A cross-strait service trade pact, which will allow Chinese investors to participate in local construction projects, is expected to lead to fund inflows into the local construction sector, market analysts said on Saturday.
The presence of Chinese construction firms is also likely to bring know-how to the local market, analysts said, adding that such cross-strait exchanges will help Taiwan’s construction business become more competitive.
Taiwan and China signed the service-trade agreement in Shanghai on Friday.
Under the agreement, Taiwan is set to liberalize China’s construction engineering sector. Chinese investors will be allowed to set up joint ventures with their Taiwanese counterparts.
Through such alliances, Chinese developers will be able to provide services across the country in the civil engineering and building construction sectors.
However, Chinese investors will not be allowed to own a stake of more than 12 percent in a joint venture. That way, the Chinese side will not have a controlling stake, and Taiwanese investors can have a say in the operations of such entities.
Because large construction engineering companies in China are sitting on plenty of funds and boast advanced technology, such openness under the agreement would no doubt benefit local businesses, analysts said.
They added that because Chinese investors would be allowed to hold a maximum of 12 percent in a joint venture with their Taiwanese partners, there was no need to fear that the Chinese side will seek to control such companies’ management.
Meanwhile, Taiwan could benefit from the agreement by allowing Taiwanese and Chinese travel agencies to operate in each other’s territories, industry insiders said.
“It is like another springboard for the local tourism business,” Travel Agent Association of the ROC chairman Yao Ta-kuang (姚大光) said.
Under the terms of the new pact, Taiwan is allowed to set up an unlimited number of travel agencies in China to provide travel services to both Chinese and foreign nationals, a move Yao said will elevate Taiwan’s presence in the Chinese market because of the better-quality service Taiwanese companies can offer.
The agreement also allows China to operate up to three travel agencies in Taiwan, with their clients limited to Taiwanese.
Chen Chiung-hua (陳瓊華), deputy director of the Tourism Bureau’s hotel, travel and training division, said the introduction of Chinese tourism operators could boost demand because they provide services at a lower price.
There were about 140 million domestic trips in Taiwan last year, only 4 percent of which were sold through travel agencies, according to a telephone survey.
Chen said this means that the market potential has not been fully tapped.
She defined a “domestic trip” as anyone leaving their place of residence and traveling elsewhere in Taiwan for any length of time.