In 1973 the government established the Development Bank of the Executive Yuan to improve and upgrade industry through investment and other financial means. The primary targets for investment were strategic or new industries such as petrochemicals, telecommunications, biotechnology and photoelectronics. Then in 1979, the Bank of Communications was transformed into an investment bank, the only bank in the country permitted to engage in investment. Its chief targets also were strategic or new industries.

The two financial institutions were acting under the direction of government policy, but unexpectedly they were themselves major winners in the scheme.

"To date we have already brought in more than ten million NT dollars," remarks Yeh Der-chang, a director of the Development Fund. It is money that comes from ten companies that requested stock repurchase rights or the ability to sell off on the open market, and has been invested by the Fund in some twenty firms in the science park. The Bank of Communications has done even better, earning two billion NT dollars last year through its investment division, around one half of total profits for the bank as a whole.

Companies cannot apply to invest through the Development Fund, as it only accepts investment on the recommendations of the authorities in charge of industry and technology. The Industrial Development Bureau and the Science Park Administration of the National Science Council are its major sources. Additionally, individual investment cannot exceed 49% to avoid creating public enterprises.

In contrast, the Bank of Communications gathers investment from a wider net. There are those investors invited on the strength of official recommendation, and also some firms which apply on their own behalf, and others which the bank has actively sought out owing to their suitability on economic grounds. Thanks to this three-pronged assault the bank has so far been able to channel investment into nearly eighty companies, more than three times the number reached by the Development Fund.

Says Huang Jung-hsien, investment department general manager at the Bank of Communications: "It has been found in the advanced nations of the West that although the risks of high-technology investment are great, the profits are too, so that on average it is enough to succeed in only two out of every ten investments to make money." His bank has so far failed in only two investments.

Such rich pickings have been enough to turn corporate groups away from the old stereotyped perception of high-technology investment as a dead end, and bring them scrambling for a share of the cake. Added incentives have been the availability of tax breaks and low-interest loans for firms at the science park, and as James Ho, deputy director of investment services with the Science Park Administration explains: "With cooperation between the managements of the firms involved, and an exclusive technology, all it takes is wise management to be almost certain of earning a big return."

But after the initial burst of interest, enthusiasm has begun to fade, and at this time the future development of high-technology in Taiwan now depends significantly on the abilities of the venture capital firms in the middle of the process to successfully fulfill their role.

The government hopes to develop the aerospace industry to advance high technology in Taiwan still further. （photo by Diago Chiu）

Telecommunications and electronics are in a period of growth in Taiwan.