National Development and Reform Commission to Release New Policy on Mainland Enterprises Investing in Taiwan

On December 15, 2008, the National Development and Reform Commission (the "NDRC") and the Office of Taiwan Affairs within the State Council ("OTA") released the Circular on Provisions Concerning Administration of Investment Projects of Mainland Enterprises Going to the Taiwan Region (the "Circular").  The Circular opens the possibility for mainland enterprises to invest in Taiwan.  The Circular offers guidelines and provides that a mainland enterprise investing in Taiwan shall (i) be a duly registered enterprise legal person (not an individual); (ii) have the funds, industrial background, technology and management capacity required for the proposed project; and (iii) be beneficial to the peaceful development of the Sino-Taiwan Strait relationship and not harm Chinese national security and unity.  However, due to its recent release, the effects of such Circular to actual investment in Taiwan remain to be tested. It is also unclear whether foreign-invested enterprises, which conceptually fall within the category of mainland enterprises and which the NDRC interprets that the Circular applies to, may also go directly to Taiwan for investment, without using their overseas affiliates.

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