Taiwan Business Brief – May 2023

Tigerair flights from Kaohsiung International Airport (pictured) currently serve five destinations in Japan and Macau.


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

Cost of Living Continues to Rise 

Taiwan’s consumer price index (CPI) rose 2.35% year-on-year in March. Although the growth rate represented a slight slowdown compared to recent months, it remained higher than the 2% target set by the Central Bank, indicating that there is still significant inflationary pressure in the economy. The Directorate General of Budget, Accounting, and Statistics (DGBAS) attributed the increase in the CPI primarily to the rising cost of entertainment and leisure activities. Increases in the cost of dining out and the price of vegetables, fruit, meat products, eggs, rent, and household items also contributed to the rise. 

April saw further increases in the cost of living due to a range of new charging standards that took effect, including increases in electricity prices and taxi fares in Greater Taipei. The Taiwan Power Co. announced an average increase of 11% in electricity prices, though it will not affect the approximately 93% of households that consume less than 700 kWh per month. Starting taxi fares were increased from NT$70 to NT$85, and from NT$90 to NT$105 between 11 p.m. and 6 a.m., while the time for the additional NT$5 charged when taxis are stationary was shortened from 80 seconds to 60 seconds.  

Industrial production contracted for the seventh consecutive month in April, with a 14.52% annual decrease. This decline can be attributed to persistent weakness in demand for semiconductors, flat panels, and other components, caused by prolonged inventory digestion. Statistics from the Ministry of Economic Affairs showed that industrial production in the first quarter fell by 14.52%, while manufacturing production dipped by 15.39% compared to the same period last year. Most sub-indices posted double-digit percent drops, indicating a significant contraction across various sectors. 

Despite some traditional industries, like petrochemicals and basic metals, picking up steam in April, the chip sector remained weak due to inventory corrections. 

Unemployment in March rose for the second consecutive month to 3.56%, although the number represented the lowest for that month in 23 years. The total number of people classified as unemployed rose to 424,000 in March, up 4,000 or 0.03% from February. 

Taiwan Wins WTO Dispute with India 

The World Trade Organization (WTO) ruled in favor of Taiwan in a dispute with India over import duties that affected over US$930 million in Taiwan IT product exports to India in the last year alone. Taiwan’s Office of Trade Negotiations (OTN) disclosed that a WTO panel ruled in its favor on April 17. The Indian government began to impose import duties of up to 20% on 32 categories of Taiwanese IT products in 2014, and Taiwan requested consultations with India in 2019. When the dispute went unresolved,  the WTP panel was established in 2020. Japan and the EU joined OTN in filing the complaint. Since joining the trade organization in 2002, Taiwan has been a claimant in seven cases, three of which were settled before litigation. Of the four cases that went before panels, three received rulings in Taiwan’s favor. 

TSMC Responds to CHIPS Act and Forecasts Drop in Sales

Taiwan Semiconductor Manufacturing Co. (TSMC) chairman Mark Liu described supplementary restrictions and regulations specified in the U.S. CHIPS and Science Act as “unacceptable” and likely to discourage prospective investors from seeking grants authorized by the legislation. For example, to apply for grants, chipmakers must agree not to expand capacity in “foreign countries of concern,” such as China, for a decade. Additionally, they are prohibited from engaging in any joint research or licensing efforts with these countries involving sensitive technologies.  

Liu said that further discussion with the U.S. will be necessary to ensure that the activities of Taiwanese companies like TSMC are not negatively impacted by the proposed restrictions. He emphasized the need for a partnership between Taiwan and the U.S. for their mutual benefit.  

TSMC said in a statement that it expects second-quarter sales to drop about 6.7% compared to the previous quarter due to inventory adjustments by its customers. Sales this quarter are predicted to be between US$15.2 billion and US$16 billion. 

Tigerair to List on Taiwan Exchange

The Taiwan Stock Exchange (TWSE) has announced that budget airline Tigerair Taiwan will list on its Taiwan Innovative Board in the third quarter of the year. Tigerair Taiwan shares have been listed on the Emerging Stock Board since December 2019. The company was founded in April 2014 as a joint venture between Taiwan flag carrier China Airlines (CAL) and Singaporean airline Tigerair. In 2017, the airline became a wholly owned subsidiary of CAL. Tigerair Taiwan accounts for 2.64% of the total revenue of the international commercial airline market in Taiwan.