Identifier
Created
Classification
Origin
04TAIPEI3605
2004-11-15 08:35:00
CONFIDENTIAL
American Institute Taiwan, Taipei
Cable title:  

CROSS-STRAIT ENTRY PERMITS - REDUCING TAIWAN'S

Tags:  ECON EINV ELAB CH TW 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 003605 

SIPDIS

DEPT FOR EAP/TC
DEPT PLEASE PASS AIT/W

E.O. 12958: DECL: 11/12/2014
TAGS: ECON EINV ELAB CH TW
SUBJECT: CROSS-STRAIT ENTRY PERMITS - REDUCING TAIWAN'S
COMPETITIVENESS


Classified By: AIT Director Douglas H. Paal, Reason 1.4 (B/D)

Summary
-------

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 003605

SIPDIS

DEPT FOR EAP/TC
DEPT PLEASE PASS AIT/W

E.O. 12958: DECL: 11/12/2014
TAGS: ECON EINV ELAB CH TW
SUBJECT: CROSS-STRAIT ENTRY PERMITS - REDUCING TAIWAN'S
COMPETITIVENESS


Classified By: AIT Director Douglas H. Paal, Reason 1.4 (B/D)

Summary
--------------


1. (U) Summary: A persistent complaint of multinational
firms in Taiwan is the difficulty of bringing PRC employees
to Taiwan for meetings, training, research, or other
temporary assignment. Some firms have learned how to work
the system and bring a relatively large number of Mainland
employees to Taiwan on a regular basis. However, many firms
complain that the process requires too much documentation,
takes too long, and does not meet the needs of multinational
firms even when it works. The Taiwan government has taken
some steps to improve the process and has more changes on the
drawing board that will address some of the problems but not
all of them. As in other areas of cross-Strait commerce,
many firms have found a way to get what they need within the
limitations of a flawed system. Nevertheless, if the Taiwan
government doesn't get serious soon about liberalizing this
and other obstacles in its cross-Strait economic relations,
the trend toward marginalization will continue. (End
summary.)


Perennial Problem Becoming More Important
--------------


2. (U) Multinationals with offices in Taiwan have long
complained about the restrictions Taiwan imposes on PRC
employee travel to Taiwan. This problem was highlighted in
the American Chamber of Commerce in Taipei's annual white
paper in 2004 as well as previous years. The European
Chamber of Commerce highlighted this issue in its White Paper
issued in October 2004. Multi-nationals point out that these
impediments make it hard to do business in Taiwan,
particularly for firms trying to manage greater China or East
Asian operations from a Taiwan headquarters. As more firms
invest in the Mainland and the PRC labor market grows more
competitive, the need to bring PRC employees to Taiwan,
especially for training, grows more important.

It Can be Done
--------------


3. (C) Despite the difficulties, some multinational firms
have learned to navigate the system and bring Mainland

employees to Taiwan on a regular basis. Taiwan's Ford
subsidiary, for example, brought about 100 employees to
Taiwan last year for training and will bring about the same
number this year. United Airlines on the other hand, brought
two employees over in 2003 for training and since decided it
was too difficult and time consuming to do so again.
Motorola brings a handful of Mainland employees to Taiwan
each year but uses a consulting firm to process the Taiwan
entry permits for them. In all, multinationals in Taiwan
brought 816 Mainland visitors in the first ten months of 2004
compared to 381 during all of 2003. Taiwan firms, which are
subject to more restrictions than multinationals, brought 971
visitors through October this year and 227 in 2003. By
comparison, thousands of Taiwan businessmen fly to and from
the PRC every day.

Too Many Documents
--------------


4. (U) The Taiwan government requires an inordinate number
of documents for entry permit applications for PRC nationals
employed by Taiwan-owned firms or multinationals operating on
the Mainland. For professional employees (who must have
worked for the multinational or Taiwan-owned firm for at
least three months) coming to Taiwan for a short visit, an
application and at least nine other documents are required.
The documentation required to show the legitimacy of the
inviting company and its investment in the PRC is
particularly burdensome. The firm must provide copies of the
Taiwan company license; Taiwan income tax report for the
previous year; letter of authorization to invest in the PRC
and notification of investment )- for Taiwan firms )- or
documentation showing that the firm's Taiwan presence is a
foreign investment )- for multi-nationals; PRC business
license; and PRC business authorization certificate.
Clearly, Taiwan officials are aware of the burdensome nature
of the process. When AIT officers ask simple questions about
how the process works, the response generally includes an
offer to help facilitate the process if AIT would like to
refer cases to Taiwan agencies.

