Industry urges Taiwan government to relax ban from investing in China refining, petrochemicals

Aug. 20, 2004
Petroleum and petrochemical industry leaders are urging Taiwan government officials to relax a ban against Taiwan companies from investing in refining and petrochemical manufacturing activities in mainland China.

By John Westbrook
OGJ Correspondent
TAIPEI, Aug. 20 -- Petroleum and petrochemical industry leaders are urging Taiwan government officials to relax a ban against Taiwan companies from investing in refining and petrochemical manufacturing activities in mainland China.

Industry representatives argue that companies in other industries are allowed to invest in China. The ban against refining and petrochemical companies weakens their position against rivals in Japan and South Korea, they said.

Numerous Taiwan companies and groups have developed investment plans for China pending Taiwan government approval. The Petrochemical Industry Association of Taiwan (PIAT) advocates the establishment of a steam cracker, using naphtha, to produce 1 million tonne/year of ethylene.

PIAT Chairman Chou Hsin-huai said a delegation recently visited mainland China and learned that officials in Dalian, Yangzhou, Tianjing, and Zhuhai all are eager for investment by Taiwan petrochemical companies.

Formosa Petrochemical Corp., also contemplating building a steam cracker in China, has submitted project applications to the Taiwan Ministry of Economic Affairs and the Mainland Affairs Council (MAC) but has not received a response from either body.

Both Formosa and PIAT dispute MAC's claim that the massive investment for refining or petrochemicals would result in a huge outflow of capital from Taiwan. PIAT envisions that at least 70% of the proposed $4.4 billion steam cracker would be financed by international investors.