He believed the progress of the application was related to political considerations and that the go-ahead had been expected soon after the Kuomintang defeated the pro-independence Democratic Progressive Party.

An office in Taipei had been chosen and renovated, and a director picked to run the venture as early as last year, the source added.

However, the elected staff member, who worked for the council in Hong Kong, had since quit and a new director would need to be found.

'The matter has dragged on for so long that the would-be director could not wait and has left the council,' the source said.

A spokesman for the council said it hoped the office would open this year, and that the application had been filed about three months ago.

'In anticipating the rising business opportunities in the region by the prospect of implementing the three direct links across the Taiwan Strait, the Trade Development Council is stepping up its effort to promote the advantages of a Hong Kong platform and its services industry to Taiwan's business community,' the spokesman said.

It also planned to organise several trade missions to the island this year. Previous visits were organised through a Taipei consultant office.

Chiang Su-hui, chairman of the Taiwan Business Association in Hong Kong, welcomed the council's plan to set up an office in Taipei. She said she hoped the council's quasi-official status would allow the Hong Kong government to play a bigger role in future discussions on trade matters with Taiwan, given that official interaction between Hong Kong and Taiwan was still restricted.

Chung Hwa Travel Service, Taipei's de facto consulate in Hong Kong, said it needed more time to comment on the council's plan.