Taipei, July 16, 2008 (CENS)--The Executive Yuan (the Cabinet) is scheduled to pass relaxation measures for investments by domestic enterprises in China at its regular meeting tomorrow (July 17), raising the investment ceiling to 60% of their book values, up from 40% now, and scrapping the ceiling altogether for those enterprises with headquarters in Taiwan, said Shih Yen-shiang, vice economics minister, yesterday (June 15).

Meanwhile, the Taiwanese subsidiaries of multinationals will also be exempt from the investment-ceiling restriction, a measure designed to encourage multinationals using Taiwan as a springboard to tap the Chinese market, according to Shih.

The policy, which has obtained the approval of President Ma Ying-jeou, is expected to benefit 163 domestic enterprises, whose investments in China have exceeded or approached the original ceilings, while increasing the number of operational headquarters set up domestic enterprises in Taiwan, which now stands at 577.

Chen Wu-hsiung, chairman of the Chinese National Federation of Industries, remarks that the relaxation will encourage Taiwanese funds returning to the island, leading to more investments by domestic enterprises at home, which will definitely be higher than their investments in China.

The Chinese investment ceiling for individuals will be raised to US$5 million annually, similar to the ceiling for outward remittance by local people, up from original NT$80 million outstanding, while the ceiling for small and medium enterprises (SME) will remain unchanged, at NT$80 million. SME owners, though, can dodge the restriction by choosing to invest in China in the name of individuals.

After being approved at the Executive Yuan meeting tomorrow, the MOEA will revise the "guidelines for screening investment in or technological cooperation with China," and the new policy is expected to take effect within one month, according to Shih.

Screening of applications for investing in China will be even more efficient, as the MOEA plans to raise the ceiling for projects needing screening on case-by-case basis, which now stands at US$20 million, while embracing simple screening method for lesser projects.

The MOEA approved US$9.97 billion worth of investment projects in China last year, boosting the accumulated amount of Chinese investment projects to over US$70 billion.

(by Philip Liu)