The U.S.-China trade dispute has brought significant changes in markets and industries around the world, and at first it appeared that Taiwan would suffer a severe negative effect. In the early months of the dispute, the imposition of heavy tariffs and other trade barriers began impacting Taiwanese companies whose manufacturing processes take place mainly in China. These enterprises began reconsidering the extent of their China operations and looking to neighboring markets as alternatives.
Seeing the enormous potential in this situation, InvesTaiwan, an inter-ministerial organization overseen by the Ministry of Economic Affairs, began devising a strategy to draw many of the affected companies back to Taiwan to help spark growth in the domestic economy.
“The U.S.-China trade dispute has forced these businesses to diversify their places of production across multiple countries, thereby minimizing investment risks and turning a crisis into a favorable situation,” says InvesTaiwan CEO Emile Chang. Depending on industry characteristics and market demand, many companies have made investing in Taiwan a priority, Chang adds.
In 2019, InvesTaiwan launched the three-year “Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan,” as well as the “Action Plan for Accelerated Investment by Domestic Corporations” and the “Action Plan for Accelerated Investment by SMEs.” These programs offer critical assistance and favorable conditions to returning companies, such as fast-track access to financial aid, preferential rental rates on land, better access to utilities, exclusive tax services, and help with manpower.
The “Three Major Programs for Investing in Taiwan” have proven to be a smashing success. To date, InvesTaiwan has managed to attract a total of nearly NT$1.18 trillion (US$42.1 billion) in investment approvals from 777 companies. The effort is also resulting in the creation of over 98,000 jobs.
Of the total amount that has been invested since the programs began, a majority 58% has come from the electronics and information technology sector, engaged mainly in the production of network communication equipment, servers, and other PC-related products. Companies from this sector include Supermicro, an AI technology firm that has been approved to invest NT$20 billion (US$667 million). In addition, Quanta Computer has invested NT$13.1 billion (US$467 million), establishing a facility to produce servers opposite its headquarters in Taoyuan.
Other industries utilizing the three investment schemes include metals and machinery, which accounts for 23% of the total, as well as renewable energy, biotech, and defense.
As Taiwan has managed to effectively contain the COVID-19 pandemic at home, the review of investment applications and provision of services to manufacturers have continued unabated, with certain processes now taking place via videoconferencing and phone calls.
“In addition to converting our preliminary review of applications to a written format and thereby expediting the application process, we also provide guidance to businesses on how to use videoconferencing tools to attend joint review meetings,” says CEO Chang. “Helping manufacturers pull through the pandemic and maintaining stability are our biggest priorities.”
COVID-19 has also presented opportunities for further investment by Taiwanese manufacturers in Taiwan, Chang says. Among the contributing factors are increased demand for tech products resulting from the stay-at-home economy, the need for cloud computing-related jobs, and the large number of orders for semiconductors to power the devices and technologies used in this new era.
As the pandemic and geopolitical situations continue to evolve, Chang and InvesTaiwan are thinking big picture about future prospects.
“The development of the Internet of Things and smart manufacturing is expected to accelerate,” Chang notes. “Taiwan not only has great development potential in these two areas, but through cross-industry alliances and cooperation, it can promote smart technologies in traditional industries, enhance the manufacturing sector’s value-added capabilities, and create further employment opportunities.”
Last but not least, Chang and his team hope to help make Taiwan an ideal investment location for foreign companies looking to restructure their supply chains. Taiwan’s friendly environment for multinationals, comprehensive tech manufacturing ecosystem, high-quality labor force, sound legal environment, and good infrastructure are just some of the attractive qualities that businesses expanding investment in Taiwan or partnering with local Taiwanese companies can enjoy.