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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (36029)	7/25/2000 9:28:29 AM
From: Jeffrey D	Read Replies (1) \| Respond to of 70976

Taiwan politicians causing problems for chipmakers. Jeff << SOUTH CHINA MORNING POST: POLICY PROBLEMS CLOUD OUTLOOK 90% match; The South China Morning Post - Hong Kong ; 25-Jul-2000 12:00:00 am ; 334 words Taiwan's high-technology sector is being battered by political uncertainty caused by the new government, with foreign investors particularly concerned by the lack of direction. A range of policy proposals has been floated by the administration of President Chen Shui-bian, whose Democratic Progressive Party is seen as having a more social-welfare-oriented approach than the Kuomintang regime that ruled for 54 years. Policies proposed since Mr Chen's election include reducing the working week from 48 to 42 hours, reducing tax incentives for hi-tech firms, taxing dividend income of employees of hi-tech companies and scrapping the island's controversial fourth nuclear power plant. About three months from taking office, only the tax plan seems to be dead, with the others already being law or under review. Last week, Mr Chen said he was opposed to the tax-on-dividends policy and indicated a proposal to tax Taiwan businesses in the mainland was in doubt. But such an about-face from the government has done little to allay concerns for the hi-tech sector, which accounts for 40 per cent of exports. The Taiwan Stock Exchange has fallen 20 per cent from its year-to-date high of 10,393 points in February, with the world's largest contract chip-maker, Taiwan Semiconductor Manufacturing, falling 25 per cent and rival United Microelectronics down 27 per cent from their post-dividend year-to-date highs. According to securities analysts, foreign institutional investors are increasingly concerned about the lack of policy clarity and have opted to take their funds elsewhere. Last week was particularly bad, with foreign qualified institutional investors pulling almost NT$7 billion (about HK$1.75 billion) out of the market in just five sessions. One policy hurting the semiconductor industry is a decision by the Ministry of Economic Affairs to remove tax breaks and investment incentives on fabrication plants (fabs) that produce wafers at more than 0.18-micron thick. According to the ministry, only fabs that produce at 0.18-micron or thinner qualify for hi-tech status, leaving much of the country's fabs without the economic benefits they once enjoyed. Taiwan's leading industry organisation, Taiwan Electrical and Electronic Manufacturers' Association, is pushing the government to scrap its proposed 42-hour working week plan, claiming the move will cost the industry NT$170 billion per year. But the move will probably go ahead, despite media reports the cabinet is attempting to stall the plan.