Taiwanese companies may need to accept mandatory financial auditing if they want to get the government's approval to invest in China in the future, Premier Frank Hsieh (
"[The relaxation] should conform to the common interests of Taiwan," Hsieh said after being briefed on the second stage of financial reform at the Bank of Taiwan (台灣銀行) yesterday.
For the moment, Taiwan's jurisdiction cannot extend across the Strait to conduct measures such as the financial inspection of Taiwanese companies investing in China because there is no bilateral agreement with Beijing, Hsieh said.
To achieve its goal of "active management," the government is planning to entrust renowned and reputable local or international accounting firms to audit companies investing in China to ensure proper supervision, he said.
Hsieh made the remarks after President Chen Shui-bian (陳水扁) announced in his New Year address on Sunday a tightening of cross-strait policy to "active management, effective opening" from the previous "active opening, effective management" that was based on a consensus reached in the first Economic Development Advisory Conference in 2001.
Companies would need to agree to the future audit of their financial statements by government-authorized accounting firms when applying for the Investment Commission's permission to invest in China, said Council for Economic Planning and Development Chairman Hu Sheng-cheng (
Details of the regulations are expected to be completed within the next two months, Hu said.
Denying that the policy was a further tightening up, Hu said that the easing of some limits on cross-strait investment can be discussed after the requirements of active management are met. The official, however, declined to comment on whether the government would consider lifting the 40 percent cap on investment in China.
At a breakfast meeting with business leaders on Dec. 24, Hsieh said the Cabinet has in principle agreed to lift the cap, but he did not give a timeframe.
Taiwanese companies currently are allowed to invest a maximum of 40 percent of their net value in China, a restriction that the nation's business community has pressed to have relaxed.
In response, business associations slammed the proposed regulation, saying that the government should give assistance and guidance, rather than intervening in business activities.
"Additional administrative measures increase costs to both government and companies," said Luo Huai-jia (羅懷家), executive director of the Taiwan Electrical and Electronic Manufacturers' Association (電電公會), which represents over 4,000 member companies.
The government should improve the nation's investment environment, through measures such as signing agreements with more foreign countries to prevent double taxation, to attract more inflow of foreign capital and funds from overseas Taiwanese, Lo said.
A business association representative who asked not to be named said that the government should not step up controls and force Taiwanese companies to choose between the two sides of the Strait.