This year has brought unprecedented challenges to the global economy. As COVID-19 spread across the world over the past half year, supply chains are restructuring, the operating modes are changing, and the need for digital transformation is increasing. The virus has also given rise to numerous business opportunities in the digital realm, and under the current fragile system of globalized production, the importance of national policies has become more apparent. In Taiwan, the government’s success in controlling the pandemic has received international recognition. At the same time, its Asia Silicon Valley Development Plan, launched in 2016, has gone the extra mile to lead the digitalization of Taiwan’s industries. Over the past four years, the Plan has achieved some admirable results, accelerating digital transformation and strengthening international links.
Speaking with the American Chamber of Commerce in Taipei, newly appointed National Development Council Minister Kung Ming-hsin discussed the formation and policy aims of the ASVDP. Kung was involved in the initial development of the ASVDP policy four years ago, and so was able to describe with great familiarity the achievements of the Plan over the past four years, as well as the supporting policies that were introduced in response to the pandemic.
In order to stimulate growth for the Taiwan economy, the Plan sought to forge “three links” (local, global, and future) and to enable work in Taiwan on developing the Internet of Things (IoT) to get an early start.
“Originally, our goal was to boost the production value of Taiwan’s IoT technology to 5% of the global market share within seven to eight years,” said Kung. But the rate of progress has been faster than anticipated thanks to the combined efforts of the Taiwan government and private sector. The semi-governmental think tank Industrial Technology Research Institute (ITRI) has calculated that the production value of IoT tech produced in Taiwan in 2018 reached NT$1.7 trillion (US$39.1 billion), constituting 4.2% of the global total. That number continued to increase in 2019, reaching NT$1.31 trillion (US$43.6 billion), or 4.3% of the global market share.
The roadmap for IoT industry development under the ASVDP has provided the industry with a firm foundation. The Asia Silicon Valley Innovative R&D Center in Taoyuan will soon begin accepting bids for facilities there, and Kung predicts that both large enterprises and startups will begin operating there within the next two years, enabling the Center to become a permanent hub for exhibiting Taiwan’s IoT solutions and development progress. In addition, the ASVDP’s “three links” will help accelerate the digital transformation of Taiwan’s industries in the post-COVID-19 era.
Linking to the future
ASVDP’s comprehensive software and hardware strengths and its expansion of smart applications have propelled Taiwan to create the innovative value and developmental momentum necessary for the 21st century. Through the National Development Fund’s “Business Angel Investment Program” and amendments to existing regulations, ASVDP will inject capital into startups it sees as having development potential. Startups that have been impacted by the pandemic this year can also apply to the Fund for a special investment program that provides funding support in exchange for preferred stock. As of mid-July 2020, the government has received 139 applications for the program, and has provided NT$2.2 billion in funding to startups that have experienced hardship.
According to Kung, “ASVDP was originally intended to develop IoT solutions, and many Taiwanese teams have discovered innovative ways to integrate hardware and software to resolve the many needs related to digital transformation as a result of the pandemic.” For example, Taipei-based Compal Electronics has combined AI, cloud, and IoT technologies into a safe-distance care-services platform for diabetics that prevents gaps in treatment due to infection concerns.
In addition, the pandemic has resulted in an increased need for unmanned technology. Local startup VoiceTube has applied AI to its online English-language learning platform, using big data analysis to learn the preferences of learners and offer personalized study suggestions.
“If these solutions are carried out well in Taiwan, we will expand them to other countries,” said Kung. Beginning with Taiwan’s future-oriented sectors, Kung is seeking to accelerate the alignment of the island’s digital industries with international standards.
Aside from helping to orient Taiwan’s local industries toward global markets, the ASVDP has also invited Microsoft, Google, Amazon AWS, Cisco, and other prominent tech firms to establish R&D or innovation centers in Taiwan. It also aims to attract more international talent to strengthen Taiwan’s R&D position in the global market.
Kung points with pride to the success of the Employment Gold Card system that the government introduced to help attract such talent by expediting residency and work-permit procedures and offering tax benefits. Between January and mid-July 2020, the government approved over 950 Gold Card applications – more than double the number issued during the same period last year.
Besides the above-mentioned upcoming R&D Center in Taoyuan and the already-operational Startup Terrace in New Taipei City’s Linkou District, an island-wide network of startup clusters has begun proliferating rapidly. The next center will be set up in Tainan’s Shalun area, and Kaohsiung may also join the network in the future, setting the stage for more international teams to flourish in southern Taiwan. ASVDP also promotes the deepening of special ties between emerging industries and local economies and minimizing the gap between smart applications and local towns and cities through cooperation between the government and the public.
“From the outset, we have wished for a close relationship between industrial development and Taiwan’s localities,” said Kung. He added that he expects more good results from the program in the coming four years.
Although faced with the disruptive innovation caused by the COVID-19 pandemic, Taiwan’s industries have continued to safely digitalize their operations, thanks to the beneficial foundation provided by ASVDP. Not only has the production value of Taiwan’s IoT steadily increased, but a more flexible regulatory environment – including “sandboxes” for unmanned vehicles and fintech – has also contributed to making Taiwan a very attractive location for innovative experimentation.
Looking to the future, Kung anticipates that the “three links” policy direction will create strong economic momentum, allowing Taiwan to gain a foothold in the 5G era and to advance its industries safely and steadily in the years to come.