Chinese investors will be allowed to indirectly invest up to 30 percent in local companies, Minister of Economic Affairs Yiin Chii-ming (尹啟銘) said yesterday, while announcing that a total of 99 sectors in manufacturing, services and public works would open to Chinese capital.
But the ministry would reject forms of Chinese investment that could exert control over local companies, such as securing enough board seats to wield excessive influence or taking up executive positions, Yiin said.
“The ministry is taking careful steps to carry out this measure on the premise of caution first and then steadily expanding the number of businesses once these measures start to bear fruit,” Yiin said.
“At this point, we have listed a specific number of industries that will be affected [by the liberalization], but as more and more [industries] are announced, the industries that are opened to Chinese investments will significantly outweigh those that are not,” he said.
The ministry expects the first-phase opening to take place on June 1 after the Executive Yuan passes the new rules, Yiin said.
In the manufacturing sector, 65 industries out of 212, or approximately 30 percent, will open to investment.
“To facilitate cross-strait business collaboration, herbal medicine and automobiles will be the priority industries,” Yiin said.
“[Other priority businesses] are upstream and downstream supply-chain enterprises, such as textiles, fabrics, plastics and plastics-related goods, as well as machinery used to produce plastic, textile and agricultural products,” Yiin said.
Automobiles and vehicle components for cars, motorcycles and bicycles will also be included.
Other manufacturing industries, including electronic components, computer peripherals, TVs, washing machines, refrigerators, DVD players, mobile handsets and telephones will also be included in the first phase, Yiin added.
Sensitive industries such as semiconductors and thin-film-transistor liquid-crystal-display panels will be left out to protect the nation’s proprietary technology, the ministry said.
Most importantly, “anything related to national defense or that could jeopardize the nation’s defense will be excluded, including state-run enterprises CPC Corp, Taiwan (台灣中油) and Taiwan Power Co (台電), as well as primary telecommunications operators,” Yiin said.
In the services arena, 23 industries, including hotels, department stores, supermarkets, restaurants, chain stores, retailers and wholesalers, will also be included in the first-phase opening because of their direct contribution to the nation’s commercial, wholesale and retail businesses.
To facilitate cross-strait transportation, sea and air shipping and related services will also be included, the ministry said.
Chinese investment in any businesses that involve educational and professional credentials, such as legal and accounting firms, will be delayed, if not excluded, Yiin said.
In the realm of public works, 14 percent, or 11 industries, including seaport, airport and tourism infrastructure, will be opened.
Tony Phoo (符銘財), chief economist at Standard Chartered Bank, said any government steps to liberalize cross-strait trade should be encouraged as they could help spur economic growth.
“Two-way capital flows are long overdue,” Phoo said by telephone. “Although the pace of opening is slow and limited, the deregulation will still be positive and favorable for Taiwan in the long run.”