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Time for Taiwan to pick up the pace

Posted: 16 Jun 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Mike Clendenin? Taiwan?

Plainly said, Taiwan's government deserves little credit for approving two investments in China recently. The go-ahead will allow a deal to close for one company in the packaging and test community, and another in the LCD industry.

The approval is likely to affect Taipei-based Advanced Semiconductor Engineering (ASE), which reportedly applied two years ago with the intent of taking over a China-based packaging house run by Philips. Philips also wanted to merge some of its China assets with flat-panel maker Toppoly Optoelectronics Corp. That deal, which has been in limbo since its announcement late last year, is also now likely to advance.

Perhaps China thinks the approvals are better late than never, but usually in business, when you're late to market, you never win.

Of course, Taiwan has standard excuses for not making investments in China: national security, cross-strait politics, the desire to encourage business to stay at home. All are decent considerations. But in this case, they are pitiable props. After all, we aren't talking about the transfer of cutting-edge technology here.

The situation is particularly sad because Taiwan hasn't made a permanent change in investment rules that would make them more predictable for business. Just the opposite, in fact.

Taiwan cited political tensions with China as a reason to delay approval it was ready to grant on investments at the end of 2004. Just as in the United States, where almost anything with a Middle Eastern air seems to irrationally arouse suspicionat least among members of Congressin Taiwan, the irritant is mainland China. That country's ambition to reclaim the island scares the wits out of everybodyor at least many government officials.

The folly goes further. ASE is looking to take over an advanced packaging house in China, but the Taiwan government is reportedly signaling a no-go. Apparently, the technology is too advanced. Deconstructing that thought process is painful. In a place that is emphasizing innovation and advanced technology, the government is telling its businesses to make sure they invest only in low-tech overseas enterprisesor at least when the country is China. You can bet their competitors aren't doing the same.

The U.S.-Taiwan Business Council described the decision as "small but encouraging."

I, too, encourage this liberalization. But I will be surprised if it happens under the current administration of President Chen Shui-bian.

- Mike Clendenin
EE Times

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