Wed, Jul 23, 2003 - Page 1 News List

Minister denies plan to relax cross-strait investments

RAISING MONEY A report that the government is thinking about letting Taiwanese companies based in China list on the stock exchange here was described as groundless

By Joyce Huang  /  STAFF REPORTER

Minister of Finance Lin Chuan (林全) yesterday denied reports that President Chen Shui-bian (陳水扁) is planning to further relax cross-strait trade restrictions to allow China-based Taiwanese businesses to raise capital in the local stock market as listed companies.

"The policy is still under study," Lin told a press conference yesterday afternoon, "and no breakthroughs will be made in the near future."

Lin called the local report groundless, saying that government agencies including the ministry, the central bank and the Mainland Affairs Council have been studying cross-strait trade policy for almost two years. But "no consensus has been reached yet."

"The government has so far set no timetable for the policy's review," he said.

The minister said it was taking a long time to review the policy because it involved many complicated issues such as cross-strait trade relations, the nation's industrial policies and its impact on local capital markets.

"The major hurdle is that at the moment, Taiwanese capital is not allowed to be wired directly to China," Lin said.

A Chinese-language newspaper yesterday ran a front-page story saying that Chen would soon announce the new policy to encourage China-based Tai-wanese businesses, whose annual revenues exceed NT$10 billion, to make use of local capital while setting up Taiwan-based headquarters and remitting their profits home to boost the local economy.

The report said that Chen planned to use the policy as one of his campaign promises to solicit votes ahead of next year's presidential election.

Vice Minister of Finance Gordon Chen (陳樹) told reporters yesterday morning, "The policy may be feasible to effectively encourage China-based Taiwanese businesses to set up headquarters at home." He did not elaborate.

The news rekindled a heated debate among local scholars and business representatives yesterday.

Wu Rong-i (吳榮義), presidential adviser and president of the Taiwan Institute of Economic Research, said he was concerned about the feasibility of the policy.

Wu said that the policy would be workable only if the capital flows of China-based Taiwanese businesses are made transparent, because Taiwan has no fiscal jurisdiction over China and cross-strait trade relations have yet to be normalized.

"The government should first come up with supporting measures to allay concerns that the more capital that goes to China, the greater the debts left behind [by loss-making China-based Taiwanese businesses]," Wu said.

However, Wang Ya-kang (汪雅康), secretary-general of the Chinese National Federation of Industries (工總), whose members have investments in China, yesterday said that relaxing the restrictions would help China-based Taiwanese businesses use local and international capital.

Wang said that the move would also help make clearer the operations of China-based Taiwanese businesses, since all listed companies are required to make their financial conditions public.

The reason that most China-based Taiwanese businesses fail to remit their earnings back to Taiwan is because they need to retain the money for future expansion, Wang said.

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