Woody T. J. Duh, Ph. D

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Woody T. J. Duh, Ph. D Powered By Docstoc
					                                      2009 Industrial Development in Taiwan, R.O.C.
                                                                                                                                     Foreword

 Contents
Foreword                                                                              01
                                                                                                                        The manufacturing sector has been the key driving
I.   Overview                                                                         02
                                                                                                                     force for Taiwan’s economic development. Over the past
     1. The macroeconomic environment                                                 02
                                                                                                                     50 years, the government and the private sectors in Taiwan
     2. Current status of Taiwan’s industrial development                             04
                                                                                                                     have been working together to continuously enhance
     3. Taiwan's world-leading products                                               06                             industrial competitiveness and to achieve steady economic
                                                                                                                     growth. As a result of these efforts, Taiwan has become
II. The Industrial Investment Climate                                                 08                             the global center for IC foundry and flat panel display as
     1. Infrastructure                                                                08                             well as a manufacturing powerhouse for many high-tech
     2. Industrial parks                                                              09                             products.

     3. Human resources                                                               12
     4. Financial assistance                                                          13
                                                                                              After many years of promoting internationalization and liberalization, Taiwan’s
     5. Technological development                                                     14
                                                                                           infrastructure, industrial parks, human resources, technological capabilities, and
     6. Tax policies and incentives                                                   15   taxation system are all on a par with those of the major industrialized countries.


III. Key Strategies and Measures                                                      18
                                                                                              The Industrial Development Bureau (IDB) has been giving full support to the
     1. Promoting the development of emerging industries and key industries           18
                                                                                           development of a first-class investment environment; providing comprehensive
     2. Encouraging foreign enterprises to establish R&D centers in Taiwan            25
                                                                                           assistance to business enterprises for overcoming investment obstacles; providing
     3. Encouraging foreign enterprises to establish international logistic centers   25
                                                                                           guidance for new industries’ development as well as existing industries’ upgrading
       in Taiwan
                                                                                           and transformation, so as to lay a firm foundation for long-term national
     4. Encouraging enterprises to establish operational headquarters in Taiwan       26
                                                                                           development. Thus, the IDB will work closely with the industry to jointly create a
     5. Promoting sustainable development                                             26   new chapter in our success story.
     6. Fostering investment and removing investment barriers                         27
     7. Furthering international cooperation                                          27


IV. Future Prospects                                                                  28

                                                                                                                                          Woody T. J. Duh, Ph. D.
                                                                                                                                                               Director General
                                                                                                                                                Industrial Development Bureau,
                                                                                                                                                    Ministry of Economic Affairs
                                                                                                                                                                                   01
                                                                                                               According to the 2009-2010 Global Competitiveness

                       I. Overview                                                                          Report released by the World Economic Forum (WEF),
                                                                                                            Taiwan ranked12th out of 133 economies around the
                                                                                                            world and 4th in Asia in Global Competitiveness Index,
                                                                                                            the WEF’s key indicator of medium to long-term economic
     1. The macroeconomic environment                                                                       growth expectancy. Taiwan maintained its fifth-best ranking
                                                                                                            among the world’s major economies on Profit Opportunity
        The economic performance of Taiwan over the past decades has been strong and stable.
                                                                                                            Recommendation Indicator released by Business Environment Risk Intelligence (BERI)
     Between 1991 and 2000, the average annual growth rate of GDP was about 6.4%. After suffering
                                                                                                            in September 2009. This report evaluates the business environment of 50 important
     negative growth for the first time in 2001, the economy recovered to resume a path of steady
                                                                                                            economies using three main indices, namely Operations Risk, Political Risk, and
     growth. In 2007, the GDP grew by 5.7%; whereas, in 2008, the GDP growth decreased to 0.06%
                                                                                                            Remittance and Repatriation Factor. In this report, Taiwan defends its fifth-place
     due to global economic downturn.
                                                                                                            ranking since 2008, and also ranked second in Asia in terms of low-risk investment
        In 2008, Taiwan ranked as the 26th largest economy in the world with a GDP totaling US$392.6        environment. Several prominent international institutes also give Taiwan a high rating
     billion, and Taiwan’s foreign exchange reserves of US$296.4 billion ranked as the 4th highest in the   for overall economic performance and competitiveness (See Table 2).
     world, according to IMF World Economic Outlook. Total investment in Taiwan decreased at a rate
     of 4.6% in 2008, with private investment dropped by 8.7%, while investment by the government
     and public enterprises augmented by 9.2%. In addition, two-way trade expanded by 6% in 2008.           2. Current status of Taiwan’s Industrial Development
     The trade surplus decreased from US$27.4 billion in 2007 to US$15.2 billion in 2008.
                                                                                                               The contribution of the industrial sector to GDP reached a peak in 1986 at 44.8%
                                                                                                            and since then has steadily declined. In 2008, the industrial sector’s contribution to
                                                                                                            GDP decreased to 25%, while that of the services sector increased to 73.3%.
     Table 1: Taiwan Macroeconomic Economic Indicators in 2008
       GDP (US$ billion)                                                                         392.3

       GDP per capita (US$)                                                                     17,083      Table 2: Assessment of Taiwan’s Overall Performance Conducted
       Economic growth rate (%)                                                                     0.06             by International Institutes
       Consumer price index (%)                                                                      3.5
                                                                                                                                                                           World       Asia          Date of
                                                                                                               Institute                     Assessment
       Unemployment rate (%)                                                                         4.1                                                                  Ranking     Ranking        Release

       Exports (US$ billion)                                                                     255.6                     Profit Opportunity Recommendation                   5         2
       Imports (US$ billion)                                                                     240.4
                                                                                                                 BERI      Operations Risk Index                               6         2       Sep 2009
       Balance of trade (US$ billion)                                                               15.2
                                                                                                                           Remittance and Repatriation Factor                  4         2
       Foreign exchange reserves (US$ billion)                                                   296.4
                                                                                                                 EIU       Information Technology Competitiveness              2         1       Sep 2008
       Exchange rate (TWD:USD)                                                                   31.54

       Approved overseas Chinese and foreign investment (US$ billion)                                8.2         IMD       World Competitiveness                             23          7       May 2009

       Outward investment (US$ billion)                                                              4.5                   Global Competitiveness Index 2009-2010            12          4       Sep 2009
                                                                                                                 WEF
       China-bound investment (US$ billion)                                                          9.9                   Business Competitiveness Index                    23          7       Oct 2007

       Source: Department of Statistics, MOEA                                                                  Heritage
                                                                                                                           2009 Indexes of Economic Freedom                  35          5           Jan 2009
                                                                                                              Foundation



02                                                                                                                                                                                                              03
        With the advent of a knowledge-based economy,                                                               Table 3: Development of the Manufacturing Industry in 2008
     the services sector’s contribution to GDP is expected
                                                                                                                                                            Contribution                       Number of      Average output
     to continue to rise; whereas, agricultural sector’s                                                                                                                   Industry output
                                                                                                                                                           to total output                     employees        per person
                                                                                                                                                                            (US$ million)
     contribution to GDP has been falling for decades and                                                                                                        (%)                       (thousand persons) (US$ thousand)

     plummeted to only 1.7% in 2008 (See Chart 1).                                                                  Manufacturing Industry                       100.0              417,921                2,533                 165

        According to the International Standard Industrial                                                          1. Metal and Machinery Industries              28.0             116,821                    752               155

