The Executive Yuan yesterday relaxed the cap on investment in China, one of several measures the Cabinet said would facilitate the return of capital from China.
Instead of revising the regulation itself, the loosening took the form of adopting a different approach to calculating the cap rate and of conditionally offering extra allowances on top of the cap.
"Although the 40 percent cap remains unchanged, the government will review applications for investment in China under the regulations in a flexible way," Mainland Affairs Council (MAC) Chairman Chen Ming-tong (陳明通) said at a press conference following the weekly Cabinet meeting.
RULES
The new proposal stipulates that the government would allow a company to calculate the percentage of its China investment out of the aggregate net assets of its group -- if doing so allows it to make a bigger investment in China -- rather than the net assets of the company alone, as is the case under existing rules.
Under existing regulations, China-bound investment may not exceed 20 percent of a company's net assets if those exceed NT$10 billion (US$323.5 million); 30 percent when net assets are between NT$5 billion and NT$10 billion; and 40 percent when net assets are below NT$5 billion.
Loosening the ceiling has long been the subject of debate.
Proponents of a relaxed policy argue that the removal of the cap would help Taiwanese businesses compete with multinationals investing in China, while opponents worry that easing the cap would accelerate the hollowing-out of local industries and increase the nation's overreliance on China.
Emphasizing that the government had neither done away with nor raised the 40 percent ceiling, Chen said: "Our policy goal is to attract Taiwanese capital back from China."
TRADEOFF
For companies whose investment in China already exceeds the 40 percent ceiling, or those on the verge of reaching that level, the government will allow them to invest a further 40 percent in China for every extra dollar they invest in Taiwan.
Chen said the measures "provide incentives" for Taiwanese businesspeople to return to and invest in Taiwan because one reason they chose to keep their capital overseas was the fear that they might encounter difficulties remitting more capital to China.
Also included in the proposal was a measure offering much lighter penalties for investors in China who had remitted capital out of Taiwan via underground or illegal channels and a promise that the government would not investigate tax evasion schemes that may have resulted from investments in China.
In accordance with the Statute Governing the Relations Between People of the Taiwan Area and the Mainland Area (兩岸人民關係條例), companies that do not obtain approval from the government prior to investing in China can be fined between NT$50,000 and NT$25 million.
The Cabinet also slashed the fine for illegal investment, but said that this would not apply to industries that are still listed under restricted categories.
Businesspeople will be absolved by paying a fine of NT$50,000 if their investment in China amounts to less than US$20 million, and NT$100,000 for investments totalling between US$20 million and US$100 million -- as long as they accept the amnesty offer and register their Chinese investments, Chen said.
The government would determine the fine for violators whose investments in China exceed US$100 million or those industries connected to Taiwan's core technologies on a case-by-case basis, he said.
"We also know that many businesspeople refuse to remit money back home in a bid to avoid paying taxes, but I promise that the [MAC] will not refer such cases to the tax inspection agencies," Chen said.
The amnesty marks the fourth time the government has offered to help businesspeople legalize their operations in China, following similar moves in 1993, 1997 and 2002.
"Despite the amnesty offers, the actual number of investment projects made by Taiwan individuals and companies in China is still much higher than the registered figure," Chen said.
In related developments, the Cabinet yesterday also approved a proposal that would allow Taiwan-based overseas enterprises to launch initial public offerings on capital markets.
Taiwan-based companies located in China and enterprises with a majority of Chinese shareholders, however, are not included in the proposal, Chen said, citing national security concerns.
"We welcome Taiwan-based companies in Southeast Asia and in Silicon Valley in the US to list in those countries' stock markets, but given Taiwan's already great dependence on the Chinese market, we don't want Taiwan-based companies operating in China to issue stocks in Taiwan as a way to earn paper money," Chen said.
In response, Democratic Progressive Party presidential candidate Frank Hsieh (謝長廷) said yesterday he was in favor of further opening up the local market on the condition that Taiwan-centered consciousness be upheld.
