Taiwan Business Brief – October 2022


Exports Up,  Confidence Down

Export orders grew in August, mainly due to the launch of new Apple products and increasing demand for new technologies, which supported a 2% year-on-year increase to US$54.59 billion, according to the Ministry of Economic Affairs (MOEA). This was the best-ever August performance by Taiwan’s export industries.

But despite increased export orders, Taiwan’s economy continued to show signs of slowdown, with leading indicators from the National Development Council (NDC) dropping for the 10th consecutive month. Confidence in the economy also continued to fall in September, according to a survey conducted September 1-7 by Cathay Financial Holding. The survey showed rising concern about inflation and increased pessimism about the local stock market due to central banks’ accelerating monetary tightening.

Optimism levels among Taiwanese businesses dropped in September to a seven-quarter low, according to business data and analytical insights provider Dun & Bradstreet (D&B). D&B attributed the drop to continuing destabilizing factors such as the COVID-19 pandemic, inflationary pressure, and supply chain bottlenecks. The business optimism index dropped 10% year-on-year in the third quarter, the firm said.

Market concerns were additionally reflected in the real estate market, as a majority of prospective homebuyers reported they would cut their budget or postpone their purchase in response to the Central Bank’s raised interest rates, a survey by Sinyi Realty showed.

The Consumer Price Index (CPI), however, grew in August by the lowest amount in six months, according to the Directorate General of Budget, Accounting and Statistics (DGBAS). The CPI rose 2.66% in August, mainly due to rising food prices, which increased by 4.86% year-on-year. The increase in household necessities meant consumers will still feel the effects of inflation, DGBAS said. 

Minimum Wage to be Raised

The government announced that the minimum monthly wage will rise by 4.55% to NT$26,400 and the hourly wage by 4.76% to NT$176 as of January 1, 2023, following a recommendation by the Minimum Wage Review Committee to the Ministry of Labor.

The hike is lower than the NT$28,000 target that labor groups demanded, but businesses are still unhappy with the decision. Paul Hsu, chairperson of the General Chamber of Commerce of the Republic of China, expressed dissatisfaction with the hike, calling it “salt in the wound” that jeopardizes the business environment for the service industry, which is already in a dire state partly due to pandemic-related restrictions.

Qualcomm Opens Second Taiwan Innovation Center

U.S. semiconductor corporation Qualcomm on September 21 inaugurated an innovation center in Kaohsiung as part of increased efforts to support local start-ups and a 5G technology ecosystem in the city. The company plans to use the “Qualcomm Innovation Center, Southern Taiwan” to provide incubation support to startups, including education and training. The Center will also contain advanced testing labs for 5G AIoT, O-RAN, small-cell base stations, and robotic tests.

Qualcomm Vice President S.T. Liew said during the opening ceremony that as a leader in global wireless communications innovation, Qualcomm is eager to work with like-minded partners globally to strengthen technology development and boost the economy.

Appier Eyes U.S. Expansion

Artificial intelligence-driven software company Appier Group CEO Yu Chih-han said it is expanding its marketing software business in the U.S. to test whether Asian software companies are competitive with Western peers.

Appier opened an office in San Francisco in 2020 and plans to double its staffing in the U.S. to 20 and broaden its range of software products. Yu noted that U.S. demand is driven by companies looking for efficient marketing while navigating more stringent privacy rules. International Data Corporation (IDC) forecasts that the global marketing operations software market will grow from US$18.5 billion in 2021 to US$31.7 billion in 2026.

Taiwan Falls in Investment Rankings

Taiwan fell from third to sixth place as an investment destination in the latest U.S. Business Environment Risk Intelligence (BERI) report. BERI reports are published three times a year and assess and evaluate the investment risks and environment in various markets from a global business perspective.

According to the MOEA, Taiwan’s drop in rankings reflects the increasing political risks in connection with geopolitical threats from China. The Ministry cited Russia’s invasion of Ukraine and China’s military exercises around Taiwan following U.S. Speaker of the House Nancy Pelosi’s visit in August as the main factors contributing to this drop.

MOEA stressed that China’s military exercises had no direct impact on Taiwan’s economic performance, given that transportation and energy supplies were all left unaffected. Despite the drop in the ranking, foreign investors still show confidence in Taiwan’s advanced high-tech industry and its stable investment environment for both the short and long term.