The China Post reports Premier Liu Chao-shiuan has said more deregulation will occur over the coming year. Premier Liu apparently argues this deregulation will make Taiwan more competitive. According to the China Post:
On deregulation, Liu said it is the only way to enhance Taiwan's international competitiveness.
To this end, Liu said the government has already implemented several measures. The Cabinet decided last month to allow foreign companies, including those with Chinese shareholders, to list shares on the domestic exchange.
Further, the government has raised the cap for Taiwanese firms investing in China from 40 percent of the firm's net worth to 60 percent.
These measures, Liu said, have made Taiwan more attractive to foreign capital.
He cited as an example a plan by Hon Hai Precision Industry Co., the Tucheng, Taipei County-based contract electronics manufacturer largest in the world, to have its overseas units list in Taiwan.
Hon Hai officials said Wednesday that Foxconn International, a subsidiary which makes phones for Nokia Corp. and Motorola Inc., is planning to list in Taiwan. Foxconn International went public in Hong Kong in February 2005.
To create an even more deregulatory environment in Taiwan, the government will announce further measures, Minister-Without-Portfolio Chu said.
Among the more than 50 measures to be implemented by the end of the year are: relaxing the types of local industries that can invest in mainland China; simplifying the procedure by which mainland Chinese apply for business visas to Taiwan; and making it easier for mainland Chinese technical professionals to visit Taiwan for exchange purposes.
As for next year, the government will announce the following: making it easier for Taiwan banks to set up branches or subsidiaries in China or invest in Chinese banks, and opening Taiwan banks to investment from foreign capital, including those from mainland China.
The effect of these deregulations on the investments in China and Taiwan are going to be very interesting to watch. As we reported earlier in the year in Taiwanese Investment in China: Now and the Future, companies are already returning to Taiwan or looking to invest in other markets due to a declining investment environment in China. Both tax and minimum wage increases have made investing in China less attractive.
Premier Liu uses the Hon Hai example of how the deregulations are having a positive affect on attracting Taiwanese companues back to Taiwan. Hon Hai are investing large sums of money into Taiwan and how Foxconn are going to list on Taiwan's stock exchange (see Hon Hai Invests in Taiwan). Only time will tell if other companies are prepared to follow and if the deregulation will have a positive impact on the economy as a whole.
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