     Classification system, the industrial sector includes                                                          2. ICT Industry                                31.9             133,394                    877               152
     mining and quarrying, manufacturing, construction,                                                             3. Chemical Industry                           30.4             127,101                    459               277
     and public utilities. In 2008, the manufacturing
                                                                                                                    4. Consumer Goods Industries                    9.7              40,605                    446                 91
     industry’s output with a total amount of US$ 417,921
                                                                                                                    Source: Monthly Report on the Manufacturing Industry, IDB/MOEA
     million accounted for 93.08% of the total output
     of industrial sector in Taiwan. Within the manufacturing industry, the ICT industry’s output
                                                                                                                    Table 4: Investment in the Manufacturing Industry in 2008
     accounted for 31.9%; the chemical industry 30.4 %, the metal and machinery industries 28.0%,
     and the consumer goods industries 9.7%. The workforce employed in the manufacturing industry                                                                               Metal &                                        Consumer
                                                                                                                                                                 Manufacturing                        ICT       Chemical
                                                                                                                                                                               Machinery                                         Goods
     was 2,533 thousand persons. A total of 3,766 new factories were opened in 2008; of which 1,771                                                                Industry                         Industry    Industry
                                                                                                                                                                               Industries                                      Industries
     factories were in metal and machinery industries (See Chart 2, Table 3 and Table 4).                                         Number of new factories                  3,766         1,771          665             671           659
                                                                                                                    Domestic
        The technical services industry, including service providers in field of R&D, design,                       Investment    Number of closed
                                                                                                                                                                           4,255         1,635          807             844           969
                                                                                                                                  factories
     engineering, information, and consulting, has been developing as a result of division of labor
     within the industrial sector. In line with the general pattern in developed countries, industrial              Foreign Investment (US$ million)                      2,379.2        195.5      1,153.5           455.5       574.8
                                                                                                                    Outward Investment except China
                                                                                                                                                                          2,068.1        659.5      1,026.4           250.9       131.3
                                                                                                                    (US$ million)

                                                                                                                    China-bound Investment (US$ million)                  8,761.2        1,652      4,901.1          1,506.1      702.1
     Chart 1: Historical Chart of Taiwan’s GDP Composition by Sector                                                Source: Monthly Report on the Manufacturing Industry, IDB/MOEA



       %
                            Industry                  Agriculture                       Services                    Chart 2: Historical Chart of Taiwan Manufacturing Output
       80
                                                                                        71.3       73.2                      Composition
                                                                       68.9
       70                                                  63.9                                                                  Consumer Goods Industries                           Metal & Machinery Industries
                                              57.6                                                                               Chemical Industry                                   ICT Industry
       60
            50.0           50.6                                                                                50
       50

       40                  43.8                                                                                40
            42.9
                                              38.4                                                                                                                                            LCD                     32.6
       30                                                                                                                                                                                                                        31.9
                                                           32.8                                                                                                                                  36.1
                                                                       29.1             27.1                   30                                                               NB                                                    30.4
       20                                                                                          25.0
            7.1                                                                                                                                                                                                                  28
       10                   5.6                4.0         3.3          2.0             1.7        1.7         20                                                           24.4
                                                                                                                                                                    IC
        0                                                                                                                                               18.7
            1981           1985               1990         1995         2000            2005       2008 year
                                                                                                                                   13.5
                                                                                                               10    12.5
                                                                                                                                      PC                                                                                          9.7
            Source: 93SNA, DGBAS, Executive Yuan

                                                                                                                0
                                                                                                                    1981           1985                1990                 1995                2000                  2005      2008 year

04                                                                                                                  Source: Monthly Report on the Manufacturing Industry, IDB/MOEA                                                           05
      development in Taiwan has brought not only a steady growth in value added and employment
      scale, but has also fostered the expansion of the technical services industry. In 2008, the technical
      services industry created a total amount of revenue of US$ 19,672 million, receiving 691
      investment projects (See Table 5 and Table 6).                                                                                          Table 7-2: Products made by Taiwan ranked No.1 in the world
                                                                                                                                                                                                                                              World’s
                                                                                                                                                                                     Production
                                                                                                                                                                                                    World                             World    largest
      3. Taiwan's world-leading products                                                                                                                      Item                      Value
                                                                                                                                                                                    (US $ million)
                                                                                                                                                                                                   share %
                                                                                                                                                                                                              Production Volume
                                                                                                                                                                                                                                     share % production
                                                                                                                                                                                                                                               volume
          Taiwan has become a world-class manufacturing center and has a leading global market share
                                                                                                                                               Portable Navigation Device                   3,575    96      39.46 million pieces       89
      in many products. Table 7-1 and Table 7-2 list products made in and made by Taiwan ranked No.
                                                                                                                                               Mask ROM                                      480    93.8      199 million pieces      93.8
      1 globally in terms of production value or volume in 2008.
                                                                                                                                               Motherboard (system & pure MB)               6,609   93.5     135.91 million pieces    92.4

                                                                                                                                               Notebook PC                              57,039      92.0     112.38 million pieces    92.4

                                                                                                                                               WLAN CPE                                     1,950    95      100.62 million pieces      92
     Table 5: Development of the Technical Services Industry in 2008
                                                                                                                                               Cable Modem                                  1,306    86      24.89 million pieces       76
                                      Share of total              Number of                  Share of total            Average revenue
             Revenue                                                                                                                           Golf Head                                     564     70        47million pieces         75
                                       value-added                employees                   employees                  per person
           (US$ million)
                                           (%)                (thousand persons)                 (%)                   (US$ thousand)          LCD Monitor                              16,484      68.4     111.12 million pieces    69.6
              19,672                        2.0                          200                       2.0                         98
                                                                                                                                               Electronic Glass Fabric                       763     69       930 million meter         62
     Note: 1. The revenue approximated the industry output and was estimated based on the statistics from Department of Statistics Bureau,
                                                                                                                                               xDSL CPE                                     1,712    67      57.22 million pieces       72
              MOEA, Financial Data Center, Ministry of Finance, and DGBAS, Executive Yuan.
                                                                                                                                               IC Foundry                               13,918      67.2     67.73 million pieces     67.2
           2. The number of employees was based on Industry, Commerce and Service Census conducted by DGBAS and the survey conducted
               by Taiwan Economic Research Institute.                                                                                          Diving Suit                                   261     65       3.49 million pieces       60
                                                                                                                                               Electric Thermometer                           60     61       30.5 million pieces       61

     Table 6: Investment in the Technical Services Industry in 2008                                                                            CDT Monitor                                   236    50.4      3.32 million pieces     53.1
                                                                                                                                               Digital Blood-Pressure Monitor                208     45       11.5 million pieces       48
                                                          Technical Services Industry
                                                                                                                                               Mobility Scooter/Powered
      Number of investment projects                                                                                     691                                                                  242     48      325 thousand pieces      46.4
                                                                                                                                               Wheelchair
      Total amount invested (NT$ billions)                                                                             48.2
                                                                                                                                               IC Package                                   7,211   45.2      14.2 billion pieces     45.2

                                                                                                                                               Shoes                                    13,514       35        5.2 billion pairs        37
     Table 7-1: Products made in Taiwan ranked No.1 in the world                                                                               Ethernet LAN Switch                          1,460     6      227.69 million ports       43
                                          Production                                                                        World’s largest    Resuscitator                                  22.3    30       2.21 million pieces       30
                                                               World                                       World share
                   Item                      Value                               Production Volume                           production
                                                              share %                                          %                               Server (System & Pure MB)                    3,283    5.5      7.56 million pieces     86.9       ★
                                         (US $ million)                                                                        volume
      Mask ROM                                    480           93.8             199 million pieces            93.8                            Chlorella                                     213     70        700 metric tons          70       ★
      Chlorella                                   213             70                  700 tons                    70                ★          Blank Optical Disk                              --     --      9.66 billion pieces       55       ★
      IC Foundry                              13,918            67.2              68 million pieces            67.2
                                                                                                                                                                                                              240 million square
                                                                                                                                               Dry Film Photoresist                         2,800    36                                 40       ★
      Blank Optical Disk                            --              --           9.66 billion pieces              55                ★                                                                              meters
      IC Package                               7,211            45.2             14.2 billion pieces           45.2                                                                                           1.13 million metric
                                                                                                                                               ABS Copolymer                                2,300    21                                 21       ★
      Mobility Scooter/Powered                                                                                                                                                                                       tons
                                                  152             34           215 thousand vehicles           30.6
      Wheelchair
                                                                                                                                              Source: Industrial Development Bureau, MOEA
      ABS Copolymer                            2,300              21           1.13 million metric tons           21


