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Talk of the Day -- Investment impact of shelving nuclear plant

2014/04/28 19:24:28

Business leaders have expressed worry over the administration's announcement to halt work on the fourth nuclear power plant amid widespread protest Sunday.

Businesspeople said foreign investors will now refrain from making investments and locals will have to prepare for higher electricity rates and inflation without power generated by the plant.

Their concerns come at a time when overseas investment, including funds from China, are petering out over a lack of confidence in Taiwan's economic environment.

The following are excerpts from local dailies on how recent controversies impact investments:

Economic Daily News:

Lai Cheng-I, chairman of the General Chamber of Commerce of the Republic of China, said the controversy over the fourth nuclear power plant has evolved into a political competition for votes between the ruling Kuomintang (KMT) and the Democratic Progressive Party (DPP).

"I'm sure the protesters (against the power plant) will regret it some day" because they don't know the tremendous impact on electricity rates and social cost shutting down the project will bring, he said.

He noted that foreign investor confidence in Taiwan has been undermined due to continued protests, first over the trade-in-services pact with China, and now over nuclear power.

The public should brace for a hike in consumer prices as a result, he cautioned.

Tsai Lien-sheng, secretary general of the Chinese National Federation of Industries, said the two biggest concerns for businesses are energy stability and electricity rates.

Whether the fourth nuclear power plant is shelved or canceled altogether, the government will need to take the necessary steps to ensure sufficient power generation, including the extension of service periods for Taiwan's three older nuclear power plants.

But extending the lifespans of the three existing plants is only a stop-gap. He said the government should explain how it plans to deal with power shortages by holding a national energy conference later this year, adding that investors will be hesitant if they are not reassured that the power supply can remain stable. (April 28, 2014).

Commercial Times:

Chinese organizations have applied for over 500 investment projects worth a total of US$870 million since Taiwan relaxed barriers in 2009, but the actual amount of incoming funds over the past two years has dropped sharply, according to officials.

The culprit is apparently a strong sense of uncertainty over investing in Taiwan. This, coupled with the government's differential treatment of Chinese and foreign businesses, has ultimately deterred some investors from moving forward.

Statistics show that China remitted as much as 98 percent of funds for the approved projects in 2009, but the stalling of the trade-in-services pact made that number tumble to 83 percent last year. It dropped yet again in the first quarter of this year to below 60 percent.

Analysts have said that some Chinese businesses are still testing the water in Taiwan even as the more open investment environment enters its sixth year, noting that Taiwan still has strict restrictions on families of Chinese executives staying in Taiwan and has seen an upsurge in unfriendly attitudes toward Chinese businesses during the Sunflower Movement student protests.

Chinese businesses could become more reserved given the likely impact on cross-strait relations if the Democratic Progressive Party, known for its unfriendly stance toward Beijing, returns to power in the 2016 presidential election.

Statistics showed that funds remitted to approved investment projects by overseas investors have dropped gradually from 77 percent in 2012 to 71 percent in 2013. Funds dropped further to less than 50 percent in the first quarter of this year.

Foreign chambers of commerce have also expressed worries over Taiwan's inability to reach internal consensus on pressing social issues, leaving investors unconfident. (April 28, 2014)

(By Lilian Wu)

Related stories:
●April 28: No immediate plans to raise electricity rates: MOEA
●April 27: Halting nuclear plant construction means bankruptcy: Taipower
●April 27: Government halts fourth nuclear plant construction (update 2)

(Click here for stories before the debate on nuclear power was recently rekindled.)