RI not good for investment now: Taiwan official

RI not good for investment now: Taiwan official

TAIPEI (Dow Jones): Taiwan will not halt its "Go South" policy
in the wake of the atrocities committed against ethnic Chinese
women during the May chaos in Indonesia, a senior official at the
Ministry of Economic Affairs said yesterday.

"Our policy is to focus on the whole region, not just a single
country," Thomas Yeh, director of the Economic Research
Department under the Ministry of Economic Affairs, said.

"That's just a matter of priority. Among the regional
countries, Indonesia is not a right place to make investments
now," he said.

Recent reports that many ethnic Chinese women were raped and
tortured during political riots in Indonesia earlier this year
have triggered worries among Taiwanese businessmen in Indonesia
that the relationship between the two countries will deteriorate.

Many are questioning whether Taiwan authorities will end its
investment policy toward Southeast Asia on the Indonesian unrest.
Taiwan authorities have urged Indonesia's government to
investigate the rape reports as soon as possible.

"The top priority is to ask the Indonesia government to find
out the truth and ask that protection be given to Taiwnese living
in that country," Yeh said.

The "Go South" policy has strongly encouraged Taiwanese
businesses to invest in Southeast Asia to diversify the risk of
over-investing in China.

However, the research department's Yeh added that "the Go
South policy aims at providing information on regional economies
to local firms to provide them greater investment options; local
firms can decide on whether to go or not by themselves."

Wang You-theng, chairman of Taiwan's General Chamber of
Commerce, said late Wednesday, "If things couldn't be settled
down soon, we will urge investors to abandon their investments
there (in Indonesia)."

However, Yeh said, "we won't consider adopting economic
sanctions on Indonesia now; we want the truth to be out soon."

The government will continue to monitor events in Indonesia
and act accordingly, he said.

"We think that Taiwanese investment there will continue to
shrink after the rape reports," Yeh said.

For the first half of the year, Taiwanese investment in
Indonesia dropped to US$6.5 million from $23.6 million in the
same period last year and Taiwan's exports to Indonesia also fell
48 percent from the year-earlier period to US$530 million, Yeh
said.

Tumble

The Investment Commission here said separately that hammered
by Asia's financial turmoil, Taiwan's overseas investment in
southeast Asia fell sharply in the first half of 1998.

Taiwan's total overseas investment, excluding that in rival
mainland China, rose 18.09 percent to $1.488 billion in January-
June from the same 1997 period -- but investment shrank
significantly in southeast Asia.

Taiwan interests indirectly invested $695 million in mainland
China, up a brisk 40.22 percent from the year-earlier period, the
commission said. Nationalist-ruled Taiwan has had no direct ties
to the communist mainland since a 1949 civil war split and all
investment must be routed through third places.

Taiwan investment into Moslem-majority Indonesia, where ethnic
Chinese have been the target of mob violence, fell 76 percent
from a year earlier, the commission said. It gave no exact
figure.

"In addition to consideration of economic factors,
(Indonesia's) political problems and strong anti-Chinese
sentiment discouraged Taiwan investors, who have adopted a wait-
and-see attitude," it said.

"Investment shrank sharply as a result," it said.

Crisis-hit Malaysia and the Philippines also saw declines,
with investment dropping a year-on-year 72 percent and 51
percent, respectively.

The government's appeal for Taiwan firms to lend a financial
helping hand by investing in southeast Asia has largely been
ignored, with a majority of investment going to central American
tax havens and the United States.