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On 10 February 2010, the Executive Yuan approved amendments to the Negative List for Investments in Mainland China – Prohibited Product Items for Investments in Mainland China by the Agricultural, Manufacturing, and Service Industries" and promulgated the amendments on 26 February 2010. The amendments relax prohibitions on investments in certain prohibited categories and adjust the scope of prohibition and standard of review on certain investments. Highlights of the amendments are listed below.
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The amendments move certain items from the prohibited category to the general category:
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1. |
Agriculture: Prohibitions on 2 items are lifted; 434 items remain restricted.
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2. |
Manufacturing: Prohibitions on 4 items are lifted; 104 items remain restricted.
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3. |
Services: Prohibitions on 3 categories are lifted; 5 categories remain restricted.
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4. |
Infrastructure construction: Prohibitions on 2 items are lifted; 12 items remain restricted.
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Amendments to the scope of prohibition and standard of review:
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1. |
Investments in silicon wafer factories: Scope of prohibition and standard of review are amended.
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(1) |
Packaging and testing: Amendments allows investments in projects involving the testing and packaging of semiconductors, provided, however that a single investment project exceeding US$50 million should be approved by the Key Technology Committee.
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(2) |
Factories producing 8+ inches silicon wafers: In principle, investments are still prohibited, provided, however, that investments may be allowed if they are made in the forms of mergers, acquisitions, or purchase of shares.
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(3) |
Factories producing silicon wafers less than 8 inches: Investments are regulated on an ag-gregate basis. The existing restriction that limits investments to a maximum of three 8-inch wafer factories is continued. Investments in the forms of mergers, acquisitions, or purchase of shares are now allowed, provided, however, that the production technology used in these invested factories must be at least two generations behind the technology available domes-tically by the investing companies and that the investment must also be approved by the Key Technology Committee.
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2. |
Investments in TFT-LCD panel factories: Scope of prohibition and standard of review are amended.
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(1) |
Investments in factories making TFT-LCD panels of sixth generation or above with tech-nology that equals or exceeds that of the investor's domestic production are prohibited. In-vestments in the form of mergers, acquisitions, or share acquisitions are also prohibited.
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(2) |
Investors may only invest in factories making TFT-LCD panels of sixth generation or above if the technology gap between the target and the investor is at least one generation. The investment must also have corresponding domestic investments and comply with other re-quirements.
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3. |
Real estate investment: Standard of review is amended.
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(1) |
Real estate investments are regulated on an aggregate basis. Total annual investment is capped at NT$50 billion.
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(2) |
A single investment is capped at US$50 million each.
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(3) |
Legal persons making investments must have been in operation for at least 3 years, and have had profits in at least 2 of the last 3 years.
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(4) |
Legal persons making investment must be in good financial health, with a liquidity ratio over 100% and, except for enterprises in the finance and insurance industries, a debt to total assets ratio of less than 70%.
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(5) |
When applying for approval, a legal person must propose the proposals that will benefit the domestic economy, such as capital repatriation.
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(6) |
Annual investments of individuals are capped at US$5 million, and will be subject to the total and individual investment caps discussed in the previous sections.
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