While Taiwanese petrochemical makers believe investment in China is essential, a government task force postponed taking a decision on whether to end the ban on investing in naphtha crackers in the Middle Kingdom late last week.
A 17-member task force on China-bound investment under the Ministry of Economic Affairs decided Friday to delay a decision on whether to allow Taiwanese naphtha cracker investments into China for two weeks, citing concerns such projects may siphon funds away from Taiwan.
Naphtha crackers process naphtha into olefins, including ethylene.
However, the task force recommended easing investment restrictions on chemical and polymer-making industries and pharmaceutical manufacturing to China.
The recommendations have to be submitted to the Cabinet for approval.
The task force's meeting held last week was presided over by Vice Minister of Economic Affairs Chen Ruey-long (
Chen said after the meeting that the task force will meet again within two weeks to review the situation and the government may allow the local petrochemical industry to invest in China if mass capital outflow can be controlled.
He said that the government should know about the source of the capital and the type of investment before giving its permission to local industry.
The construction of the the seventh and eighth naphtha crackers in Taiwan -- which would produce higher quality ethylene -- have been not smoothly implemented because difficulty with land purchase, labor and environmental protection issues, Chen said.
However, ethylene produced by the second, third and fourth naphtha cracking plants operated by the Chinese Petroleum Corp (中油) and the sixth naphtha cracking plant operated by the Formosa Plastic Group (台塑) have been able to meet domestic demand, and petrochemical makers now feel they need to invest in China to expand operations, he said.
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