Search

 

Cablegate: Taiwan: Part Three of 2009 National Trade Estimate Report

P 070820Z NOV 08
FM AIT TAIPEI
TO SECSTATE WASHDC PRIORITY 0301
INFO CHINA POSTS COLLECTIVE
AMEMBASSY SEOUL
AMEMBASSY TOKYO
USDOC WASHDC

UNCLAS AIT TAIPEI 001576


STATE FOR EAP/TC, EB/TBB/BTA
STATE PASS TO USTR/BLUE AND WINELAND AND AIT/W
COMMERCE FOR 4431/ITA/MAC/AP/OPB/TAIWAN


E.O. 12958: N/A
TAGS: ETRD ECON EFIN TW
SUBJECT: TAIWAN: PART THREE OF 2009 NATIONAL TRADE ESTIMATE REPORT

REF: STATE 88685

SERVICES BARRIERS
-----------------

Accounting/Consulting Services
------------------------------

1. Foreign certified public accountants may serve as private agents
contracted by Taiwan authorities to provide notary services or
conduct audits only if they pass Taiwan's public certified
accountant qualification tests, although foreign CPAs are exempt
from some portions of the tests. Foreign CPAs may provide
management consultant services in Taiwan.

Banking
-------

2. Foreign banks may set up representative offices, branches, and
subsidiaries. To establish a representative office, banks must rank
among the world's top 1,000 banks in terms of capital or assets, or
have over $300 million in transactions with Taiwan banks and/or
enterprises over the past three years. To establish a bank branch,
a bank must rank among the world's top 500 banks in terms of capital
or assets, or have over $1 billion in transactions with Taiwan banks
and/or enterprises over the past three years. The above
requirements are waived if the government of the foreign bank's home
country has signed a relevant agreement with Taiwan. Taiwan sets a
minimum working capital requirement of NT$150 million ($4.6 million)
for the first branch and another NT$120 million ($3.7 million) for
each additional branch. In addition, a foreign bank's branch in
Taiwan is required to maintain net worth above two-thirds of its
working capital.

3. Foreign banking institutions may acquire up to 100% of equity in
Taiwan banks. Foreign-invested banks in Taiwan are accorded with
national treatment, and these banks are subject to a 25% ownership
limit for each investor, a requirement exactly the same as for
Taiwan banks.

Brokerage/Asset Management
--------------------------

4. Foreign securities firms may set up representative offices,
branches, and subsidiaries, and Taiwan securities firms are not
subject to any foreign ownership limit. They are subject to minimum
capital requirements, including NT$400 million ($12.3 million) for
underwriting, NT$400 million ($12.3 million) for trading, and NT$200
million ($6.15 million) for brokerage. The minimum capital
requirement increases by NT$30 million ($923,080) for establishing a
domestic or offshore branch.

5. Asset management requires a securities investment trust
enterprise (SITE) license and/or securities investment consultant
enterprise (SICE) license. SITEs are allowed to organize, sell, and
manage mutual funds in Taiwan, and SICEs are permitted to sell and
manage overseas mutual funds. Both SITEs and SICEs are not subject
to any foreign ownership limit. They are subject to minimum capital
requirements, including NT$300 million ($9.23 million) for SITEs and
NT$20 million ($615,380) for SICEs, with an ownership limit of 25%
for each investor (shareholder). A minimum 20% of the SITE must be
held one or more of the following:

--fund management firms having over three years of experience and
currently managing assets above NT$65 billion ($2 billion);

--banks ranking among the world's top 1,000 banks and having three
years asset management experience;

--insurance companies with over three years asset management
experience, holding assets above NT$8 billion ($246 million);

--securities firms having a minimum paid-in capital of NT$8 billion
($246 million) and engaging in underwriting, trading and brokerage
for a minimum of three years; and/or

--financial holding companies whose subsidiaries meet any of the
four qualifications.

