After raising the cap on China-bound investment earlier this month, the government is seeking to relax rules governing overseas companies with Chinese capital seeking to invest in Taiwan, in a bid to make the country a regional financial center, the nation’s top economic planner said yesterday.
Council for Economic Planning and Development Chairman Chen Tian-jy (陳添枝) said government agencies were working to relax restrictions to facilitate the return of Taiwanese firms based abroad to trade in the local bourse.
In addition, the government would allow Chinese capital to invest in Taiwan’s service and manufacturing industries, including banks, restaurants, shops and commercial property, Chen said.
LESS RISKY
As the opening would cover a wide range of sectors, the government would give top priority to easing measures that do not need to involve cross-strait talks and whose implementation requires limited supervision and risk management, Chen said.
“By the end of August, part of the deregulation may be put into practice,” he said.
Things the government could do unilaterally included lowering requirements for Taiwanese companies based overseas to trade in the stock market here, even if the firms have more than 20 percent in Chinese capital. At present, those firms are not allowed to trade in the local market.
The liberalization seeks to help companies raise funds in Taiwan so that they may have more capital to expand their manufacturing facilities in China and boost their efficiency and competitiveness.
On July 17 the Cabinet approved lifting the cap on China-bound investment to 60 percent of a company’s net worth, from 40 percent, granting firms greater financial leverage to conduct business there.
Companies headquartered in Taiwan and multinational subsidiaries listed here will be exempt from the limit.
INVESTORS
Chen said the government would also consider allowing qualified domestic institutional investors (QDII) in China to invest in Taiwan’s stock market.
This would mean that Chinese investors could take a stake in banks, restaurants, shops and commercial property in Taiwan, once restrictions are removed.
The series of measures fall in line with the government’s ambition to turn Taiwan into a regional fund-raising and asset management hub and replace Hong Kong as the financial center in the Asia-Pacific region, Chen said.
QDIIs have contributed nearly HK$130 billion (US$16.66 billion) to the fund management market in the Special Administrative Region so far this year, an official securities report said yesterday, adding that the capital flow underscored the former British colony’s position as a regional asset management center.
Chen said the government would work to enhance Taiwan’s competitiveness relative to Hong Kong in a gradual but steady manner.
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