Investment Opportunities in Taiwan: Semiconductor, Chemical and Consumer Goods will Lead the Pack

Investment Opportunities in Taiwan: Semiconductor, Chemical and Consumer Goods will Lead the Pack
Taiwan has established strong position in the world economy from many decades. The country has witnessed developmental reforms to make education mandatory, infrastructure developments, human workforce development and social stability. Taiwan has outstandingly sustained crisis that affected Asian markets in 90s. Chinese government policies also had a major impact on the growth of this economy. Taiwan has ranked 15 by World Economic Forum for Global competitiveness. With a huge GDP of over USD 1 trillion, this country is an indicator for industry development. Purchasing Power Parity of this region is attracting large scale investors throughout the globe. This country took shift in various stages throughout decades. During 1940s and 50s, it has followed land reforms, industrial production and imports. Later on, adapting economy with heavy industries, export based revenues industrial restructuring were focused through high investments both from public and private sectors.
 
Taiwan joined World Trade Organization, country’s economy has become global and business opportunities started increasing. Major players from many industries considered this region as potential center to establish R&D centers. Bi-lateral and global trade relations with other countries made Taiwan as 5th largest economy in Asian market. Export based economy is one of the largest influencer in the country. Electronic and Semi-conductor industry’s contribution is the leading segment in its income. 
 

FDI scenario in Taiwan

Taiwan is highly productive market for foreign investments. Purchasing power of population is increasing year on year. Export and free trade are prorated to form special zones to promote foreign investments. Many favorable government policies for tax benefits, interest rates are eased by government to adopt pathway to create more interests towards investing in Taiwan. A major benefit which needs to be considered is availability of huge economic labor force. Other parameters which add to these are choice of research centers, highly efficient logistics base. Taiwan has planned to make country as hub for startups in Asian market. It has enhanced Visa process that which enable investors or entrepreneurs to ultrapermanent nation membership if their investment raising crosses USD 66000.
 
Small and Medium Enterprises have grown with high numbers, which provides investors flexibility to manage funds for trading. More than 800 registered companies are trading in country’s stock exchange. Foreign reserves in these public companies can be tracked and data provided will enable real time investing statistics.
 
Taiwan Sector wise FDI inflow
 
Electronics segment constituted highest market share in terms of foreign investments. As per Doing business statistics, Taiwan stood at top in protection of investors list compared to top countries globally. Taiwan government is providing wide range of advantages for investors in areas of Tax incentives for commodities, land incentives in industrial parks discount ranging from 20 to 35% depending on the industrial facilities and lease agreements, low interest loans which are provided to range of more than 75% of the expense that requires to operate the company. Loans based on the industry and operations ranged up to NTD 80 million.      

Major Industries and Companies

Taiwan is base for many industries. Manufacturing components for various industries and managing global wide exports is crucial element in Taiwan economy. Electronic and Integrated circuits along with mother board production is dominant segment in Taiwan’s business. This country has topped the list of IC production in the world. Relied on this growth for semiconductor industry which is performance more than double growth rate compared to global growth rate of 3.4% estimated by WSTS. Foundries contributed a major portion in these figures with CAGR of 8.8% from 2012-16. TSMC and UMC are major players in this segment. After foundry, DRAM and OSAT are leading this segment. Science parks with advanced technology are sources for production of these equipment which also has manufacturing of computers. Major producers like World’s leading companies like Apple and Samsung manufacture components in Taiwan.  Acer, HTC are operating through this region to manage entire global distribution. Fabrication of semiconductors is estimated to outreach USD 10 Bn by 2018. 
 
Taiwan Fab Spending by Product Type
Samsung and Intel are major spending companies on fab equipment. Taiwan’s trade is majorly dependent on transportation through sea. More than 2 Mn TEU capability to handle this transportation. Shipbuilding industry is other significantly focused area. Began in 1948 with government’s TSBC, gradual increase in technology and affordability supported to expand this industry. Expansion to large containers and luxury yachts took place. Near to 130 players contributing to this production. Petrochemical industry has transformed from major importer to exporter since 90s. CPC and Formosa are major players for this region in this industry. Demand from various Asian and other nations for petrochemicals and low operating charges in Taiwan has designed pathway for investors to look into this location. Iron and steel in another major contributor for its GDP. Taiwan has ranked 12th in steel exports as per International trade administration, with more than 11 Mn MT. Exports to around 160 countries steel industry has allocated significant position. China steel corporation and Dragon steel corporation are leaders in steel production in this region. Machinery and tooling industry is another crucial segment in industrial base of Taiwan. Plastic imports value in 2016 first quarter itself has recorded more than 37% rise on previous year same period. In 2016, production value of more than USD 46 Bn took place. Though the machinery segment faced challenges due to global economic crisis, segments under smart machinery utilized for automation and precision has increased overall value of this industry for Taiwan. Biosciences, Consumer products, Food industries are also few others which contribute significantly in country’s industrial revenue.

Where to invest in Taiwan

Various economic factors and industry conditions are acting as favorable parameters for investors in Taiwan. SMBs are growing with significant rise in revenues and volume. Country is recording less number for unemployment and trade surplus is well maintained. Experts consider that the most effective way to invest in Taiwan’s business is through stock exchange. Integrated circuits, semiconductors, steel and computer industries are highly attractive to invest in the country. Surrounded by merging Asian markets is a favorable factor complementing growth. But there are other considerations which impact business of Taiwan, like country is highly dependent on China’s economic performance. Nearly 30% of Taiwan’s exports are contributed by China. Political considerations are also present.
 
Through a government initiative ‘Invest Taiwan’, country is providing huge opportunities for investors to invest in Big Data, R&D and Manufacturing, Biosciences, Defense and New age agriculture. Through technological advancements in IT industry and smart Taiwan plans investors are encouraged with tax benefits and land incentives. 
 
Performing Sectors in Taiwan
Technology sector which performed with smart Taiwan goal and semiconductors segment performance has shown significant opportunities.

Companies that got investments in recent times

Taiwan has become worldwide hub for innovation centers. Technology sector is witnessing huge rise in investments from diverse geographical locations, which was leading by US investments. Companies like IBM, Microsoft, HP, Dell, Intel and many more majors have established R&D centers. Companies from semiconductor industry, Chemicals, Consumer goods received major investments. Flex group for textiles and materials, Twi pharmaceuticals in pharma sector, Apple’s major supplier TPK received significant investments. Agilent technologies, ARM holdings and AZ Electronic materials and Cardiff Assurance France are few of many companies which have raised foreign investments in diverse sectors. Automotive sector is also a one of the top performers in raising investments from companies like Ford and Gen trading etc. Major automobile manufacturers global wide looking Taiwan as a hub for OEM manufacturing and supply base.

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