2011 Industrial Development in Taiwan, R.O.C.
Foreword
I. Overview
1. The macroeconomic environment
2. Current status of Taiwan's industrial development
3. Taiwan's world-leading products
II. The Industrial Investment Climate
1. Infrastructure
2. Industrial parks
3. Human resources
4. Financial assistance
5. Technological development
6. Tax policies and incentives
III. Key Strategies and Measures
1. Participating in regional economic integration
2. Promoting the development of key industries
3. Encouraging foreign enterprises to establish R&D centers in Taiwan
4. Encouraging enterprises to establish operational headquarters in Taiwan
5. Promoting sustainable development
6. Fostering investment and removing investment barriers
7. Furthering international cooperation
IV. Future Prospects
Foreword top
The manufacturing sector has been the key driving force behind Taiwan’s economic development. Over the past 50 years, the government and the private sector in Taiwan have been working together to continuously enhance industrial competitiveness and achieve steady economic growth. As a result of these efforts, Taiwan has become the global center for IC foundries and flat panel displays as well as a manufacturing powerhouse for many high-tech products.
After many years of promoting internationalization and liberalization, Taiwan’s infrastructure, industrial parks, human resources, technological capabilities, and taxation system are on a par with those of the major industrialized countries.
The Industrial Development Bureau (IDB) has been giving its full support to the development of a first-class investment environment; providing comprehensive assistance to business enterprises to overcome investment obstacles; providing guidance for the development of new industries as well as the upgrading and transformation of existing industries, so as to lay a firm foundation for long-term national development. In future, the IDB will continue to work closely with the industry to jointly create a new chapter for Taiwan’s industrial development.
Tyzz-Jiun Duh, Ph.D.
Director General
Industrial Development Bureau,
Ministry of Economic Affairs
I. Overview top
1. The macroeconomic environment top
The economic performance of Taiwan over the past few decades has been both strong and stable. Between 1991 and 2000, the average annual growth rate of GDP was about 6.4%. After registering negative growth for the first time in 2001, the economy recovered to resume a path of steady growth. In 2009, the GDP growth rate decreased to -1.91% due to the global economic downturn. However, driven by the world economic recovery, the strong external trade and robust private investment led the GDP growth to 10.9% in 2010.
In 2010, Taiwan was ranked as the 24th largest economy in the world with a GDP totaling US$430.1 billion with the 4th highest foreign exchange reserves in the world of US$382.0 billion, according to Global Insight. Due to the worldwide economic recovery, total investment in Taiwan increased at a rate of 39.7% in 2010, with private investment rising by 34.9%, and investment by the government and public enterprises increased by 3.51%. In addition, two-way trade increased by 39.1% in 2010. The trade surplus decreased from US$29.3 billion in 2009 to US$23.4 billion in 2010.
Table 1: Taiwan’s Macroeconomic Economic Indicators in 2010
| GDP (US$ billion) |
430.1 |
| GDP per capita (US$) |
18,588 |
| Economic growth rate (%) |
10.9 |
| Consumer price index annual rate of change (%) |
0.97 |
| Unemployment rate (%) |
5.21 |
| Exports (US$ billion) |
274.6 |
| Imports (US$ billion) |
251.2 |
| Balance of trade (US$ billion) |
23.4 |
| Foreign exchange reserves (US$ billion) |
382.0 |
| Exchange rate (TWD:USD) |
30.37 |
| Approved overseas Chinese and foreign investment (US$ billion) |
3.8 |
| Outward investment (US$ billion) |
2.8 |
| Mainland-bound investment (US$ billion) |
14.6 |
Source: Department of Statistics, Ministry of Economic Affairs (MOEA)
According to the Global Competitiveness Report 2010-2011 released by the World Economic Forum (WEF), Taiwan was ranked 13th out of 139 economies around the world and 4th in Asia according to the Global Competitiveness Index, the WEF’s key indicator of medium to long-term economic growth expectancy. Taiwan maintained its 4th-best ranking among the world’s major economies based on the Profit Opportunity Recommendation Indicators released by Business Environment Risk Intelligence (BERI) in April 2011. This report evaluates the business environment of 50 important economies using three main indices, namely Operations Risk, Political Risk, and the Remittance and Repatriation Factor. In this report, Taiwan has maintained its 4th-place ranking since 2009 and has also been ranked second in Asia in terms of its low-risk investment environment. Several prominent international institutes have also given Taiwan a high rating for overall economic performance and competitiveness (see Table 2).
Table 2: Assessment of Taiwan’s Overall Performance Ranked by International
| Institute |
Assessment |
World Ranking |
*Asian Ranking |
Date of release |
| International Institute for Management Development (IMD) |
World Competitiveness Yearbook |
6 |
3 |
May 2011 |
| Business Environment Risk Intelligence (BERI) |
Profit Opportunity Recommendation |
4 |
2 |
April. 2011 |
| Operations Risk Index |
3 |
2 |
| Remittance and Repatriation Factor |
3 |
2 |
| World Economic Forum (WEF) |
Global Competitiveness Index 2010-2011 |
13 |
4 |
Sep. 2010 |
| The Networked Readiness Index 2009-2010 (The Global Information Technology Report 2010-2011) |
6 |
2 |
April. 2010 |
| The Global Enabling Trade Report 2010 |
28 |
5 |
May 2010 |
| Economist Intelligence Unit (EIU) |
Information Technology Industry Competitiveness Index 2009 |
15 |
4 |
Sep. 2009 |
| Heritage Foundation |
2011 Indexes of Economic Freedom |
25 |
5 |
Jan. 2011 |
* Accroding to the IMF World Economic Outlook 2010, Asian countries exclude the Middle East (e.g., Israel, Bahrain).
2. Current status of Taiwan’s industrial development top
The contribution of the industrial sector to GDP reached a peak in 1986 at 44.8% and since then has steadily declined. In 2010, the industrial sector’s contribution to GDP decreased to 31.3%, while that of the services sector increased to 67.1%. With the advent of a knowledge-based economy, the services sector’s contribution to GDP is expected to continue rising. By contrast, the agricultural sector’s contribution to GDP has been falling for decades and plummeted to only 1.6% in 2010 (see Chart 1).
