VZCZCXRO4955
RR RUEHGH
DE RUEHIN #0074/01 0110135
ZNR UUUUU ZZH
R 110135Z JAN 07
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 3687
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUCPDOC/USDOC WASHDC
RUCPCIM/CIM NTDB WASHINGTON DC
RUEHBK/AMEMBASSY BANGKOK 3531
RUEHBJ/AMEMBASSY BEIJING 6189
RUEHUL/AMEMBASSY SEOUL 8383
RUEHGP/AMEMBASSY SINGAPOR 6754
RUEHKO/AMEMBASSY TOKYO 8366
RUEHML/AMEMBASSY MANILA 9899
RUEHJA/AMEMBASSY JAKARTA 3986
RUEHKL/AMEMBASSY KUALA LUMPUR 3636
RUEHHI/AMEMBASSY HANOI 3200
RUEHBY/AMEMBASSY CANBERRA 4420
RUEHWL/AMEMBASSY WELLINGTON 1683
RUEHHK/AMCONSUL HONG KONG 7421
RUEHGH/AMCONSUL SHANGHAI 0697
RUEHGZ/AMCONSUL GUANGZHOU 9878

UNCLAS SECTION 01 OF 08 TAIPEI 000074 
 
SIPDIS 
 
SIPDIS 
 
STATE PLEASE PASS USTR 
STATE FOR EB/IFD/OIA, EAP/RSP/TC, EAP/EP 
USTR FOR ALTBACH and Stratford 
USDOC FOR 3132/USFCS/OIO/EAP/WZARIT 
TREASURY FOR OASIA/LMOGHTADER 
TREASURY ALSO PASS TO FEDERAL RESERVE/BOARD OF 
GOVERNORS, AND SAN FRANCISCO FRB/TERESA CURRAN 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ECON PINR OPIC KTDB USTR TW
SUBJECT: Taiwan's 2007 Investment Climate Statement (Part I) 
 
REF: 06 STATE 178303 
 
This is the first part of Taiwan's 2007 Investment Climate 
Statement.  The second part will follow septel. 
 
---------------------------------- 
A.1 Openness to Foreign Investment 
---------------------------------- 
 
¶1.  Taiwan officially welcomes foreign direct investment.  Taiwan's 
science-based industrial parks and export processing zones offer 
streamlined procedures.  Taiwan has made significant improvement in 
protecting intellectual property. 
 
¶2.  As part of its efforts to improve the investment climate, Taiwan 
no longer has a list of permitted investments, but maintains a 
"negative" list of industries closed to foreign investment to 
maintain security and environmental protection.  Liberalization has 
reduced that list to less than one percent of manufacturing 
categories and less than five percent of service industries.  The 
latest significant liberalization took place in February of 2003 
when alcohol production, agricultural production, fishing, and 
animal husbandry were opened to foreign investors, although prior 
approval is still required from the Taiwan authorities.  To live up 
to its WTO accession commitments, Taiwan opened private production 
of cigarettes in 2004 without any foreign ownership limit.  Railway 
transport, freight transport by small trucks, pesticide manufacture, 
real estate development, brokerage, leasing and trading are all 
completely open to foreign investment.  After its accession to the 
WTO in January 2002, Taiwan started permitting imports of gasoline 
and liquid natural gas (LNG) by the private sector, without any 
foreign ownership restriction.  It also permitted private wine and 
cigarette imports.  In April 2004, Taiwan dropped mining and 
ordinary trucking services from the negative list but added 
single-axle truck leasing. 
 
