Fri, Nov 09, 2001 - Page 17 News List

Pundit says new rules to spur growth

POLICY Analysts say more open investment rules may boost business and encourage US and European companies to shift operations to Taiwan


The US has praised Taiwan's trade and investment opening to China as a move toward the peace and security of East Asia, while analysts say the move will help spur more US investments in Taiwan.

This was in reaction to President Chen Shui-bian's (陳水扁) move to scrap the "no haste, be patient" (戒急用忍) policy which had maintained a US$50 million ceiling on individual investments destined for China.

"We welcome the decision," the US State Department said. "We believe improving cross-strait economic ties serves the interest of both Taiwan and China and is conducive to peace and security in the region."

US-based companies may be more likely to invest in Taiwan following the move.

The new policy "makes Taiwan a more attractive destination for corporate capital that is interested in having operations which are well integrated with operations in China," said Michael Aller, a researcher at the Brookings Institution in Washington.

"Dell Computer and some other major Western investors have long complained about problems in going between Taiwan and China, and have cited the `go-slow, be patient' policy and the US$50 million ceiling as reasons for not investing in Taiwan. [The new policy] will help the business climate," Aller said.

High-tech companies, however, are likely to hold back until the US economy improves.

"Under present circumstances, companies may not jump in because they are fairly risk-averse at the present moment," Aller said.

He said the growth in investment across the Taiwan Strait is likely to be "significant," especially among low-end high-tech companies that are now investing in third countries such as Malaysia and Singapore.

He also said that the policy will help shed light on the true level of cross-strait trade and investment during Taiwan's 50-year-old policy of heavily restricting direct business links with China.

"I think it will help both sides realize the exact extent of the trade they have now. A lot of this trade and investment has been going through tax havens," Aller said.

The decision to allow the tax-free transfer of funds from offshore banks may also lead to the repatriation of substantial funds to Taiwan.

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