Two venture capital companies managed by former top-ranking government officials are suspected of illegally investing in China and are expected to be fined up to NT$5 million each, officials at the Ministry of Economic Affairs said yesterday.
"The government has decided to come down hard on Taiwanese companies that have invested illegally in China," Minister of Economic Affairs Lin Yi-fu (
One of the companies on the ministry's list is Prudence Capital Co (
The company invested US$80 million in Shanghai-based Semiconductor Manufacturing International Corp (SMIC, 中芯國際集成電路), the Cabinet said in a statement on Friday.
Prudence, a Taiwan-based venture capital company funded in part by the government's Development Fund (
"Though the company [Prudence] agreed to withdraw its investment, its practice is still considered illegal given current laws and should be punished," said Huang Chin-tan (
According to regulations, Cabinet funds cannot be invested directly or indirectly in China through venture capital companies, Huang said.
Another company on the list is Global Strategic Investment Fund (
Huang said Global Strategic, which is invested in part by the ministry's Yao Hua Glass Co (
"We have submitted to the Executive Yuan a list of Taiwanese companies that have illegally invested in China," Huang said, without naming the companies suspected of breaking the law.
"We will also severely punish those investors," he added.
The ministry required Taiwanese companies to register their China-bound investments with the government. A total of 23,806 China-bound investment items worth of US$9.1 billion had been registered as of Dec. 26, the ministry said.
Today is the last day for registration and the government is formulating legislation to tighten China investment rules.
Under that plan, "companies would have to apply to the government for approval if they plan to invest in China, or they will face punishments ranging from NT$50,000 to NT$25 million," Huang said.
Under the current rules, companies suspected of breaking the law are subject to fines ranging between NT$1 million and NT$5 million.
Last Friday, the government said it would adopt stricter measures to prevent companies from illegally transferring capital to China while leaving debts unsettled at home.