Forum defends China cap

Political and economic analysts yesterday warned that raising the cap on China-bound investment would be detrimental to the nation's economy.

Panelists taking part at a forum hosted by the Taiwan Advocates yesterday said the recent buyout of Advanced Semiconductor Engineering Inc (ASE) was irrelevant to the issue of whether to raise the investment cap and should not be used by the government or companies to justify such a move.

The government currently caps domestic companies' China-bound investment at 40 percent of their net worth, a restriction that many companies have long wanted changed.

GLOBAL TREND

Taiwan Futures Exchange chairman Wu Rong-i (吳榮義) said that buyouts and mergers of promising companies across the globe was a global trend.

He said that ASE's investment in China is less than 10 percent of its net worth.

Therefore, Wu said, he did not think the buyout aimed to break the investment cap.

"The total amount of the buyout cases that the world dealt with in Asia was about US$35 billion last year. We should see that foreign-invested companies showed their confidence in Taiwan and our people should show the same faith in our economy," he said.

Former national policy adviser Huang Tien-lin (黃天麟) said he could not understand why certain media outlets had interpreted the buyout of ASE as a trick to get around the government's investment cap.

"I think it is a simple merger and it is inappropriate to relate this case to the discussion of the removal of the cap on China-bound investment," Huang said.

CHINA OR BUST

Democratic Progressive Party (DPP) Legislator Wang To-far (王塗發) said if the government raises the investment cap, Taiwanese companies will swarm to China and the victims will be the people living in Taiwan.

"A high unemployment in Taiwan is an expectable scenario and will deepen the poverty gap in Taiwan," Wang said.

Kenneth Lin (林向愷), an economics professor at National Taiwan University, said a new economic policy introduced by the Cabinet is wrong and might cause the reversed effect.

The Cabinet promoted the "Big Investment, Big Warmth" plan in September.

The plan aimed to create a beneficial investment environment for domestic and international investors within three years.

"The Cabinet should not only make a policy that focuses on promoting the economic growth rate," he said. "It should put more emphasis on the growth of the employment rate."