¶3.  Most foreign ownership limits have been removed.  Taiwan-flagged 
merchant ships are subject to a foreign ownership limit of 
two-thirds.  The foreign ownership limit on wireless and wireline 
telecommunications firms is 60%, including a direct foreign 
investment limit of 49%.  For the state-owned Chunghwa Telecom Co., 
which controls 97% of the fixed line telecom market, the limit on 
direct and indirect foreign investment was raised from 20% to 35% in 
August 2004 and to 49% in August 2006.  In January 2003, Taiwan 
raised the foreign ownership limit on cable television broadcasting 
services from 50% to 60%, including a 20% limit on foreign direct 
investment.  As a result, foreign investors now control three of the 
top five cable TV networks in Taiwan.  A 50% foreign ownership limit 
remains on satellite television broadcasting services, power 
transmission and distribution, piped distribution of natural gas, 
high-speed railways, ground-handling firms, air-cargo terminals, 
air-catering companies, and air-cargo forwarders.  The 50% foreign 
ownership limit on ground-handling firms, air-cargo terminals, 
air-catering companies, and air-cargo forwarders was removed for 
investors from WTO members in November 2001.  The foreign ownership 
limit on airline companies is 33%, which Taiwan plans to raise to 
49% in the near future. 
 
¶4.  Regulations governing foreign direct investment principally 
derive from the Statute for Investment by Foreign Nationals (SIFN) 
and the Statute for Investment by Overseas Chinese (SIOC).  These 
two laws permit foreign investors to use either foreign currencies 
or NT dollars.  In mid-2006, Taiwan authorities started permitting 
NT dollar loans obtained from local banks to serve as sources of 
foreign direct investment.  Companies with foreign ownership below 
33% are exempt from limitations on the negative list.  Both the SIFN 
and the SIOC specify that foreign-invested enterprises must receive 
 
TAIPEI 00000074  002 OF 008 
 
 
the same regulatory treatment accorded local firms.  Foreign 
companies may invest in state-owned firms undergoing privatization 
and are eligible to participate in publicly financed research and 
development programs. 
 
¶5.  The Investment Commission (IC) of the Ministry of Economic 
Affairs screens applications for investment, acquisitions, and 
mergers.  According to the IC, approximately 98% of projects with an 
investment value less than NT$500 million (US$15.4 million at an 
exchange rate of NT$32.5 per US$) are excluded from the negative 
list; the IC estimates that approval for these projects is generally 
granted within two working days at the IC division chief level.  For 
investments in the range from NT$500 million to NT$1,500 million 
excluded from the negative list, approval authority rests with the 
IC Executive Secretary and normally is granted within three working 
days.  Approval of investments in industries above NT$1,500 million 
or on the negative list requires two weeks because those investments 
must be referred to the relevant supervisory ministries and require 
approval of the IC Chairman or IC Executive Secretary.  Investments 
involving complications such as merger and acquisition require 
screening at the monthly meeting of an inter-ministerial 
commission. 
 
¶6.  Taiwan offers incentives to encourage investment, including 
accelerated depreciation and tax credits for investments in emerging 
or strategic industries, pollution-control systems, production 
automation, and energy conservation.  Equipment for R&D purposes can 
be brought into Taiwan duty-free.  Other incentives include 
low-interest loans for developing new and/or cutting edge products, 
upgrading traditional industries, and importing automation or 
pollution-control equipment.  A broad five-year tax holiday for new 
investments was re-instituted in January 1995.  Incentives for 
manufacturing firms to locate factories in designated industrial 
parks prior to the end of December 2006 include free rent the first 
two years, 40% discount on rent the next two years, and 20% discount 
on rent in the fifth and sixth years.  A three-year development 
program adopted in late 2006 has extended this incentive to December 
¶2008.  Under another incentive program, state-owned land is 
available for investors rent-free for the first four years and 50% 
off for the next six years.  As part of its financial reform, Taiwan 
encourages and provides incentives for banks, insurance companies, 
securities firms, and financial holding companies to merge. 
 
