Sat, Feb 04, 2006 - Page 11 News List

Chen's China policy will help lift economy: report

COMING HOME The new policy will encourage more disillusioned Taiwanese entrepreneurs in China to invest back home, an Academia Sinica report claimed

CNA , TAIPEI

The government's "active management, effective opening" policy laid out by President Chen Shui-bian (陳水扁) in his New Year's speech will help lift Taiwan's economy, an economist said yesterday.

Tsai Chi-yuan (蔡吉源), a researcher at Academia Sinica, Taiwan's highest research institute, said that the outlook of Taiwan's economy remains encouraging after the government decided to shift to Chen's policy to better guide China-bound investment. He made the analysis in the latest edition of the electronic newspaper operated by the Investment Commission under the Ministry of Economic Affairs.

Tsai based his optimism on the fact that Taiwan's tax revenues totaled NT$1.564 trillion (US$48.9 billion) last year, up by NT$177 billion over the 2004 level and NT$184.6 billion higher than the government's target.

He attributed the growth to the increases in Taiwan's per capita income and the amount of tax payable by returning Taiwan businessmen from China, noting that income tax revenue grew the most -- by NT$169.8 billion last year.

According to Tsai, some 20 percent of Taiwanese businesspeople who relocated to China have already returned home to invest here because of the rising costs and risks of investing in China.

He said he expects more such businesspeople to make larger investments at home as a result of the government's new measures, thus propping up Taiwan's economy.

Taiwanese businesspeople will naturally invest at home, where investment risks are much lower than in China, as long as estimated profits to be made on either side are about the same, he claimed.

This is the main reason behind the government's success in collecting an extra NT$184.6 billion in tax revenues, evidenced in the fact that private-sector fixed capital investment at home has picked up in the last two years, he said.

A low investment willingness among Taiwanese firms in the home market between 2001 and 2003 was due to the government's "active opening, effective management" China investment policy during that period, which he said prompted a large number of businesses to "go west" in search of better profits.

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