While he supports the policy of allowing Chinese investment in Taiwan, Hsieh said it is important that Chinese capital focus on manufacturing.
Regarding Chinese investment in real estate, Hsieh said he was against Chinese capital manipulating the housing prices as it could sabotage the normal chain of supply and demand. The local real estate market could collapse if China changed its policies, he said.
Taking property values in Taipei City as an example, Hsieh said prices were so high that young people and people with an average income could no longer afford a place of their own.
Hsieh said that his proposal had displeased many and affected political donations, but that he would not change his views because it was the right thing to do.
Chinese Nationalist Party (KMT) presidential candidate Ma Ying-jeou (馬英九) yesterday challenged the government's decision to relax investment regulations and grant an amnesty to Taiwanese businesses two weeks before the presidential election, saying he doubted it was determined to follow through on its promises.
"The government did not relax the regulations during the past eight years. Announcing the policy before the election is clearly for electoral purposes," Ma said yesterday in Taipei.
"Such a policy is good, but the timing of the announcement is interesting ... We don't know whether the government would carry it out after the election," he said.
Ma said he agreed that the investment regulations should be relaxed in order to revive the economy, but added that the nation's interests should still be the priority.
While promising to open up the nation's real estate market to Chinese investors in no more than six months if he was elected president, Ma said he would provide supplementary measures to restrain the excessive growth of housing prices, such as giving people under the age of 30 a two-year zero-interest rate on the first home they purchase.
Additional reporting by Ko Shu-ling and Mo Yan-chih
The paramount chief of a volcanic island in Vanuatu yesterday said that he was “very impressed” by a UN court’s declaration that countries must tackle climate change. Vanuatu spearheaded the legal case at the International Court of Justice in The Hague, Netherlands, which on Wednesday ruled that countries have a duty to protect against the threat of a warming planet. “I’m very impressed,” George Bumseng, the top chief of the Pacific archipelago’s island of Ambrym, told reporters in the capital, Port Vila. “We have been waiting for this decision for a long time because we have been victims of this climate change for
MASSIVE LOSS: If the next recall votes also fail, it would signal that the administration of President William Lai would continue to face strong resistance within the legislature The results of recall votes yesterday dealt a blow to the Democratic Progressive Party’s (DPP) efforts to overturn the opposition-controlled legislature, as all 24 Chinese Nationalist Party (KMT) lawmakers survived the recall bids. Backed by President William Lai’s (賴清德) DPP, civic groups led the recall drive, seeking to remove 31 out of 39 KMT lawmakers from the 113-seat legislature, in which the KMT and the Taiwan People’s Party (TPP) together hold a majority with 62 seats, while the DPP holds 51 seats. The scale of the recall elections was unprecedented, with another seven KMT lawmakers facing similar votes on Aug. 23. For a
Taiwan must invest in artificial intelligence (AI) and robotics to keep abreast of the next technological leap toward automation, Vice President Hsiao Bi-khim (蕭美琴) said at the luanch ceremony of Taiwan AI and Robots Alliance yesterday. The world is on the cusp of a new industrial revolution centered on AI and robotics, which would likely lead to a thorough transformation of human society, she told an event marking the establishment of a national AI and robotics alliance in Taipei. The arrival of the next industrial revolution could be a matter of years, she said. The pace of automation in the global economy can
All 24 lawmakers of the main opposition Chinese Nationalists Party (KMT) on Saturday survived historical nationwide recall elections, ensuring that the KMT along with Taiwan People’s Party (TPP) lawmakers will maintain opposition control of the legislature. Recall votes against all 24 KMT lawmakers as well as Hsinchu Mayor Ann Kao (高虹安) and KMT legislative caucus whip Fu Kun-chi (傅崐萁) failed to pass, according to Central Election Commission (CEC) figures. In only six of the 24 recall votes did the ballots cast in favor of the recall even meet the threshold of 25 percent of eligible voters needed for the recall to pass,
RSS