Chart 1: Historical Chart of Taiwan’s GDP Composition by Sector
Source: 93SNA, DGBAS, Executive Yuan
According to the International Standard Industrial Classification system, the industrial sector includes mining and quarrying, manufacturing, construction, and public utilities. In 2010, the manufacturing industry’s output with a total amount of US$467,795 million accounted for 93.11% of the total output of the industrial sector in Taiwan. Within the manufacturing industry, the ICT industry’s output accounted for 35.0% with the chemical industry for 29.4%, the metal and machinery industries for 26.1%, and the consumer goods industries for 9.6%. The workforce employed in the manufacturing industry was 2,488 thousand persons. A total of 3,581 new factories were opened in 2010; of which, 1,508 factories were in the metal and machinery industry (see Chart 2, Table 3 and Table 4).
Chart 2: Historical Chart of Taiwan Manufacturing Output Composition
Source: Monthly Report on the Manufacturing Industry,IDB/MOEA
Table 3: Development of the Manufacturing Industry in 2010
| |
Contribution to total output(%) |
Industry output(US$ million) |
Number of employees (thousand persons) |
Average output per employee (US$ thousand) |
| Manufacturing Industry |
100.0 |
437,040 |
2,488 |
176 |
| 1. Metal and Machinery Industries |
26.1 |
113,879 |
728 |
156 |
| 2. ICT industry |
35.0 |
152,943 |
855 |
179 |
| 3. Chemical Industry |
29.4 |
128,259 |
461 |
278 |
| 4. Consumer Goods Industries |
9.6 |
41,959 |
444 |
95 |
Source: Monthly Report on the Manufacturing Industry, IDB/MOEA
Table 4: Investment in the Manufacturing Industry in 2010
| |
Manufacturing Industry |
Metal & Machinery Industries |
ICT Industry |
Chemical Industry |
Consumer Goods Industries |
| Domestic Investment |
Number of new factories |
3,581 |
1,508 |
662 |
696 |
715 |
| Number of closed factories |
3,239 |
1,308 |
559 |
625 |
747 |
| Foreign Investment (US$ million) |
1,307 |
297.6 |
494.6 |
446.3 |
68.4 |
| Outward Investment except for the Mainland (US$ million) |
1,105.3 |
312.6 |
269.2 |
181.1 |
342.5 |
| Mainland-bound Investment (US$ million) |
10,840.5 |
1,694.1 |
6,772.6 |
1,016.2 |
1,357.6 |
Source: Monthly Report on the Manufacturing Industry, IDB/MOEA
The technical services industry, including service providers in the field of R&D, design, engineering, information, and consulting, has been developing as a division of labor within the industrial sector. In line with the general pattern in developed countries, industrial development in Taiwan has brought not only a steady growth in value added and the employment scale, but has also fostered the expansion of the technical services industry. In 2010, the technical services industry generated total revenue of US$20,237million, receiving 944 investment projects (see Table 5 and Table 6).
Table 5: Development of the Technical Services Industry in 2010
| Revenue(US$ million) |
Share of total output(%) |
Number of employees(thousand persons) |
Share of total employees(%) |
Average revenue per employee(US$ thousand) |
| 20,237 |
4.6 |
224 |
2.11 |
90.2 |
Note:
1. The revenue approximated the industry output and was estimated based on the statistics from the Department of Statistics Bureau in MOEA, the Financial Data Center in Ministry of Finance, and the DGBAS in Executive Yuan.
2. The number of employees was based on the Industry, Commerce, and Service Census conducted by the DGBAS and the survey conducted by the Taiwan Economic Research Institute.
Table 6: Investment in the Technical Services Industry in 2010
| Technical Services Industry |
| Number of investment projects |
944 |
| Total amount invested (NT$ billions) |
48.8 |
Source: Industrial Development Bureau, MOEA
3. Taiwan’s world-leading products top
Taiwan has become a world-class manufacturing center and has a leading global market share in many products. Table 7-1 and Table 7-2 list the products made in and made by Taiwan that were ranked No. 1 globally in terms of production value or volume in 2010.
Table 7-1: Products made in Taiwan ranked No.1 in the world
| Item |
Production Value (US $ million) |
World share % |
Production Volume |
World share % |
World's largest production by volume |
| Mask ROM |
280 |
52.3 |
-- |
-- |
|
| Chlorella |
171 |
51 |
873 tons |
51 |
|
| IC Foundry |
10,292 |
44.4 |
16.5 million pieces |
59.8 |
|
| Blank Optical Disk |
1,031 |
53.8 |
-- |
-- |
|
| IC Package |
10,292 |
44.4 |
-- |
-- |
|
| Mobility Scooter/Powered Wheelchair |
162 |
30 |
176 thousand vehicles |
23.5 |
|
Source: Industrial Development Bureau, MOEA
Table 7-2: Products made by Taiwan ranked No.1 in the world
| Item |
Production Value (US $ million) |
World share % |
Production Volume |
World share % |
World's largest production by volume |
| Portable Navigation Device |
3,451 |
76.1 |
32.47 million pieces |
88.6 |
|
| Mask ROM |
280 |
52.3 |
-- |
-- |
|
| Motherboard (system & pure MB) |
5,998 |
95.6 |
120.86 million pieces |
94 |
|
| Notebook |
68,374 |
94.4 |
143.26 million pieces |
93.7 |
|
| WLAN CPE |
2,776 |
67.3 |
266 million pieces |
85 |
|
| Cable Modem |
1,405 |
81.9 |
27.8 million pieces |
89.7 |
|
| Golf Head |
688 |
79.8 |
34.75 million pieces |
79.8 |
|
| LCD Monitor |
14,223 |
71.9 |
112.04 million pieces |
68.8 |
|
| Electronic Glass Fabric |
1,330 |
62 |
1.34 billion meter |
60 |
|
| xDSL CPE |
1,493 |
63 |
55.49 million pieces |
70 |
|
| IC Foundry |
17,140 |
69.3 |
18.28 million pieces |
66.4 |
|
| Diving Suit |
350 |
75 |
4.2 million pieces |
75 |
|
| Electric Thermometer |
65 |
61 |
35.5 million pieces |
71 |
|
| Digital Blood-Pressure Monitor |
200 |
33 |
9.5 million pieces |
32.1 |
|
| Mobility Scooter/Powered Wheelchair |
255 |
47 |
250 thousand pieces |
33.4 |
|
| IC Package |
11,119 |
47.9 |
-- |
-- |
|
| Shoes |
9,500 |
32 |
550 million pairs |
32 |
|
| Resuscitator |
25 |
33.3 |
2.5 million pieces |
33.3 |
|
| Server (System & Pure MB) |
3,543 |
-- |
7.89 million pieces |
88.7 |
★ |
| Chlorella |
171 |
51 |
873 metric tons |
51 |
|
| Blank Optical Disk |
1,171 |
57 |
-- |
-- |
|
| Dry Film Photoresist |
280 |
35 |
240 million square meters |
40 |
★ |
| Desktops |
14,893 |
22.6 |
54.62 million pieces |
46 |
★ |
| Reels |
1,500 |
50 |
3.5 million pieces |
50 |
|
| Netbook |
5,338 |
88.3 |
25.67 million pieces |
98.5 |
|
Source: Industrial Development Bureau, MOEA
II. The Industrial Investment Climate top
A superior investment environment and attractive incentives are the main factors in promoting both industrial and economic development. Taiwan possesses a well-established infrastructure, excellent industrial parks, abundant talents, a sound fiscal system, strong technological capabilities, competitive tax schemes, and a solid legal framework, providing an excellent environment for Taiwan’s industrial development.