06                                                                                                                                                                                                                                                        07
                                                                                                          Corporation established its Asia Pacific    implementing the M-Taiwan Project

                     II. The Industrial Investment                                                        transit center and large-scale transit
                                                                                                          service center in Taiwan.
                                                                                                                                                      (Mobile Taiwan), which focuses on
                                                                                                                                                      constructing a mobile environment for

                         Climate                                                                             Water and electricity are vital
                                                                                                          components for the development of
                                                                                                                                                      the next generation, promoting innovative
                                                                                                                                                      technologies and service applicability,
                                                                                                                                                      integrating mobile and wireless networks
                                                                                                          industry. Factories and plants require
        A Superior investment environment and                                                                                                         and establishing a nationwide seamless
                                                                                                          stable and reliable water and electricity
     attractive incentives are the main factors in                                                                                                    Internet environment, and creating
                                                                                                          supply for safe and efficient operation.
     promoting both the industrial and economic                                                                                                       cutting-edge dual-network application
                                                                                                          In this regard, the government develops
     development. Taiwan possesses a well-                                                                                                            services. Based on a government-funded
                                                                                                          water resources according to the demand
     established infrastructure, excellent industrial                                                                                                 wireless Internet environment, the
                                                                                                          of various regions in the country to
     parks, abundant talents, a sound fiscal system,                                                                                                  project also entails collaboration with the
                                                                                                          meet the needs of households and
     strong technological capabilities, competitive                                                                                                   telecommunication vendors, operators,
                                                                                                          industry. The government also has made
     tax incentives, and a solid legal framework,                                                                                                     digital content, and information services
                                                                                                          continuous efforts to diversify its power
     providing an excellent environment for                                                                                                           providers, etc. This project not only
                                                                                                          generation based on different energy
     Taiwan’s industrial development.                                                                                                                 aims to create an "all-win" situation
                                                                                                          sources in order to assure an adequate
                                                                                                                                                      for customers, companies, and the
                                                                                                          supply of electricity.
                                                                                                                                                      government, but also enables customers
     1. Infrastructure                                                                                       To cope with the liberalization of       to enjoy the various applications of high-
                                                                                                          telecommunication markets worldwide         speed Internet at a reasonable cost.
        TTaiwan is equipped with a well-developed          Taiwan's deep-water harbors and
                                                                                                          and to provide a diversified range of
     transportation system. Apart from the existing     international airports offer effective domestic
                                                                                                          telecom services, Taiwan’s telecom
     round-the-island railway, the Taiwan High          and international transportation services. The
     Speed Rail can reduce travel time with             Port of Kaohsiung is Taiwan's largest container
                                                                                                          services industry has been fully            2. Industrial parks
                                                                                                          liberalized. As of December 2008, the
     express trains that are capable of traveling at    port and ranked the 7th largest in the world,                                                    According to WEF Global
                                                                                                          penetration rate for mobile phones and
     up to 300 km/h travel from north to south in       according to Review of Maritime Transport:                                                    Competitiveness Report 2009-2010,
                                                                                                          fixed-line telephones were 110.3%
     roughly 90 minutes as opposed to 4-6 hours         2008; The Taiwan Taoyuan International                                                        Taiwan ranked 6th out of 133 economies
                                                                                                          and 56.8% respectively. The number
     by conventional rail. Other than railways,         Airport ranked the world’s 15th busiest                                                       around the world in "state of cluster
                                                                                                          of Internet users stood at 15.1 million;
     there are eight national freeways, one north-      airport, according to Cargo Traffic 2008 final                                                development." There are three types of
                                                                                                          the number of broadband subscribers
     south cross-island highway and three east-         data from Airports Council International.                                                     industrial parks in Taiwan: "science-based
                                                                                                          stood at 7.1 million, making Taiwan
     west cross-island highways, as well as several     With these advantages, many internationally                                                   industrial parks" (under the jurisdiction of
                                                                                                          one of the top 20 broadband countries
     provincial highways and expressways. In            renowned transportation and express delivery                                                  the National Science Council, Executive
                                                                                                          in the world. Taiwan ranked 6th in
     the capitol of Taiwan, Taipei Rapid Transit        companies have increased their investments                                                    Yuan), "export processing zones" (under
                                                                                                          broadband penetration and ranked 20th
     System, as known as Taipei Metro, serves a         in Taiwan. For instance, United Parcel Service                                                the jurisdiction of the Export Processing
                                                                                                          in the number of broadband subscribers,
     large part of Taipei metropolitan area, and        of America, Inc. (UPS) made Taiwan its pan-                                                   Zone Administration Office, MOEA)
                                                                                                          according to the World Knowledge
     will be extended to The Taiwan Taoyuan             pacific transit center; DHL International                                                     and "industrial parks" (developed by
                                                                                                          Competitiveness Index and World
     International Airport. Taiwan’s second largest     GmbH. established six large cargo transit                                                     the IDB, local governments and private
                                                                                                          Broadband Statistics.
     city, Kaohsiung, launched Kaohsiung Mass           service centers in Taiwan; Federal Express                                                    enterprises). Following the pace of
     Rapid Transit System in early 2008.                                                                     Moreover, the government is
                                                                                                                                                      industrial transformation, Taiwan’s



08                                                                                                                                                                                                   09
                                                  Figure 1
                                                                                                         industrial parks have developed into        (1) One-stop service in all industrial
                                       Map of Industrial Parks,                                          specialized parks and corridors. For           parks
                 Science-based Industrial Parks and EPZs in Taiwan                                       example, the Nankang Software Park
                                                                                                                                                        In 2001, the IDB initiated a one-
                                                                                                         in Taipei is a technology park for
                                                                                                                                                     stop service in all industrial park service
                                                                                                         knowledge-intensive industries that
                                                                                                                                                     centers, accepting applications and
                                                                                                         focus on software development, digital
                                                                                                                                                     forwarding the documents to the relevant
                                       Nankang Software Park                                             content, IC design, and biotechnology.
                                                                                                                                                     government agencies during the factory
                                                                                                         The parks in entral Taiwan reflect the
                                                                                                                                                     construction period. To advise investors
                 Hsinchu Industrial Park                                                                 fact that the region, with its well-
                                                                                                                                                     on the progress of their applications,
                                                                                                         developed industrial supply chain,
                                                                                                                                                     the IDB also maintains an information
               Hsinchu Science-                                                                          is an important manufacturing base
               based Industrial Park                                            Litzer Industrial Park
                                                                                                                                                     service system in all industrial parks.
                                                                                                         for precision machinery. The Tainan
                                                                                                                                                     Through this system, investors may easily
               Taichung EPZ                                                                              Technology Industrial Park in southern
                                                                                                                                                     inquire about the current status of their
                                                                                                         Taiwan, with the Industrial Innovative
             Chungkang EPZ                                                                                                                           application, obtain information regarding
                                                                                                         R&D Zone, allows researches on core
                                                                                                                                                     the lease and sale of land, and receive
                                                                                                         technologies, such as micro-nano
     Taichung Industrial Park                                                                                                                        other relevant information.
                                                                                                         systems, 3C integration, applications
      Central Taiwan Science-                                               Hoping Industrial Park       of communication software and the
      based Industrial Park                                                                                                                          (2) The 00-66-88 Program
                                                                                                         Internet, etc. The establishment of the
      Changhua Coastal                                                                                   Central Taiwan Science-based Industrial        In order to reduce land costs during
      Industrial Park
                                                                                                         Park completes the linkage of the           the initial factory construction period
                                                                                                         three science-based industrial parks in     and to promote the utilization of land in
                                                                          Yunlin Silk Industrial Park    northern, central and southern Taiwan       all industrial parks, the IDB implemented

