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Taiwan's economy gets boost from outsized fund repatriation

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At a Cabinet meeting Thursday, Premier Su Tseng-chang received a Ministry of Finance (MOF) briefing on programs to encourage the repatriation of offshore funds by overseas Taiwanese companies. In the year-plus since the enactment of the Management, Utilization, and Taxation of Repatriated Offshore Funds Act on August 15, 2019, more than NT$210 billion (US$7.3 billion) has been sent back to Taiwan, exceeding the NT$130 billion target by more than NT$80 billion. These inflows not only increased the nation's taxation revenues by NT$17.5 billion but also funded NT$65 billion in new investment. The central bank expects cumulative repatriated funds to top NT$400 billion by the law's second anniversary next August.

Premier Su said the government originally designed the act to help overseas Taiwanese companies reallocate their investments in response to the U.S.-China trade war and other global economic changes. Tax incentives were employed to reward the companies that returned to Taiwan. Later, major events including the backlash to Hong Kong's extradition bill and the COVID-19 worldwide pandemic only motivated investors to repatriate funds on a larger scale than anticipated.

With over NT$1.1 trillion (US$38 billion) in offshore and local funds already committed under three major investment incentive programs aimed at overseas and domestically based Taiwanese, 2020 is turning out to be a banner year for Taiwan with more than NT$620 billion expected to be committed to actual investment projects by the end of December. From January through July the government also approved over NT$132 billion in investment by foreign entities, an 11 percent increase from the same period in 2019. Such figures offer clear evidence that not only are locals eager to put money in Taiwan, but that confidence in the nation's investment environment is high among international businesses, as well, the premier said.

Citing MOF import and export data released on Wednesday, the premier pointed to 2020 third-quarter exports totaling US$90 billion as a new all-time single-quarter record, up 6 percent from the same quarter last year. Additionally, the National Development Council's overall business indicator for August flashed "green" from last month's "yellow-blue" signal. The positive change reflects the domestic economy's gradual return to stability, demonstrating Taiwan's ability to hold strong against the pandemic and perform well across a broad range of economic indices.

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