¶7.  However, in 2005 and 2006, Taiwan authorities slashed some 
investment tax incentives as a part of a tax reform designed to 
reduce the fiscal deficit.  A new law to levy a ten-percent 
alternative minimum tax on business firms became effective in 
January 2006.  Since early 2005, Taiwan authorities have cut the 
number of industries entitled to tax incentives by one-third and 
doubled the thresholds in annual R&D expenses for tax offsets from 
NT$15-20 million to NT$30-40 million.  The tax credit for 
procurement of automation equipment has been lowered from 11% to 7% 
and that for procurement of technologies reduced from 10% to 5%. 
The tax credit for projects in remote poor areas has been cut from 
20% to 15%. 
 
------------------------------------ 
A.2 Conversion and Transfer Policies 
------------------------------------ 
 
¶8.  There are relatively few restrictions on converting or 
transferring direct investment funds.  Foreign investors with 
approved investments can readily obtain foreign exchange from a 
large number of designated banks.  The remittance of capital 
invested in Taiwan is made according to a schedule submitted by the 
company to the IC.  Declared earnings, capital gains, dividends, 
royalties, management fees, and other returns on investments can be 
 
TAIPEI 00000074  003 OF 008 
 
 
repatriated at any time.  Capital movements arising from trade in 
merchandise and services, as well as frm debt servicing, are not 
restricted.  No prior approval is required for movement of foreign 
currency funds not requiring exchange between the NT dollar and the 
foreign currency.  No prior approval is required if the cumulative 
amount of inward or outward remittances does not exceed the annual 
limit of US$5 million for a person or US$50 million for a 
corporation.  There are no reported delays in remitting investment 
returns or principal through legal channels. 
 
¶9.  An outbound investment may not exceed 40% of the investing 
company's net worth or paid-in capital (whichever is less), unless 
the company charter waived the 40% limit or unless such investment 
is approved by shareholders.  A local company is not required to 
obtain prior approval for overseas investments; however, such an 
approval exempts the company from the annual capital outflow limit 
of US$50 million.  Investments in China are subject to additional 
restrictions. 
 
¶10.  Taiwan has significantly relaxed restrictions on Taiwan 
entities' direct investment in China down to a negative list 
covering only about 100 manufacturing products and 430 agricultural 
products.  Taiwan has abolished a requirement for direct investment 
in China to go through third nations or areas and removed a direct 
investment limit of US$50 million.  The ceiling on small and medium 
enterprises' investment in China was raised from NT$60 million to 
NT$80 million.  For large enterprises, the China investment may not 
exceed 20% of the company's net worth exceeding NT$10 billion, 30% 
of net worth from NT$5 billion to NT$10 billion, and 40% of the net 
worth below NT$5 billion.  For investments below US$200,000, prior 
approval can be issued within the same day of submitting the 
application.  Taiwan authorities require an investor to submit a 
quarterly financial report if the cumulative investment in a project 
exceeds US$20 million.  Investors are encouraged to repatriate their 
capital and earnings. 
 
¶11.  Taiwan authorities have actively encouraged investment in 
Southeast Asia and India.  Investments are also encouraged in a 
number of countries with which Taiwan has diplomatic relations, 
mainly in Central America.  Incentives include loans and/or overseas 
investment insurance from Taiwan's Export-Import Bank. 
 
---------------------------------- 
A.3 Expropriation and Compensation 
---------------------------------- 
 
¶12.  No foreign-invested firm has ever been nationalized or 
expropriated in Taiwan.  No examples of "creeping expropriation" or 
official actions tantamount to expropriation have been reported. 
Under Taiwan law no venture with 45% or more foreign investment can 
be nationalized for a period of 20 years after the venture is 
established.  Expropriation can be justified only for national 
defense needs and "reasonable" compensation must be given. 
 
---------------------- 
A.4 Dispute Settlement 
---------------------- 
 
¶13.  Taiwan is not a member of the International Center for the 
Settlement of Investment Disputes or the New York Convention of 1958 
on the recognition and enforcement of foreign arbitrage awards. 
Investment disputes with the government are not common.  Normally, 
Taiwan resolves disputes according to domestic laws and 
regulations. 
 