1. Infrastructure
Taiwan is equipped with a well-developed transportation system. Apart from the existing round-the-island railway, the Taiwan High Speed Rail can reduce travel time with express trains that are capable of traveling at up to 300 km/h travel from north to south in roughly 90 minutes as opposed to 4-6 hours by conventional rail. Other than railways, there are eight national freeways, one north-south cross-island highway and three east-west cross-island highways, as well as several provincial highways and expressways. In the capital of Taiwan, the Taipei Rapid Transit System, also known as the Taipei Metro, serves a large part of the Taipei metropolitan area, and will be extended to the biggest international airport in Taiwan – the Taiwan Taoyuan International Airport. Taiwan’s second largest city, Kaohsiung, launched the Kaohsiung Mass Rapid Transit System in early 2008.
Taiwan's deep-water harbors and international airports offer effective domestic and international transportation services. The Port of Kaohsiung is Taiwan's largest container port and is ranked the 12th largest in the world, according to the Review of Maritime Transport in 2010﹔The Taiwan Taoyuan International Airport is ranked the world’s 13th busiest airport, according to Cargo Traffic 2010 final data from Airports Council International. With these advantages, many internationally renowned transportation and express delivery companies have increased their investments in Taiwan. For instance, United Parcel Service of America, Inc. (UPS) has made Taiwan its pan-Pacific transit center; DHL International GmbH. has established six large cargo transit service centers in Taiwan; and Federal Express Corporation has established its Asia-Pacific transit center and large-scale transit service center in Taiwan.
Water and electricity are vital components for the development of industry. Factories and plants require stable and reliable water and electricity supply for safe and efficient operation. In this regard, the government develops water resources according to the demands of various regions in the country to meet the needs of households and industries. The government has also made continuous efforts to diversify its power generation based on different energy sources in order to assure an adequate supply of electricity.
To cope with the liberalization of telecommunications markets worldwide and to provide a diversified range of telecom services, Taiwan’s telecom services industry has been fully liberalized. As of December 2010, the penetration rates for mobile phones and fixed-line telephones were 120.4% and 54.8%, respectively. As of March 2011, the number of Internet users stood at 10.81 million; and the number of broadband subscribers stood at 5.10 million. According to WEF (2011), The Global Information Technology 2010-2011, Taiwan was ranked 6th in The Networked Readiness Index 2010-2011.
Moreover, the government has implemented the M-Taiwan Project (Mobile Taiwan), which focuses on constructing a mobile environment for the next generation, promoting innovative technologies and service applicability, integrating mobile and wireless networks and establishing a nationwide seamless Internet environment, and creating cutting-edge dual-network application services. Based on a government-funded wireless Internet environment, the project also entails collaboration with the telecommunications vendors, operators, digital content providers, and information services providers, etc. This project not only aims to create an “all-win” situation for customers, companies, and the government, but also enables customers to enjoy the various applications of high-speed Internet at a reasonable cost.
2. Industrial parks top
According to the WEF Global Competitiveness Report 2010-2011, Taiwan is ranked 3rd out of 139 economies around the world in terms of the “state of cluster development.” There are three types of industrial parks in Taiwan: “science-based industrial parks” (under the jurisdiction of the National Science Council, Executive Yuan), “export processing zones” (under the jurisdiction of the Export Processing Zone Administration Office, MOEA), and “industrial parks” (developed by the IDB, local governments and private enterprises). Following the pace of industrial transformation, Taiwan’s industrial parks have developed into specialized parks and corridors. For example, the Nankang Software Park in Taipei is a technology park for knowledge-intensive industries that focus on software development, digital content, IC design, and biotechnology. The parks in central Taiwan reflect the fact that the region, with its well-developed industrial supply chain, is an important manufacturing base for precision machinery. The Tainan Technology Industrial Park in southern Taiwan, with the Industrial Innovative R&D Zone, allows research on core technologies, such as micro-nano systems, 3C integration, applications of communication software and the Internet, etc. The establishment of the Central Taiwan Science-based Industrial Park completes the linkage of the three science-based industrial parks in northern, central and southern Taiwan into a “technology corridor” along the western coast (see Figure 1).
Figure 1
In order to assist investors in acquiring land for production facilities, the IDB offers the following services:
(1) The 00-66-88 Program
In order to reduce land costs during the initial factory construction period and to promote the utilization of land in all industrial parks, the IDB implemented the “Industrial Land Rental Discount Measures” (00-66-88 Program) on May 1, 2002. Under this program, qualified manufacturers renting land in industrial parks are entitled to certain benefits. They do not need to pay any rent for the first two years (00) and pay only 60% of the total rent for the third and fourth years (66) and 80% for the fifth and sixth years (88) respectively. The full rent becomes payable starting from the seventh year.
