Taiwan to review China investment limits - papers

TAIPEI Nov 19 (Reuters) - Taiwan's government will review by the end of the year plans to remove restrictions on investments by semiconductor and LCD makers in China as the island's economy recovers, two local newspapers said. Premier Wu Den-yih told the Commercial Times in an interview that the government would like to see Taiwan companies build more manufacturing plants in China if they can leave their research and development headquarters in Taiwan.

The administration of Taiwan's President Ma Ying-jeou, which was elected on a platform of closer economic ties with China, has been turning to its giant neighbour to help revive the sagging economy.

Wu told the Commercial Times that Taiwan's economy should grow above the statistics agency's forecast of 3.92 percent in 2010 on rising exports, a forecast roughly in line with market expectations.

In a Reuters poll in October, economists forecast Taiwan's gross domestic product would expand 4.1 percent next year after a 4 percent contraction this year.

The Economic Daily News, another Chinese-language newspaper, also said on Thursday that the plan will be discussed at the cabinet's inter-departmental meeting at the end of the year, and local LCD panel makers may be able to expand investment in China. Taiwanese firms including LCD maker AU Optronics (2409.TW) and chipmaker UMC (2303.TW), have urged the government to allow them to invest more in China or use more advanced technologies to cut costs and compete with global rivals, such as in South Korea.

For now, under Taiwan's rules, LCD makers can only do final assembly work in China using panels produced elsewhere. Panel production is high-tech work that typically requires about $3 billion or more for the construction of a single factory.

Major companies in the sector have been flocking to China with blueprints of new LCD plants to take advantage of its market. [ID:nTP209929] (Reporting by Baker Li, Editing by Jacqueline Wong)