On Sept. 13, President Chiang Ching-kuo invited 14 leaders of the Republic of China's business community to a meeting to discuss Taiwan's business environment. He pointed out to Premier Sun Yun-suan and officials of the ministries of Finance and Economic Affairs. "Our past economic development achievements are the result of the entire nation working together. From now on, we must work even harder to create a profitable investment climate for business; we must stimulate an industrious spirit in private enterprise and together raise the nation's industrial level."
The world is in an economic recession, and as Taiwan's economy is dependent on exports, it has felt the effects severely. Moreover, since Taiwan is undergoing an economic transition, it can no longer compete with cheap labor costs, but at the same time capital and technology intensive industries have not yet been fully developed. As a result, starting in the second half of 1981, exports have slumped and investment in business and industry has fallen. The problem now lies in overcoming the effects of the recession and starting a business recovery. Vice Minister of Economic Affairs, Wu Mei-tsun, uses Japan as an example. "During the first energy crisis in 1973, Japan experienced an economic slowdown. Nevertheless, industry increased investment, bought new equipment, developed new talent, and automated their processes. As a result, during the second energy crisis of 1978, Japanese products were low priced, yet their quality was high, so they fared well on world markets. Japan suffered no severe economic setbacks during that period," said Wu, who feels that now is the time for high-technology industries to take root in Taiwan.
To encourage investment, the government has implemented several new measures, including lowering or eliminating taxes on imported machinery, allowing businesses to pay taxes in installments, lowering interest rates, and broadening the rules governing government loans to business. Industries which comply with the government investment plans can receive five years tax holiday and government loans 2 percentage points lower than average.
The government is also looking to Overseas Chinese to bring both capital and technology to help the Republic of China in its efforts to break away from labor intensive industry and establish capital and technology intensive industries. Industrial Development and Investment Center (IDIC) director, T. Y. Wan remarked: "We have a very friendly attitude toward Overseas Chinese investment. In addition to businesses, they also receive these special benefits: 1) Profits can be freely withdrawn; 2) After the first year, investors can apply annually to withdraw 20 percent of their initial capital; 3) Businesses with 45 percent or higher Overseas Chinese investment will be exempt for 20 years from government requisition, but if, in case of a national defense emergency, the government must make requisitions, investors will be justly compensated; and 4) Overseas Chinese can own up to 100 percent of any company."
Pointing to the Republic of China's attractive investment climate, Chen Fei-lung, chairman of Nan Chao Chemical Industries commented, "Over the last 30 years, Taiwan has had a very stable and secure government. There is a highly skilled and educated work force, and with the traditional cultural and ethical background, this makes for harmonious labor relations. Worker productivity also surpasses that in many Southeast Asian nations. These are all factors that attract Overseas Chinese investment." Nan Chao Chemical Industries is an example of a successful Overseas Chinese investment. Over a 30-year period, the initial investment has been returned 230 times and by the end of the year total earnings will have reached NT$414.7 million.
Chen who is also Secretary General of the Overseas Chinese Enterprises Association, continued: "Many Overseas Chinese invest in the ROC because of their love for China, and this is especially true of the older generation. Members of the most recent generation of Overseas Chinese, however, are more serious about investment. They look into economic, social, and political factors before they take action, and while a common cultural background is important, it is not the only reason they return with their capital."
The government established the Hsinchu Science-based Industrial Park to attract investment in the development of technology intensive industries in Taiwan. The park includes complete public facilities and is located close to both the Hsinchu expressway interchange and the Chiang Kai-shek InternationalAirport in Taoyuan. Not far from the park are the Ching Hua and Chiao Tung Universities, and the Industrial Technology Research Institute. Park manager Dr. Ho Yi-tse remarked that many companies located in the park take advantage of their availability and make use of the research facilities of the schools in the area to carry out their research and development projects.
Besides enjoying this research environment, companies which have established themselves in the Hsin-chu Science-based Industrial Park receive many other benefits. Among these are tax reductions and exemptions, government investment, and the availability of government built factories which allow investors to save on the cost of construction.
The IDIC United Service Center represents another step the government has taken to attract foreign investment. It is divided into five sections: Service, industrial and commercial administration, export-import, foreign exchange, and taxes. In order to facilitate one-step service, representatives of the Investment Commission of the Ministry of Economic Affairs, IDIC, the Central Bank, the Ministries of Interior and Finance, the Bank of Communications, the Science-based Park, Taiwan Power Co., and other organizations concerned with investment, have all been brought together under one roof. The service center also helps with visas, provides information and data, arranges interviews, and helps in land acquisition.
The Ministry of Economic Affairs is also considering the establishment of a Free Trade Zone to attract investors from Hong Kong. People, capital, and goods will all be allowed to enter and leave this zone easily and a single simplified tax system will be introduced. This will be a breakthrough in the economic development of the Republic of China.
New government investment policies have brought about a dramatic increase in foreign investment in the Republic of China. According to estimates, such investment from January through August this year was US$297 million, an increase of 33 percent over the same period of last year. Overseas Chinese investment made up 47 percent of the total, showing an increase of 31 percent.
In addition, industrial output is slowly rising. Director of the IDIC, T. Y. Wan, commented: "The recession will not go away overnight, but conditions will slowly improve. This is the ideal time to invest. Machinery and equipment are all selling for lower prices now, and by the time new equipment is in place and factories have resumed production, the economy will be far along the way to complete recovery."
[Picture Caption]
1: Vice Minister Wu Mei-tsun said, "We should use this period of economic recession to transform domestic industry." 2: IDIC director, T. Y. Wan, feels now is an ideal time to invest. 3: Goodyear Taiwan chairman, Chai Chih-kuo, remarked the first thing investors look at is a country's latent development potential. 4: Secretary General of the Overseas Chinese Enterprises Association, Chen Fei-lung, says the stable government and good labor relations of the Republic of China are attractive to overseas investors. 5: 76 percent of the investment in Goodyear Taiwan came from abroad.
1: Dr. Wu Wei-kuo returned from overseas to set up an electronics firm. 2: Science-based Industrial Park director, Ho Yi-tse, emphasizes the park's good investment environment. 3: Head of the IDIC United Service Center, Li Chang-yi, has called on all organizations to concentrate on service. 4,5: An electronics firm located in the Hsinchu Science-based Industrial Park.
Investors go to the Service Center for help. Center employees analyze problems and propose solutions.
IDIC director, T. Y. Wan, feels now is an ideal time to invest.
Goodyear Taiwan chairman, Chai Chih-kuo, remarked the first thing investors look at is a country's latent development potential.
Secretary General of the Overseas Chinese Enterprises Association, Chen Fei-lung, says the stable government and good labor relations of the Republic of China are attractive to overseas investors.
76 percent of the investment in Goodyear Taiwan came from abroad.
Dr. Wu Wei-kuo returned from overseas to set up an electronics firm.
Science-based Industrial Park director, Ho Yi-tse, emphasizes the park's good investment environment.
Head of the IDIC United Service Center, Li Chang-yi, has called on all organizations to concentrate on service.
An electronics firm located in the Hsinchu Science-based Industrial Park.
An electronics firm located in the Hsinchu Science-based Industrial Park.
Investors go to the Service Center for help. Center employees analyze problems and propose solutions.
Investors go to the Service Center for help. Center employees analyze problems and propose solutions.