Under the Fourth Stage of the 00-66-88 Program, which is implemented since January 1, 2011, companies renting land in an industrial park pay a reduced rent for the first six years. For any company that applies to buy the land it rents during the rental period, the total or partial amount of rent previously paid can be deducted from the total cost of the land without paying any interest.
(2) Preferential Program for Pricing Land in Industrial Parks Approaching Market Price
In order to promote local and foreign investment and facilitate the quick and effective sale of industrial park lands, the IDB has provided available park lands in the Changhua Costal Industrial Park, Tainan Technology Industrial Park, Douliu Industrial Park, Hualien Hoping Industrial Park, and Yunlin Offshore Industrial Park through a favorable reserve price auction.
(3) The 767 Program
The IDB has also implemented its "Industrial Land Sale Discount Measures" (767 Program) from June 24, 2011 to December 31, 2012, offering different discounts to manufacturers buying land in certain industrial parks.
A. 30% off in the Yilan Litzer Industrial Park
B. 40% off in the Changhua Costal Industrial Park
C. 30% off in the Yunlin Technology Industrial Park
3. Human resources top
According to the WEF Global Competitiveness Report 2010-2011, Taiwan was ranked 34th in Labor Market Efficiency out of 139 economies around the world. To meet the needs of future industrial development, the IDB has implemented the following measures to increase the size and quality of its workforce through training and recruiting:
(1) Training
The IDB conducts technical training programs in response to the needs of industrial development and in cooperation with relevant academic and research institutions. The objective of such on-the-job training and pre-job training programs is to prepare an adequate supply of technical personnel as may be required in the course of industrial development. The IDB also sets up “virtual colleges” to cultivate talents for key industries, such as semiconductors and digital content, and ensure that the supply of human resources keeps up with the demand of enterprises.
(2) Recruiting
In order to attract and retain human resources from overseas, the government has relaxed the restrictions on foreign workers and simplified the application procedures in recruiting skilled workers from overseas.
The government also organizes an overseas recruitment mission every year to help private enterprises recruit foreign professionals. Foreign workers will receive assistance in overcoming their language barriers and adapting to local culture upon their arrival in Taiwan. This website (http://hirecruit.nat.gov.tw/english/index.asp) provides matching services for overseas talents and local recruiters.
4. Financial assistance top
In order to actively promote industrial development and upgrading, and to maintain continuous economic growth, the Development Fund of the Executive Yuan sets aside a special fund in cooperation with banks to provide various kinds of special low-interest loans. The loans include those for R&D; the purchase of automated, pollution-control and energy conservation machinery and equipment; small and medium enterprises; and traditional industries, etc. The government also provides mid- to long-term financing for major investment projects in amounts of NT$100 million or more upon application by private enterprises.
For small and medium-sized enterprises (SMEs) that were denied a loan due to a lack of sufficient collateral, the Small and Medium Business Credit Guarantee Fund, a non-profit organization founded by the government and financial institutions, can provide credit guarantees to qualified firms.
To facilitate the development of high-tech industries, the IDB stipulated that regardless whether domestic or foreign, all approved companies with high-tech products or successfully developed technologies may apply for listing or OTC with simpler qualification to aid in acquiring funding in the capital market.
5. Technological development top
Each year, the IDB has a budget for upgrading technology in industries by providing R&D grants under the “New Leading Product Development Program” and the “Conventional Industry Technology Development Assistance Program.” The Department of Industrial Technology at MOEA also provides grants for R&D projects conducted by industry and academia as well as planning and development activities of critical, forward-looking industrial technologies.
With regard to R&D activities, the participation of several important research institutes, including the Industrial Technology Research Institute (ITRI), Institute for Information Industry (III), Chung Shan Institute of Science and Technology (CSIST), Taiwan Textile Research Institute (TTRI), Metal Industry Research and Development Center, and Food Industry Research and Development Institute, is instrumental for the development of new industrial technologies in private sectors.
To further promote the dissemination of technology, the IDB has established the Taiwan Technology Marketplace (TWTM, http://www.twtm.com.tw) as a worldwide technology/patent transaction platform for industries, academia, and research institutes. TWTM also provides a matching service for technology/patent transactions together with intellectual property consulting services.
Taiwan tops the world in “utility patents,” according to the WEF Global Competitiveness Report 2010-2011, and Taiwan was ranked 5th globally in terms of the number of patents registered in the U.S. in 2010 (see Table 8). As for Taiwan’s R&D expenditure, R&D expenditure consists 2.94% of GDP in 2009; the proportion of R&D conducted by business enterprises accounted for 70.7% of the overall R&D expenditure in 2008 (see Table 9).