                                                                           Yunlin Technology             into a "technology corridor" along the      the "Industrial Land Rental Discount
                                                                           Industrial Park               western coast. (See Figure 1)               Measures" (00-66-88 Program) on May
                                                                                                                                                     1, 2002. Under this program, qualified
                                                                                                            In order to assist investors in
                                                                                                                                                     manufacturers renting land in industrial
                                                                                                         acquiring land for production facilities,
                                                                                                                                                     parks are entitled to certain benefits.
                                                                          Southern Taiwan                the IDB offers the following services:
     Tainan Technology                                                    Science-based Park                                                         They do not need to pay any rent for the
     Industrial Park
                                                                                                                                                     first two years (00), and pay only 60%
                                                                                                                                                     of the total rent for the third and fourth
               Pingtung EPZ                                                                                                                          years (66) and 80% for the fifth and sixth
                                                                                                                                                     years (88). The full rent becomes payable
            Kaohsiung EPZ
                                                                                                                                                     starting from the seventh year.
                                                                  Science-based Industrial Park
                                                                                                                                                        Under the Third Stage of the 00-66-
                                                                  Industrial Park                                                                    88 Program, which will be implemented
                                                                  Export Processing Zone (EPZ)                                                       from January 2008 to December 31,
                                                                                                                                                     2009, companies renting land in an
                                                                                                                                                     industrial park pay a reduced rent for the


10                                                                                                                                                                                                 11
     first six years. If a company applies to buy the    state-owned land under their jurisdiction.                                                      Foreign workers will receive assistance
     land it rents during the rental period, the total   The Council for Economic Planning and                                                           with their language barriers and
     or partial amount of rent previously paid can       Development has organized a cross-ministerial                                                   adaptation to local culture upon their
     be deducted from the total cost of the land         review committee to coordinate the release                                                      arrival in Taiwan. This website (http://
     without paying any interest.                        of such land and to formulate measures to                                                       hirecruit.nat.gov.tw/english/index.asp)
                                                         reduce the rental payable on state-owned                                                        provides matching services for overseas
     (3) The 789 Program                                 land. Enterprises leasing state-owned land                                                      talents and local recruiters.
        The IDB also implemented "Industrial             can now apply for a four-year exemption
     Land Sale Discount Measures" (789 Program),         from land rental payment, followed by a fifty
     offering different discounts for manufacturers      percent reduction in the amount payable for a                                                   4. Financial assistance
                                                         period of six years.                              (2) Training
     buying land in certain industrial parks from                                                                                                           In order to actively promote
     October 1, 2009 to December 31, 2010.                                                                    The IDB conducts technical training        industrial development and upgrading,
     A. 30% off in Changhua Costal Industrial
                                                         3. Human resources                                programs in response to the needs             and to maintain continuous economic
        Park, Tainan Technology Industrial Park,                                                           of industrial development and in              growth, the Development Fund of the
        and Hualien Hoping Industrial Park                  According to WEF 2009-2010 Global              cooperation with relevant academia and        Executive Yuan sets aside a special fund
     B. 20% off in Douliou Industrial Park and           Competitiveness Report, Taiwan ranked             research institutes. The objective of such    in cooperation with banks to provide
        Yunlin Technology Industrial Park                24th in Labor Market Efficiency out of 133        on-the-job training and pre-job training      various kinds of special low-interest
     C. 10% off in Yilan Litzer Industrial Park          economies around the world. To meet the           programs is to prepare an adequate            loans. The loans include those for R&D;
                                                         needs of future industrial development, the       supply of technical personnel as may          the purchase of automated, pollution-
     (4) Release of Land Owned by Taiwan Sugar           IDB has implemented the following measures        be required in the course of industrial       control and energy conservation
        Corporation (TSC)                                to increase the size and quality of workforce     development. The IDB also sets up             machinery and equipment; small
                                                         through education, training and recruiting:       “virtual colleges” to cultivate talents for
        Manufacturers and property developers                                                                                                            and medium enterprises; traditional
     may submit their plans for the utilization                                                            key industries, such as semiconductors        industries, etc. The government also
                                                         (1) Education
     of TSC-released land to the IDB. An inter-                                                            and digital content, and ensure the           provides mid-to-long-term financing for
     ministerial review committee will then                 Taiwan places great emphasis on higher         supply of human resources keeps up            major investment projects in amounts
     appraise such investment projects, taking           education, and every year the education           with the demand of enterprises.               of NT$100 million or more upon
     usage needs and project feasibility into            system produces at least 20,000 professional                                                    application by private enterprise.
                                                         personnel who graduate with a master’s or         (3) Recruiting
     consideration. Arrangements can then be                                                                                                                For small and medium-sized
     made for TSC to lease the land to the approved      doctoral degree. According to WEF 2009-              In order to attract and retain human       enterprises (SMEs) that were denied a
     applicants, thereby making the land available       2010 Global Competitiveness Report, Taiwan        resources from overseas, the government       loan due to a lack of sufficient collateral,
     for industrial use.                                 ranked 13 in Higher Education and Training        has relaxed the restrictions on foreign       the Small and Medium Business
                                                         out of 133 economies globally. In order           workers and simplified the application        Credit Guarantee Fund, a non-profit
     (5) Land Rental Exemption and Reduction for         to expand the human resources supply of           procedures in recruiting skilled workers      organization founded by the government
        the Leasing of State-owned Land                  master’s degree-level R&D personnel to the        from overseas. The government also            and financial institutions, can provide
                                                         industry, the MOEA initiated a project in 2004,   organizes an overseas recruitment
        In line with the needs of industrial                                                                                                             credit guarantees to qualified firms.
                                                         setting up specialized master’s programs in       mission every year to help private
     development, local governments may submit
                                                         conjunction with universities and enterprises.    enterprises recruit foreign professionals.
     development plans of idle or underutilized




