Invest in TaiwanDepartment of Investment Services, MOEA
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With a mature business environment, central location in the Asia, and favorable tax incentives, Taiwan is the ideal site for a company's operations headquarters or R&D center. Fueled by a robust high-tech industry, Taiwan's innovation and value-added production sectors are growing steadily as the island makes a transition to a knowledge-based economy. Geographical and cultural proximity to China also makes Taiwan a natural gateway for companies looking to enter the greater China market, and an increasing number of companies are taking advantage of incentives and preferential tax incentives offered under the government's Challenge 2008 National Development Plan.
Location and resources are Taiwan's foremost assets for business development in Asia -- the island's central location and well-developed infrastructure offer a strategic transit point for multinational companies seeking to enter the Chinese market. Taiwan's linguistic and cultural ties to China can also help multinationals deal with issues related to investment, production, localization, and market segmentation. Furthermore, these ties make Taiwan an ideal test-bed
for entering the Greater China market, as well as other markets in the region.
Companies on the island have access to Taiwanese capital (with foreign reserves totaling over USD266 billion in 2006) and a well-educated workforce. Taiwan has a high proportion of skilled workers and R&D workforce -- national expenditure on R&D as a percentage of GDP reached 2.45% in 2005. Taiwan also has a comparatively high number of R&D workers, with 8.9 researchers per 1,000 employed persons in 2005. Taiwan's human resource talent is also reflected in its high number of patents -- according to the latest figures from the MOEA, Taiwan's number of patents from the US in 2006 totaled 5,991, ranking 2nd for number of patents per 1 million people.
Taiwan also offers a stable yet dynamic business environment –the island was listed as the third best place to do business in Asia in 2006 according to the Economist Information UnitEIU, while the World Economic Forum’s Global Competitiveness Report 2006-7 listed Taiwan as the world’s ninth most innovative economy and the second most innovative economy in Asia. In addition, Taiwan leads its regional peers for its sovereign credit, political stability, outstanding public debt and fiscal stability -- according to figures released by Standard and Poor in September 2002, Taiwan held a sovereign rating of AA, outperforming other Asian countries, such as Japan (AA-), China (BBB), South Korea (A-), Malaysia (BBB+).
In Business Environment Risk Intelligence's (BERI) Business Environment Risk Report for 2006, Taiwan ranked 3rd in Asia and 6th worldwide for its overall business environment, behind only Switzerland, Singapore, the Netherlands, Norway and Japan. Taiwan once again received a 1A rating in the BERI report, which indicates that it is a low-risk country suitable for investment.
Riding on the wave of a high-tech boom, Taiwan's industrial development is moving from traditional manufacturing goods towards more value-added production, innovation and design, changes which reflect Taiwan industries' readiness to adapt with the global business environment. Taiwan businesses have moved away from their past exporting strategy of concentrating on light and small
products, focusing more on precision, higher added-value, vertical integration
in supply chain production, and emphasizing products with high added-value, branding and marketing. Recent studies from the MOEA indicate that Taiwan's small and medium-size enterprises (SMEs) have developed a strong production and sales network with multinational companies as first-tier suppliers, and have the potential to develop further on this business model. This network, along with the island's R&D and innovation talents, provide a solid foundation for strategic alliances.
A number of incentives are available to companies that establish an operations headquarters in Taiwan under the Statute for Upgrading Industries and the Action Plan for Promoting the Establishment of Operations Headquarters. These incentives include:
Similar incentives are also available to companies establishing R&D centers. These incentives include:
New goals for the development of new industries were recently proposed by the Executive Yuan Science and Technology Advisory Group:
To date 32 multinational companies have formed R&D centers in Taiwan, with more than 60 local companies operating their own R&D centers. The MOEA estimates that within three years these operations will bring approximately NT$17 billion in R&D investment funds, with over 270 projects underway by Taiwan manufacturers. Prominent companies that have committed to running an operations headquarters or R&D center in Taiwan include IBM, Intel, Hewlett Packard, Sony, Altin Materials Technology, Viva Biotechnology, Dell, Microsoft, Pericom Semionductor, Aixtron Semiconductor, Taiwan Semiconductor, United Microelectronics, and Acer.
Intel Corp., the world's largest computer chipmaker, made a significant step in establishing the Intel Innovation Center in Taiwan, the first of its kind for Intel in the Asia-Pacific region. The Center focuses on the convergence of computing and communications technologies. Intel has already had close contacts with Taiwan IT manufacturers and researchers for many years, gradually expanding cooperation from procurement and technical support to information sharing.
Among multinational companies, IBM is one of the most well-established in Taiwan when it comes to innovation and R&D. In 1999, the company formed the Greater China Software R&D Center, which is the largest software R&D organization among foreign information technology companies in Taiwan, with 350 employees. IBM Taiwan then founded the Bioinformatics R&D Center in 2002, the first of its type in the Asia-Pacific region, performing work combining IT and biology. In 2004, IBM established its xSeries Taiwan Development Center (xTDC), the company's first R&D center outside of the US devoted to its xSeries server product, which is slated for further expansion. With these facilities and resources, IBM has established its presence in Taiwan and the Asia-Pacific as an R&D stronghold.
French telecom-technology giant Alcatel-Lucent (formerly Alcatel SA) on March 24, 2004 announced the formation of the Alcatel Taiwan ICT R&D Applications Center, which focuses on the broadband wireless applications market. The key areas for research include cell phone applications services and certification, intelligent service platforms and wireless communications, with a goal of providing an open platform for third-generation (3G) and 2.5G mobile communications solutions and interoperability testing.
German conglomerate Merck KGaA is investing NT$900 million to establish Liquid Crystal Center Taiwan (LCCT) to produce liquid crystal materials and conduct R&D. The center contributes to all sectors of the TFT-LCD industry in Taiwan, which is one slated to become the world's largest producer. Merck's Taiwan subsidiary Merck Display Technologies (MDT) already supplies over 60% of the liquid crystal materials used by Taiwan's TFT-LCD flat panel makers. Merck has invested a total of NT$ 2.4 billion in and currently operates three ITO coated glass and two color filter manufacturing facilities in Taiwan.
Dell -- one of the world’s largest PC makers -- currently operates an R&D and design Center in Taiwan. In 2005 the US-based company doubled its research personnel in Taiwan from 200 to 400 to handle its growing share of the server market. Thanks to its growing ties with Taiwan OEMs, Dell's Taiwan R&D center has helped shorten design and development times by three to six months, better facilitating its manufacturing operations in China.
Source: Government Information Office, Taiwan External Trade Association (TAITRA), Taiwan Economic Outlook, February 2007, Taipei Representative Office Brussels, DoIT, IDB
(Updated October 2007)
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