Table 8: Number of US Patents Granted to the Citizens of Selected Countries
| 2010 Ranking |
Country |
No. of Patents |
Share of All Patents Granted (%) |
| 2006 |
2007 |
2008 |
2009 |
2010 |
2006 |
2007 |
2008 |
2009 |
2010 |
| 1 |
America |
102,267 |
93,690 |
92,000 |
95,038 |
121,179 |
52.06 |
51.22 |
49.66 |
45.52 |
49,59 |
| 2 |
Japan |
39,411 |
35,941 |
36,679 |
38,066 |
46,978 |
20.06 |
19.65 |
19.80 |
19.83 |
19.23 |
| 3 |
Germany |
10,889 |
10,012 |
10,086 |
10,352 |
13,633 |
5.54 |
5.47 |
5.44 |
5.39 |
5.58 |
| 4 |
South Korea |
6,509 |
7,264 |
8,731 |
9,566 |
12,508 |
3.31 |
3.97 |
4.71 |
4.98 |
5.12 |
| 5 |
Taiwan |
7,920 |
7,491 |
7,779 |
7,781 |
9,635 |
4.03 |
4.10 |
4.20 |
4.05 |
3.94 |
| 6 |
Canada |
4,094 |
3,970 |
4,125 |
4,393 |
5,513 |
2.08 |
2.17 |
2.23 |
2.29 |
2.26 |
| 7 |
England |
4,329 |
4,031 |
3,843 |
3,805 |
5,100 |
2.20 |
2.20 |
2.07 |
1.98 |
2.09 |
| 8 |
France |
3,856 |
3,720 |
3,813 |
4,009 |
5,038 |
1.96 |
2.03 |
2.06 |
2.09 |
2.06 |
| 9 |
Mainland |
970 |
1,235 |
1,874 |
2,270 |
3,303 |
0.49 |
0.68 |
1.01 |
1.18 |
1.35 |
| 10 |
Italy |
1,899 |
1,836 |
1,916 |
1,837 |
2,254 |
0.97 |
1.00 |
1.03 |
0.96 |
0.92 |
| 11 |
Australia |
1,485 |
1,506 |
1,544 |
1,550 |
2,079 |
0.76 |
0.82 |
0.83 |
0.81 |
0.85 |
| |
Total |
196,437 |
182,928 |
185,244 |
191,933 |
244,358 |
100 |
100 |
100 |
100 |
100 |
Source: US Patent and Trademark Office (USPTO)
Table 9 Research and Development Expenditure Comparison
| Category/Country |
Total R&D Expenditure(US$ millions) (PPP) |
Proportion of R&D Expenditure to GDP (%) |
R&D Expenditure by Sector of Performance (2007) |
Government (%) |
Business Enterprises (%) |
| Taiwan, 2009 |
21,572 |
2.94 |
28.2(2008) |
70.7(2008) |
| Japan, 2008 |
149,213 |
3.42 |
15.6 |
78.5 |
| United States, 2008 |
398,194 |
2.77 |
27.1 |
72.6 |
| Germany, 2008 |
76,797 |
2.64 |
27.7 (2007) |
69.9 |
| France, 2008 |
42,893 |
2.02 |
39.4 |
63.0 |
| United Kingdom, 2008 |
38,707 |
1.77 |
30.7 |
62.0 |
| South Korea, 2008 |
45,294 |
3.37 |
25.4 |
75.4 |
Source: Indicators of Science and Technology 2009, National Science Council, Executive Yuan
6. Tax policies and incentives top
The Government promulgated the “Statute for Industrial Innovation” on 12 May, 2010 in order to facilitate new industrial advantages.
In conjunction with the stipulation for the “Statute for Industrial Innovation” and to realize the goal of tax system reform - reducing taxes while simplifying government administration - the “Income Tax Act” was amended on 15 June, 2010, which resulted in a reduction in the business income tax rate from 25% to 17%. Compared to neighboring areas like South Korea (22%), Hong Kong (16.5%), Singapore (17%), and Mainland China (25%), a 17% business income tax rate will create an internationally competitive tax environment, decrease the tax burden for enterprises, as well as generate benefits to all industries. Besides, in order to encourage the industries to conduct R&D activities which generate high spillover effects and high value-added, companies can, according to the “Statute for Industrial Innovation”, enjoy a 15% tax credit against business income tax for their R&D expenditures.
III. Key Strategies and Measures top
The IDB has been implementing a wide variety of measures to strengthen industrial development in Taiwan and to help enterprises adjust to changes in the external business environment, such as the ongoing process of economic liberalization, the improvement of environmental quality, and changes in employment relations.
1. Participating in regional economic integration top
“Connecting with the world and participating in global economic integration” has been at the core of foreign economic and trade policy of the Government. In light of the slow progress in the Doha round of multilateral negotiations in the WTO, as well as the trend toward regional economic integration that has affected the competitiveness of Taiwan’s exported products, the government signed the Economic Cooperation Framework Agreement (ECFA) with Mainland China on June 29, 2010, which took effect on September 12, 2010. The agreement covers issues related to commodity trade, services, investment, the protection of intellectual property, trade promotion, and trade facilitation, together with the Early Harvest Program for goods and services, to which the Mainland has reduced tariffs on 539 items for Taiwan, accounting for US$13.8 billion and 16.1% of total imports from Taiwan. Taiwan has reduced tariffs on 267 items for the Mainland, which account for US$2.9 billion and 10.5% of total imports from the Mainland.
In addition, ECFA's Cross-Strait Economic Cooperation Committee announced and launched the negotiations on continuing trade, service trade, and dispute settlement on February 22, 2011. It also established 6 working group in charge of trade in goods, trade in service, investment, dispute settlement, industrial cooperation, and customs cooperation. The Industrial Cooperation Division will enhance cooperation in key industries between Taiwan and Mainland. The goals are to facilitate the development of cross-Strait industrial cooperation, upgrade the level of industrial cooperation, as well as develop Taiwan's own brands to vie for the global market.
2. Promoting the development of key industries top
Sustainable and prosperous economic development is the most important objective for the Ministry of Economic Affairs (MOEA). The government has reviewed Taiwan’s economic development strategies and made corresponding adjustments. The only way to triumph in the face of trade liberalization is through development, which can only come from the strengthening of our nation’s economy through continuous innovation and enhancement.
The IDB has also formulated the following promotional measures to enhance the key industries, including iron and steel, machinery, communications, semiconductor, flat panel, digital content, petrochemicals, textile & clothing, design services, R&D services, information services, intelligent electric vehicle and invention patent commercialization (see Table 10).