12                                                                                                                                                                                                      13
                                                                                                                                     With regard to R&D activities,
     5. Technological development
                                                                                                                                the participation of several important
         Each year, the IDB budgets to upgrade technology in industries, providing R&D grants                                   research institutes, including the
     to special projects under the “Regulations for Assisting Development of Leading New                                        Industrial Technology Institute (ITRI),
     Products” and the “Traditional Industry Technology Development Assistance Program.” The                                    Institute for Information Industry (III),
     Department of Industrial Technology, MOEA also sponsors R&D projects conducted by                                          Chung Shan Institute of Science and
     industry and academia, and subsidizes the planning and development of critical, forward-                                   Technology (CSIST), Taiwan Textile
     looking industrial technologies.                                                                                           Research Institute (TTRI), Metal Industry
                                                                                                                                Research and Development Center,
     Table 8: Number of US Patents Granted to the Citizens of Selected                                                          and Food Industry Research and
              Countries                                                                                                         Development Institute, is instrumental
                                                                                                                                for the development of new industrial
       2008                                       No. of Patents                    Share of All Patents Granted(%)
                     Country                                                                                                    technologies in private sector.
      Ranking                         2000       2006         2007        2008     2000          2006      2007      2008
                                                                                                                                   To further promote the dissemination
          1        United States      97,011 102,267          93,690    92,000       55.1         52.1       51.2        49.7
                                                                                                                                of technology, the IDB has established
          2            Japan          32,922     39,411       35,941    36,679       18.7         20.1       19.6        19.8
                                                                                                                                the Taiwan Technology Marketplace
                                                                                                                                                                            6. Tax policies and
          3          Germany          10,824     10,889       10,012    10,086        6.1          5.5        5.5         5.4
                                                                                                                                (TWTM, http://www.twtm.com.tw) as a
                                                                                                                                                                               incentives
                      Untied
          4                            4,092          4,329    4,031      3,843       2.3          2.2        2.2         2.1
                     Kingdom                                                                                                    worldwide technology/patent transaction        The maximum business income tax
          5            France          4,173          3,856    3,720      3,813       2.4          2.0        2.0         2.1   platform for industries, academia, and      rate currently is 25%, and the maximum
          6           Taiwan           5,806          7,920    7,491      7,779       3.3          4.0        4.1         4.2   research institutes. TWTM also provides     rate for personal income tax is 40%. The
          7           Canada           3,925          4,094    3,970      4,125       2.2          2.1        2.2         2.2   matching service of technology/patent       two taxes have been integrated since
          5        South Korea         3,472          6,509    7,264      8,731       2.0          3.3        4.0         4.7   transaction together with intellectual      January 1, 1998. Business income tax
          9             Italy          1,967          1,899    1,836      1,916       1.1          1.0        1.0         1.0   property consulting services.               paid by a company can be deducted
         10        Switzerland         1,458          1,388    1,280      1,403       0.8          0.7        0.7         0.8
                                                                                                                                   Taiwan tops the world in “utility        from the personal income taxes paid by
                       Total        176,083 196,437 182,928 185,244                  100           100       100         100                                                its individual shareholders. Various tax
                                                                                                                                patents,” according to WEF 2009-2010
     Source: US Patent and Trademark Office (USPTO)
                                                                                                                                Global Competitiveness Report, and the      incentives are available to companies to

                                                                                                                                number of Taiwan’s patents registered       reduce their tax burden. Since January 1,
     Table 9: Research and Development Expenditure Comparison                                                                   in the U.S. ranked 6th globally in 2008     2006, companies with business income
                                                                                                                                                                            of NT$2 million or more have been
                  Category         Total R&D               Proportion          Proportion of             Proportion of          (See Table 8). As for Taiwan’s R&D
                                  Expenditure                of R&D          government R&D              business R&D           expenditure, the proportion of R&D          subject to an alternative minimum tax,
                                 (US$ millions)          Expenditure to        to total R&D               to total R&D                                                      which obliges the companies to pay at
      Country                        (PPP)                  GDP (%)          expenditure (%)            expenditure (%)         expenditure to GDP was 2.62% in 2007;
                                                                                                                                the proportion of R&D conducted by          least 10% in tax on their income after
      Taiwan, 2007                     18,117                    2.62             31.4(2006)               67.2(2006)
                                                                                                                                                                            all tax benefits have been taken into
      Japan, 2006                     138,782                    3.39                     16.2                    77.1          business enterprises accounted for 67.2%
      U. S. A., 2006                  343,748                    2.62                     29.3                    64.9          of the whole R&D expenditure in 2006        account. In 2008, the average nominal
      Germany, 2006                    66,689                    2.53             28.4(2005)               67.6(2005)           (See Table 9).                              tariff rate for all imported goods is 5.98%,
      France, 2006                     41,436                    2.11             38.4(2005)               52.2(2005)                                                       with 4.18% for industrial products and
      The U.K, 2006                    35,591                    1.78                     31.9                    45.2                                                      14.83% for agricultural products. The
      South Korea, 2006                35,886                    3.23                     23.1                    75.5                                                      value-added business tax rate is as low
     Source:    Indicators of Science and Technology, National Science Council, Executive Yuan                                                                              as 5%.


14                                                                                                                                                                                                                         15
        The main vehicle for the government to promote industrial          (5) Incentives for newly emerging and           conservation can be granted a 5%
     development hitherto is the Statute for Upgrading Industries (SUI),      strategic industries                         to 20% tax credit against business
     providing following incentives:                                       a. A tax credit of up to 20% of the             income tax payable for expenditures
                                                                              capital investment made by a                 on the equipment and technologies.
     (1) Incentives for new investment                                                                                     (The deduction rate for equipment
                                                                              corporate investor in a newly
        Companies in the manufacturing industry and technological             emerging and strategic industry              is 7%, and for technology is 5%; for
     services industry can enjoy a five-year tax exemption against            can be applied against its business          energy-saving equipment is 15 %,
     business income tax for new investments made during the period           income tax payable. In the case of an        and for energy-saving technology is
     from July 1, 2008, to December 31, 2009. Capital increase                individual investor, the tax credit may      10%).
     threshold and purchase of new machinery or equipment amounting           be as high as 10%. (The deduction         b. Exemptions from import tariffs are
     to is at least NT$500,000 for manufacturing industries, and              rate for individual investors is 7%).        available for equipment (including
     NT$100,000 for technology services industries.                        b. Alternatively, companies in a newly          components) used exclusively
                                                                              emerging and strategic industry may          for the prevention and control of
     (2) Incentives for R&D
                                                                              choose to be exempted from business          air pollution, noise and vibration
     a. Companies can enjoy a 30% tax credit against business income                                                       control, water pollution control, toxic
                                                                              income tax for a five-year period (tax
        tax for their research, improvement and experiment expenses                                                        chemical substance pollution control,
                                                                              holiday). This exemption requires that
        incurred for research and developing new products, improving                                                       waste clean-up, soil and groundwater
                                                                              shareholders waive their investment
        production technology, technology for providing services and                                                       contamination remediation, and
                                                                              tax credit by passing a resolution to
        production process.                                                                                                environmental analysis.
                                                                              this effect at a shareholders meeting
     b. Equipment and machinery exclusively used for R&D,                                                               c. Machinery and equipment purchased
                                                                              within two years from the date
        experiments or quality inspection can be fully depreciated over                                                    for pollution control and energy
                                                                              of the first stock subscription by
        a two-year period.                                                                                                 conservation or for use of new and
                                                                              shareholders.
     c. When patent rights are provided or sold to companies in Taiwan,                                                    clean energy, and are able to reserve
        only 50% of the royalty payment is calculated as the taxable       (6) Incentives for pollution control and        or substitute energy may be fully
        value for purposes of personal income tax.                            energy conservation                          depreciated over a two-year period.
                                                                           a. Companies making investment                  Nonetheless, in the effort to create
     (3) Incentives for personnel training
                                                                              in equipment and technology               a more efficient industrial development
        Companies can enjoy a 30% tax credit against business
                                                                              for pollution control and energy          environment facing new challenges in the
     income tax for expenditures for personnel training relevant to the
                                                                                                                        21st century, and as an integrated part of
     company's business activities.
                                                                                                                        the broader fiscal reform policy strategy,
     (4) Incentives for automation                                                                                      the Statute for Upgrading Industries (SUI)
     a. Companies can enjoy a 5% to 20% tax credit against business                                                     phases out at the end of 2009, and will
        income tax payable for expenditures for purchasing automated                                                    be replaced by the Statute for Industrial
        equipment and production technologies. (The deduction rate for                                                  Innovation (SII). The SII aims to meet

        automated equipment is 7%, and that for automated technology                                                    the needs of industrial development and
        is 5%).                                                                                                         innovation by offering tax incentives to

     b. Companies are also eligible for low-interest loans for the                                                      improve industrial environment as well
        purpose of purchasing automated equipment and machinery.                                                        as to upgrade industrial competitiveness
                                                                                                                        in Taiwan.


