Poor security fails to stem flow of funds

THE flow of Taiwan funds into the mainland market will continue unabated despite a failure to reach agreement on protecting Taiwanese investments.

And yesterday, mainland officials and academics stressed that Taiwan was welcome to take a larger share in the lucrative market on the mainland, while putting pressure on it to remove restrictions on cross-strait economic contacts.

Mr Wang Lu-yen, honorary chairman of the Taiwan Businessmen Association in Hongkong, was disappointed with the failure of both sides to offer more extensive and legal protection for Taiwan investors.

''It is a matter of uncertainty. We do not know what's going to happen in China and there's always this fear that things might get out of hand because we lack legal protection,'' he said.

But he said Taiwan investment would continue to grow on the mainland by 50 per cent each year.

Official figures from the island show that there are 2,500 Taiwan investors in China, but Mr Wang said it was far from the true figure, which he estimated to be around 120,000 or more.

His view was shared by Mr Stanley Lim Yu-yan, general manager of Taiwan Merchants (Hongkong) Service Centre.

Mr Lim urged the Chinese Government to upgrade the 22-point guidelines issued by the State Council on Taiwanese investment to the status of formal legislation.

''There has been great expectation [among] Taiwan businessmen that the problem could be resolved in the summit,'' he said.

''We cannot even set up a formal organisation on the mainland and there is very little assistance for us once we cross the border.'' However, Mr Lim believed Taiwan businessmen would continue with their trade in the mainland with little protection.

Businessmen in Taiwan said the fact that the issue of Taiwanese investment protection has received wide concern from the two sides during the talks would be a confidence-boaster for Taiwanese investors in the mainland.

A Taiwan University lecturer who has had frequent contacts with businessmen said the real significance of the ''Koo-Wang talks'' was that the ''mainland craze'' of Taiwanese investors would ''certainly accelerate''.

A vice-chairman of the State Council's construction committee on the Three Gorges Dam Project, Mr Guo Shuyan, said Taiwanese businessmen were welcome to take part in the multi-billion-dollar plan.

And Vice-President Mr Rong Yiren told a visiting banking delegation from Taiwan in Beijing yesterday: ''There are both hopes and problems for the monetary sector of Taiwan to invest on the mainland. But the problems can be solved.'' He maintained that investment was two-way and called on Taiwan to lift restrictions against mainland investment.

In another CNS report, a vice-chairman of the All-China Federation of Industry and Commerce, Mr Jin Shuping, said he was confident that the pace of increase of economic and trade contacts between the two sides would be speeded up after the summit.

On the issue of investment protection, he said the major problem was that the legal system in China remained inadequate.