The Council for Economic Planning and Development (CEPD) yesterday proposed lifting the restriction on Chinese foreign direct investments in the free economic pilot zones to help Taiwanese companies, including AU Optronics Corp (友達光電), the nation’s second-largest LCD panel maker.
The plan will be submitted to the Cabinet by June, CEPD minister Kuan Chung-ming (管中閔) said at a press conference.
Currently, Chinese companies can invest in local companies, but cannot acquire a controlling stake in companies that make LCD panels, LEDs, solar cells, integrated circuits, metal-cutting tools and machinery equipment for manufacturing electronics and semiconductors, as well as IC packagers and testers.
“These investment limits may reduce the investment willingness of Chinese companies and hamper the development of local companies,” Kuan said.
The minister said there were two major challenges facing Taiwanese flat-panel display makers. One is that the advanced technologies to upgrade LCD panel manufacturing are costly and the other is debt-ridden LCD panel makers find it hard to obtain bank loans.
Eyeing the more advanced technologies of Taiwanese companies, Chinese companies would have invested in local LCD panel makers if it were not for the investment restriction, Kuan said.
If the Cabinet approves the plan, Chinese companies can form joint ventures with local companies, including AU Optronics, in the free economic pilot zones.
Furthermore, the government will negotiate with the Chinese government to reduce tariffs for goods imported from Taiwanese free economic pilot zones to make them more competitive in the Chinese market, the minister said.