Gov't Further Relaxes Restrictions on Mainland Chinese Investments

Taipei, March 16, 2012 (CENS)--The government will allow Chinese investors to buying into domestic firms in the five key manufacturing industries of LED, FPD (flat panel display), semiconductor, machine tool, electronic and semiconductor manufacturing equipment, with maximum stake being set at less than 50%, up from 10% now.

The decision is part of the third-wave opening for mainland Chinese investments in Taiwan, which was approved at an inter-ministry meeting presided by Kuan Chung-ming, minister without portfolio, yesterday (March 15). The opening package will be submitted to Premier Sean Chen for ratification soon and take effect by the end of March.

The third-wave opening also expands the extent of opening for mainland Chinese investments to 97% for the manufacturing sector, 54% for infrastructure, and 50% for the service sector. Mainland Chinese investors will be able to invest in such service businesses as warehousing and 25 new infrastructural items will be opened to mainland Chinese investors, which can invest in those items via BOT (build-operate-transfer) method.

Chen Deming, China's minister of commerce, pointed out the other day that following the signing of cross-Taiwan Strait investment protection agreement, mainland China plans to expand the investment scope in Taiwan, which will cover not only manufacturing industry but also infrastructure. The investment protection agreement is scheduled for signing in the first half this year.

At present, mainland Chinese investors cannot own over 10% stake in existing enterprises in the five key manufacturing sectors and for new joint ventures, the ceiling is set at less than 50%. In the future, both figures will be set at less than 50%.

For 10 less critical sectors, including fertilizer and woodworking machinery, mainland Chinese investors presently cannot own over 20% stake in existing enterprises and the ceiling is set at less than 50% for new joint ventures. In the future, both figures will also be set at less than 50%.

In the future, the government will screen mainland Chinese investments according to two major criteria. First, mainland Chinese investors must put forth industrial cooperative strategy, and secondly, mainland Chinese investors cannot own control over the invested enterprises.