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Invest in Taiwan

Invest in Taiwan. North America. Europe. West Asia. Asia Pacific. Africa. Central/South America. Taipei Economic & Cultural office in Tel Aviv Jerry Shyy August 24, 2010. 1. Topics. Taiwan’s Economic Development and Competitive Advantages Why Invest in Taiwan

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Invest in Taiwan

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  1. Invest in Taiwan North America Europe West Asia Asia Pacific Africa Central/South America Taipei Economic & Cultural office in Tel Aviv Jerry Shyy August 24, 2010 1

  2. Topics • Taiwan’s Economic Development and Competitive Advantages • Why Invest in Taiwan • Inbound and Outbound Investment • Foreign Direct Investment (FDI) in Taiwan • Investment Incentives and Benefits • Government’s Strategies of Economic Reform, and Investment Opportunities • 2010 Taiwan Business Alliance Conference • Investment Service Contact 2

  3. Taiwan’s Economic Development and Competitive Advantages 3

  4. 1. Taiwan’s Major Economic Indices 4

  5. IMD World Competitiveness Yearbook Investment Environment Risk Assessment Report (BERI) 8th in the World 2010 4th in the World 2010 Global Competitiveness Index World Economic Forum (WEF) Innovation Ranking(EIU) 12th in the World 4TH in Asia 2009 7th in the World 2nd in Asia 2009 Taiwan’s Investment Environment and Competitive Advantages 2. Assessment of Taiwan’s Investment Environment by International Institutions 5

  6. Why Invest in Taiwan 6

  7. First in the Competitiveness of Industry Cluster Development Capacity of Industries to Innovate High-Quality R&D and International Marketing Specialists Highly Efficient and Integrated Global Logistics System Free Capital Market Why Invest in Taiwan 7

  8. 5.7 5.5 5.5 5.5 5.5 5.4 5.4 5.4 1. First in Competitiveness of Industry Cluster Development 2001~2009 Taiwan’s Global Ranking in State of Industry Cluster Index 1 1 1 2 2 2 2 3 8 Source: WEF, Global Competitiveness Report & Global Information Technology Report

  9. 1. First in Competitiveness of Industry Cluster Development Strong Industry Clusters Nangang Software Park IC Design, Digital Content, Biotech Hsinchu Science Park (HSP) (Hsinchu, Jhunan, Hsinchu Biomedical Park in Jhubei) IC Manufacturing, Optoelectronics, Biotech Central Taiwan Science Park (CTSP), Taichung Precision Machinery Park Tainan Science Park, Liou-Ying Technology & Environment Industrial Park, Yongkang Digital Creative Design Park Semiconductors, Optoelectronics, Biotech, Precision Machinery Optoelectronics, Environmental Protection Technology, Auto Parts, Precision Machinery Changhua Coastal Industrial Park Kaohsiung Software Science Park, Kaohsiung Linhai Industrial Park, Tafa Industrial Park Metal, Recycling, Green Energy, Glass Petrochemical, Iron/Steel, Yachts, Metal Processing, Precision Machinery, IC, Optoelectronics, Telecoms, Environmental Protection Technology 9

  10. 2. Capacity of Industries to Innovate (2) R&D Spending (1) U.S. Patents Granted Million USD % U.S. Patents Granted R&D Expenditures Source: U.S. Patent and Trademark Office R&D Expenditures as Percentage of GDP 10

  11. 3. High Quality R&D and International Marketing Specialists Comparison of the number of R&D personnel per 1,000 employees: 9.4 per 1,000 employees in Taiwan are engaged in R&D; 11.1 in Japan, 8.7 in Korea, 7.2 in Germany, 5.8 in the UK, and 1.6 in China Taiwan’s vast experience in world trade has created an environment with an international image, and a people with a global mindset A wealth of managerial professionals knowledgeable in finance and international trade Well-educated people possessing multilingual skills especially in English, Japanese, and Chinese 11 Source: Info Times, 2008

  12. 4. Highly Efficient and Integrated Global Logistics System Taiwan -- Situated in a strategic geographical location New York London 16 Hours 8 Hours 4 Hours 2 Hours TAIPEI Chicago Amsterdam Vancouver Luxembourg Seattle San Francisco Rome Los Angeles Beijing Seoul Nanjing Shanghai Tokyo Xiamen Hong Kong Honolulu Guangzhou Ho-Chi-Min Frankfurt Bangkok Delhi Singapore Sydney Abu Dhabi Auckland International (Direct/Indirect Flights from Taipei) Direct Flight Indirect Flight Int’l Airport 12 Direct Flights between Taiwan & China (from July 2008)

