For the government to attract foreign investment which uses Taiwan as a base of operations for activities in the mainland, it must loosen restrictions for foreign investment in the telecommunications, media and financial areas, simplify the investment application process and speed up the internationalization of finance-related laws. More importantly, it also has to be flexible when dealing with cross-strait communications. Otherwise it will be difficult to develop Taiwan as a planning and management base for foreign capital.
After the mainland joins the WTO, foreign investment will gradually become concentrated in the telecommunications, finance, insurance, high technology, and product research and development industries. However, even if foreign capital is interested in cooperating with Taiwanese companies, Taiwanese companies will still have to face the government's investment restrictions. The finance ministry's raising of the ratio of capital raised abroad that listed companies can invest in the mainland will help Taiwanese companies issue overseas depository receipts and company debt, and to borrow money from international financial institutions to raise international capital for investment.
Due to the huge amount of capital invested by multinational corporations, current regulations restrict foreign investments in Taiwan to US$50 million and there are investment ratio restrictions for individual industries. This is not enough for the needs of joint venture projects. Further, if the government continues to restrict the high technology, finance, insurance and various other industries from investing on the mainland, this will also influence the feasibility of joint Taiwan-foreign investment projects.
Because of this the finance and other relevant ministries should match President Chen Shui-bian's drive to bring together foreign capital and Taiwanese companies in strategic alliances, and adjust investment regulations accordingly. The government should give more latitude to encourage Taiwanese companies to move into mainland markets through international cooperation.
Tsai Horng-ming is vice secretary-general of the Chinese National Federation of Industries.
Translated by Perry Svensson
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