¶14.  Taiwan has comprehensive commercial laws, including the Company 
Law, Commercial Registration Law, Business Registration Law, 
 
TAIPEI 00000074  004 OF 008 
 
 
Commercial Accounting Law as well as laws for specific industries. 
Taiwan's Bankruptcy Law guarantees that all creditors have the right 
to share the assets of a bankrupt debtor on a proportional basis. 
Secured interests in property, both chattel and real, are recognized 
and enforced through a registration system. 
 
¶15.  Taiwan's court system is generally viewed as independent and 
free from overt interference by the other government branches. 
Judges are generally over-worked.  In response to complaints about 
the slow pace of the judicial decision-making, Taiwan authorities 
adopted measures in 2002 to monitor the case processing time. 
Simplified courts have been set up to deal with minor cases that can 
be resolved quickly.  The legislature is considering a bill to set 
up special courts for intellectual property rights (IPR) cases.  The 
judgments of foreign courts with jurisdictional authority are 
enforced in Taiwan by local courts on a reciprocal basis. 
 
------------------------------------------- 
A.5 Performace Requirements and Incentives 
------------------------------------------- 
 
¶16.  All of Taiwan's performance requirements were removed in 
January 2002 upon Taiwan's WTO accession.  Like domestic firms, 
foreign-invested companies must be located in areas zoned for 
appropriate industrial or commercial use.  Taiwan does not require 
that firms transfer technology, locate in specified areas, or hire a 
minimum number of local employees as a prerequisite to investment. 
 
¶17.  Manufacturing firms located in export-processing zones and 
science-based industrial parks are required to export all of their 
production in exchange for tariff-free treatment of production 
inputs.  However, these firms may sell on the domestic market upon 
payment of relevant import duties. 
 
¶18.  When acceding to the WTO in January 2002, Taiwan promised to 
phase out industrial offset requirements (IOR) for non-military 
public procurement upon signing the Government Procurement Agreement 
(GPA).  Even without the GPA membership, Taiwan started reducing the 
IOR coverage of non-military procurements four years ago. 
Currently, only railway and power generation projects are subject to 
IOR.  For these two categories and military procurements, a contract 
of US$5 million or more triggers an offset obligation of at least 
33%.  In some military cases, the offset ratio has reached 70% due 
to legislative pressure.  Over the past 18 years since the first 
industrial offset contract (IOC) was signed in 1988, Taiwan has 
signed IOCs with 46 suppliers from ten foreign countries. 
Commitment value of these contracts total US$6,998 million, and 
realized contracts amounted to US$4,882 million.  Half of the total 
realized value was directed to transfer of technologies, 19% to 
foreign direct investment in Taiwan, 17% to procurement from Taiwan, 
6% to trade promotion, 4% to personnel training, and 3% to 
assessment certification.  Taiwan has published industrial offset 
rules in both Chinese and English languages to which readers can get 
internet access.  However, some contractors still complain of lack 
of transparency and predictability in setting offset requirements. 
 
--------------------------------------------- --- 
A.6 Right to Private Ownership and Establishment 
--------------------------------------------- --- 
 
¶19.  Private investors have the general right to establish and own 
business enterprises, except in a limited number of industries 
involving national security and environmental protection.  Private 
entities have the right to freely acquire and dispose of interests 
in business enterprises.  Private firms have the same access as 
state-owned companies to markets, credit, licenses, and supplies. 
Taiwan authorities have eliminated state-owned monopolies in such 
 
TAIPEI 00000074  005 OF 008 
 
 
areas as power generation, oil refining, telecommunications, and 
cigarette and wine production. 
 
