Taiwan to Lift Ban on Mainland Chinese Investment

It has been a longstanding policy of the Taiwanese government that Mainland Chinese are not allowed to make investment in Taiwan in the form of foreign direct investment. This policy has has been heavily criticized by many that it has skewed the balance of inflow and outflow of capital investment, resulting in huge deficit in Taiwan’s capital account. The underlying considerations have been due to national security concerns over the hostility of the Beijing government towards Taiwan. Given the recent ease of tensions between Taipei and Beijing, Chinese investors are no longer seen as much of a threat as before. Consequently, it has been recently discussed and proposed in the cross ministerial meetings of the Executive Yuan that the Mainland Chinese will be able to invest in Taiwan in certain enumerated sectors in the form of a solo proprietorship, partnership, subsidiary company and/or branch office. These investors however must satisfy the requirement of a minimum capital investment of 8 million NT dollars, and the sectors that will likely be available for investment are various manufacturing and service sectors (such as financial institutions, semi-conductor, departments stores, and restaurants) and various infrastructure projects (such as aviation and tourism). Also, under the proposed draft, any company with 30% of Mainland Chinese equity will be considered a Mainland Chinese entity. Professional services such as accounting and legal services are not within the sectors to be lifted.