The government should take a more active role in regulating outbound foreign direct investment (FDI), especially as geopolitical tensions make advanced technology strategically sensitive, experts said on Tuesday.
At a conference on strategic resilience in Taipei, Lee Wen-chieh (李文傑), an economics associate professor at National Chengchi University, said Taiwan’s “dual-track” policy — strict controls on investment in China, but comparatively loose rules elsewhere — has been “insufficient to cope with increasing external risks.”
While the government maintains tight oversight of China-bound investment, overseas expansion in other markets is largely left to companies themselves, Lee said.
Photo: Liao Chia-ning, Taipei Times
“We barely have a designated agency regulating outbound investments outside China,” he said.
Citing Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) recent global expansion, Lee said the lack of government representation in its talks with foreign governments put the Taiwanese company in a weaker negotiating position.
He cited TSMC’s announced additional US$100 billion investment in the US in early March, saying that “all the Ministry of Economic Affairs did was deny any involvement three days later while saying TSMC made the decision.”
Taiwan’s outbound investment rules are outdated and lack a clear legal basis, lawyer Chen Yen-po (陳言博) said.
The ministry has not updated the regulations to reflect amendments made to the Industrial Innovation Statute (產業創新發展條例) in April, he said.
Only TSMC’s Nanjing, China, fab is covered by specific restrictions under the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area (臺灣地區與大陸地區人民關係條例), Chen said.
Its other overseas investments remain largely outside any regulatory framework, he said, urging the government to introduce comprehensive oversight rather than leaving such decisions to companies.
Taiwan should look to how other major economies have strengthened their oversight systems, Lee said, citing the US’ CHIPS and Science Act enacted in 2022 and the Reverse CFIUS mechanism created last year, as well as Japan’s Economic Security Promotion Act approved in 2022.
By contrast, the Department of Investment Review is operating under an “outdated and reactive regulatory structure,” he said.
Lee suggested establishing a cross-ministerial FDI oversight mechanism to balance national security with corporate autonomy.
A stronger government role would allow negotiations to be conducted “government-to-government,” enabling Taiwan to leverage foreign industrial policies, tariffs and trade arrangements, he added.
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