16                                                                                                                                                                   17
                    III. Key Strategies and
                         Measures
                                                                                                             Table 10: Status of 2008, Goals for 2015 and Promoting Measures of Key
                                                                The IDB has been implementing a
                                                                                                                       Industries
                                                             wide variety of measures to strengthen the
                                                             industrial development in Taiwan, and to          Category                                              Iron and Steel
                                                             help enterprises adjust to changes in the
                                                                                                             Status of 2008   ●   Production value in 2008: NT$1,540 billion
                                                             external business environment, such as the
                                                             ongoing process of economic liberalization,     Goals for 2015   ●   Production value in 2015: NT$1,690 billion

                                                             improvement of environmental quality and                         1. Enhancing the ability to produce high-quality steel materials
                                                             changes in employment relations.                                 2. Strengthening market-based competition mechanisms to help the industry respond to
                                                                                                                                  changes in global supply and demand
                                                                                                                              3. Coordinating the domestic production of iron and steel materials to give priority to
                                                                                                               Promoting          meeting domestic demand
                                                             1. Promoting the development                      measures       4. Balancing environmental and economic development needs, developing best-available
                                                                of emerging industries and                                        technology (BAT) to reduce environmental impact
                                                                key industries                                                5. Helping the industry to develop reliable and competitive supply sources for steel-making
                                                                                                                                  operations
                                                                To maintain Taiwan industry’s competitive                     6. Providing guidance to improve the energy efficiency of electric arc furnace plants
                                                             advantages in international markets, the IDB      Category                                                Machinery
                                                             has been endeavoring to bring about effective
                                                                                                                              ●   Production value in 2008: NT$855 billion
                                                                                                             Status of 2008
     collaboration between the government and the private sector in promoting the development of                              ●   World’s 5th largest machine tool producer
     emerging and key industries. The government designated a number of market-leading industries.
                                                                                                                              ●   Production value in 2015: NT$1,700 billion
     It is anticipated that focusing resources on these industries will help to promote the development      Goals for 2015
                                                                                                                              ●   Becoming world’s 4th largest machine tool producer
     of related industries, thereby strengthening the competitiveness of Taiwan's emerging and key
                                                                                                                              1. Increasing the R&D budgets for leading and special projects, including the development
     industries.
                                                                                                                                  of machine tools, machinery component parts, FPD production equipment and
        Emerging industries the development of which the government is promoting include the wireless                             electronic machinery
                                                                                                                              2. Helping manufacturers to develop high-tech production process equipment, key
     broadband and related services, digital life industry, healthcare, and green industries.
                                                                                                                                  components and application software to support product differentiation and value
        The IDB has also formulated the following promoting measures to promote the key industries,            Promoting          adding
                                                                                                               measures       3. Training specialized personnel and encouraging promotional mechanisms for white-
     including semiconductor, flat panel, communications, biotech, petrochemicals, steel, information
                                                                                                                                  collar and blue-collar workers
     services, design services, R&D services, machinery, textile & clothing, digital content, and
                                                                                                                              4. Encouraging manufacturers to expanding business scale and global market share through
     telematics (See Table 10).                                                                                                   mergers and acquisitions
                                                                                                                              5. Conducting research in potential/emerging industry markets to identify business
                                                                                                                                  opportunities




18                                                                                                                                                                                                                          19
     Table 10: Status of 2008, Goals for 2015 and Promoting Measures of Key                                           Table 10: Status of 2008, Goals for 2015 and Promoting Measures of Key
               Industries (Cont.)                                                                                               Industries (Cont.)

       Category                                                  Telematics                                            Category                                                  Semiconductor

     Status of 2008   ●   Production value in 2008: NT$67.8 billion                                                                   ●   Production value in 2008: NT$1,347.3 billion
                                                                                                                     Status of 2008   ●   12-inch fabrication plants:
     Goals for 2015   ●   Production value in 2015: NT$300 billion
                                                                                                                                          19 fabs in operation, 6 under construction, and 16 in planning
                      1. Helping companies develop smart cars and key system components and modules                                   ●   Production value in 2015: NT$1,657.5 billion
                          through the Technology Development Plan (TDP)
                                                                                                                     Goals for 2015   ●   12-inch fabrication plants:
                      2. Establishing inspection and testing standards for leading international car manufacturers
                                                                                                                                          27 fabs in operation, 4 under construction, and 10 in planning
                          and Tier One suppliers
                      3. Providing information and analysis regarding international telematics standards,                             1. Leveraging the “Semiconductor Institute Project” to cultivate talent in line with industry
                          regulatory requirements and industry developments                                                               needs
       Promoting
                      4. Participating in international standards-setting organizations and international                             2. Promoting investment in the Nangang IC Design Incubator Center
       measures
                          automotive industry conferences, to help Taiwanese companies develop international                          3. Encouraging semiconductor firms to establish R&D centers for the development of
                          markets                                                                                      Promoting          cutting-edge research on semiconductor production processes
                      5. Supporting collaboration with domestic automakers to integrate telematics into their          measures       4. Establishing mechanisms and liaison windows for international exchange to enhance
                          supply chain                                                                                                    international technology collaboration and to explore international business
                      6. Helping Taiwanese telematics firms improve product quality to secure certification from                          opportunities
                          leading international car makers, and integrate into global supply chains                                   5. Helping the industry to overcome investment obstacles; supporting and promoting large-
                                                                                                                                          scale investment projects
       Category                                               Communications
                                                                                                                       Category                                            Flat Panel Display (FPD)
                      ●   Production value in 2008: NT$384.2 billion (communication equipment and
     Status of 2008       components)                                                                                                 ●   Production value in 2008: NT$1,637 billion
                      ●   WiMAX production value in 2008: NT$6,184 billion                                           Status of 2008   ●   G2.5 to G6 production facilities: 13
                                                                                                                                      ●   G7.5 production facilities: 2
                      ●   Production value in 2015: NT$572.9 billion (communication equipment and
                          components)                                                                                                 ●   Production value in 2015: NT$2,600 billion
                      ●   Becoming world’s leading producer of hand-held networking and communications                                ●   G2.5 to G6 production facilities: 14
     Goals for 2015                                                                                                  Goals for 2015
                          devices                                                                                                     ●   G7.5 production facilities: 2
                      ●   Top global market share in 10 key networking and communication product categories                           ●   G8.5 production facilities: 2
                      ●   Establishing an industry chain for broadband wireless access, IPTV and IP surveillance
                                                                                                                                      1. Helping the industry to overcome investment obstacles; supporting and promoting
                      1. Promoting domestic deployment of fiber-optic and WiMAX networks, encouraging                                     large-scale investment projects; upgrading the industry’s ability to self-produce key
                          the use of Made-in-Taiwan (MIT) network equipment, and building interoperability                                components
                          testing capabilities to develop business opportunities for deployment of next-generation                    2. Promoting the value of Taiwanese FPD brands; helping FPD firms to participate in major
                          networks (NGN)                                                                                                  FPD exhibitions and expos
                      2. Strengthening industrial collaboration by signing memorandums of understanding                Promoting      3. Holding the FPD Component, Product & Technology Awards annually to encourage
                          with leading international communication equipment vendors to explore procurement            measures           technology development
                          opportunities in emerging markets                                                                           4. Coordinating FPD industrial resources to promote the development of a green value
       Promoting
                      3. Promoting the establishment and collaboration of applications for cross-strait broadband                         chain and establish a gre--en product inspection and testing system
       measures
                          and wireless broadband networks                                                                             5. Helping FPD manufacturers to develop and patent key technologies
                      4. Promoting new fiber-optic broadband services, and encouraging the development of                             6. Integrating the LED and lighting industries to expand the scope of LED applications
                          opportunities for people to experience new wireless broadband applications services                         7. Cultivating LED industry talent
                          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


20
                          establish mechanisms for training personnel in the use of new technologies
                                                                                                                                                                                                                                      21
     Table 10: Status of 2008, Goals for 2015 and Promoting Measures of Key                                           Table 10: Status of 2008, Goals for 2015 and Promoting Measures of Key
               Industries (Cont.)                                                                                               Industries (Cont.)

