Taiwan May Establish New Offshore Capital Market

by Mary Swire, Tax-News.com, Hong Kong

21 January 2005

Taiwan’s Financial Supervisory Commission is mulling a proposal to create an offshore stock market in an attempt to boost capital raised by foreign investors and bypass listing restrictions on domestic firms with investments in China, the Financial Times has reported.

Under the proposal, a foreign currency-denominated board will be established for listings by foreign companies, including Taiwanese-owned firms with operations in mainland China but which are registered offshore, according to Kong Jaw-sheng, FSC chairman.

Current rules prevent firms listed on the Taiwan Stock Exchange from having more than 40% of their capital invested in China.

Moves to relax this rule were thwarted last year after policy discussions were derailed by anti-Chinese elements in the Taiwan government, who feared a growing economic dependence on the mainland.

However, analysts have warned that Taiwan’s development is being held back by preventing international investors an opportunity to buy into Chinese growth.

Nonetheless, it is unclear whether the 40% rule will be abolished under the new proposals, and Mr Kong indicated the government is seeking a broader solution aimed at attracting “quality companies.”

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