  13. Xiamen 4. Highly Efficient and Integrated Global Logistics System Weekly direct flights to 33 major cities in China Beijing, Shanghai, Guangzhou, Xiamen, Nanjing, Chengdu, Chongqing, Hangzhou, Dalian, Guilin, Shenzhen, Wuhan, Fuzhou, Qingdao, Changsha, Haikou, Kunming, Xi’an, Tianjin, Zhengzhou, Haerbin, Guiyang, Nanchang, Hefei, Ningbo, Jinan, Shenyang…etc. • Cross-strait direct two-way travel improves shipment delivery time and lowers freight and transportation costs • Average flying time from Taoyuan International Airport to Shanghai is only 1.3 hours • Taiwan’s maritime navigation to China can save 16~27 hours and cut costs by 15%~30% in cost • Taiwan’s close proximity to China can boost industry competitiveness and increase exports • Taiwan can also serve as an ideal regional hub for global logistics • Division of labor across the Taiwan straits is now even more convenient and accessible 13

  14. 5. Free Capital Market 1. Stock Market 14 Sources: Taiwan Stock Exchange Corp.; FSC, Executive Yuan; Taiwan Venture Capital Association; GreTai Securities Market

  15. 5. Free Capital Market 2. Banks 15 Source: FSC, Executive Yuan

  16. Inbound and Outbound Investment 16

  17. Foreign investment in Taiwan increased rapidly in 2006, 2007, but dropped to US$4.8 billion in 2009 due to the global economic recession. Inbound Investment 1. Trends in Inbound Investment Investment Amount in Billion USD Investment Cases Invest. Amt. Invest. Cases 17 Source: Investment Commission, MOEA

  18. Inbound Investment From Jan 1952 to Dec 2009, the total number of inbound investments reached 25,866 cases, with a value of US$107.11 billion. Jan ~ Dec 2009 2. Major Overseas Investors by Country Jan 1952 ~ Dec 2009 18 Source: Investment Commission, MOEA

  19. Inbound Investment 3. Major Invested Industries Jan 1952 ~ Dec 2009 Jan ~ Dec 2009 19 Source: Investment Commission, MOEA

  20. From 2001 to 2005, outbound investment declined; however, it increased gradually from 2006 onwards. The total amount of outbound investment in 2007 reached US$6.47 billion; however, it fell back in 2009 with an amount of US$3 billion due to the global economic recession. Outbound Investment 1. Trends in Outbound Investment Investment Amount in Billion USD Investment Cases Invest. Amt. Invest. Cases 20 Source: Investment Commission, MOEA

  21. Outbound Investment 2. Major Invested Markets by Country Based on statistics by DOIS, MOEA, from 1952 to December 2009 a total of 12,602 outbound investment cases were generated, amounting to almost US$62.774 billion in value. Jan ~ Dec 2009 Jan 1952 ~ Dec 2009 21 Source: Investment Commission, MOEA

  22. Outbound Investment 3. Major Invested Industries Jan ~ Dec 2009 Jan 1952 ~ Dec 2009 22 Source: Investment Commission, MOEA

  23. Outbound Investment in China From 2000 to 2004, Taiwanese investment in China showed a rapid increase, before declining in 2005. However, in 2007, Taiwanese investments peaked at US$9.97 billion, and then slightly dropped in 2008 to US$9.84 billion, a decline of 1%. It dropped to US$6.06 billion in 2009 due to the global economic recession. 1. Investment Trend Investment Amount in Billion USD Invest. Cases Investment Cases Invest. Amt. 23 Source: Investment Commission, MOEA

  24. A total of 37,771 cases of Taiwanese investment in China were recorded from January of 1952 until December of 2009, reaching an amount of US$82.7 billion. Outbound Investment in China 2. Outbound Investment in China by Region Jan ~ Dec 2009 Jan 1952 ~ Dec 2009 24 Source: Investment Commission, MOEA

  25. Outbound Investment in China 3. Major Invested Industries Jan 1952 ~ Dec 2009 Jan ~ Dec 2009 25 Source: Investment Commission, MOEA

  26. Foreign Direct Investment (FDI) in Taiwan 26

  27. R&D Centers: About 30 multinational corporations have established 43 R&D centers on the island Global Logistics Centers: About 13 multinational corporations have established global logistics centers in Taiwan Foreign Direct Investment (FDI) in Taiwan 27