Educational Services
--------------------

6. Taiwan's Ministry of Education (MOE) does not recognize credit or
degrees earned in Taiwan offered by foreign-owned or operated
facilities which are not physically established in Taiwan and have
not been approved by the MOE. Under Taiwan law, however, foreign
universities can only offer degree programs by setting up a full
campus in Taiwan, and requirements to do so are burdensome. New
schools must have at least four hectares of land, initial floor
space of 6,000 square meters, a substantial endowment deposited in a
local bank account, and 12 academic departments across three or more
fields of research. Foreign colleges and universities may, however,
set up representative offices to provide Taiwan students information
about the foreign schools.

7. Taiwan recognizes joint degrees earned by students who split
attendance between the school in Taiwan and the foreign campus.
However, the MOE does not recognize such degrees unless at least
half of the credits are earned in-person on the foreign campus,
effectively shutting out foreign "capstone" and weekend or executive
MBA programs.

8. Joint degree programs between a foreign school and a Taiwan
school via distance education are also possible. However, credits
earned through distance learning cannot exceed one-third of the
total credits required for a degree in Taiwan, which limits the cost
savings and convenience of distance education.

9. Taiwan allows establishment of private schools at the senior high
level or below only for children of foreign expatriates. Foreign
investors are allowed to establish and operate language training
institutes, and are also allowed to employ local and foreign
teachers. Foreign teachers may not teach in local primary and high
schools unless they pass Taiwan teachers' qualification tests.
Foreign teachers may teach in local tertiary schools when under an
employment contract from the school.

Financial Services
------------------

10. Foreign portfolio investors are required to register rather than
seek advance approval, though since December 2003, the registration
can be done through the Internet. Since 2003, Taiwan has allowed
foreign portfolio investors to trade in the futures and money
markets as a part of financial management before actual portfolio
investment, although domestic currency denominated futures, money
market funds, and bank deposits are limited to 30 percent of total
inward remittances. All offshore foreign portfolio investors may
trade in Taiwan's stock market regardless of their size, except for
investors from the People's Republic of China. Since October 2003,
hedge funds have been permitted to trade in Taiwan's stock market,
but are subject to Taiwan authorities' close surveillance. Foreign
individual investors, however, are still subject to an investment
limit. Onshore foreign individuals and institutional investors are
also subject to annual inward/outward limits.

11. In addition to liberalization, Taiwan set up an international
bond market in 2006. Since then, two foreign banks have issued
foreign currency-denominated bonds. Taiwan has also announced plans
to establish a securities market international board where both
listing and trading will be denominated in U.S. dollars. The plan,
which is designed to attract foreign companies to list as well as
foreign portfolio investors to trade, has thus far not been
implemented due to restrictions on cross-Strait mutual investment.

Healthcare Services
--------------------

12. Taiwan law permits foreign-invested health care services, such
as hospitals and nursing homes, but all types of health care
services in Taiwan must be provided by non-profit organizations.
The number of foreign persons permitted to serve on the board of
directors of a healthcare service provider is limited to no more
than one-third of the total members. In addition, one-third of
board members must have professional medical qualifications. Only
those who have Taiwan-issued medical licenses can practice medical
service in Taiwan. Foreign medical doctors may take
English-language licensing exams which allow them to practice
medicine outside Taiwan's major cities.

13. Taiwan does not license or recognize chiropractors as legitimate
medical practitioners, and allows chiropractors to practice in
Taiwan only if they do not advertise their services and make no
claims about the results or efficacy of treatments.

Insurance
---------

14. Taiwan allows foreign insurance firms to set up representative
offices, branches, and subsidiaries. Taiwan also allows foreign
insurance firms to merge with or acquire local companies. The
minimum capital requirement for an insurance company is NT$ 2
billion ($615 million), and there is no foreign ownership limit. The
minimum working capital for a Taiwan branch of a foreign insurance
company is NT$ 50 million ($1.5 million), and the only entry
requirement is a record of sound performance in its home market in
the past three years, and no major violations in the past five
years. Foreign insurance firms in Taiwan may engage in life,
non-life, and re-insurance businesses.

