INDEPENDENT NEWS

Cablegate: Media Reaction: President Chen Shui-Bian's Future And

Published: Mon 27 Nov 2006 07:10 AM
VZCZCXYZ0019
RR RUEHWEB
DE RUEHIN #3968/01 3310710
ZNR UUUUU ZZH
R 270710Z NOV 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 3194
INFO RUEHBJ/AMEMBASSY BEIJING 5993
RUEHHK/AMCONSUL HONG KONG 7213
UNCLAS AIT TAIPEI 003968
SIPDIS
DEPARTMENT FOR INR/R/MR, EAP/TC, EAP/PA, EAP/PD - DAVID FIRESTEIN
DEPARTMENT PASS AIT/WASHINGTON
SIPDIS
E.O. 12958: N/A
TAGS: OPRC KMDR KPAO TW
SUBJECT: MEDIA REACTION: PRESIDENT CHEN SHUI-BIAN'S FUTURE AND
CROSS-STRAIT RELATIONS
Summary: Taiwan's major Chinese-language dailies November 25-27
focused on [Taiwan's] Advanced Semiconductor Engineering's
announcement that it will sell 100 percent of the company's stock to
the U.S.-based Carlyle Group for NT$39 [US$1.20] per common share,
or a total of NT$179 billion [US$5.5 billion], to get around the
government's restriction limiting Taiwan companies' investments in
China to 40 percent of their net worth. The other major focus of
all Taiwan dailies is the allegedly luxurious life of President Chen
Shui-bian's son, Chen Chih-chung, and daughter-in-law, Huang
Rui-jing, in New York; and whether they will return to Taiwan to
give birth to their baby to prevent President Chen from "being the
grandfather of an American."
In terms of editorials and commentaries, pro-status quo "China
Times" said in its editorial that the year-end mayoral elections in
Taipei and Kaohsiung will determine the future of President Chen
Shui-bian and KMT Chairman Ma Ying-jeou. Another "China Times"
editorial said that the Purchase of [Taiwan's] Advanced
Semiconductor Engineering by [the U.S.-based Carlyle Group] is an
ominous sign for Taiwan's economy, and urged the government to
adjust its cross-Strait economic policy. The English-language,
pro-independence "Taipei Times" editorialized that the government
should be wary of companies that may attempt to delist their stock
in Taiwan's stock market in order to circumvent China-bound
investment regulations. End summary.
A) "Citizens in the Taipei City and Kaohsiung City are Determining
the Nation's Future"
The pro-status quo "China Times" [circulation: 400,000]
editorialized (11/26):
"... The political climate in general, haunted by the shadow of
scandals involving high-ranking officials, in spite of the
Presidential Office Allowance for State Affairs that involves
President Chen Shui-bian and the First Family, or the special
allowance case that involves KMT Chairman Ma Ying-jeou, has made the
[mayoral] elections a decisive battle between 'rectitude and
corruption.' Regardless of whether it was [the] Blue [camp] or
Green [camp], they all praised 'rectitude.' This means that
political practitioners have become more aware of the importance of
not getting tainted in their careers. It is certainly advantageous
for the political culture as a whole.
"However, it is also because of the shadow of scandals that involve
high-ranking officials that the elections have tacitly become a
confidence vote of Chen Shui-bian vs. Ma Ying-jeou. ...
"... In other words, the moment that constituencies cast their votes
on December 9 is a critical one that determines the DPP's next move.
Obviously, not only the party chairman might face having to
consider resigning, but the Premier and Chen Shui-bian as well. The
maneuvers of the four DPP bigwigs, their relations with President
Chen, and even the DPP's choice to completely distance itself from
corruption might face a showdown. ..."
B) "Taiwan's Ominous Economy Forecasted by the Purchase of Advanced
Semiconductor Engineering"
The pro-status quo "China Times" [circulation: 400,000]
editorialized (11/27):
"... From the development of industries across the Strait,
industries [in Taiwan] have reached a critical decision point. More
than ten years ago, when the policy of 'no haste, be steady' started
to restrict investments in China, China's development in industry
was still falling behind relative [to Taiwan's]. Other than
labor-intensive industries, China has been developing
capital-intensive traditional industries, such as petrochemicals and
automobiles. Hence, Taiwan's high-tech industry, which is vital
overall to Taiwan's industries, did not face any imminent crisis.
But China has made speedy development in its high-tech industry
through policy guidance, the influx of global capital and
technology, and the establishment of factories in China by
multinational companies. ... Taiwan's industries, however, were
chained on the small island by the government and did not have any
space to maneuver. ...
"Whether the foreign company [i.e. the U.S.-based Carlyle Group]
will complete the purchase of the Advanced Semiconductor Engineering
remains to be seen, the matter is a serious warning to the
government's cross-Strait relations and Taiwan's capital market. If
the government is not able to look squarely into its implications
and make major adjustments to its policy, this might be a watershed
mark in a downhill trend for Taiwan's industrial and capital
markets."
C) "Companies, like life, will find a way"
CROSS-STRAIT RELATIONS
The pro-ndependence, English-language, "Taipei Times" [circulation:
30,000] editorialized (11/27):
"The film [Jurassic Park] reminded many in the industry just what
happened last Friday when ASE, the world's largest semiconductor
packaging and testing company, confirmed it had received an
indication of interest from a private equity consortium led by the
Carlyle Group, paving the way for the Taiwanese firm to openly
invest in China.
"The reason why the analogy is a pertinent one is that if ASE agrees
to the all-cash buyout by the Carlyle-led consortium -- and provided
the government does not oppose it -- ASE will be transformed into a
foreign company. At that point, Carlyle will likely apply to delist
ASE from the Taiwan Stock Exchange, as long as it secures 75 percent
of the outstanding common shares of the local firm. This will in
turn allow ASE to circumvent the government's China-bound investment
restrictions, especially the present 40 percent investment ceiling
of a listed company's net value. ...
"In the past, buyouts of local firms were usually an isolated
phenomenon. Nowadays, the appetite of foreign investors is higher
and businesses are keener on delisting. Several investment banks,
including Goldman Sachs, have predicted more foreign investors will
follow suit in shopping for other potential acquisition targets in
Taiwan, especially those which are undervalued, such as United
Microelectronics Corp, MediaTek, Quanta Computer and Lite-On
Technology Corp.
"Coupled with recent cases of companies that have announced capital
reduction plans, the government should be wary of companies that may
attempt to delist their stock in order to circumvent China-bound
investment regulations. Life will find a way and so do companies.
The publicized cases are just the tip of the iceberg."
YOUNG
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