11.08.2001
''No haste, be patient'' - Confined to history?

• The gov't yesterday scrapped the US$50m limit on individual investments in China. While approval for large projects is still required, the ceiling has been raised to over US$20m from US$3m. Approval for projects under US$20m will be simplified. Taiwanese investors who have previously invested in China will also be allowed to legalize investments by officially registering them, while a system to encourage the repatriation of funds back into Taiwan will be established. Investors who have paid tax in China will also not be liable to pay tax in Taiwan. The measures are designed to combat the hollowing out of the Taiwanese economy. The Cabinet has yet to announce the easing of investment bans in restricted industries such as semiconductors. We believe that yesterday's measures are only a first step in what will be a lengthy process of economic engagement. However, the gov't will need to come up with more attractive incentives for Taiwanese companies to repatriate funds back home, as these companies can conveniently use third countries to invest in China. Non-official sources estimate total accumulated investment in China at over US$50bn, double the official figure. The above measures indicate the gov't is catching up with reality.