The Ministry of Finance said yesterday it has launched an inquiry into whether a local tycoon's multi-million dollar investment in China violated government rules.
The move came just days after the government lifted a five-decade ban on direct investment in China in anticipation of both countries entering the WTO.
The ministry's Investment Commission said it has asked Wang Yung-ching (王永慶), chairman of the giant Formosa Plastics Group (台塑集團), to clarify reports by local media that he invested in a power plant in China's southern Fujian Province.
The commission said in a statement that China-bound investment without government permission face fines of up to NT$5 million (US$145,000) and the project must be suspended immediately.
"The case is still under investigation and will be dealt with in accordance of the law if there is enough evidence," the statement said.
Wang said last week the money-losing power plant, which cost millions of dollars to build, was a "mistake."
But Wang said the power plant was a personal investment and had nothing to do with his giant petrochemical conglomerate.
Current rules ban Taiwan firms or individuals from investing in China in upstream petrochemicals, high-tech, infrastructure and other industries deemed strategic, but the ministry is to review the curbs later this year.
Despite the restrictions, Taiwan investors have poured more than US$60 billion into China since the late 1980s.
Wang has drawn fire from former president Lee Teng-hui (李登輝) and pro-independence groups, who accuse him of fueling a "China fever" and hollowing out Taiwan's industries.
The 84-year-old Wang -- who is often referred to as the "management god" -- one of the nation's richest men, has long been a proponent of full commercial links with China.
Wang led an advisory panel which urged the government in August to drop its "no haste, be patient" policy of trade and investment with China for one that advocates "aggressive opening, effective management" of risks in order to boost the faltering domestic economy.
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