Taiwan lifts cap on China investment in LCDs, chips

TAIPEI, March 20 Tue Mar 20, 2012 6:23am EDT

TAIPEI, March 20 (Reuters) - Taiwan has raised investment ceilings for Chinese investors in five key sectors including liquid crystal displays (LCDs) and semiconductors, but stopped short of allowing mainland companies to hold controlling stakes, the government said on Tuesday.

Under the new regulations, Chinese investors are no longer limited to a 10 percent stake in local companies, or 50 percent in joint ventures, the economics ministry said.

It added that they mainland investors would still be barred from taking controlling stakes or appointing managers in their investments, and that all investments must be approved by Taiwan regulators.

The other three key sectors are integrated circuit assembly and testing, metal tool manufacturing, and machinery used for electronics and chip production.

The ministry added that the revision, aimed at ensuring the development of these key industries, would also cover makers of light-emitting diodes and solar cells, which were opened to Chinese investment for the first time.

"Some of Taiwan's companies are operating near the forefront of their industries. As with anywhere else in the world, there are some reservations when it comes to industry competition and national security," said Economic Vice-Minister Hwang Jung-chiou. "On principle, Taiwan is open to foreign investors."

The re-election of President Ma Ying-jeou in January has been seen as a vote of support for his four-year economic rapprochement with China, which has taken annual bilateral trade to about $145 billion and helped cushion Taiwan's export-led economy from the global downturn.

Ma has taken a controlled approach to opening the economy since his first term, but key sectors such as banking and top-end technology including semiconductor and flat panels remain only partially open on concern over Chinese influence and the unequal division of benefits. (Reporting by Argin Chang; Writing by Faith Hung; Editing by Chris Lewis)

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