At a time when the collision between the U.S. and China is shaking up the established order in the conduct of world trade, it’s natural to wonder whether an opportunity is arising for Taiwan to achieve its long-held aspiration of taking on a role as a regional hub. In exploring that question, the cover story in this issue of Taiwan Business TOPICS concludes that the answer depends in large part on the definition of “hub.”
From one point of view, Taiwan is regarded as already well on the way to becoming a regional hub in two industry sectors. One is offshore wind power. Taiwan’s excellent location for harnessing wind energy from offshore turbines and the government’s determination to develop the industry to meet renewable energy targets are attracting world-class developers. These companies are viewing Taiwan not only as a good market in itself, but also as a base for expansion elsewhere in the region.
The second potential hub is for high-tech research and development, including the internet of things, artificial intelligence, and the interconnectivity of these technologies with 5G. Building on Taiwan’s prowess as a manufacturing center for electronic and computer products – and encouraged by the strong IPR protection that Taiwan provides – local and leading multinational companies are continuing to set up facilities on the island to engage in cutting-edge R&D.
On the other hand, Taiwan appears no closer to its onetime ambition of becoming an overall Asia Pacific Regional Operating Center. No one doubts that Taiwan possesses many of the necessary attributes. Among them are a central location within the region, well-educated and industrious workforce, good engineering and technical talent, and appealing living conditions, including a safe and stable environment. In recent years, Taiwan’s costs for office space and salaries have looked more and more attractive compared to neighboring countries.
However, various factors have held Taiwan back from taking a more prominent role in the region. Some of these are rather intractable, such as China’s incessant efforts to isolate Taiwan diplomatically. In addition, Taiwan’s calcified financial-services sector lessens its chances of capturing businesses that may decide to desert turbulence-ridden Hong Kong (although Taiwan may be suitable for certain back-office operations).
At the same time, there is much that the Taiwan government can do to raise this country’s attractiveness to companies as a potential regional operations center. One initiative that has already started is the program to develop Taiwan into a bilingual nation by 2030. Increasing the English proficiency of candidates for employment would help alleviate one of this society’s current shortcomings for multinationals.
The government also appears to be making a serious effort to improve the regulatory system, eliminating unclear, unreasonable, and inconsistent laws and regulations – often in response to suggestions raised in AmCham Taipei’s Taiwan White Paper. Taking up one of those recommendations, it has adopted a 60-day notice and comment period for new regulations, which should help enhance communications with stakeholders – though it is still too early to tell how well the system is working.
Also still unknown is the ultimate effectiveness of the government’s program to remove obstacles to investment by tackling the “Five Shortages” of land, electricity, water, manpower, and specialized talent.
But these efforts are all on the right track. If successful, they should greatly increase the chances for Taiwan to be a more active player within the regional economy.