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AMENDED REGULATIONS GOV-ERNING INVESTMENT AND TECHNICAL COOPERATION IN THE PRC
Patrick Wong
On 31 July 2002, the Ministry of Economic Af-fairs (MOEA) announced amendments to the Regulations Governing Approval for Investment and Technical Cooperation in the Mainland Area." The amendments took effect on 2 August, 2002. The major amendments are as follows:
In order to implement a resolution of the Au-gust 2001 Economic Development Advisory Conference, which recommended that enter-prises be allowed to invest directly in mainland China without the need to set up a subsidiary in a third territory, the regulations are amended so that an investor in the Taiwan area that wishes to apply for investment in the mainland or to conduct technical cooperation there, may choose at its discretion whether to invest directly, or to invest indirectly (through an entity established in a third territory).
In response to investors' needs, a new provi-sion is added to allow investments to be made in the form of other assets approved by the competent authorities, in addition to cash. This allows the Investment Commission (IC) of the MOEA greater flexibility in reviewing applications and filings.
An entity granted approval to invest in the mainland area must, within six months after the implementation of its investment plan, file related documents with the IC and fill out an invested enterprise operation status survey form. If the cumulative investment exceeds the threshold set forth by the competent au-thorities (currently US$20 million), after commencing implementation of its investment plan, the investor must also submit audited financial reports to the IC within four months after the end of each business year, and report the status of execution of the investment plan in each quarter within ten days after the end of the quarter. If an investor fails to fill out the survey form or present financial reports within the above time limits, the IC may revoke its investment approval, and order it to remit the amount of its investment back to Taiwan within a specified time period.
To encourage the return of funds to Taiwan, if an entity that implements an approved in-vestment in the mainland area subsequently remits back to Taiwan the investment capital or retained earnings of the invested enterprise, it should report the remittance to the IC within one month by submitting the relevant eviden-tiary documentary, to have the remitted amount deducted from its cumulative invest-ment record.
