Investment Climate Statements

The U.S. Department of State’s Investment Climate Statements, prepared annually by U.S. embassies and diplomatic missions abroad, provide country-specific information and assessments of the investment climate in foreign markets. The Investment Climate Statements include examples of expanding openness to foreign investment and investor protections, as well as challenges and barriers to investment.

Taiwan is an important market in regional and global trade and investment. It is one of the world’s top 25 economies in terms of gross domestic product (GDP) and was the United States’ 11th largest trading partner in 2017. An export-dependent economy of 23 million people with a highly skilled workforce, Taiwan is also a key link in global supply chains, a central hub for shipments and transshipments in East Asia, and a major center for advanced research and development (R&D).

Taiwan welcomes and actively courts foreign direct investment (FDI) and partnerships with U.S. and other foreign firms. President Tsai Ing-wen has launched an initiative to promote economic growth by increasing domestic investment and FDI. The effort aims to leverage Taiwan’s strengths in high-technology, manufacturing, and R&D to attract this investment. Plans for expanded investment by the central authorities in physical and digital infrastructure across Taiwan complement this investment promotion strategy. Premier William Lai has declared that investment promotion is a top priority and, since September 2017, has convened a series of inter-ministerial meetings to lower investment barriers. The authorities have also introduced new rules that help establish a modern regulatory framework for a thriving digital economy.

The finance, wholesale and retail, and electronics sectors remain top targets of inward FDI, although Taiwan attracts a wide range of U.S. investors, including in the high-technology, digital, traditional manufacturing, and services sectors. The United States is Taiwan’s second largest single source of FDI after the Netherlands, through which many U.S. firms choose to invest. In 2016, according to U.S. Department of Commerce data, the total stock of U.S. FDI in Taiwan reached USD 16.2 billion, while U.S. services exports to Taiwan totalled USD 11.3 billion.

Structural impediments in Taiwan’s investment environment include: excessive or inconsistent regulation; market influence exerted by domestic and state-owned enterprises (SOEs) in the utilities, energy, postal, transportation, financial, and real estate sectors; foreign ownership limits in sectors deemed sensitive; and regulatory scrutiny over the participation of People’s Republic of China (PRC)-sourced capital. Taiwan has among the lowest levels of private equity investment in Asia, and U.S. private equity firms have expressed concern about a lack of transparency and predictability in the investment approvals process, especially in sectors deemed sensitive but that allow foreign ownership. Businesses have questioned the feasibility of Taiwan’s long-term energy policy in light of plans to phase out nuclear power by 2025 and increase use of fossil fuels and renewables, and voiced concern about how new stricter labor regulations would reduce businesses’ need for a flexible workforce. Taiwan in late 2016 implemented new rules mandating a 60-day public comment period for draft laws and regulations emanating from regulatory agencies, but the new rules have not been consistently applied. The authorities are revising foreign investment regulations with the goal of promoting inward investment through streamlined reporting and approval procedures. Taiwan’s regulatory system imposes no gender-based restrictions and offers tailored financing programs for women entrepreneurs.

Table 1

Measure

Year

Index/Rank

Website Address

TI Corruption Perceptions Index

2017

29 of 175

http://www.transparency.org/
research/cpi/overview

World Bank’s Doing Business Report “Ease of Doing Business”

2017

15 of 190

http://www.doingbusiness.org/rankings

Global Innovation Index

N/A; Taiwan data not provided

U.S. FDI in partner country (M USD , stock positions)

2016

USD 16,187

http://www.bea.gov/
international/factsheet/

World Bank GNI per capita

N/A; Taiwan data not provided

 

Click here to view the complete text: Investment Climate Statements for 2018 (Taiwan)

Taiwan, located between Northeast and Southeast Asia, is an important market in regional and global trade and investment. It is one of the world’s top 25 economies in terms of gross domestic product (GDP) and is the United States’ 10th largest trading partner. An export-dependent economy of 23 million people with a highly skilled workforce, Taiwan is also a key link in global supply chains, a central hub for shipments and transshipments in East Asia, and a major center for advanced research and development (R&D). Official Taiwan statistics estimate 2017 GDP growth may reach two percent, marking a recovery over recent years in step with improving global economic conditions.

Taiwan welcomes and actively courts foreign direct investment (FDI) and partnerships with U.S. and other foreign firms. President Tsai Ing-wen, who was elected in January 2016 and assumed office in May that year, has launched an initiative to promote economic growth by increasing domestic investment and FDI. The effort aims to leverage Taiwan’s strengths in high-technology, manufacturing, and R&D with a focus on targeted sectors, including smart machinery, defense and aerospace, green energy, biotechnology and biopharmaceuticals, and the Internet of Things (IoT). Plans for expanded investment by the central authorities in physical and digital infrastructure across Taiwan complement this investment promotion strategy.

As a relatively open and liberal economy, Taiwan benefits from substantial FDI as well as the management and technical expertise that accompany it. The finance, wholesale and retail, and electronics sectors have been the top targets of inward FDI over the past decade, although Taiwan attracts a wide range of U.S. investors, including in the high-technology, digital, traditional manufacturing, and services sectors. The United States is Taiwan’s second largest single source of FDI after the Netherlands, through which many U.S. companies choose to invest. In 2015, according to U.S. Department of Commerce data, the total stock of U.S. FDI in Taiwan reached USD 15 billion, while U.S. private commercial services exports to Taiwan totaled over USD 12 billion. Taiwan is a major purchaser of U.S. intellectual property (IP), spending nearly USD $5.3 billion on licensing of technology and audiovisual materials in 2015.

Structural impediments in Taiwan’s investment environment include: excessive or inconsistent regulation; market influence exerted by domestic and state-owned enterprises (SOEs) in the utilities, energy, postal, transportation, financial, and real estate sectors; foreign ownership limits in sectors deemed sensitive; and regulatory scrutiny over the participation of People’s Republic of China (PRC)-sourced capital. The Taiwan Central Bank retains a currency convertibility policy in which it reserves the right to require large transactions that could impact the foreign exchange market to be scheduled over several days. Taiwan has among the lowest levels of private equity investment in Asia, and U.S. private equity firms have expressed concern about a long-standing lack of transparency and predictability in the investment approvals process, especially in sectors deemed sensitive but that allow foreign ownership. Sharing economy investors have faced obstacles in the form of protections for domestic industries and the absence of implementing regulations for approved investments. Taiwan in late 2016 implemented new rules mandating a 60-day public comment period for draft laws and regulations emanating from regulatory agencies; while welcomed by the U.S. business community, the new rules have not been consistently applied.

Click here to view the complete text: Investment Climate Statements for 2017 (Taiwan)