HONG KONG: Taiwan business groups and individuals soon may enjoy broader privileges for investing in the mainland and for setting up residences there.

Delegates attending the nation's top consultative meetings pledged to review and upgrade policies designed to protect the interests of Taiwan investors. "It has been ten years, the investment and business environment is no longer the same as before, we need a newer policy to apply better to the new environment," said Hu Youqing, a Taiwan deputy to the National People's Congress (NPC).

Each province and city may review the existing policy based on local conditions. Naturally these will vary from region to region, Hu said.

About 1 million Taiwanese are living and working on the mainland. Investment by Taiwan companies reached $150 billion in 2008, according to statistics issued by the Taiwan Affairs Office.

"I'm glad to hear the authorities would consider providing Taiwan people on the mainland with better treatment," said Andy Lo, chairman of Taiwan Business Association (Hong Kong) Ltd.

"The policy has improved and bans loosened over the years, we see more Taiwan businessmen plant their homes on the mainland," he said.

Having lived in Shenzhen for three years, Rod Huang, a 33-year-old Taiwanese engineer at Foxconn, said he currently doesn't have the same rights as his mainland compatriots but he commented, a more welcoming treatment will attract more Taiwanese investors.

"There are still barriers for us when it comes to investment in the stock and property markets, these are the two major means to maintain our asset values," he said.

Taiwan investors have access to the B-share equities market but are prohibited from investing in A-shares. The latter are Shanghai and Shenzhen-listed stocks open to domestic investors and qualified foreign institutional investors only. The B shares are traded predominantly in US dollars and are available to overseas investors only.

Delegates to the NPC and members of the the Chinese People's Political Consultative Conference (CPPCC) also suggest that authorities re-consider some of the restrictions on Taiwanese investment in mainland properties.

"In some cities, a Taiwan investor can not purchase more than two apartments under his name. In others there is no such limit," a delegate said.

Experts predicted there will be new policies benefiting Taiwan business groups, following the top level national meetings.

Beijing agreed last December to offer 130 billion yuan ($19 billion) in loans to Taiwan companies operating on the mainland and to buy $2 billion worth of flat-panel displays from the island's manufacturers.

The local governments of Fujian, Guangdong, Jiangsu, Zhejiang and Chongqing have also established policies, principally financial support, to encourage business innovation at the mainland operations of Taiwan companies.

In Fujian, the Xiamen government has promised up to 50 percent subsidies on loans to small- and medium-sized Taiwan firms, and allocated 10 million yuan to set up a Risk Compensation Fund for SMEs.

(HK Edition 03/12/2009 page16)