--------------------------------- 
A.7 Protection of Property Rights 
--------------------------------- 
 
¶20.  Over the past year, Taiwan has continued efforts to improve its 
IPR legal regime and enforcement.  The Intellectual Property Office 
(TIPO) has set up a joint task force to conduct internet monitoring 
and has coordinated with enforcement agencies to implement this 
program.  Taiwan has amended its Patent Law and Copyright Law to 
extend the term of protection from 18 years to 20 years for some 
patents and to define computer software as literary works.  Taiwan 
has enacted the Optical Media Law to address CD/DVD piracy problems. 
 The law provides Taiwan authorities with a legal framework to 
manage CD manufacturing plants through licensing and the use of 
Source Identification (SID) codes in production.  Convicted 
violators may receive prison terms of up to three years and fines of 
up to NT$6 million (US$184,600).  The Optical Media Law and the 
Joint Optical Disk Enforcement (JODE) Task Force's night/day 
inspections have led to a dramatic decrease in large-scale 
production of counterfeit CD products.  Taiwan passed additional 
amendments to strengthen its copyright law in 2003 and 2004.  These 
amendments made infringement a public crime, increased penalties for 
counterfeiters and made it illegal to tamper with technical 
protection measures.  A 2004 amendment to the Pharmaceutical Law 
stiffened penalties for production, distribution and sale of 
counterfeit medicines.  A 2005 amendment to the Law to authorized 
pharmaceutical data exclusivity for five years to prevent unfair 
commercial data use. 
 
¶21.  Taiwan established in 2003 an Integrated Enforcement Task Force 
(IETF) consisting of 220 IP police officers.  The task force was 
transformed in 2004 to a permanent IP police squadron.  The IP 
police have frequently raided retail optical media sales points to 
enforce IP rights, leading to a significant decrease in the number 
of vendors of counterfeit CDs and DVDs.  Other enforcement measures 
include increasing the reward (by ten times to NT$10 million 
(US$300,000) to IPR informants for counterfeiting seizures and 
setting up an anti-pirating CD export task force to strengthen 
inspection of commodities entering or leaving Taiwan. 
 
¶22.  Taiwan's Legislature (LY) passed amendments to the Patent and 
Trademark Laws in January and April of 2003 which abrogated the 
administrative and legal procedures for opposing patent applications 
and added voice and 3-D shapes as eligible for trademark 
protection. 
 
¶23.  While Taiwan has improved IPR protection, transshipment of 
counterfeit products from China to the United States remains a 
problem.  Taiwan's ranking in counterfeit goods seized by the U.S. 
Customs dropped from second highest in 2002 to well below the top 
ten during 2003-2004.  However, an increase in transshipment of 
counterfeit goods from China pushed up Taiwan's ranking back to 
ninth in 2005.  In addition, Taiwan is facing a growing 
internet-based piracy threat.  Counterfeit and parallel imported 
pharmaceuticals are common in the Taiwan marketplace.  Although the 
LY passed amendments to the Pharmaceutical Law in March 2004 to 
increase the penalties for dealing in counterfeit pharmaceuticals, 
enforcement remains relatively weak.  Rights owners continue to 
complain of slow progress in judicial cases, or poor protection on 
trade dress properties, such as unregistered marks, packing 
configurations, and outward appearance features. 
 
----------------------------------------- 
A.8 Transparency of the Regulatory System 
 
TAIPEI 00000074  006 OF 008 
 
 
----------------------------------------- 
 
¶24.  Taiwan has a set of relatively comprehensive laws and 
regulations regarding taxes, labor, health and safety. 
 
¶25.  Foreign investors note that in addition to tax incentives, 
Taiwan's science-based industrial parks and export processing zones 
have simple and transparent bureaucratic procedures for the 
investment application process.  Outside of these areas, the 
Department of Investment Services (DOIS) is supposed to function as 
the coordinator between investors and all agencies involved in the 
investment process.  The Investment Commission (IC) is charged with 
reviewing and approving inbound and outbound investments. 
 
