As one of the “Four Asian Tigers,” Taiwan a few decades ago was widely viewed as among the world’s most vibrant economies. In recent years, however, growth rates have slowed as competition in international markets has intensified. To inject revived dynamism into the economy, the Tsai Ing-wen administration has been promoting the “5+2 Innovative Industries” program in recognition of the key role of innovation in driving economic momentum.
The National Development Council (NDC), led by Minister Chen Mei-ling, is in charge of the most important segment – referred to as the Asia Silicon Valley Plan (ASVDP) – among the 5+2 programs. ASVDP focuses on the development of the Internet of Things (IoT) and the startup ecosystem by tackling the challenges related to capital, talent, and market development.
“These important industries all need the support of IoT or digital technology, as well as the involvement of startups to provide fresh ideas and new technology,” says Paul Lee, chief administration officer of the Asia Silicon Valley Development Agency (ASVDA) set up by NDC. “Therefore you could say that ASVDP is the flagship of the seven plans. Our role is to spur economic growth through innovation and entrepreneurship, and to promote industrial transformation and upgrading with the help of IoT.”
Because much of the IoT supply chain is located in Taoyuan, the ASVDA headquarters was established near the Taoyuan High Speed Rail station in the Qingpu district. The organization’s five department chiefs are responsible respectively for technology development, talent cultivation, investment in startups, improvement in the legal environment, and public relations. One of ASVDA’s main functions is to serve as a connection hub, coordinating domestically with the various central government ministries, local governments, incubators, and universities, and internationally with strategic partners in Silicon Valley and other technology clusters around the world.
“Our vision is to build up a complete IoT and digital-technology ecosystem in Taiwan,” says Lee. The scope is seen as encompassing such areas as IoT, Artificial Intelligence (AI), AIoT, AR/VR, blockchain, cybersecurity, big data, fintech, and 5G. Taiwan currently accounts for over 4% of global IoT production value, and the goal is to reach at least 5% by 2025.
As a policy communication and coordination platform and supervisor of ASVDA, NDC is also aware that meeting that objective will require reinforcing the existing innovation and startup ecosystem in four respects:
- Capital. Making early-stage funding easier to obtain and providing more diverse exit channels. A new government-backed company, Taiwania Capital, and the National Development Fund under the NDC are providing more early-stage financial assistance.
- Talent. Cultivating more experienced industrial talent and enhancing the level of internationalization in the work force. A “virtual academy” offering some 200 courses has been established online, and classroom courses will be added later in cooperation with National Chiao Tung University. In addition, groups of students and entrepreneurs are being sent abroad for training.
- Market. Raising the international visibility of startups (for example, through attendance at international conferences and exhibitions), strengthening market expansion, and enhancing cooperation between startups and established corporates.
- Regulations. Revising laws and regulations to apply to new business models such as autonomous vehicles and drones, and creating a friendlier overall regulatory environment for startups. New initiatives can be given a trial through a regulatory sandbox.
In fact, Taiwan was ranked as one of the world’s four “super innovators” in 2018 by the World Economic Forum, along with Germany, the U.S., and Switzerland. A lively startup and entrepreneurship ecosystem is already in place. Lee notes the existing successful clusters of startups and accelerators – including many attracted from overseas – at such venues as Taiwan Tech Arena and FinTech Space in Taipei and Startup Terrace in Linkou. “ There are now so many startups and activities that it is hard to follow what is happening and where,” says Lee. “That wide dispersion may be good strategy at the beginning, but in future we’d like to make the location of information and resources more concentrated.”
Another of Taiwan’s strengths is the presence of major multinational investors such as Amazon, Cisco, Facebook, Google, and Microsoft, who are engaged in various IoT-related programs here, including R&D and personnel training. ASVDA has also brought together an IoT Grand Alliance of domestic and foreign companies dedicated to developing and applying digital technologies.
To help provide the necessary infrastructure for the ecosystem, ASVDA this June helped to open the Hutoushan Innovation Hub in Taoyuan. It consists of two centers – a facility for cybersecurity testing of new IoT devices and an autonomous vehicle training and testing area.
A further sector receiving special attention is smart cities, which depends heavily on digital technology. The government is preparing to implement smart-city projects throughout Taiwan, and is planning to turn Qingpu into a model smart city and innovation center.
For ASVDA, a primary strategy is to encourage large traditional corporations to collaborate with startups and other small and medium enterprises for their mutual benefit. “In the future many big companies will need AI or other digital technology to upgrade their processes and production, but they don’t have the necessary talent and knowledge,” says Lee. “That could open up business opportunities for the SMEs with new technologies and new ideas.” Similarly, there will be opportunities for systems integrators – whether local or international – to play a key role.