The Private Equity Association calls for accelerating the loosening of the system to guide long-term capital investment in AI and public construction

The Private Equity Investment Business Association calls on the government to accelerate the loosening of the system and guide long-term private capital investment in AI, innovative industries and public construction. Qiu Decheng, chairman of the Private Equity Association, pointed out that as the government proposes 13 core strategic industries, covering the five trustworthy industries, the new ten core AI construction technologies and key industries, private equity and venture capital investors are expected to obtain more investment opportunities. The government should further improve the capital support system to support industrial transformation and national construction.

The Private Equity Association recently held a "Focus Forum on Private Equity Investment Environment and Policy Optimization", chaired by Qiu Decheng and attended by Zhan Fangguan, deputy chairman of the National Development Council, and invited industry players such as Red Mansion Capital, Boguan Capital, China Development Capital, Cathay Private Equity, Differ Asia Pacific and China Trust Private Equity to exchange views on taxation, long-term funding, sales channels, talent cultivation and institutional structure.

Qiu Decheng said that in recent years, the government has continued to respond to industry suggestions and accelerated regulatory adjustments. The Financial Supervisory Commission has also lowered the risk coefficient for the insurance industry to invest in private equity funds to provide support for market development. Private equity and venture capital are important sources of capital to support industrial transformation and national construction. Private funds should be directed to invest in innovative industries, corporate growth, infrastructure and major transformation plans.

Zhan Fangguan pointed out that driven by the development of the AI ​​industry, the scale of domestic excess savings has increased from about 8 trillion yuan to more than 25 trillion yuan. How to guide private and insurance funds to invest in domestic industry and public construction through private equity funds will be an important issue in the next stage of the capital market. The National Development and Reform Commission will continue to assist the industry in removing institutional structural obstacles. Many suggestions put forward by the industry in the past year have been coordinated and processed through the "Regulatory Adjustment Group" of the National Development Plan of Trillion Dollar Investment.

Regarding the use of long-term funds, industry participants suggested guiding medium- and long-term funds such as labor retirement funds to appropriately invest in domestic private equity funds, and raising the upper limit for the insurance industry's indirect investment in public and infrastructure through domestic private equity funds to 45% compared with direct investment. Qiu Decheng suggested that the labor retirement fund can first invest in domestic private equity funds in a small proportion on a trial basis, gradually accumulate experience, and then expand the allocation based on the results.

Zhan Fangguan responded that the National Development Fund has revised relevant management points and clearly stated that it can directly invest in private equity funds. As for issues such as labor retirement funds and insurance industry investment limits, the National Development Fund will invite the competent authorities and industry for further discussions.

In terms of taxation, industry participants suggested normalizing the through-taxation system for limited partnerships to improve the double-tier taxation issues that M&A and growth-oriented private equity funds may face. Qiu Decheng said that the association will integrate legal and accounting professional opinions, propose specific plans, and communicate with the competent authorities in stages.

Chiu Decheng emphasized that Taiwan’s private equity system started late, and it should speed up the deregulation of the system, integrate it with international standards, and strengthen the cultivation of professional talents and emerging management teams. The association will incorporate the forum recommendations into annual policy recommendations and continue to communicate with the government and competent authorities.