Asia Silicon Valley Development Plan for industrial transformation

  • Date: 2017-09-27

I. Background
The Asia Silicon Valley Development Plan was approved by the government on September 8, 2016 to help transform Taiwan’s industries and build new engines for economic growth. In the year since, government agencies have come up with breakthrough and innovative measures for implementing the plan, including by easing regulations, creating financing mechanisms, recruiting and developing talent, creating global networks, promoting an internet-of-things (IoT) value chain, and providing demonstration sites.
Looking ahead, the government will continue promoting the dual themes of IoT technology and innovative entrepreneurship, placing focus on new types of application services including mobile lifestyles, artificial intelligence, automated driving and piloting, augmented and virtual reality (AR/VR), and IoT information security. These strategies are intended to shift Taiwan away from contract manufacturing and toward innovation and smart technology.


II. Asia Silicon Valley plan: Past year’s progress
A. Building an innovation and entrepreneurship ecosystem
1. Providing financing assistance: The National Development Fund (NDF) earmarked NT$100 billion (US$3.3 billion) for an industrial innovation and transformation fund, and injected NT$1 billion (US$33 million) in operating capital into social enterprises. The NDF also approved NT$1 billion for a business angel investor program, to be used in conjunction with private-sector angel investors for investments in innovative businesses. The national investment firm Taiwania Capital Management Corp. has been established to provide additional funding.

Finance-related organizations also raised NT$270 million (US$8.9 million) for an innovation and entrepreneurship fund that primarily supports innovative companies. The Financial Supervisory Commission (FSC) is encouraging banks to lend generously to businesses, and those relating to the Asia Silicon Valley have so far received the most financing among the “five plus two” industries. The Taiwan Innovation and Entrepreneurship Center provides subsidies for local startups to move into business accelerators overseas, where 34 of the startups that received such subsidies have attracted investments totaling more than US$25 million. The Ministry of Economic Affairs also sponsored a “startup concepts competition” offering business hopefuls early-stage funding through a simple application process.
2. Attracting and developing top talent: As part of its effort to increase incentives for foreign professionals to work in Taiwan, the Executive Yuan approved a program to create a friendlier living and working environment for foreigners, and passed a draft act for the recruitment and employment of foreign professionals, which cleared the Legislature on October 31, 2017. The administration is also actively advocating an entrepreneurial visa program, granting the visa to 67 foreigners so far. The Ministry of Science and Technology has sent 35 doctoral degree holders to Silicon Valley for internships at reputable corporations and startups.
3. Formulating laws and regulations to encourage innovation: Amendments to the Fundamental Science and Technology Act were approved by the Legislature to ease restrictions that prohibit professors and students from starting up new companies. The Statute for Industrial Innovation is being amended to provide tax relief for venture capital firms and angel investors, thereby promoting the development of high-risk innovative firms by helping startups raise the funds they need. The FSC has also completed a draft law that provides a regulatory sandbox for financial tech companies to develop innovative financial products and services.
4. Providing venues to foster innovation: The Executive Yuan established two youth startup bases in central and southern Taiwan, respectively, and has helped local governments set up entrepreneurial clusters. The social enterprise hub and the northern Taiwan youth startup base have been combined and upgraded into the newly formed Social Innovation Lab.


B. Connecting with international R&D resources
1. Opening headquarters in Taoyuan, branch office in U.S.: The government established the Asia Silicon Valley Development Agency in Taoyuan and a branch office in California’s Silicon Valley to accelerate the plan’s progress.
2. Establishing links with international enterprises: Microsoft, Qualcomm and other multinationals have set up innovation centers and high-tech labs in Taiwan. Cisco is expected to sign a cooperative agreement with the government to expand investments in Taiwan. Facebook’s FbStart program to help mobile app startups has arrived in Taiwan, kicking off collaborations with the Taiwan Startup Stadium (TSS) and AppWorks Ventures.
3. Linking innovative enterprises: The government in conjunction with the Epoch Foundation invited over 40 international tech startups to Taiwan for exchanges with local firms, investors and startup groups. The government also helped organize the 2016 Meet Taipei forum and exhibition for innovation and entrepreneurship. Taipei Computex 2017 featured a Taiwan AR/VR apps exhibition area that showcased products by outstanding startups and matched them to investors for early-stage funding. The TSS, which also helps local startups penetrate international markets, led several teams to San Francisco, New York and Hong Kong for major innovation exhibitions such as Disrupt and Rise.


C. Creating an IoT value chain
Under the Asia Silicon Valley plan, a Major League IoT alliance was launched in December 2016 to form an IoT value chain promoting interdisciplinary cooperation among businesses of all sizes. As of August 2017, the league had grown to over 230 members, including domestic and international manufacturers, small and medium-sized enterprises, startup communities and industry associations. In recent years, the number of new IoT companies with promising app services has risen sharply in Taiwan, and these newcomers are seeking to capture IoT business opportunities in collaboration with more established hardware producers of sensor components and Internet equipment.


D. Setting up smart demo sites
The government is currently promoting smart city demo sites focusing on the areas of smart transportation, smart health care and IoT application platforms. The first call for proposals has been completed with subsidies awarded to 10 out of 45 applicants. Promoting cooperation among business large and small will help Taiwan create system integration solutions for export to other countries.

 

III. Conclusion
The Asia Silicon Valley Development Plan promises to open new doors for emerging industries, drive the economy to new heights, and create new jobs for Taiwan. It will also be linked with the Digital Nation and Innovative Economic Development Plan (DIGI+) and other industrial innovation policies toward the goal of upgrading domestic industries and transforming Taiwan into a digital nation and “smart island.”