Table 10 Status in 2010, Goals for 2015 and Promotional Measures for Key Industries
| Category |
Iron and Steel |
| Status in 2010 |
● Production value in 2010: NT$1,420 billion |
| Goals for 2015 |
● Production value in 2015: NT$1,500 billion |
| Promotional measures |
1. Completing the Steel Industry Policy Assessment Report
2. Continuing the Communication with Taiwan's steel industry on the topics of opening the Mainland steel imports
3. Strengthening exchange with steel industries in EU, Japan, and Mainland China to reduce unfair trades
4. Allowing big companies to dominate, promote an industrial value chain R&D alliance, improve the collaboration of up, mid, and down stream companies to upgrade the collective industrial competitiveness
5. Encouraging the elimination of small, low-efficiency furnances and assisting in promoting blast furnances and electrical furnances
|
| Category |
Machinery |
| Status in 2010 |
● Production value in 2010: NT$860 billion
● World’s 5th largest machine tool producer |
| Goals for 2015 |
● Production value in 2015: NT$1,300 billion
● Becoming the world’s 4th largest machine tool producer |
| Promotional measures |
1. Increasing the R&D budgets for leading and special projects, including the development of machine tools, machinery component parts, FPD production equipment, and electronic machinery
2. Helping manufacturers to develop high-tech production process equipment, key components, and application software to support product differentiation and value adding
3. Training specialized personnel and encouraging promotional mechanisms for white-collar and blue-collar workers
4. Encouraging manufacturers to expand business scale and global market share through mergers and acquisitions
5. Incorporating the ICT applications to create products tailored to market demands and assist companies to develop new technologies, grasping the huge future busniess potential |
| Category |
Communications |
| Status in 2010 |
● Production value in 2010: NT$469.9 billion (communications equipment and components)
● WiMAX production value in 2010: NT$28.1 billion |
| Goals for 2015 |
● Production value in 2015: NT$576.2 billion (communications equipment and components)
● Becoming the world’s leading producer of hand-held networking and communications devices
● Top global market share in 10 key networking and communications product categories
● Establishing an industry chain for broadband wireless access, IPTV and IP surveillance |
| Promoting measures |
1. Promoting the domestic deployment of fiber-optic and WiMAX networks, encouraging the use of Made-in-Taiwan (MIT) network equipment, and building interoperability testing capabilities to develop business opportunities for the deployment of next-generation networks (NGN)
2. Strengthening industrial collaboration by signing memorandums of understanding with leading international communications equipment vendors to explore procurement opportunities in emerging markets
3. Promoting the establishment and collaboration of applications for cross-Strait broadband and wireless broadband networks
4. Promoting new fiber-optic broadband services and encouraging the development of opportunities for people to experience new wireless broadband applications services that target particular locations or groups
5. Establishing new indicators for communications industry competitiveness and continuing to monitor the overall health of the industry; and helping companies to establish mechanisms for training personnel in the use of new technologies |
| Category |
Semiconductors |
| Status in 2010 |
● Production value in 2010: NT$1,620 billion
● 12-inch fabrication plants: 15 fabs in operation |
| Goals for 2015 |
● Production value in 2015: NT$1,660 billion
● 12-inch fabrication plants: 17 fabs in operation |
| Promotional measures |
1. Cultivating talent in line with industry needs by “Semiconductor Institute” and “System-on-Chip ” training program
2. Promoting investment in the Nangang IC Design Incubator Center
3. Encouraging semiconductor firms to establish R&D centers for the development of cutting-edge research on semiconductor production processes
4. Establishing mechanisms and liaison windows for international exchange to enhance international technology collaboration and to explore international business opportunities
5. Helping the industry to overcome investment obstacles; supporting and promoting large-scale investment projects |
| Category |
Flat Panel Displays (FPD) |
| Status in 2010 |
● Production value in 2010: NT$1,600 billion
● G5 to G6 production facilities: 14
● G7.5 production facilities: 3
● G8.5 production facilities: 2 |
| Goals for 2015 |
● Production value in 2015: NT$2,000 billion
● G5 to G6 production facilities: 14
● G7.5 production facilities: 3
● G8.5 production facilities: 3 |
| Promotional measures |
1. Eliminating operational obstacles and facilitate industrial investment to assist companies in upgrading intellectual property protection as well as strengthening patent and legal settlement platforms
2. Carrying out survey on the supply and demand of prefessional personnel in panels and key parts as well as strengthening industrial information exchange and resource consolidation
3. Promoting company-centered cross-industry and cross-Strait cooperation platforms
4. Consolidating marketing resources to assist companies in developing global market share
5. Constructing exchange platform between the mid and upstream display device companies and system industry to promote cross-disciplinary development and upgrade product values
|
| Category |
Digital Content |
| Status in 2010 |
● Production value in 2010: NT$522.5 billion
● Amount of Investment, including direct and indirect investment: NT$22.1 billion
● Combined value in international collaboration projects: NT$2.7 billion
● Medium/long-term talent cultivation: 370 people; on-the-job training: 1,543 people |
| Goals for 2015 |
● Production value in 2015: NT$956 billion
● Amount of investment, including direct and indirect investment: NT$30 billion
● Combined value in international collaboration projects: NT$6 billion
● Medium/long-term talent cultivation: 300 people; on-the-job training: 1,550 people |
| Promotional measures |
1. Providing investment, financing and product development subsidies and guidance to assist the industry in innovation and upgrading
2. Cultivating digital content talent in line with the industry’s needs
3. Organizing digital content competitions to incentivize the development of outstanding products and emerging talent
4. Providing open sharing services at the Digital Content Academy to support SME product development
5. Participating in major exhibitions and expos, both in Taiwan and internationally, and organizing sales promotions
6. Encouraging different industries to adopt e-learning; promoting cross-industry alliances and collaboration
7. Providing guidance to local digital learning businesses on innovative marketing and sales, and using Chinese-language digital learning as the focus of international marketing schemes
8. Promoting digital learning in the industry sector and expanding the domestic market
9. Promoting cross-industry strategic partnerships for the industrialization of digital source materials |
| Category |
Petrochemicals |
| Status in 2010 |
● Production value in 2010: NT$1,820 billion
● World’s 9th largest producer of ethylene, with annual production capacity of 4 million tons |
| Goals for 2015 |
● Production value in 2015: NT$2,700 billion
● Becoming the world’s 7th largest producer of ethylene, and increasing annual ethylene production capacity to 5.4 million tons |
| Promotional measures |
1. Decreasing emissions, implementing new manufacturing processes and environmental techniques in petrochemical plants, improving wastewater processing, and decreasing GHG emissions
2. Strengthening petrochemical plant industrial safety guidance measures and establishing health-risk assessments
3. Enhancing facility resource efficiency and improving fire and pollution prevention systems
