.

The ban would be lifted "within a few weeks", Taiwan's "Mainland Affairs" policy decision-maker Tsai Ing-wen told a seminar on Saturday, the Chinese-language Commercial Times reported.

"The measures are being handled according to due official process," said Tsai, chairwoman of the "Mainland Affairs Council."

Once the ban is lifted, Taiwan businesses will be able to invest directly in the mainland rather than going through third places, such as Hong Kong, she said. Direct commercial links between Taiwan and the mainland were cut off in 1949 after they split at the end of a civil war.

But, with or without government approval, Taiwan businessmen have poured an estimated 70 billion US dollars of investment into the mainland.

Taiwan official Chen Ruey-long hailed the planned lifting of the ban. He said "it would benefit the companies, and public share holders could have their interests better safeguarded after the companies they invest become more transparent."

Chen was swift to dismiss concerns the move could spark a wave of mainland-bound investment mania.

"Allowing direct investment is just a change of form. There are many other factors investors may have to weigh before they decide to invest there," Chen said.

The dramatic policy change comes as a majority of Taiwanese enterprises have given the mainland top priority in their overseas investment considerations, despite the lingering political standoff between the rivals.

A Taiwan economic department survey released in March showed 74.7 percent of 1,910 businesses polled had operations on the mainland, up from 69.1 percent in 1999. Some 16.5 percent have investments in the United States, followed by 9.1 percent in Hong Kong and 6.7 percent in Malaysia.

Chinese mainland's vast market potential, cheaper production costs and special investment incentives offered to Taiwanese businessmen had also enticed more funds from the island.

Taiwan Pours More Investment in Mainland

Taiwan Authorities to Open Direct Taiwan Investment in Mainland: on the morning of November 7, 2001,Taiwan "Administrative Yuan" adopted the executive plan for the "implementation of investment in the mainland, active opening, and effective management" put forward by the department concerned, formally liberalizing direct investment in the mainland and abolishing the investment ceiling of US$50 million.

Taiwan Investment to Be Encouraged after China's WTO Entry: China will continue to encourage Taiwan investment in the mainland and protect Taiwan investors' interests after the two sides of the Taiwan Straits enter the World Trade Organization (WTO), a spokesman for the Taiwan Affairs Office of the State Council said.

Direct Taiwan Investment in China's Mainland Shoots Up: Statistics from Taiwan "Ministry of Economic Affairs" show that in the first nine months of this year, direct Taiwan investment in China's mainland totaled US$2.122bn, a near 19 percent increase over last year.

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