Ministry of Economic Affairs floats new China review

The Ministry of Economic Affairs is thinking of imposing an extra policy review on China-bound investments exceeding US$100 million as well as those involved in sensitive technology, as part of the government's bid to tighten investment in China, a ministry official said yesterday.

To implement President Chen Shui-bian's (陳水扁) "active management, effective opening" China policy, the Mainland Affairs Council said last week that the government would introduce supporting measures to reduce Taiwan's economic reliance on that country.

The government also aims to cut China's share of Taiwanese overseas investment from 70 percent by looking to the rest of Asia and the Middle East, Vice Premier Tsai Ing-wen (蔡英文) said on Monday.

"The US$100 million threshold is a proposal. The final decision, including the specific amount and items required for the review, will be made by the end of June as required by the Cabinet," Emile Chang (張銘斌), deputy executive secretary of the ministry's Investment Commission, said in a telephone interview yesterday.

The commission reviews China-bound investment projects based on company capital, financial status, technical expertise and the potential impact on the nation's labor market, Chang said.

Reports on the additional policy review and the US$100 million investment threshold appeared earlier in the Economic Daily News, but Minister of Economic Affairs Morgan Hwang (黃營杉) said he had no knowledge of the proposal.

Speaking to the Central News Agency yesterday, Hwang said the review should proceed with the consensus of appropriate government departments, and not solely under the auspices of the ministry.

He didn't elaborate.

The government has yet to decide on investments in China by memory chipmakers Powerchip Semiconductor Corp (力晶半導體) and ProMOS Technologies Inc (茂德科技). Each investment would exceed the US$100 million level.

But the ministry said on Monday that it would again review investment applications filed by the two companies.

Powerchip and ProMOS applied to establish low-tech eight-inch wafer plants in China. The companies must provide financial reports for the most recent quarters as reference for the review, according to the commission.

The government had said it would allow three eight-inch wafer manufacturers to set up plants in China by the end of last year, but only gave the green light in April 2004 to Taiwan Semiconductor Manufacturing Co (台積電), the world's largest contract chipmaker, to relocate its eight-inch wafer facilities to Shanghai.

United Microelectronics Corp (聯電), the world's second-largest contract chipmaker, did not get government approval to establish plants in China and was fined NT$5 million by the commission on Feb. 15 after it was found to have illegally worked with He Jian Technology (Suzhou) Co (和艦科技) in China.