¶26.  Taiwan has simplified work-permit procedures for foreign 
white-collar employees.  In March 2004, the Council of Labor Affairs 
(CLA) set up a single window to issue work permits for all 
white-collar workers.  It takes 7 to 10 days for CLA to issue work 
permits.  The work permit may be extended indefinitely as long as 
the employer considers the employment necessary. 
 
¶27.  Taiwan has removed the job experience requirement for 
employment of foreign management professionals by global operational 
headquarters and R&D centers as well as business firms of designated 
industries.  White-collar workers having a master's degree or above 
are not subject to any job experience requirement.  Those with lower 
education levels are required to have job experience.  Foreign 
white- and blue-collar workers have the right to obtain permanent 
residence status after they have legally stayed in Taiwan for seven 
consecutive years with the minimum time of residence of 180 days per 
year in Taiwan.  The seven-year requirement is waived for high-tech 
personnel and those who have made "significant contributions" to 
Taiwan. 
 
¶28.  The entry-visa issuance procedures for foreign white-collar 
workers who work for foreign-invested companies are relatively 
simple.  A foreign executive who enters Taiwan with a tourist visa 
is no longer required to leave the island before the tourist visa 
can be changed to an employment visa.  A foreign executive whose 
employment visa expires is not required to exit before renewing the 
visa. 
 
--------------------------------------------- -------- 
A.9 Efficient Capital Markets and Portfolio Investment 
--------------------------------------------- -------- 
 
¶29.  A wide variety of credit instruments, all allocated on market 
terms, are available to both domestic- and foreign-invested firms. 
Legal accounting systems are largely transparent and consistent with 
international standards.  The regulatory system is generally fair. 
Foreign portfolio investors are no longer subject to the foreign 
ownership limits or investment fund limits.  In recent years, Taiwan 
authorities have taken a number of steps to encourage a more 
efficient flow of financial resources and credit.  The limit on NT 
dollar deposits that a branch of a foreign bank may take has been 
lifted.  Non-residents are permitted to open NT dollar bank 
accounts, which are subject to capital-flow controls.  Taiwan has 
lifted restriction on residents opening bank accounts overseas. 
Limits on branch banking have been lifted.  (Currently, there is a 
freeze on new bank branches to encourage consolidation.) 
Restrictions on capital flows relating to portfolio investment have 
been removed.  The insurance and securities industries have been 
liberalized and opened to foreign investment.  Access to Taiwan's 
securities markets by foreign institutional investors has also been 
broadened. 
 
¶30.  Taiwan abolished a complicated regulatory system governing 
 
TAIPEI 00000074  007 OF 008 
 
 
foreign portfolio investment in October 2003.  In the past, only 
such approved "qualified foreign institutional investors" (QFIIs) as 
large banks, insurance companies, securities firms and mutual funds 
were permitted to engage in portfolio investment.  Since then, any 
foreign institutional investor is allowed to enter Taiwan's markets. 
 Subsequent registration has replaced the need for prior approval. 
There is no minimum asset requirement.  Investment and capital flows 
are not limited.  On-shore foreign investors (like other residents) 
are still subject to capital flow limits of US$5 million for an 
individual foreign investor and US$50 million for an unregistered 
foreign company. 
 
¶31.  Taiwan has removed all legal limits on foreign ownership 
(except PRC) in companies listed on the Taiwan Stock Exchange 
(TAIEX) except for power distribution, telecommunications, mass 
media firms, and airline companies.  There have been no reports of 
private or official efforts to restrict the participation of 
foreign-invested firms in industry standards-setting consortia or 
organizations. 
 
¶32.  Taiwan has a tightly regulated banking system.  Since the 
mid-1980s, the financial sector as a whole has been steadily opening 
to private investment.  The market share held by foreign banks 
remains relatively small (three percent), but will increase to ten 
percent after a number of foreign investors acquired local banks in 
¶2006.  The establishment of new securities firms, banks, insurance 
companies, and holding companies has underscored this liberalization 
trend and enhanced competition.  Over the past decade, nine 
state-owned banks have been privatized.  The only reinsurance 
company was privatized in 2002.  Privatization efforts have reduced 
the number of public banks to four and cut the share of assets 
controlled by public banks from 61% to 16% of total assets of all 
domestic and foreign banks.  The total assets of these four public 
banks were NT$4.8 trillion (US$148 billion) as of June 2006. 
 
