By FANNY LIU
TAIPEI -- Taiwan's government may loosen restrictions on investment in petrochemical production in China, where new projects have already attracted some interest from Taiwanese companies.
Taiwan's Investment Commission, which regulates outbound investments and is under the Ministry of Economics Affairs, said Monday it has proposed to let the island's petrochemical producers build naphtha cracker plants and produce ethylene and propylene in China.
Final approval of projects will hinge on conditions concerning ownership and shipment priority, Emile Chang, executive secretary of the Investment Commission, told the Wall Street Journal. Mr. Chang said the projects will have to be at least 50% owned by Taiwanese companies, which will also pledge to ship the output back to Taiwan if there is a shortage at home.
Taiwan currently doesn't allow investment in naphtha cracking in China, likely as part of efforts to avoid capital outflows.
Still, the island's petrochemical industry has been seeking investment opportunities in China after government-linked Kuokuang Petrochemical Technology Co. failed in the past two years to find a suitable site in Taiwan or Malaysia to build a much-needed naphtha cracker.
Analysts have said that Taiwan's downstream petrochemical companies might face a shortage of feedstock. Taiwan is a net importer of ethylene; it produced 3.47 million metric tons of ethylene in 2012 and imported around 348,000 metric tons of the product.
The Investment Commission's proposal has been submitted to the cabinet and is pending approval, Mr. Chang said, declining to give a time frame on the process.
Formosa Plastics Group, among the most active Taiwanese petrochemical firms investing in China, has flagged an interest to build ethylene plants in the provinces of Zhejiang and Fujian. The company currently produces petrochemical products, such as ethylene glycol and polyvinyl chloride, in its Ningbo petrochemical complex in Zhejiang province.
Dow Jones Newswires