Tue, Nov 28, 2006 - Page 1 News List

Legislators urge easing of investment cap

By Shih Hsiu-chuan  /  STAFF REPORTER

The news that the world's largest chip-testing and packaging company could merge with a US private equity firm has prompted lawmakers from across party lines to advocate lifting the 40 percent cap on China-bound investments.

Although the proposal, which would further cement cross-strait trade and economic ties, was backed by a handful of Democratic Progressive Party (DPP) lawmakers, the head of the DPP caucus said that the party had not decided its stance on the issue.

Chinese Nationalist Party (KMT) Legislator Christina Liu (劉憶如) said that she began garnering support for the relaxation of the investment cap when Advanced Semiconductor Engineering (ASE) confirmed on Friday that a consortium of investors led by the US-based Carlyle Group had offered to buy the company.

"[The proposal] has been signed by more than 50 lawmakers, including some from the DPP. However, I would rather not name the DPP lawmakers for the moment, considering the pressure they might face for supporting it," Liu said.

At present, Taiwanese firms with a net worth of less than NT$5 billion (US$152.4 million) are allowed to invest up to 40 percent of their net worth in China.

Cumulative China-bound investments for Taiwanese firms with a net worth of NT$5 billion to NT$10 billion are capped at 30 percent of net worth and the ceiling is set at 20 percent for firms with a net worth of more than NT$10 billion.

Liu's initial proposal calls for a cap of 60 percent for firms with a net worth of less than NT$5 billion and a ceiling of 40 percent for companies with a net worth of more than NT$5 billion.

DPP Legislator Hong Chi-chang (洪奇昌) had initially planned to act as a joint-initiator of the proposal but backed down and now merely supports it, Liu said.

"When the news that Hong advocates easing the investment caps was reported, he came under criticism from pan-green supporters," Liu said.

Liu said that she and Hong had introduced another proposal calling for the cap to be raised to 40 percent -- regardless of net worth.

Hong said that the second proposal was more appropriate for Taiwan as it could help large companies to enhance competitiveness.

The two proposals would amend Article 35 of The Statute Governing the Relations Between the Peoples of the Taiwan Area and the Mainland Area (兩岸人民關係條例), effectively overriding the current regulation, which is an executive order.

DPP Legislative caucus whip Ker Chien-ming (柯建銘), however, said that the caucus would oppose relaxing the regulations through amending the statute.

"Party members should reach a consensus on the issue within the party before signing off on the proposals," he said.

Taiwan Solidarity Union caucus whip Huang Chung-yung (黃宗源) said that his party was firmly against easing the ceiling as such a move would increase the outflow of industry from Taiwan to China and lead ultimately to economic unification with China.

Meanwhile, the Executive Yuan said that cross-strait policy would not have any obvious and immediate effect on a Carlyle-ASE buyout.

"However, we will assess the impact of cross-strait policy on industrial competitiveness so the policy will strike a balance between national interest and the needs of the industrial sector," Cabinet Spokesman Cheng Wen-tsang (鄭文燦) said.

Cheng made the remark late last night at the Executive Yuan.

This story has been viewed 3007 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top