       Category                                              Digital Content                                           Category                                                 Biotechnology

                      ●   Production value in 2008: NT$400.4 billion                                                                  ●   Production value in 2008: NT$201 billion
                      ●   Amount of Investment, including direct and indirect investment: NT$15.1 billion            Status of 2008   ●   Global market share of over 50% for pre-filled syringes, electronic thermometers, and
     Status of 2008
                      ●   Combined value in international collaboration projects: NT$2.05 billion                                         micro-cellulose (MCC) products
                      ●   Medium/long-term talent cultivation: 200 people; in-service training: 500 people
                                                                                                                                      ●   Production value in 2015: NT$650 billion
                      ●   Production value in 2008: NT$720 billion                                                                    ●   Developing niche products: Multifunctional remote patient monitoring equipment,
                                                                                                                     Goals for 2015
                      ●   Amount of direct investment: NT$6 billion                                                                       clinical biochemical analysis instruments, compound products for chronic diseases, and
     Goals for 2015
                      ●   Combined value in international collaboration projects: NT$3.6 billion                                          generic biomedicines
                      ●   Medium/long-term talent cultivation: 300 people; in-service training: 600 people
                                                                                                                                      1. Building an environment conducive to the development of the biotech industry;
                      1. Providing investment, financing and product development subsidies and guidance to                                encouraging leading international biotech firms to invest in Taiwan, to consolidate the
                          assist the industry in innovation and upgrading                                                                 biotech industry supply chain
                      2. Cultivating digital content talent in line with the industry needs                                           2. Expanding the promotion of investment, technology transfer (of R&D results),
                      3. Organizing digital content competitions to incentivize the development of outstanding                            international collaboration, and strategic alliances
                          products and emerging talent                                                                                3. Identifying technologies and products in which Taiwan enjoys competitive advantages to
                      4. Providing open sharing services at the Digital Content Academy to support SME product                            integration in global supply chains
       Promoting          development                                                                                  Promoting      4. Coordinating the formation of export promotion alliances to develop international
       measures       5. Participating in major exhibitions and expos, both in Taiwan and international, and           measures           markets
                          organizing sale promotions                                                                                  5. Helping companies to develop as specialized pharmaceutical manufacturers and build
                      6. Developing the international market and leveraging Chinese e-learning products and                               brand images
                          services                                                                                                    6. Collaborating with the ICT industry to add value and develop a smart medical supply
                      7. Encouraging different industries to adopt e-learning; promoting cross-industry alliances                         industry
                          and collaboration                                                                                           7. Establishing a comprehensive testing and certification system
                      8. Promoting industrialization of digital archive materials                                                     8. Strengthening the image of MIT (made-in-Taiwan) medical devices, co-branding to
                                                                                                                                          develop international markets
       Category                                              Petrochemicals
                                                                                                                       Category                                              Textile & Clothing
                      ●   Production value in 2008: NT$1,630 billion
     Status of 2008   ●   World’s 8th largest producer of ethylene, with annual production capacity of 4.2 million                    ●   Production value in 2008: NT$433.8 billion (including man-made fibers)
                          tons                                                                                       Status of 2008   ●   Proportion of total production value by category: garments: 68%; home furnishings: 12%;
                                                                                                                                          industrial textiles: 20%
                      ●   Production value in 2015: NT$2,700 billion
     Goals for 2015   ●   Becoming world’s 6th largest producer of ethylene, increasing annual ethylene                               ●   Production value in 2015: NT$580 billion
                          production capacity to 5.89 million tons                                                   Goals for 2015   ●   Proportion of total production value: garments: 50%; home furnishings: 17%; industrial
                                                                                                                                          textiles: 33%
                      1. Gradually expanding production to balance the development of dual-core petrochemical
                          production in Taiwan                                                                                        1. Developing product differentiation in functional textile and industrial textile to boost
       Promoting
                      2. Encouraging the development of high value-added petrochemical products                                           product added value
       measures                                                                                                        Promoting
                      3. Promoting the globalization of operations and sustainable development in the                                 2. Developing inspection and certification systems for functional and industrial textile
                                                                                                                       measures
                          petrochemical industry                                                                                          products
                                                                                                                                      3. Encouraging the establishment of R&D centers and e-enablement




22                                                                                                                                                                                                                                  23
     Table 10: Status of 2008, Goals for 2015 and Promoting Measures of Key
               Industries (Cont.)
       Category                                                Design Services
                       ●    Production value in 2008: NT$77 billion
     Status of 2008    ●    Annual exports: NT$43.2 billion
                       ●    450 winners of international design awards
                       ●    Production value in 2015: NT$115 billion
     Goals for 2015    ●    Annual exports: NT$70 billion
                       ●    1,700 winners of international design awards

                       1.   Helping design services firms with market development
                       2.   Helping traditional industries to add value through design
       Promoting       3.   Helping the high-tech sector with global design market logistics
       measures        4.   Promoting the development of innovative design applications
                       5.   Strengthening the integration of international design talent
                       6.   Strengthening the international image of Taiwanese design

       Category                                                 R&D Services

     Status of 2008    ●    Production value in 2008: NT$110 billion

     Goals for 2015    ●    Production value in 2015: NT$165.1 billion

                       1. Leveraging the Taiwan Technology Marketplace (TWTM) and Technology Information
                          Network to facilitate transactions involving the R&D results of the industry, academia
       Promoting          and research institutes, and promoting the establishment of industry-specific technology    2. Encouraging foreign enterprises to establish R&D
       measures           transaction service alliances by the R&D services industry
                       2. Promoting the adoption of Technology and Intellectual Property Strategies (TIPS)
                                                                                                                         centers in Taiwan
                       3. Collaborating with appraisal organizations in the U.S. to cultivate domestic appraisal
                                                                                                                         The government launched the “Multinational Innovative R&D Centers in
                          talent
                                                                                                                      Taiwan” program in 2002 to encourage foreign enterprises to set up R&D centers
       Category                                              Information Services
                                                                                                                      in Taiwan to take advantage of Taiwan’s comprehensive industrial supply chains,
                       ●    Production value in 2008: NT$302.7 billion
                       ●    Number of CMMI-certified firms: 111, ranking Taiwan the 7th in the world
                                                                                                                      excellent professional personnel, bountiful supply of capital, and a good legal
     Status of 2008    ●    Export value in 2008: NT$44.8 billion                                                     system that effectively protects intellectual property. In response to this program,
                       ●    One Taiwanese information services firm ranked among the top-five ERP firms in the Asia   internationally renowned companies, such as HP, Becker, Sony, Dell, Microsoft,
                            Pacific region.
                                                                                                                      Intel, DuPont, Wyeth, Phoenix, AIXTRON, Fujitsu, Motorola, Nokia, Pfizer, JSR,
                       ●    Production value in 2015: NT$488 billion
                                                                                                                      GM, Matsushita and Broadcom, have set up R&D centers in Taiwan.
                       ●    Number of CMMI-certified firms: 200, ranking Taiwan the 7th in the world
     Goals for 2015    ●    Export value in 2015: NT$65.5 billion
                       ●    At least two Taiwanese information services firms will rank among the top-three in
                            specific segments in the Asia Pacific region.
                                                                                                                      3. Encouraging foreign enterprises to establish
                       1. Providing guidance to help outstanding Taiwanese information services providers
                          improve their export performance
                                                                                                                         international logistic centers in Taiwan
                       2. Promoting the development of new information services sub-industries and information
                                                                                                                         In order to encourage foreign enterprises to establish international logistics
                          services solutions for regional industry clusters
       Promoting       3. Helping information services firms to organize delegations to attend international          centers in Taiwan, Article 14-1 of the “Statute for Upgrading Industries” provides
       measures           exhibitions and expos, and to form alliances with leading international vendors and         the following incentive: Any foreign company or its branch office in Taiwan which
                          local distributors
                       4. Providing guidance to help information services providers adopt Capability Maturity         sets up a logistic center to conduct cargo storage, processing or distribution of its
                          Model Integration (CMMI), and publicizing examples of successful CMMI adoption              goods to local or regional customers is exempted from the business income tax.
                       5. Cultivating CMMI-specialized talent




