Taiwan urged to tighten outbound FDI rules amid rising geopolitical tensions

Taipei, Nov. 25 (CNA) Taiwan's government should take a more active role in regulating outbound foreign direct investment (FDI), especially as geopolitical tensions make advanced technology more strategically sensitive, experts said Tuesday.

At a conference on strategic resilience in Taipei, Lee Wen-chieh (李文傑), an economics associate professor at National Chengchi University, said Taiwan's "dual-track" policy -- strict controls on investment in China but comparatively loose rules elsewhere -- has been "insufficient to cope with increasing external risks."

Lee noted that while the government maintains tight oversight of China-bound investment, overseas expansion in other markets is largely left to companies themselves. "We barely have a designated agency regulating outbound investments outside China," he told CNA.

Using Taiwan Semiconductor Manufacturing Co.'s (TSMC) recent global expansion as an example, Lee said the lack of government representation in its talks with foreign governments put the Taiwanese company in a weaker negotiating position.

He cited TSMC's announced additional US$100 billion investment in the U.S. in early March, "All the Ministry of Economic Affairs did was deny any involvement three days later while saying TSMC made the decision."

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Lawyer Chen Yen-po (陳言博) said in a phone interview that Taiwan's outbound investment rules are outdated and lack a clear legal basis. The Ministry of Economic Affairs has yet to update the regulations to reflect amendments made to the Industrial Innovation Statute in April, he said.

Chen said only TSMC's Nanjing fab is covered by specific restrictions under the Act Governing Relations between the People of the Taiwan Area and the Mainland Area. Its other overseas investments, he said, remain largely outside any regulatory framework. He urged the government to introduce comprehensive oversight rather than leaving all decisions to companies.

Meanwhile, Lee said Taiwan should look to how other major economies have strengthened their oversight systems, citing the U.S. CHIPS Act (2022) and Reverse CFIUS mechanism (2024), as well as Japan’s Economic Security Promotion Act (2021). By contrast, he said, Taiwan’s Investment Commission still operates under an “outdated and reactive regulatory structure.”

Lee suggested establishing a cross-ministerial FDI oversight mechanism to balance national security with corporate autonomy. A stronger government role would allow negotiations to be conducted "government-to-government," enabling Taiwan to leverage foreign industrial policies, tariffs and trade arrangements more effectively.