It Takes Too Long
--------------


5. (C) The Taiwan government claims that for routine cases
entry permits can be issued to PRC employees of multinational
firms in ten working days once all the documents have been
gathered. However, multi-national firms report that the
Taiwan government rarely meets the ten-day approval goal.
Taiwan offers a "one-stop" window for entry permit
applications at the Bureau of Immigration. However, the
Bureau of Immigration must then distribute the application to
the agencies that must also approve it, namely the Mainland
Affairs Council (MAC) and local police in the jurisdiction
where the visitor will stay. According to Robert Wang,
government programs executive for IBM Taiwan, the Bureau of
Immigration will not ensure that other agencies meet the
ten-day time limit. Wang reported that the process is often
delayed by local police visits to the inviting company or
even the home of the sponsoring individual. IBM brought
about 30 employees to Taiwan in 2003 and will bring more by
the end of 2004. In Wang's experience, approval of the entry
permit usually takes about a month.


6. (C) In addition, after Taiwan approves the entry permit,
the inviting firm must then apply for a PRC exit permit.
Businesses in Taiwan report that the PRC exit permit
application cannot be submitted without the approved Taiwan
entry permit, so the two cannot be processed simultaneously,
substantially lengthening the entire process. Businesses
report that approval of the PRC exit permit takes up to a
month. According to Y.M. Yen, Employee Services Manager of
Ford Lio Ho Motor Company, Taiwan's Ford subsidiary, even a
firm that has considerable experience navigating this process
like Ford needs at least two months to prepare the paperwork
and obtain the entry and exit permits. For a firm new to the
system it can take six months.

Too Many Limitations
--------------


7. (U) Unfortunately, even after the time and trouble
involved in getting an entry permit, multinational firms
still complain that what the Taiwan government offers doesn't
meet their needs. First, Taiwan generally only issues single
entry permits for stays of short duration. For most business
travelers the entry permit allows a two-month stay extendable
up to a total of four months. For intra-company transfers or
technological research, longer stays are allowed. However,
in nearly all cases, Taiwan will only issue a single-entry
travel document, which is renewable in some cases. This is
particularly burdensome for visitors staying for longer
durations, but causes problems for short-term travel as well.
It does nothing for executives and senior technical and
marketing staff who need the ability to travel frequently.


8. (U) In addition, except for transferees and researchers,
Taiwan will not issue travel documents for spouses or other
family members who wish to accompany the visitor. Businesses
find this limitation especially problematic for longer-term
trainees who may be staying in Taiwan for up to four months.
Furthermore, even for long-term visitors, Taiwan has no
system in place at this time to provide work permits. This
can prevent long-term visitors from opening a bank account,
renting an apartment, obtaining a driver's license, etc.
Finally, the number of entry permits issued to employees of a
single firm each year is limited for some firms. Many
multinationals, depending on the size of their presence in
Taiwan, are not subject to a quota. All Taiwan-owned firms
have a quota based on the amount of capital the firm has
invested in Taiwan. The maximum quota is 30 visits per year,
a minuscule fraction of the number of trips employees of any
of these companies take to the PRC in a year.

Reformed Already, More on the Way
--------------


9. (C) The Taiwan government has made some effort to
simplify the process of applying for Taiwan entry permits and
reduce the time required for approval. A package of
simplifications was approved in 2002. MAC Department of
Economic Affairs Director Fu Don-cheng told AIT that another
set of reforms is awaiting Executive Yuan approval and should
be implemented within the next two months. He would not
provide a copy of the proposed changes, but said they
included simplification of the application form, lengthening
the maximum stay for most short term visitors to six months,
allowing spouses and one other relative to accompany
short-term visitors, and expanding the quota that Taiwan and
some foreign-owned firms are subject to. He said the
proposed reforms should be available within the next two
weeks. We will report on the proposed changes septel when
they are released. In addition, the Ministry of Economic
Affairs recently announced that PRC employees of high-tech
firms with special skills will be able to apply for permanent
residency after a two year stay in Taiwan. The Council of
Labor Affairs is also working on a proposal to grant work
permits to PRC employees on long-term temporary assignment in
Taiwan that should be implemented sometime next year.

Comment
--------------


10. (C) As in other areas of cross-Strait commerce, many
firms have found a way to get what they need within the
limitations of a flawed system. The market has also stepped
in to help them as demonstrated by the availability of
consulting services to assist in obtaining entry permits.
Nevertheless, the entry permit process for Mainland visitors
is another example of how Taiwan's cross-Strait restrictions
reduce Taiwan's competitiveness. Others include lack of
direct air links, import bans, prohibited categories of
investment, and currency exchange restrictions. These
impediments make Taiwan firms less competitive when it comes
to taking advantage of business opportunities in the
Mainland, and discourage foreign firms from conducting
greater China business from Taiwan. Many observers believe
that multinationals are increasingly bypassing Taiwan
altogether as a small market on the fringe of China. As a
result, Taiwan firms that want to remain competitive in
regional and world markets face growing pressure to move
management and other operations to the Mainland along with
manufacturing. If the Taiwan government doesn't get serious
soon about liberalizing this and other obstacles in its
cross-Strait economic relations, the trend toward
marginalization will continue. (End comment.)
PAAL