BY JAMES HILL AND LINDA YANG

A selection of these news stories are also covered in AmCham Taiwan’s Executive Sweet podcast, available to listen to on Apple Podcasts, Spotify and online, here.

CPI and Rents Soar; Manufacturing Down

The Consumer Price Index (CPI) grew at its fastest pace in six months in January, climbing 3.04% year-over-year. Steep increases in the price of vegetables and increased spending during the Lunar New Year holiday contributed to the rise, according to the Directorate-General of Budget, Accounting and Statistics (DGBAS). Vegetable prices soared 28.25% in the runup to the 10-day holiday period during the second half of the month.  

DGBAS also attributed the rise to the increased cost of dining out, meat products, eggs, seafood, household products, and holiday transportation. However, the lowered prices of fruit and telecommunications partially offset the rise.   

Taiwan’s manufacturing output declined in January for the seventh consecutive month, according to the Chung-Hua Institution for Economic Research (CIER). The Purchasing Manager’s Index (PMI) in January fell to its lowest mark since July 2012. CIER’s index tracking activity in the service sector also fell 3.2 points to 50 (a score below 50 indicates contraction).  

CIER partly attributed the drop to workdays lost to the 10-day lunar new year holiday. Citing a rebound in the index on industry perceptions of the business outlook for the next six months, CIER sees prospects for gradual recovery in the local manufacturing sector. Although the lunar new year holiday boosted domestic spending and consumption, CIER cautioned that  inflationary pressures remain. Taiwan’s rent index, for example, rose 2.44% in January to a record high as landlords passed on the financial burden of inflation to tenants.  

A survey conducted by Chinatrust Real Estate Co. showed that 52.7% of respondents believed Taiwan’s Central Bank, taking cues from central banks worldwide, would raise interest rates again this year. The bank increased interest rates four times in 2022. Nearly 30% of survey takers said they would delay house-hunting due to increased costs.  

Rents increased by 2.22% in northern Taiwan, 2.65% in central Taiwan, 3.08% in southern Taiwan, and 1.65% in eastern Taiwan. The increase in the south was attributed to major technology firms’ expansion plans, which increased the demand for housing. 

Cash Incentives for Tourists Planned

Taiwan’s government plans to issue vouchers worth NT$5,000 (US$163) to international tourists to encourage spending in the domestic travel and hospitality sector following the reopening of borders. Minister of Transportation and Communications Wang Kwo-tsai said the vouchers could be available before April once the Legislative Yuan passes a draft special statute and would be funded by surplus tax revenue from last year.   

In addition to individual vouchers, travel agencies will receive NT$10,000 for every inbound tour group of 8-14 travelers and NT$20,000 for larger groups, with up to 90,000 tour groups expected to be eligible. The ministry’s Tourism Bureau aims to attract six million foreign visitor arrivals in 2023. It also intends to provide subsidies to employers in the hospitality industry who hire additional janitors or service staff with a monthly salary above a certain level. 

Starlux Launches Taipei-LA Flight

Starlux Airlines will start direct flights to Los Angeles from April 26. Round-trip flights will be offered at first every Monday, Wednesday, Thursday, Friday, and Saturday, and every day of the week beginning in June. The new route will be served by Airbus A350-900 aircraft with 306-seat capacity.  The airline has also announced flights to Sendai in Japan from April, aiming to attract tourists for the annual cherry blossom season. The airline’s revenue has increased 13-fold year-over-year due to a rebound in air travel after nearly three years of pandemic restrictions.

Hotel Rates Hit New Record

Hotel room rates in Taiwan hit a new average high of NT$4,195 (US$140) in 2022, despite a relatively low occupancy rate due to the Covid-19 pandemic, Taiwan Tourism Bureau data showed. Workforce shortages and the increasing price of goods were considered to be the major reason for the higher rates.  

Amid the rebound in tourism, Four Seasons Hotels and Resorts announced in February that construction has started on its first facility in Taiwan.  The 31-story hotel, located in Taipei’s Xinyi District, will have 260 rooms. 

DBS to Become Biggest Foreign Bank

Singaporean DBS Bank is expected to become the largest foreign bank in Taiwan by assets after completing the acquisition of Citigroup’s consumer business. The integration is expected to be completed in the third quarter of 2023, said Sier Han Ng, who will take over as the general manager of DBS Bank (Taiwan) on April 1. The deal is worth NT$93.6 billion (US$3 billion).  

After the integration is complete, DBS Bank (Taiwan) is set to grow by 4.3 times in the number of credit cards and secured loans issued, 3.5 times in wealth management volume, and 4.7 times in demand deposits. Citigroup announced in April 2021 that it would sell its consumer banking units in 13 countries, leaving Hong Kong and Singapore as the only exceptions in the Asia-Pacific region. 

Taiwan Second in Asia for Innovation

Taiwan was hailed as the second most innovative country in Asia by Clarivate Analytics, which included 11 Taiwanese companies and institutions in a list of 100 global innovators. In total, 58 Asian organizations were listed, of which 38 were from Japan, five from South Korea, and four from China. The technology sector was most prominently featured, with organizations such as the Industrial Technology Research Institute (ITRI), Hon Hai Precision (also known as Foxconn), Delta Electronics, Nanya Technology Corp., TSMC, Quanta Computer, and AUO Corp listed. 

ITRI has been featured in the annual list seven times, Hon Hai six, and Media-Tek and Quanta five. Hon Hai, which currently owns 61,489 patents worldwide, said that its inclusion demonstrated that the company’s efforts to deploy high-value intellectual property had gained international recognition.