Pay Television Services
-----------------------

15. The Cable Radio and Television Law restricts foreign investment
in pay television services to a total equity share of 20 percent for
direct investment, or 60 percent for direct plus indirect
investment. Further limits each cable service provider's potential
market share to no more than one-third of the total cable market in
Taiwan. Despite these restrictions, the largest multi-system cable
TV operators in Taiwan are foreign-owned. However, recent,
seemingly arbitrary, NCC decisions requesting financial
restructuring of local affiliates of foreign-owned cable operators
may undermine the ability of foreign cable companies to do business
in Taiwan. In addition, continuing caps on monthly cable TV fees
are overly restrictive, hamper the Taiwan public's access to more
expensive, higher-quality programming, and may reduce the cable
industry's incentives to invest in expensive digitalization of
Taiwan's largely-analog cable system.

Telecommunications Services
----------------------------

16. Since 2005, the Directorate General of Telecommunications (DGT)
has used local population to calculate the capital requirements and
license costs for facilities-based operators providing local, long
distance, and international services. For instance, NT$1.2 billion
($36.4 million) may be required for a local call license in Taipei
City and NT$2 billion ($60.0 million) for long distance and
international service licenses, while licenses in less-populated
areas will be less.

17. To encourage further investments and more competition, in
January 2008, the National Communications Commission
(NCC)--established in 2006 to regulate the telecoms and
broadcasting sectors--reduced capital requirements for
facilities-based operators from NT$16 billion ($485 million) to
NT$6.4 billion ($194 million) for an integrated network operator;
from NT$1.2 billion ($36.4 million) to NT$500 million ($15.2
million) for local call service providers in Taipei; and from NT$2
billion ($60.0 million) to NT$800 million ($24.2 million) for both
long distance and international call operators. In 2008, the NCC
also began accepting and reviewing license applications at any time,
rather than on a quarterly basis.

18. Existing fixed-line operators still face serious difficulties in
negotiating reasonable interconnection arrangements at technically
feasible points in the network of the dominant carrier, Chunghwa
Telecom (CHT). Despite CHT's announcement in May 2004 that it would
share the local loop with the three private providers, fixed-line
operators complain that local loop fees collected by CHT are still
too high. In addition to NT$35 billion ($1.1 billion) of new
broadband-network construction ongoing since 2003, the NCC in July
2007 issued six regional licenses to Worldwide Interoperability for
Microwave Access (WiMax) operators. Taiwan expects WiMax operators
to begin services in 2009, which will help break CHT's monopoly on
the telecommunications network.

19. CHT still retains close ties to the authorities, however. Until
2005, CHT and Taiwan's telecommunications regulator (DGT) were both
under the direct control of the Ministry of Transportation and
Communication (MOTC), creating an obvious conflict of interest.
Privatizing CHT and establishing an independent regulator were two
of Taiwan's WTO accession commitments. In August 2005, MOTC
partially privatized CHT and, after sales of additional shares in
September 2006, state ownership has been reduced to 34 percent, and
more than 40 percent of the company is held by foreign investors.

ELECTRONIC COMMERCE
-------------------

20. Over 90 percent of Taiwan's companies have corporate networks
and a network infrastructure, and 4.7 million households link their
computer to Internet by Asymmetric Digital Subscriber Line (ADSL),
cable modem, or optical fiber (FTTx). Taiwan law has recognized the
legal validity of electronic contracts, records, and signatures
since 2001, the same year Taiwan's legislature passed a data privacy
protection law. Taiwan has not joined with the United States in
APEC to advocate for a permanent moratorium on taxation of Internet
transactions, and the Ministry of Finance imposes business taxes on
Internet vendors who sell products for profit and have monthly sales
over NT$60,000 ($1,820). In 2007, the volume of Internet sales,
including "Business to Consumer" (B2C) and "Consumer to Consumer"
(C2C) totaled NT$214 billion ($6.5 billion), according to the Taiwan
Institute for Information Industry (III). Sales are expected to
increase 32 percent to NT$282 billion ($8.7 billion) in 2008.