  28. Investment Incentives and Benefits 28

  29. Protection of Foreign Investors’ Rights Ownership Rights May have 100% ownership (excluding some types of businesses requiring special permission) Freedom from Expropriation Investments by foreigners or overseas Chinese may not be expropriated within 20 years so long as the foreigners hold 45% or more of the equity in the invested enterprises Remittance of Funds (the following funds may be freely remitted out of Taiwan) Interest or profit on investment Permitted sale, withdrawal, or reduction of investment Capital gains 29

  30. Tax Incentives Incentives for R&D A company incorporated according to the Taiwan Companies Act may be entitled to a tax credit of up to 15% of the R&D investment against its income tax liability. The credit is limited to 30% of the income tax payable. The competent authority and the Ministry of Finance will announce the qualified scope, application term, application procedure, governing authority, credit rate and other related details. This incentive will be effective from January 1, 2010 to December 31, 2019. Other tax incentives □ Biotechnology and New Pharmaceutical Industry □ Private Investment in Infrastructure Projects □ Free Trade Zones / Airport Park □ Acquisition of Technology for Operation and Production □ Tax Incentives for Company Reorganization □ Indirect Tax Incentives for Science Parks, Export Processing Zones, BondedFactories, and Bonded Warehouses 30 Source: Industrial Development Bureau, MOEA

  31. Land Procurement • Extending and expanding the 006688 preferential land rental • incentive 006688 Measure 789 Program • A 10%~30% discount on the sale of land in industrial zones • under development, effective from October 1998 to December • 31, 2010 Release of Land by Taisugar • Taisugar releases lands for use by industries through rental/ • leasing or surface rights agreements, with a maximum • guaranteed lease term of 50 years 31 Source: Industrial Development Bureau, MOEA

  32. Government’s Strategies of Economic Reform, and Investment Opportunities 32

  33. i-Taiwan 12 Projects Six Emerging Industries Biotechnology Tourism Green Energy Healthcare High-end Agriculture Cultural and Creative Industries Government’s Strategies of Economic Reform, and Investment Opportunities 33

  34. i-Taiwan 12 Projects 1. Goals • Transportation Network • A fast and convenient islandwide transportation network • Kaohsiung Port-City Regeneration • Taoyuan International Air City • Industrial Development • Central Region New High -Tech Industrial Clusters Program • Intelligent Taiwan • Industrial Innovation Corridors • Urban and Rural Development • Urban and Industrial Park Regeneration • Rural Regeneration • Environmental Protection • Coastal Regeneration • Green Forestation • Flood Prevention and Water Management • Sewer Construction • 12 major public construction projects to regenerate Taiwan’s economic miracle • Estimated investment amount of NT$4 trillion (about US$12.5 billion) from 2008~2016 i-Taiwan 12 Projects 34 Source: http://ppp.pcc.gov.tw/pcc_site/files/5_1.pdf

  35. i-Taiwan 12 Projects Unit: NT$ 2. Vision and Targets Goals • Expand domestic demand • Improve investment environment • Boost economic strength • Upgrade quality of life Govt. investment: About US$8.3 billion Private investment: About US$4.2 billion 35

  36. On July 15, 2009, Taiwan officially becomes the 41st WTO GPA (Government Procurement Agreement) member Tremendous opportunities are available for foreign investors, including government procurement projects as well as public private participation in construction works Useful links relating to Taiwan’s investment opportunities: Public Construction Commission, Executive Yuan http://www.pcc.gov.tw/pccap2/TMPLfronted/ChtIndex.do?site=002 Promotion of Private Participation http://ppp.pcc.gov.tw/pcc_site/ Government Procurement Agreement (GPA) http://www.pcc.gov.tw/pccap2/TMPLfronted/ChtIndex.do?site=002 i-Taiwan 12 Projects 3. Investment Opportunities 36

  37. High-end Agriculture Biotech • Six Emerging • Industries Healthcare Tourism Green Energy Culture & Creation Six Emerging Industries 37 2014/9/13