4. Developing high-quality petrochemical products and maintaining the development of two petrochemical supply and demand systems |
| Category |
Biotechnology |
| Status in 2010 |
● Production value in 2010: NT$227.6 billion
● Amount of investment: NT$30.1 billion |
| Goals for 2015 |
● Production value in 2015: NT$350 billion
● 10 new drugs approved for the market
● Entering the Asian market with high-quality yet affordable products
● Becoming the regional center for bio-tech products R&D, manufacturing, and business operation |
| Promotional measures |
1. Building a bio-tech industry network, strengthening resources consolidation, and accelerating the commercialization process
2. Guiding the industries to undergo concept verification for innovative products and assisting the expedition of commercialization
3. Leading traditional industries as well as other industries to enter the bio-tech field and providing the necessary complementary measures
4. Guiding the industries in utilizing government's R&D assistance funding to carry out product mass development and establish Taiwan's own brands
5. Providing technical and legal assistance to accelerate products' commercialization and international certification
6. Nurturing industrial human resources
7. Assisting in expanding global market share
8. Facilitating industrial investment and assisting industries to resolve legal, investment, and technical issues |
| Category |
Textiles & Clothing |
| Status in 2010 |
● Production value in 2010: NT$482.3 billion (including man-made fibers)
● Proportion of total production value by category: garments: 58%; home furnishings: 10%; industrial textiles: 32% |
| Goals for 2015 |
● Production value in 2015: NT$580 billion
● Proportion of total production value: garments: 48%; home furnishings: 12%; industrial textiles: 40% |
| Promotional measures |
1. Developing product differentiation in functional textiles and industrial textiles to boost product added value
2. Developing inspection and certification systems for functional and industrial textile products
3. Encouraging the establishment of R&D centers and e-enablement
4. Promoting the application of e-commerce |
| Category |
Design Services |
| Status in 2010 |
● Production value in 2010: NT$71 billion
● Annual exports: NT$41.7 billion
● 1,071 winners of four major international design competitions |
| Goals for 2015 |
● Production value in 2015: NT$115 billion
● Annual exports: NT$70 billion
● 1,821 winners of four major international design competitions |
| Promotional measures |
1. Organizing design industry consultation meetings to facilitate cooperation between manufacturers and design industry service providers
2. Establishing a design marketing service platform and utilizing website displays of quality designs to facilitate their use by government and private industry procurers, so as to expand the domestic market
3. Organizing an integrated international marketing effort of top design products by leading local designers to exhibits abroad in “Taiwan Design Pavilions”
4. Assisting enterprises with entry into the four major international design competitions to elevate international exposure and enhance the image of Taiwanese design worldwide
5. Promoting and assisting with international training for design talents |
| Category |
R&D Services |
| Status in 2010 |
● Production value in 2010: NT$115.4 billion |
| Goals for 2015 |
● Production value in 2015: NT$140 billion
|
| Promotional measures |
1. Integrating government project resources to provide service and guidance for invention patent industrial applications, establish successful models of patent commercialization, and create an environment conducive to the development of invention patent industrial applications
2. Utilizing the Taiwan Technology Marketplace (TWTM) and technological exchange network to gather information on available-for-trade products (patents) of foreign industrial and academic R&D; pool private R&D service industry (IP service industry) capabilities to create a joint promotional effort in the technology market
3. Promulgating the Taiwan Intellectual Property Management System (TIPS); and organizing IP service providers in the R&D service arena to establish TIPS and verification services |
| Category |
Information Services |
| Status in 2010 |
● Production value in 2010: NT$259.5 billion
● Number of CMMI-certified firms: 147, ranking Taiwan 9th in the world
● Export value in 2010: NT$38.5 billion
● One Taiwanese information services firm ranked among the top-five ERP firms in the Asia-Pacific region |
| Goals for 2015 |
● Production value in 2015: NT$372 billion
● Number of CMMI-certified firms: 200, ranking Taiwan 7th in the world
● Export value in 2015: NT$55 billion
● At least two Taiwanese information services firms will be ranked among the top-three in specific segments in the Asia-Pacific region |
| Promotional measures |
1. Implementing BEST II Flagship Guidance for IT service applications, as well as XaaS innovative service guidance and regional industry cluster IT service solutions guidance
2. Helping information services firms to organize delegations to attend international exhibitions and expos, and to form alliances with leading international vendors and local distributors
3. Hosting IT service innovation competitions and developing human resources for IT applications services
4. Providing guidance to help information services providers adopt Capability Maturity Model Integration (CMMI), and publicizing examples of successful CMMI adoption
5. Cultivating CMMI-specialized talent |
| Category |
Intelligent Electric Vehicles |
| Status in 2010 |
● --- |
| Goals for 2015 |
● Production Value: NT$60.3 billion
● Accumulated Sales: 25,000 for domestic market;15,000 for exports |
| Promotional measures |
1. Facilitating the advanced operation of intelligent electric vehicle (EV) companies with a commodity tax exemption
2. Overseeing the establishment of a smart grid by Taipower to support the distribution and management of charging stations; assessing power usage during peak and off-peak hours to ensure the said smart grid can meet future surges in power demand; and examining charging station related laws to ensure accessibility and ease of use
3. Enacting a three-year commodity tax exemption on EVs, encouraging local governments to eliminate related vehicle license fees, and facilitating the amendment of related laws to create a special EV plate
4. Implementing a testing and verification standard for the intelligent EV and its parts, as well as promoting technical R&D and marketing to facilitate vehicle industry upgrading
|
| Category |
Invention Patent Commercialization |
| Status in 2010 |
● --- |
| Goals for 2015 |
● Accumulated private investment: NT$20 billion
● Accumulated derivative economic benefits: NT$113 billion |
| Promotional measures |
1. Integrating government project resources to provide service and guidance for industry patent commercialization
2. Providing guidance to, or subsidizing, entrepreneurial efforts for personal patents or the development of new products
3. Strengthening commercialization of government special project R&D results
4. Establishing a patent added-value guidance and consultation center
5. Overseeing commercialization verification services
6. Strengthening TWTM service capabilities |
Source: Industrial Development Bureau, MOEA
3. Encouraging foreign enterprises to establish R&D centers in Taiwan top
The government launched the “Multinational Innovative R&D Centers in Taiwan” program in 2002 to encourage foreign enterprises to set up R&D centers in Taiwan to take advantage of Taiwan’s comprehensive industrial supply chains, excellent professional personnel, bountiful supply of capital, and a good legal system that effectively protects intellectual property. In response to this program, internationally renowned companies, such as HP, Becker, Sony, Dell, IBM, Microsoft, Intel, DuPont, Wyeth, Phoenix, AIXTRON, Fujitsu, Motorola, Nokia, Pfizer, JSR, GM, Matsushita, Broadcom, Alcatel and AMSL, have set up R&D centers in Taiwan.
