Taiwan maintains its investment in SE Asia

Taiwan maintains its investment in SE Asia

TAIPEI (Dow Jones): China Development Corp. isn't backing down from its investments in Southeast Asia but is keeping its focus on targets in Thailand and Malaysia where markets appear to have bottomed out, a top official from the company said yesterday.

Indonesia's latest crisis hasn't scared China Development, one of Taiwan's largest and most well-known financial institutions, from scouring the region for bargain companies, Benny Hu, the company's president said in an interview with Dow Jones Newswires.

Indonesia's limited affect on neighboring markets has made China Development more comfortable with its strategy of targeting Thailand and Malaysia where the company already has some investments, Hu said.

The currencies "in Malaysia and Thailand weren't affected by (Indonesia's) political turmoil," Hu said. "This seemed to indicate each country was more independent. The Asian financial crisis had less of a 'domino' effect."

"These last two weeks served as a test" to see whether neighboring countries could withstand Indonesia's political storm, Hu added.

China Development, one of the more outspoken Taiwanese companies advocating Southeast Asian investment, has always been slow on investing in Indonesia, Hu said.

The company's only Indonesian investment is a US$12 million stake in PT Tamara Bank, accumulated over the past three years. Provisions have already been made against losses from this investment, Hu said.

About 11 percent of China Development's US$1 billion investment portfolio is located offshore in Asia, Europe and the U.S. Hu didn't have exact figures on how much of that 11 percent is invested in Southeast Asia, though he said the percentage was "small."

Still, China Development has been one of the more vocal of Taiwanese companies aiming to grab large stakes in beleaguered Southeast Asian companies. The company, which counts the ruling Kuomintang Party as one of its major shareholders, is evaluating financial companies, telecommunications operators and agribusinesses in Thailand and Malaysia for acquisitions.

"We're putting the money...in several phases," Hu said. "We're not putting it all in at one time. We don't worry too much about the risks since we do our due diligence."

"The worst thing to do is do nothing," Hu added.

China Development Corp. is also leading the creation of an investment company targeting Southeast Asia for sometime this summer. The total capital of this company was recently raised to NT$30 billion from NT$20 billion.

Though most of the attention these days has been focused on the company's Southeast Asian push, executives at China Development continue to concentrate on Taiwanese investments which make up a large part of the portfolio.