In this new series, “Doing Business In,” we asked our members about the current business climate in their countries, investment opportunities, and what others should know about doing business there.
1. What is the current business climate in your jurisdiction, including major political, economic, and/or legal activities on the horizon in your country that could have a big impact on businesses?
Although the outbreak of COVID-19 has had a considerable impact on most people in Taiwan and its local industries, the overall business environment in Taiwan remains transparent and sound.
Taiwan is one of Asia’s major exporters of technology goods. With COVID-19 accelerating shifts in global supply chains, Taiwan and the US have engaged in cooperation under the auspices of the new Economic Prosperity Partnership Dialogue launched in November 2020. Both sides recognize semiconductors as the top mutual priority in supply chain cooperation, in addition to other areas, including healthcare, renewable energy, 5G, and telecommunications.
Taiwan was one of the few economies in the world to register positive growth in 2020. Real GDP expanded by 2.98%, boosted by strong export performance, and the official growth forecast for 2021 is 5.4%. As a result, it is expected that Taiwan’s business environment will continue to score highly in several rankings.
2. From what countries do you see the most inbound investment? What about outbound?
Inbound investment: Japan is one of the top investors in Taiwan, particularly in the manufacturing sector, wholesale and retail trade, financial services, and technical services. The US, Hong Kong, and Denmark are also top investors in Taiwan.
Outbound investment: Investment from Taiwan tends to go into the US, Southeast Asian Nations, Europe, and China.
3. In what industries/sectors are you seeing the most opportunity for foreign investment?
The Taiwan Government has actively promoted innovative industries, including semiconductors, biomedicines, smart machinery, green energy, and circular economy industries.
Apart from traditional sectors, such as manufacturing, we believe that the growth of investment in the semiconductor industry, solar photovoltaic systems, the offshore wind power industry, and IP will continue to create opportunities for foreign investment in Taiwan.
4. What advantages and pitfalls should others know about doing business in your country?
Taiwan’s Ministry of Economic Affairs (“MOEA”) announced on 30 December 2020 a tightening of the regulations for investments from China due to national security concerns, following in the steps of several countries around the world. The MOEA also strengthened its control over the sale or licensing of Taiwanese technology or IP to China, including via third countries, which will now be considered “technical cooperation” and must be approved in advance.
Even so, Taiwan still has many attractive aspects for investors. With the exception of funds or capital sourced from China or investments in a relatively few industries regulated by the Government based on national security concerns, there are no restrictions against foreign investment in other industries in Taiwan, as long as said foreign investors can obtain approval from the relevant authorities.
In addition, the exceptionally high degree of economic freedom in Taiwan is greatly recognized and appreciated internationally. According to the 2021 Index of Economic Freedom published by the Heritage Foundation, Taiwan is ranked 4th among the 184 economies of the world.
5. What is one cultural fact or custom about your country that others should know when doing business there?
Generally, the Taiwanese are friendly and kind to their business partners. Most Taiwanese entrepreneurs place tremendous value on long-term relationships for business and other collaborations.