The Investment Commission announced stricter rules for investment projects by Chinese companies as President Ma Ying-jeou (馬英九) seeks to overcome lawmakers’ resistance to legislation that would boost economic ties with China.
In new rules effective yesterday, commission said it would not approve transactions deemed politically sensitive and that it would now require more Chinese-invested companies to report financial information, according to a statement released on Wednesday.
The new restrictions come as lawmakers prepare to ratify the cross-strait service trade agreement signed in June that would open up as many as 80 service sectors, including banking, brokerage and e-commerce.
The government is refining existing rules on Chinese investment based on input from various groups, said Chu Ping (朱萍), a director at the commission, which is under the the Ministry of Economic Affairs.
“As the services pact is still under legislative review, the government wants to reduce the space for opposition,” Jihsun Securities Co (日盛證券) economist Leon Chu (褚國廷) said.
The Democratic Progressive Party, concerned that Chinese competition will hurt domestic industries, has called for a detailed review of each provision of the trade agreement, which allows certain industries to hold controlling stakes in joint ventures across the Taiwan Strait.
Ma’s administration has offered support to industries, such as traditional Chinese medicine and beauty salons, as part of its outreach campaign for the pact.
Enterprises judged by the commission to be politically, socially or culturally sensitive would have their investment licenses revoked, the commission said.
The rule also applies to companies that create monopolies, threaten national security, or damage economic development or financial stability.
Chinese companies with paid-in capital of more than NT$30 million (US$1 million) must now submit financial statements to regulators, compared with a previous threshold of NT$80 million, according to the statement.
The commission also said the government would not approve any stake sales by Chinese-invested corporates if they affect national security or the public interest.
Existing restrictions on telecommunications assets caused the collapse of China Mobile Ltd’s (中國移動) plan to buy part of Far EasTone Telecommunications Co (遠傳電信), the first investment by a Chinese state-owned company in Taiwan in six decades.
The companies waited four years for Taiwan to lift the ban before abandoning the plan.
The planned US$670 million deal by China’s biggest bank by assets, Industrial & Commercial Bank of China Ltd (中國工商銀行), to take a 20 percent stake in Sinopac Financial Holdings Co (永豐金控) is also in limbo, pending passage of the trade pact and regulatory sign-off.