Foreign investors in Taiwan are prohibited from investing in those industries that may negatively affect national security, public order, good customs, or human health, or in those industries otherwise prohibited by the law. For an investment in an industry that is restricted by law or by an order decreed under the mandate of the law, an approval or consent shall be obtained from the competent authority in charge of the industry. (§ 7 Statute for Investment by Foreign Nationals) Pursuant to the above provisions of the Statute, a Negative List for Investment by Overseas Chinese or Foreign Nationals has been decreed and put into effect by the government. That Negative List specifies 10 categories of prohibited industries (e.g. manufacture of basic chemical materials, manufacture of basic metals, land transportation, programming and broadcasting activities, etc.) as well as 16 categories of restricted industries. That negative list is reviewed and modified by the government from time to time, if and when the situation so require. In order to provoke Taiwan’s innovation environment and attract more foreign direct investment, on June 17, 2013 the Investment Commission of Ministry of Economic Affairs announced the new “negative list”, in which 2 sub-items of prohibited industries are removed from the list and 22 sub-items are eliminated from restricted industries.

In addition, for facilitating the current application process of foreign investment, Investment Commission has proposed the draft amendments to both the “Statute for Investment by Foreign Nationals” and the “Statute for Investment by Overseas Chinese” and is waiting for the Legislative Yuan to legalize these amendments, approximately by the end of 2013. The proposed amendments will deregulate the restriction of the required prior approval for foreign investments and allow investors to inform the authorities afterwards. Around 80% of foreign investment projects will benefit from this new policy.