Taiwan to spend NT$20b to promote strategic mergers

Taiwan's National Development Fund said on Tuesday it has agreed to spend NT$20 billion (HK$5.13 billion) to encourage companies of strategic importance to the economy to merge.

A spokesman for the Industrial Development Bureau said the fund will be targeted at companies with long-term development potential, which will most likely benefit the island's overall economic growth.

He did not mention any specific companies but said firms involved in green energy development, manufacturing and other technical fields would likely fall under the definition.

The spokesman did not give an exact definition of "strategic" but said companies in fields such as national defence have not as yet been considered for inclusion in the plan.

Andrew Tsai, a Taipei-based economist at KGI Securities, said he would expect the government to encourage mergers among firms at different ends of the manufacturing chain in the same industry, such as solar energy.

"It would make sense for them to encourage this kind of upstream-downstream cooperation among companies that complement each other," Tsai said.