24
      Source: Industrial Development Bureau, MOEA
                                                                                                                                                                                                              25
     4. Encouraging enterprises                                        5. Promoting sustainable                                The IDB also provides the industry with the information about international environmental
        to establish operational                                          development                                          protection and industrial safety conventions, such as Basel Convention on the Control
        headquarters in Taiwan                                                                                                 of Transboundary Movements of Hazardous Wastes and Their Disposal; United Nations
                                                                           A high-quality environment for industrial           Framework Convention on Climate Change, WEEE, RoHS & EuP, etc.
           The government encourages domestic as                       development requires a proper strategy
     well as foreign enterprises to establish their                    for sustainable development. The IDB has
     operational headquarters in Taiwan so that high                   therefore formulated policies to promote the            6. Fostering investment and removing investment barriers
     value-added activities in the supply chain, such                  sustainable use of resources, clean production,
     as R&D, design, brand marketing, management,                      greenhouse gas reduction, industrial safety,               In line with the "Investment in Taiwan First Program" approved by the Executive Yuan,
     distribution and logistics support, can be                        waste recycling and treatment, and the                  the MOEA actively encourages investments from selected target investors. Task forces and
     conducted in Taiwan. The IDB has developed                        development of security industry.                       industrial promotion offices are responsible for identifying these investors. In addition,
     concrete measures to help enterprises set up                                                                              the "Coordination Office for Investment Promotion" was set up to provide one-stop
                                                                           In order to comply with global trends in
     their operational headquarters in Taiwan by                                                                               service to handle major investment projects of over NT$200 million in the manufacturing
                                                                       environmental protection and industrial safety,
     strengthening the financial system, expanding                                                                             sector as well as to deal with the development projects of industrial parks, multi-purpose
                                                                       the IDB assists factories in establishing their
     the supply of human resources, and offering                                                                               industrial and commercial districts, independent power plants, etc.
                                                                       own environment management system (ISO
     reasonable tax incentives and efficient
                                                                       14001), occupational safety and hygiene
     administrative services (See Table 11). As of
                                                                       management systems (OHSAS 18001), and
     June 2009, 640 operational headquarters have
                                                                       promotes technologies relevant to environment
     been established in Taiwan.
                                                                       management (e.g. CER, LCA, EPR, EA and EPE).


     Table 11:  Promoting measures for Establishment of Operational
             Headquarters
                 Type of measures                                                  Measures

                                                   Exemption of business income tax on income derived from
                                                   1. providing management services or R&D services to overseas affiliates
      Tax incentives
                                                   2. royalty payments by overseas affiliates
                                                   3. capital gains and dividends payable by overseas affiliates

      Land acquisition assistance
                                                   Assisting companies in rezoning industrial districts for establishment of
                                                   operational headquarters
                                                                                                                               7. Furthering international cooperation
                                                   1. Draft-age young men with technology backgrounds are allowed to              The IDB actively participates in WTO negotiations and regional economic integration
                                                      work in the operational headquarters as an alternative to military       efforts, with the aim of building up a fair, reasonable and open environment for industrial
                                                      service
                                                   2. Foreigners who hold at least a Bachelor's degree and are hired by        development and reinforcing the international competitiveness of domestic industries
                                                      the operational headquarters to engage in professional and technical     through mutually beneficial cooperation with other economies.       The bilateral industrial
      Professional personnel recruitment
                                                      activities in Taiwan may be exempted from requirements on work
                                                      experience.                                                              cooperation consultation meeting (ICCM) is held annually with France in order to increase
                                                   3. The application procedure for the operational headquarters to invite     communications with senior government officials and to enhance substantive economic
                                                      Mainland Chinese professional personnel to visit Taiwan has been
                                                      simplified.
                                                                                                                               cooperation. All MOEA’s task forces and industrial promotion offices participate in the
                                                                                                                               ICCM and organize delegations to visit France. Such measures are designed to help
     Source: Industrial Development Bureau, MOEA
                                                                                                                               Taiwan industries acquire key technologies, develop overseas markets and attract foreign
                                                                                                                               companies to invest in Taiwan.

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                       IV. Future Prospects
        In recent years, economic globalization and the growing importance of information technology
     have intensified economic competition worldwide. In response to this trend, countries all over the
     world have been adopting globalized strategies for production, marketing and R&D. Restrictions
     that have hampered the flow of production factors, products and capital are gradually loosening,
     and business information flows faster and more freely, contributing to the deepening of global
     economic integration. As the development of new technology continues and existing technologies
     come into more widespread use, business enterprises are able to leverage technology to overcome
     obstacles to growth. The intensification of competition has led to a shortening of product lead
     times, time to market, and product lifecycles, leading to dramatic changes in the industrial structure
     and in competitive strategies.

        In the future, Taiwan must continue to upgrade its industries and enhance the business
     environment to achieve quantitative and qualitative improvements. For the manufacturing industry,
     development strategies should be based on high market and development potential, higher levels
     of technology, high value-added, low pollution, and reduced reliance on non-renewable energy                             2009
     sources. Enterprises will need to strengthen their design, R&D, logistics and marketing capabilities                     Industrial Development in Taiwan, R.O.C.
     to build on core competitive advantages. Such efforts will also help Taiwan transform into a leading
     global R&D and logistics center and a major international production base for high value-added
                                                                                                                              Author: Industrial Development Bureau, Ministry of Economic Affairs
     products.
                                                                                                                              Publisher: Dr. Woody T. J. Duh
                                                                                                                              Publishing Unit: Industrial Development Bureau, Ministry of Economic Affairs
     Table 12: Objectives for Development of the Manufacturing Sector                                                         Address: 41-3, Sinyi Rd., Sec. 3, Taipei 10675, Taiwan (R. O. C.)
                                            Category                                               2008       2009    2015    Tel: 886-2-2754-1255
                                                                                                                              Fax: 886-2-2703-0160
      Number of manufacturers (thousand)                                                               76        75      79
                                                                                                                              Website: http://www.moeaidb.gov.tw
      Number of employees (thousand)                                                               2,530      2,400   2,400

      Production value (US$ billion)                                                               417.9      464.4   559.6

      Added value (US$ billion)                                                                      85.7      99.8     140   Designer: ARTECK Creative Consultants, Inc
      Export value (US$ billion)                                                                   233.1      246.1   310.7   Address: 7F-2, 35, Fushing N. Rd., Taipei 105, Taiwan (R. O. C.)

      Average annual production value per employee (US$ thousand)                                     165       194     233
                                                                                                                              Tel: 886-2-2751-9900
                                                                                                                              Date: 2009
      Average added value per employee (US$ thousand)                                                  34        42      52
                                                                                                                              GPN: 2008900777
      Percentage of R&D expenditure to total production value (%)                                       --      1.7     2.5
                                                                                                                              Price: NT$120
     Source: Research project conducted by Taiwan Institute of Economic Research, commissioned by IDB/MOEA.




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