4. Encouraging enterprises to establish operational headquarters in Taiwan top
The government encourages domestic as well as foreign enterprises to establish their operational headquarters in Taiwan so that high value-added activities in the supply chain, such as R&D, design, brand marketing, management, distribution and logistics support, can be conducted in Taiwan. The IDB has developed concrete measures to help enterprises set up their operational headquarters in Taiwan by strengthening the financial system, expanding the supply of human resources, and offering efficient administrative services (see Table 11). As of December 2010, 691 operational headquarters had been established in Taiwan.
Table 11 Promotional Measures for the Establishment of Operational Headquarters
| Type |
Measures |
| Administrative procedures |
1. No ceiling limitation on net value for companies that are certified as operational headquarters on their Mainland-bound investment
2. Simplifying visa application procedures for headquarters personnel |
| Land acquisition assistance |
Coordinating entry to industrial parks developed by the central government or its municipality, or by local county or city governments |
| Professional personnel recruitment |
1. Increasing the prescribed numbers of R&D military draftees
2. Foreigners who hold at least a Bachelor’s degree and are hired by the operational headquarters to engage in professional and technical activities in Taiwan may be exempted from requirements on work experience |
Source: Industrial Development Bureau, MOEA
5. Promoting sustainable development top
A high-quality environment for industrial development requires a proper strategy for sustainable development. The IDB has therefore formulated policies to promote the sustainable use of resources, clean production, greenhouse gas reduction, industrial safety, waste recycling and treatment, and the development of the security industry.
In order to comply with global trends in environmental protection and industrial safety, the IDB assists factories in establishing their own environment management system (ISO 14001), occupational safety and hygiene management systems (OHSAS 18001), and promotes technologies relevant to environment management (e.g., CER, LCA, EPR, EA and EPE). The IDB also provides the industry with information regarding international environmental protection and industrial safety conventions, such as the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal; the United Nations Framework Convention on Climate Change, WEEE, RoHS & EuP, etc.
6. Fostering investment and removing investment barriers top
In conjunction with the Executive Yuan’s launching of a global investment recruitment committee, the MOEA established the “Global Investment Recruitment Joint Services Center” on August 8, 2010. The center aims to zero in on and develop potential investors, working together with the MOEA’s promotional task forces of Color Image, Semiconductor, Communication, Digital Content, Biotechnology, Precision Machinery, Aerospace, Railway as well as the Industrial Cooperation Group.
In addition, the MOEA’s “Joint Investment Coordination Center” delivers one-stop service for the development of manufacturing investment, industrial parks, and business & industrial parks. It also assesses each individual case in terms of its progress and the difficulties encountered, so as to offer effective assistance with any investment road blocks.
7. Furthering international cooperation top
The IDB actively participates in WTO negotiations and regional economic integration efforts, with the aim of building up a fair, reasonable, and open environment for industrial development and reinforcing the international competitiveness of domestic industries through mutually beneficial cooperation with other economies.
The bilateral industrial cooperation consultation meeting (ICCM) is held annually with France in order to increase communications with senior government officials and to enhance substantive economic cooperation. All of the MOEA’s task forces and industrial promotion offices participate in the ICCM and organize delegations to visit France. Such measures are designed to help Taiwan’s industries acquire key technologies, develop overseas markets and attract foreign companies to invest in Taiwan.
IV. Future Prospects top
In the face of the change of global economic situation, Taiwan must consider how to manage future development opportunities. To further stabilize economic development, Taiwan needs to focus on the development of a wide range of main industries to facilitate a more professional division of labor, as well as create more emerging industries and employment opportunities. In future, Taiwan will seek to strengthen investment in intangible assets such as R&D, software, patents, brand image, and human resources. Taiwan will also work to enhance ICT technologies and aesthetics designs for both a quality and quantity upgrading of conventional industries, as well as accelerate the development of emerging industries. In addition to the six major emerging industries in 2010, Taiwan will keep promoting cloud computing, intelligent electric vehicles, smart buildings, and commercialization of invention patents. Using advanced technologies, we hope to facilitate the balanced development of industry software and hardware, as well as industry’s manufacturing and service aspects, for the further enhancement of economic development and the quality of life.
Table 12: Objectives for the Development of the Manufacturing Sector
| Category |
2009 |
2010 |
2015 |
| Number of manufacturers (thousand) |
77.3 |
77.6 |
79 |
| Number of employees (thousand) |
2,382 |
2,488 |
2,400 |
| Production value (US$ billion) |
391.6 |
437 |
559.6 |
| Added value (US$ billion) |
89.5 |
112.9 |
140 |
| Export value (US$ billion) |
192.1 |
259.4 |
310.7 |
| Average annual production value per employee (US$ thousand) |
164.4 |
175.6 |
233 |
| Average added value per employee (US$ thousand) |
37.6 |
45.4 |
58 |
| Percentage of R&D expenditure to total production value (%) |
2.94 |
- |
- |
Source: Research project conducted by the Taiwan Institute of Economic Research, commissioned by IDB/MOEA.
2011 Industrial Development in Taiwan, R.O.C.
Author: Industrial Development Bureau, Ministry of Economic Affairs
Publisher: Director General, Dr. Tyzz-Jiun Duh
Publishing Unit: Industrial Development Bureau, Ministry of Economic Affairs
Address: 41-3, Sinyi Rd., Sec. 3, Taipei 10675, Taiwan (R. O. C.)
Tel: 886-2-2754-1255
Fax: 886-2-2703-0160
Website: http://www.moeaidb.gov.tw
