Wed, Nov 29, 2006 - Page 3 News List

Premier evades decision on China investment cap

WAFFLE TIME Lawmakers and the media wanted answers on the government's stance on raising the cap on investment in China, but Su refused to discuss the matter directly

By Shih Hsiu-chuan  /  STAFF REPORTER

Premier Su Tseng-chang (蘇貞昌) yesterday avoided taking a clear stance on recent proposals by some lawmakers to raise the 40 percent cap on investment in China.

The renewed calls to raise the cap on the amount of money companies can invest in China came after a coalition of investors led by the Carlyle Group on Friday said it was bidding for Advanced Semiconductor Engineering (ASE).

Many analysts speculate that the reasoning behind the bid is to allow ASE to circumvent the cap on China-bound investment by Taiwanese companies, as ASE would be delisted if purchased by the Carlyle Group consortium.

Su dodged the issue of investment caps when confronted by the media yesterday. He said that the government would reflect on the issue using three principles -- maintaining Taiwan's national identity, taking the initiative in forging cross-strait policy and keeping the government's dominant position in handling related issues.

"The government will surely take a flexible approach in deliberation upon the issue," Su told the press when asked to comment on the buyout.

He added, "The government will take it seriously to ponder deeply over what was the cause of [the buyout]. We will review the implications of the case modestly."

The buyout has prompted more than 50 lawmakers from across party lines to advocate the lifting of the 40 percent cap on China-bound investment, so the issue was central to yesterday's question-and-answer session with Su.

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, and the ceiling is set at 20 percent for firms with a net worth of more than NT$10 billion.

Two proposals have been made to override the current regulations.

One version 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. The other calls for the cap to be set at 40 percent regardless of a company's net worth.

"I can't say which one is better. Some academics also have totally different ideas. I respect lawmakers' right to revise the regulations. But the government has to consider the policy comprehensively, and some situations need to be reviewed on an individual basis," Su said.

When asked by Chinese Nationalist Party (KMT) Legislator Joanna Lei (雷倩) whether the government has considered relaxing the ceiling, Su said that "no consensus has been reached on the issue."

"The number of listed companies in Taiwan has been on the decrease in recent years, not like the increasing tendency in the other Asian tigers [Singapore, Hong Kong and South Korea]. It's the tight controls on cross-strait economic policies that make the difference," Lei said.

The rapid economic growth in Hong Kong and Singapore is a warning to Taiwan, but the ASE buyout also proved that foreign investors have great expectations for Taiwan's industries and stock market, Su said.

also see stories:

ASE chairman shrugs off speculation

ASE buyout could trigger chain reaction in local firms

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