VZCZCXRO7183
RR RUEHCN RUEHGH RUEHVC
DE RUEHIN #0605/01 0750703
ZNR UUUUU ZZH
R 160703Z MAR 07
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 4484
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 02 TAIPEI 000605 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS USTR 
STATE FOR EAP/TC 
COMMERCE FOR 3132/USFCS/OIO/EAP/WZARIT 
TREASURY FOR OASIA/LMOGHTADER 
USTR FOR STRATFORD, ALTBACH 
 
E.O. 12958: N/A 
TAGS: ELAB ECON EINV CH TW
SUBJECT: TAIWAN SLOWLY OPENING DOOR TO PRC EMPLOYEES 
 
REF: A. 05 TAIPEI 3839 
     ¶B. 05 TAIPEI 2869 
     ¶C. 05 TAIPEI 4395 
     ¶D. 04 TAIPEI 3605 
 
¶1. (SBU) Summary: Taiwan has made gradual but notable 
progress in making it easier for firms in Taiwan, both 
foreign and local, to bring Mainland employees to Taiwan 
for business activities.  Requirements have been lowered 
and processing times have been reduced.  The next step 
will be to treat business visitors from China more like 
visitors from any other location.  This should be 
combined with broader efforts to allow companies to 
employ workers from outside Taiwan.  These efforts could 
help Taiwan address labor shortages and take advantage of 
its potential as a regional center for greater China. 
End summary. 
 
¶2. (U) Among cross-Strait policy recommendations, one of 
the highest policy priorities of the foreign business 
community in Taiwan has been further reform of entry- 
permit requirement and procedures for Mainland personnel 
traveling to Taiwan for business.  It has repeatedly been 
included in both the American Chamber of Commerce's 
(Amcham) annual White Paper and the European Chamber of 
Commerce's Position Papers. 
 
Small Steps Adding Up 
--------------------- 
 
¶3. (U) In the last few years, there have been several 
small but important steps in the liberalization of cross- 
Strait personnel flow during the Chen administration. 
They include the following: 
 
-- Capital Requirements. The requirement for firms 
wishing to invite Mainland employees for research and 
development activities was lowered in October 2003 from 
capitalization or annual revenue of NT$30 million to 
NT$10 million.  In November 2004, the requirement was 
relaxed to allow new firms with capitalization of NT$5 
million (about US$ 150,000) to invite Mainland employees 
for any short-term business activities. 
 
-- Length of Stay.  In February 2002, the maximum length 
of stay for research activities was extended from three 
to six years.  In September 2002, the maximum length for 
employees of multinational firms coming to Taiwan for 
work or training was extended from four months to three 
years with the possibility of multiple extensions of one 
year each. 
 
-- Number of Visitors.  The ceiling for the number of 
Mainland employees invited for research and development 
activities was eliminated in October 2003.  The ceiling 
for other activities was set at 15 for smaller firms and 
30 for larger ones in November 2004.  The upper ceiling 
was raised to 50 in September 2006 with the option for 
higher numbers on a case-by-case basis. 
 
-- Scope of Eligible Visitors.  In January 2003, Taiwan 
announced that companies in Taiwan could invite potential 
buyers from the Mainland.  In November 2004, the 
requirement that Mainland employees invited by a firm 
must have worked for the firm for a certain amount of 
time was eliminated. 
 
-- Guarantee Requirement.  In August 2002, the 
requirement that multinational firms identify a local 
guarantor for invited Mainland employees was eliminated. 
 
-- Processing Time.  In February 2002, Taiwan announced 
that the processing time would be reduced from two months 
to ten days and only five days in emergency cases. 
 
-- Quality of Life.  In October 2004, Taiwan announced 
that Mainland personnel with long-term residence permits 
were allowed to open accounts in Taiwan banks.  In 
November 2004, rules on Mainland spouses of foreign 
professionals were also relaxed.  Taiwan announced in 
November 2006 that children of Mainland employees in 
Taiwan on intra-company transfers were allowed to attend 
 
TAIPEI 00000605  002 OF 002 
 
 
Taiwan schools. 
 
Producing Results 
----------------- 
 
¶4. (U) Each of these measures is small but taken together 
they have had significant results.  The number of entry- 
permits issued to PRC passport holders coming to Taiwan 
for commercial purposes increased 32.6 percent to reach 
33,605 in 2006.  This followed a 47.3 percent increase in 
¶2005.  In August, approximately 400 Mainland employees of 
Microsoft were able to come to Taiwan for a conference. 
Amcham told AIT that its members report fewer problems 
than two or three years ago in obtaining the entry 
permits they need for their employees. 
 
¶5. (SBU) One of the most important changes has been 
reduction in processing time.  Despite the commitment in 
2002 to reduce processing time to 10 day, as recently as 
2004, Amcham members reported that it generally took a 
month.  Improvement started to appear in 2005.  As 
reported ref A, Air Products Asia Inc. conducted a test 
case for Amcham in fall 2005 in which all of the 
applicants were processed in less than four working days. 
Taiwan officials were aware of the test case, which may 
have affected the outcome.  However, Air Products Vice 
President Tom Johnson recently confirmed for AIT that 
Taiwan is now consistently processing cases more rapidly. 
He said applications from his company generally take 
eight to ten days.  Microsoft Taiwan Government Relations 
Manager Hope Ong told AIT that Taiwan Authorities were 
very accommodating in arranging visas for the conference 
reported in para. 4 above. 
 
Larger Problems Persist 
----------------------- 
 
¶6. (U) Despite recent progress, Taiwan can still do more 
as part of a broader effort to remove restrictions on 
hiring practices.  U.S. and other foreign businesses 
complain that Taiwan places too many restrictions in 
general on bringing in foreign personnel for long-term 
assignments.  As unemployment declines, concerns about 
labor shortages in Taiwan have risen.  A survey of 
manufacturing companies conducted by Taiwan's Council of 
Labor Affairs in August 2006, estimated a shortage of 
more than 80,000 workers in Taiwan.  More than a quarter 
of firms who responded to the survey reported problems 
due to labor shortage.  The largest shortage was in 
unskilled labor, where firms reported a gap of 57,000 
workers.  However, Taiwan's high-tech companies also 
complain of shortages of highly skilled workers.  The 
Executive Yuan's Science and Technology Advisory Group 
(STAG) estimates that demand for workers among Taiwan's 
high-tech industries -- especially semiconductors, 
digital content, flat-panel displays and information 
services -- will outpace supply by 8,550 employees in 
2007 and 10,450 in 2008. 
 
Comment: A New Approach 
----------------------- 
 
¶7. (SBU) Through gradual and sometimes piecemeal 
liberalization of restrictions on entry-permits for 
Mainland employees, Taiwan has made considerable progress 
in making it easier for firms to do business here.  At 
this stage, Taiwan would be well served by treating 
employees from the Mainland more like personnel from any 
other foreign location.  This would help Taiwan realize 
its potential as a regional business center for an 
integrated greater China market.  Combining this approach 
with a more aggressive effort to ease restrictions on 
hiring foreign workers in general could improve labor 
market conditions in Taiwan, enhancing its attractiveness 
as an investment destination. 
YOUNG