Taiwan's authorities are to remove some restrictions and raise the ceiling on local companies' investments on China's mainland as part of plans to strengthen the island's economy.

Taiwan companies will be able to invest as much as 60 percent of their net worth on the mainland starting in August, up from a maximum of 40 percent, the authorities said yesterday.

The island authorities will scrap mainland investment limits for local companies if their operational headquarters are in Taiwan; they make annual revenue of more than NT$500 million (US$16 million); and they hire more than 50 people, the government said. This also applies to units of foreign firms operating in Taiwan. "The move will signal to foreign investors the openness of the Taiwan economy and raise their confidence in the Taiwan market, and ensure foreign funds continue to flow into Taiwan," the authorities said.

Taiwan companies and individuals have invested as much as US$150 billion on the mainland, the island's biggest trading partner and investment destination, according to government data.

Exports to the mainland and Hong Kong accounted for more than 40 percent of total overseas shipments last year.

Shares in Taiwan Semiconductor Manufacturing, the world's largest maker of chips designed by other companies, which has a factory in Shanghai, surged by its daily limit to NT$57.50.

Under the new rules, individuals can invest as much as US$5 million a year on the mainland, up from US$2.6 million. The cap for small and medium-sized companies will be raised to NT$80 million or 60 percent of their net worth, whichever is higher.

Under the old rules, Taiwan companies with net worth less than NT$5 billion were allowed to invest up to 40 percent on the mainland. The cap was 30 percent for companies valued from NT$5 billion to NT$10 billion, and 20 percent for those worth more than NT$10 billion.

(Shanghai Daily July 18, 2008)