Thu, Mar 15, 2001 - Page 1 News List

Cabinet plans to regulate cross-strait capital flows

By Stanley Chou and Lin Chieh-yu  /  STAFF REPORTERS

Under a joint Cabinet proposal -- made by the Mainland Affairs Council, the Ministry of Economic Affairs and the Central Bank of China -- the government plans to use bank credit controls to regulate Taiwanese investment in China.

According to the proposed rules, each Taiwanese investor will be allowed to use a certain amount of credit from domestic banks to fund their projects in China.

For projects with an investment of less than US$50 million, a credit ceiling of 50 percent would apply. For investments of US$50 million to US$100 million, a ceiling of 25 percent is being proposed, and for China-bound investments above US$100 million, a 10 percent credit ceiling would apply.

In addition to the recent revisions to China-bound investment ceilings, it has been proposed that all projects exceeding US$50 million should be approved by the Ministry of Economic Affairs on a case-by-case basis.

According to the Ministry of Finance, the move does not mean a policy change.

"The regulation is to put a reasonable control on investment by Taiwan's companies. It does not mean there is any change in the `no haste, be patient' (戒急用忍) policy," said Minister of Finance Yen Ching-chang (顏慶章).

Meanwhile, President Chen Shui-bian (陳水扁) also hopped on the bandwagon of government officials cautioning businessmen on investing in China.

"I should remind Taiwan's business community to be aware of risk management. Don't blindly say good things about China and belittle Taiwan," Chen said.

Chen made the appeal during an architecture awards ceremony yesterday. Chen went on to say that while economic prospects were not looking good internationally, Taiwanese would make it through the difficult period by sticking together.

"I'm convinced that we can overcome all the difficulties and challenges, so long as we have confidence in ourselves, believe in this land and trust in others," Chen said.

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