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Foreign direct investment fell in first half

Inward foreign direct investment (FDI) approved by the government fell in the first half of the year, while Taiwanese investment abroad, especially to China, registered a sharp growth during the same period, the Ministry of Economic Affairs said in a report on Friday.

During the first six months of the year, inward FDI totaled US$3.72 billion, a drop of 11.4 percent year-on-year, while outward FDI, excluding China, surged 59.9 percent to US$2.27 billion, statistics from the ministry’s Investment Commission showed.

Approved investments in China alone for projects worth more than US$200,000 reached 309 cases in the first half of the year, with a total value of US$4.77 billion, the report said.

Although the number of China-bound investment projects recorded a 39 percent fall compared with the same period last year, their total value marked a year-on-year increase of 30.8 percent, the report said.

The approved projects included 43 investments worth US$997.54 million last month, it said.

For China-bound projects worth less than US$200,000, Taiwanese businesses registered 129 such investments amounting to US$16.7 million in the first half of the year, the report said.

The surge in outward FDI has raised concern that the Cabinet’s lifting of the investment cap on China-bound investment to 60 percent of a listed company’s net worth from the previous 40 percent effective Aug. 1 could cause more capital outflow across the Strait.

Asked whether the recent deregulation could prompt more Taiwanese investments in China, officials at the Investment Commission said they would closely monitor the situation.

As it usually takes time for businesses to conduct evaluation on potential investment projects, the officials said that the deregulation might not trigger a sharp jump in China investments.

Separately, the latest data from the Securities and Futures Bureau showed that new securities issued overseas by Taiwan-based listed companies amounted to US$618 million during the first six months of the year, while foreign investors remitted a net US$12.38 billion into Taiwan for investment in the stock market.

Since the beginning of the year, the benchmark TAIEX has dropped 11.6 percent as of the end of last month, as investors grappled with inflationary worries and the global credit crisis.

Among the three major institutional investors, foreign institutional investors net sold NT$85.87 billion (US$2.83 billion) in local shares during the first six months, Taiwan Stock Exchange tallies showed.

Also See: EDITORIAL: Ignoring the threat of capital outflow
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