Premier Sean Chen said today that the government attaches high priority to investment and will step up its efforts to attract investments from overseas Taiwanese and foreign enterprises. He directed all related government agencies to check the resources available for Taiwan to do this and work closely with the Executive Yuan's InvesTaiwan Service Center to provide overseas Taiwanese firms seeking to invest in the island a useful channel for assistance.
Since foreign investment is crucial to capital formation, technology transfer, job creation, improvement of balance of payments and industrial deepening, spurring investment is one of the five major initiatives of the Economic Power-Up Plan unveiled by the Executive Yuan in September. During today's political affairs meeting, the premier instructed that the official personnel stationed abroad be educated in investment promotion and that their achievements in this area be an item on their performance appraisal.
Recently, the United Nations Conference on Trade and Development (UNCTAD) issued its 2012 World Investment Report, which revealed that Taiwan's net foreign direct investment (FDI) inflow in 2011 was negative US$1.96 billion. This total raised the question that foreign businesses do not invest in Taiwan.
"Statistics from the Central Bank's capital account and the UNCTAD's report cannot tell the whole story on Taiwan's FDI," Chen said in response. "The Central Bank's balance of payments, which UNCTAD uses for its calculation, is the net of total capital inflows by foreign investors minus their total outflows. Given Taiwan's stable economic conditions, foreign firms' capital outflows are often profit remittances or transfers. Taiwan's fixed capital formation is not affected by such transactions because these foreign investors continue to do business in Taiwan following such remittances. In terms of economic development, only foreign investment inflows will affect gross fixed capital formation as a percentage of Taiwan's GDP."
The loans foreign firms take out in Taiwan should be included in foreign investment measurements, the premier said. With local financing included, foreign enterprises invested US$7.99 billion in Taiwan in 2010 (US$1.74 billion of their capital and US$6.25 billion of local loans), US$9.53 billion in 2011 (US$1.9 billion of their capital and US$7.63 billion of local loans), and US$9.47 billion from January to September of 2012. This year's total investments will surpass last year's, said the Ministry of Economic Affairs (MOEA), which added that more barriers will be removed to encourage a further increase in foreign investors.
This year the MOEA dispatched three business recruitment teams abroad—to Europe, the United States and Japan, respectively—which attracted 61 foreign enterprises to agree to invest a total of NT$126.6 billion (US$4.3 billion) in Taiwan. Among these investors, 13 major enterprises have inked letters of intent with the MOEA promising to invest NT$8.5 billion (US$290 million) that is expected to create an estimated 4,630 new jobs for Taiwanese workers.
Enticing foreign businesses to establish regional headquarters in Taiwan will help Taiwan achieve its goal of becoming an Asia-Pacific economic hub, a global innovation powerhouse and a headquarters base for overseas Taiwanese enterprises, Chen said. He urged the MOEA to thoroughly implement related measures so as to achieve its target of convincing 300 foreign enterprises to choose Taiwan as their regional headquarters base by 2015.
The premier also took note of the recent increase in investments from Japan, which has recently coped with a devastating earthquake and soaring currency and also signed an investment pact with Taiwan. The intensifying clash between Japan and mainland China is forcing Japanese companies to reposition their overseas investments, and Taiwan must take advantage, he added.
The trade relationship between Taiwan and the U.S. has been close, and the establishment of the Taiwan-USA Industrial Cooperation Promotion Office will help Taiwan take part in the negotiations for a Trade and Investment Framework Agreement between the two countries, Chen said, adding that since the U.S. is a leader in technology innovation, expanding cooperation with it can also raise Taiwanese industry standards and competitiveness. He asked the MOEA to continue promoting cooperation between the two countries to attract more American investment to Taiwan.
Creating an investment-friendly environment is another top priority. The premier said it is as important as inviting investment because when foreign investors are successful in Taiwan, they normally want to expand their business. In accordance with the openness principle which President Ma Ying-jeou declared in this year's National Day address, Chen asked the MOEA and other agencies to pay more attention to regulations of foreign investment and propose appropriate amendments.
According to the MOEA, the government's strategies to attract foreign investors include:
--Enhancing investment attraction mechanisms; encouraging foreign businesses to establish their regional headquarters in Taiwan; and promoting the nation as a knowledge-based Asia-Pacific economic hub
--Forging partnerships with competitive Japanese industries, such as small and medium-sized enterprises specializing in key components and materials; attracting Japanese companies to leverage the Cross-straits Economic Cooperation Framework Agreement to use Taiwan as a pilot market before investing in mainland China or enter the mainland market in cooperation with Taiwanese enterprises
--Following the Taiwanese-Japanese cooperation model, using three strategies (industrial clusters networking, innovative connection and location selection) and four aspects (inspiration, innovation, incubation and investment) of innovative industrialization as principles to proactively promote Taiwan-U.S. cooperation in this area