"The Ministry of Economic Affairs" (MOEA) has approved an investment plan by China Mobile Communications Corp to set up an affiliate in Taiwan to run an electronic components wholesale business, but the mainland telecommunications giant will not be allowed to buy a stake in Taiwan's Far Eastone Telecommunications Co.

Fan Liang-tung, executive secretary of the Investment Commission, said yesterday that the government has not opened the telecommunications sector to mainland investors.

Fan said the telecommunications sector was not included in the list of sectors that Taipei would allow mainland investments in.

While the MOEA is studying a second stage of opening to mainland investment, Fan said that it is considering allowing investments in public infrastructure projects, adding that it is not considering doing so for the telecommunications sector.

When China Mobile's plan to invest in Far Eastone was first reported last summer, it raised worries in Taiwan, and the MOEA was quick to express its concern to Far Eastone's management.

Fan said that through its affiliate in the Netherlands, Zong B.V., China Mobile applied for approval to set up an affiliate in Taiwan last November. On December 11, the commission approved China Mobile's application for operating an electronic components wholesale business here.

A Hong Kong television company reported from Beijing yesterday that China Mobile's Chairman Wang Jianzhou said that his company will buy a stake of Far Eastone through the newly-formed company and that the plan is under review.

Wang and Far Eastone Chairman Douglas Hsu reached a strategic alliance agreement last April that gave China Mobile permission from Far Eastone to buy a 12 percent stake in the Taiwanese telecommunications firm for NT$17.77 billion, despite the fact that the Taiwanese government has not opened the telecommunications sector to mainland investors.

China Daily/CNA

(HK Edition 03/05/2010 page8)