----------------------- 
A.10 Political Violence 
----------------------- 
 
¶33.  Taiwan is a relatively young multi-party democracy with still 
evolving, democratic political institutions.  The close margin in 
the 2004 presidential election resulted in an attack on election 
offices and several large-scale demonstrations.  Nevertheless, these 
incidents and other protests were peacefully resolved in a short 
time.  There have been no reports of politically motivated damage to 
foreign investment.  Both local and foreign companies have, however, 
been subject to protests and demonstrations relating to labor 
disputes and environmental issues. 
 
------------------ 
A.11.a. Corruption 
------------------ 
 
¶34.  Taiwan has implemented laws, regulations, and penalties to 
combat corruption.  The Corruption Punishment Statute and the 
criminal code contain specific penalties for corrupt activities.  In 
January 2004, legislation doubled the penalties for corruption by 
financial personnel, including maximum jail sentences of up to ten 
years. 
 
¶35.  We are not aware of cases where bribes have been solicited for 
investment approval.  Both central and local governments offer 
investors incentives including free rent on land for the first 
several years and discounts in subsequent years.  Taiwan authorities 
encourage foreign investment and would take action against officials 
and individuals convicted of profiting illegally from foreign 
investors. 
 
TAIPEI 00000074  008 OF 008 
 
 
 
¶36.  The Government Procurement Law promulgated in 1998 and amended 
in February 2001 was an element of promised significant improvements 
upon accession to WTO.  The Public Construction Commission (PCC) now 
publishes all major government procurement projects that require 
open bidding, in accordance with WTO transparency requirements.  The 
PCC organizes inspection teams to monitor all public procurement 
projects both at the central and local levels.  It now publishes 
results of bidding and of inspections.  A task force has been 
organized to investigate complaints. 
 
¶37.  Authorities generally investigate allegations of corruption and 
take action to penalize corrupt officials.  Since its inauguration 
in May 2000, the Chen Administration has strengthened 
anti-corruption efforts.  Since then, prosecutors have indicted 
8,720 persons for corruption, including prominent personalities, 467 
senior officials (department director level and above) and 542 
elected officials.  Indicted elected officials included 21 
legislators.  In September 2006, the Taiwan High Court upheld a 
district court's four-years-in-jail sentence for a former speaker of 
the legislature on a charge of taking a NT$150 million (US$4.6 
million) bribe.  Over the past year, two deputy secretary generals 
of the Presidential Office stepped down due to corruption charges. 
The chairman of the Financial Supervisory Commission (FSC) was 
discharged of his duties and indicted for corruption when he was a 
chief executive officer of a state-owned enterprise. 
Anti-corruption efforts have contributed to an increase in Taiwan's 
corruption perception index compiled by the Transparency 
International from 5.3 in 1998 and 5.5 in 2000 to 5.6 in 2004 and 
5.9 in 2005. 
 
¶38.  Attempting to bribe, or accepting a bribe from, Taiwan 
officials constitutes a criminal offense, punishable under the 
Corruption Punishment Statute and the Criminal Code.  The Corruption 
Punishment Statute as amended in late 2002 treats payment of a bribe 
to a foreign official as a criminal act and makes such a bribe 
subject to criminal prosecution.  The maximum penalty for corruption 
is life imprisonment plus a maximum fine of NT$3 million dollars 
(US$92,300).  In addition, the offender may be barred from holding 
public office.  The assets obtained from acts of corruption may be 
seized and turned over to either the injured parties or the 
Treasury. 
 
YOUNG