The Taiwan government recognizes the importance of cultivating startups as a way to constantly inject new vigor into the economy and build the major enterprises of tomorrow.

To optimize the environment in Taiwan for startups, the government has set two paramount goals for the “Action Plan for Enhancing Taiwan’s Startup Ecosystem.” First, to create a favorable ecosystem to enable potential local startups to grow and provide role models yet more startups to follow. Second, over the next five years to transform Taiwan into Asia’s premier startup hub by boosting investment in local startups by NT$5 billion (about US$167 million) annually.

Inter-ministerial cooperation will be integral to achieving those goals, says Minister Chen Mei-ling of the National Development Council (NDC), the policy-planning arm of the Executive Yuan. In this project, the NDC will work together with the ministries of Economic Affairs, Science and Technology, Health and Welfare, Transportation and Communications, and Education, as well as the Financial Supervisory Commission.

While the startup scene in Taiwan is growing, “getting access to funding at different stages remains a significant challenge,” Minister Chen says. “Young startups may struggle to grow because they cannot secure early-stage investment, while successful startups looking for exit channels face many restrictions.”

Given the importance of the digital economy to Taiwan’s future prospects, “it is imperative that we facilitate a dynamic startup ecosystem,” she stresses.

The NDC has rolled out this action plan to help local startups secure necessary funding at all stages of their development, Chen says. A key focus of the plan is improving startups’ access to early-stage funding. In this regard, the Legislative Yuan last November passed an amendment to the Act for Industrial Innovation to allow angel (early-stage) investors who invest more than NT$1 million (around US$34,000) in an individual startup to receive tax deductions of up to NT$3 million.

In addition, the National Development Fund (NDF) relaxed restrictions on investment in local venture-capital firms and directly in startups. Under the revised regulations, the NDF can hold more than 30% of a VC Firm’s shares, with value exceeding NT$1 billion (US$34 million). Also, the NDF can invest up to NT$10 million in any new startup, instead of the previous NT$5 million.

Further, angel investors and new startup owners can now repurchase NDF shares at just 1.5 times the original price, compared to the previous three times. This policy change will facilitate greater private investment in startups, the NDC says.

A second policy under the NDC’s action plan addresses talent recruitment and regulatory change. A key part of this policy is the Act for the Recruitment and Employment of Foreign Professionals, which took effect February 8. The Act incentivizes foreign professionals to work in Taiwan by cutting red tape and offering various perks.

Notably, the Act introduces an “Employment Gold Card,” which acts as a combination work permit, residency visa, alien residence certificate (ARC), and re-entry permit. Compared to the typical foreign professionals in Taiwan, holders of the card will have greater flexibility when accepting or changing jobs. The validity of Employment Gold Card is 1-3 years.

Additionally, the Act offers foreign professionals tax and retirement benefits. For the first three years that they work in Taiwan, qualifying foreign professionals with salaried income exceeding NT$3 million a year can deduct half of their salary for taxation. Meanwhile, foreign professionals approved for permanent residence in Taiwan will be included in the national pension system for the first time.

“The Act aims to make Taiwan an attractive destination for foreign professionals, who can help strengthen the startup ecosystem,” Minister Chen says.

The NDC’s action plan is also helping to improve operational flexibility and exit channels for startups. For instance, the government plans to revise the Company Act to allow issuance of no-par value stocks. A no-par stock avoids capital deficiency issues – a common problem for startups – and allows startup owners to hold greater ownership in their companies with less money.

At the same time, the government is addressing a long-running grievance of the startup community: the requirement that a company show profitability before it can list on either of Taiwan’s stock exchanges. Diversified listing conditions would still protect investors while allowing promising young companies access to Taiwan’s dynamic capital markets.

Finally, the government will help Taiwanese startups tap global markets. This broad initiative aims to both bring global technology resources here and spur international expansion by local startups. Some key parts of this policy, which is still in a preliminary stage, include attracting international accelerators to Taiwan and encouraging Taiwanese tech talent overseas to return home. With deep ties to Silicon Valley, overseas Taiwanese can play a paramount role in vitalizing the local startup ecosystem.

Overall, the NDC is optimistic about the future of startups in Taiwan, Minister Chen says. “Startups not only can help activate Taiwan’s industrial transformation, they can also offer dynamic career opportunities for our youth,” she says. “We must show young people that they can have a bright future here in Taiwan.”