Taiwan Opens More Industries to China as Former Foes Draw Closer

Taiwan will allow Chinese investments in 138 more industries in the third wave of easing since mid-2009 as the island’s President Ma Ying-jeou seeks to deepen economic ties between the former civil-war foes.

Taiwan will let Chinese investors own up to 50 percent of companies in industries including beverages and food processing, the Ministry of Economic Affairs said in a statement in Taipei today. The new rules will take effect by the end of this month.

Ma’s push for closer ties with China (CHFAYOY), which has invested billions of dollars in projects from roads to power plants across Africa and Asia, won a fresh mandate in January when he was re-elected president. Cross-strait relations improved after Ma took office in May 2008 and dropped his predecessor’s pro- independence stance, with the island relaxing trade, travel and investment restrictions and ending a six-decade ban on mainland Chinese visitors.

“The economic ministry will uphold the principle of ’putting Taiwan first and what is beneficial for the people,’ and continue to review Chinese investments so that we can combine our strengths and develop the mainland and international markets,” Hwang Jung-chiou, a vice minister at the ministry, said in Taipei today.

Chinese investors won’t be allowed to have management control in industries including flat panels, semiconductors, testing and packaging, light-emitting diodes and solar batteries, Hwang said. Any investments in these areas would need approval by a taskforce to protect Taiwan’s technologies, he said.

Trade Accord

The mainland and Taiwan signed a trade accord in June 2010 and the two sides cut import taxes in January last year on more than 800 products under an Economic Cooperation Framework Agreement.

In March 2011, the island’s government allowed Chinese investors to buy stakes of up to 10 percent in flat-panel and chip-manufacturing companies, and less than 50 percent of any ventures with Taiwanese companies. Taiwan also allowed Chinese investment in other parts of the manufacturing and services industries and in nine public-works projects.

In the two previous rounds of easing in investment rules in 2009 and 2011, Taiwan opened more than 200 industries to Chinese investments, including textiles, plastics and computers. Industries deemed strategic, such as telecommunications, remain closed.

The island will allow Chinese investments in 115 manufacturing industries, 23 service industries and 23 public infrastructure projects including logistics centers, according to the statement today. China Mobile Ltd. (941)’s plan to buy a stake in Taiwan’s Far EasTone Telecommunications Co. hasn’t been approved yet, Hwang said.

Manufacturing and Services

Today’s easing would allow Chinese capital into 97 percent of Taiwan’s manufacturing industry, and more than half of the services sector and public infrastructure projects, Hwang said.

In the more than two years since June 2009, when investments were first allowed from the mainland, investment from China in Taiwan had reached $272 million as of the end of January, according to data from the economic ministry. Taiwanese companies have invested more than $150 billion in China since 1991, seeking to take advantage of lower labor costs, according to the Taipei-based Mainland Affairs Council.

China, Taiwan’s largest export market, regards the independently governed island as part of its territory, threatening to attack if it declares formal independence. The two sides split more than 60 years ago after Mao Zedong’s communists took control of China, forcing the ruling Kuomintang to retreat to Taiwan.

To contact the reporters on this story: Janet Ong in Taipei at jong3@bloomberg.net; Chinmei Sung in Taipei at csung4@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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