INVESTMENT BARRIERS
-------------------

21. Taiwan prohibits or restricts foreign investment in a handful of
industries, including agricultural production, public utilities, and
postal services. In May 2008, Taiwan removed single-axle truck
leasing from the list of sectors in which foreign investment is
restricted, but added pesticides. Taiwan has allowed private
production of cigarettes since 2004 without any foreign ownership
limit, although prior official approval is required. Taiwan-flagged
merchant ships are subject to a foreign ownership limit of 50
percent.

22. The foreign ownership limit on wireless and wire line
telecommunications firms is 60 percent, including a direct foreign
investment limit of 49 percent. Separate rules exist for Chunghwa
Telecom, the legacy carrier still partially owned by the Ministry of
Transport and Communications, which controls 97 percent of the fixed
line telecommunications market. For Chunghwa Telecom, the cap on
direct and indirect investment was raised to 55 percent in December
2007, including a direct foreign investment limit of 49 percent. In
January 2003, Taiwan raised the total direct and indirect foreign
ownership limit on cable television broadcasting services to 60
percent, including a 20 percent limit on foreign direct investment.

23. A 49 percent foreign ownership limit remains on satellite
television broadcasting services, power transmission and
distribution, piped distribution of natural gas, high speed
railways, airport ground handling firms, air cargo terminals, air
catering companies, and air cargo forwarders. In July 2007, the
foreign ownership limit on airline companies was raised from 33
percent to 49.99 percent, with each individual foreign investor
subject to an ownership limit of 25 percent.

Portfolio Investment
--------------------

24. Foreign portfolio investors are required to register rather than
seek advance approval, though since December 2003, the registration
can be done through the Internet. Up to 30 percent of funds remitted
for purposes of portfolio investment may be held in money market or
other similar instruments. Funds for futures trading, however, must
be remitted to Taiwan specifically for that purpose and are
segregated from funds remitted for equity investment. In June 2007,
Taiwan set a cap of NT$300 million on the balance of a foreign
investor's NT$ omnibus account resulting from profits gained from
futures trading in Taiwan. If the balance exceeds the limit, the
foreign investor is required to convert the NT$ into U.S. dollars,
with the new balance below $10 million. Except for investors from
the People's Republic of China, offshore foreign portfolio investors
may trade in Taiwan's stock market regardless of their size.

25. In mid-August 2008, Taiwan announced that it will allow
China-based qualified domestic institutional investors (QDII) to
engage in portfolio investment in Taiwan after relevant regulations
are promulgated, likely before the end of 2008. Such investment,
however, will be subject to a PRC-set cap of 3% net worth until
Taiwan and the PRC sign a cross-Strait memorandum of understanding
on this issue.

26. Since October 2003, foreign hedge funds have been permitted to
trade in Taiwan's stock market, but are subject to Taiwan
authorities' close surveillance. Foreign individual investors,
however, are still subject to an investment limit. Onshore foreign
individuals and institutional investors are also subject to annual
inward/outward limits of $5 million and $50 million, respectively.

© Scoop Media

 
 
 
 
 
World Headlines

 

Werewolf: Gordon Campbell On North Korea, Neo-Nazism, And Milo

With a bit of luck the planet won’t be devastated by nuclear war in the next few days. US President Donald Trump will have begun to fixate on some other way to gratify his self-esteem – maybe by invading Venezuela or starting a war with Iran. More>>

Victory Declared: New Stabilisation Funding From NZ As Mosul Is Retaken

New Zealand has congratulated the Iraqi government on the successful liberation of Mosul from ISIS after a long and hard-fought campaign. More>>

Gordon Campbell: On The Current US Moves Against North Korea

If Martians visited early last week, they’d probably be scratching their heads as to why North Korea was being treated as a potential trigger for global conflict... More>>

ALSO:

Gordon Campbell: On The Lessons From Corbyn’s Campaign

Leaving partisan politics aside – and ignoring Jeremy Corbyn’s sensational election campaign for a moment – it has to be said that Britain is now really up shit creek... More>>

ALSO:

Another US Court: Fourth Circuit Rules Muslim Ban Discriminatory

ACLU: Step by step, point by point, the court laid out what has been clear from the start: The president promised to ban Muslims from the United States, and his executive orders are an attempt to do just that. More>>

ALSO: