The Ministry of Economic Affairs (MOEA
The announcement was welcome news to the petrochemical industry, as the prospective policy change is seen as a crucial step in allowing the sector to compete internationally.
"The Industrial Development Bureau [IDB, 工業局] is cautiously evaluating a policy adjustment whereby upstream petrochemical operations to China would be loosened," said Yiin Chii-ming (尹啟銘), vice minister of economic affairs yesterday.
"Petrochemical industry investments normally involve tens of billions of NT dollars, and upstream investments even more. The government should therefore evaluate the transfer of capital and maintain the industrial base in Taiwan before the new policy is made," Yin added.
According to current government policies, investment in downstream petrochemical manufacturing -- including the production of plastic and rubber materials and products -- in China is open.
But, according to officials at the IDB, upstream petrochemical industries -- those which involve the manufacturing of basic petrochemical raw materials -- is currently prohibited. In addition, the government bans all China projects over US$50 million.
The authorities' past opposition to lifting the restrictions stemmed from the fact that petrochemicals is a highly capital-intensive industry and would involve the transfer of what are seen as key manufacturing techniques to China. These advances, it was feared, could give China an unfair "leap forward" that would propel her into an even more competitive position with Taiwan.
According to the Petrochemical Industry Association of Taiwan (台灣區石油化學工業同業公會), about half of Taiwan's 50 plus petrochemical companies have invested in plastic and rubber manufacturing in China. Drawn by low costs, cheap labor and an abundant supply of water and electricity supply, many Taiwanese investors see the direct geographic access to Chinese markets as a major attraction, according to the association.
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