  38. A. Biotechnology Six Emerging Industries 38

  39. Taiwan’s Biotechnology Industry Biotech Food biotech/ Chinese herbal medicine Regenerative Med Agri-biotech Medical Testing Chemical/ Biotech Biotech Industry Medical Devices In 2008, production value was NT$22.6 billion; food biotech, Chinese herbal medicine, and agricultural biotech comprised most firms. 食品生技/中草藥 In 2008, production value was NT$51.5 billion, with medical products for household use ranking first. Large medical equipment used by hospitals occupied a fairly low ratio of only 0.73%. Taiwan holds only 1% of the global market share for medical devices. 農業生技 Source: ITIS Source: IEK 39 Source: Executive Yuan

  40. Biotech Investment • Since a record breaking NT$20 billion in investments • was made in 2001, investments generated annually • were over NT$20 billion. • Major areas of investment were pharmaceutical, • medicines and the development of new drugs, • medical devices, health food products. Taiwan’s Biotechnology Industry In Hundred Million NT$ In Hundred Million NT$ 40 Source: Biotechnology and Pharmaceutical Industries Program Office, MOEA

  41. Status of Taiwan’s Biotech Industry Taiwan’s Biotechnology Industry Encouraging the Creation of New Value-Added Drugs and Development of High-End Medical Devices • In June 2001, listing rules were relaxed for biotech companies,and by the end of 2008, 38 companies from the biotech/medical device industries had been listed on Taiwan’s stock and OTC market. • The Biotechnology Takeoff Package was announced in 2008. This package consists of 4 major areas: • Strengthening of the Industrial Value Chain & Pre-Clinical Development in the Commercialization Process • Establishment of a Biotechnology Venture Capital Fund • Creation of Biotech Incubation Centers • Formation of a Taiwan Food & Drug Administration • Companies such as AbGenomics, Panion & BF Biotech, and Medigen Biotech have gradually developed • partnerships with multinational pharmaceutical corporations through close collaboration and alliances • with them. • ApexBio, Bioptik Technology, Health & Life Co., and other Taiwanese firms hold an important position in the • global marketfor blood glucose meters. 41 Source: Executive Yuan

  42. B. Tourism 42

  43. Goals Tourism Industry • 2010: To attract 4.5 million tourists to Taiwan • 2012: To attract 5.5 million tourists to Taiwan and generate NT$550 billion in revenue, create 400,000 jobs, attract NT$200 billion in private investments, and bring at least 10 major international hotel chains into Taiwan Create Business Opportunities Create NT$550 billion worth of business opportunities NT$300 billion in increased spending by foreign tourists (increase from 45% to 55% of total tourist revenue) NT$250 billion in increased spending by domestic travelers Generate Job Opportunities Create 400,000 jobs Direct employment: 130,000 jobs Indirect employment: 270,000 jobs Attract NT$200 billion in private investment Attract Private Investment Attract at least 10 major international hotel chains to Taiwan Attract International Hotel Operators 43 Source: Executive Yuan

  44. Tourism Industry Action Programs Regional Development Best of Taiwan • International Scenic Spots • Flagship • “Best of Taiwan Action Program” • “Foundation Building Action Program” • “Value Enhancement Plan” North: “Living Taiwan” Offshore Islands: “Uniquely Island Taiwan” Foundation Building Center: “Industrial Taiwan” • Industry Restructuring • Cultivating Elites East: “Relaxing Taiwan” Value Enhancement South: “Historical Taiwan” • Market Development • Quality Enhancement • Hotel Evaluation • Non-government Certification Program Whole Island: “Multifaceted Taiwan” 44 Source: Executive Yuan

  45. Actual and Forecast Foreign Arrivals in Taiwan, 2008-2012 Tourism Industry Unit: 1,000 45 Source; Executive Yuan

  46. Funding Plan Tourism Industry Source: Tourism Development Fund (60% from airport service fees, plus allocation from the National Treasury) Unit: 100 Million NT$ Action Programs 2009 2010 2011 2012 Total A. Best of Taiwan Action Program 1. Flagship Attractions 2. International Scenic Spots B. Foundation Building Action Program 1. Industry Restructure 2. Develop Elites C. Value Enhancement (Tourism Value Added) 1. Market Development 2. Quality Enhancement Total 46 Source: Executive Yuan

  47. C. Green Energy 47

  48. Re-exporting Technology Breakthrough Key Investments 5 Major Driving Forces Expanding Domestic Demand Shaping the Environment Green Energy Industry Take-Off Program for the Green Energy Industry Key Industries Photovoltaic LED Illumination Green Energy Industry Potential Industries Wind power generation, biofuels, hydrogen energy and fuel cells, energy information and communication, electric vehicles Govt. investing NT$25 billion over a 5-year period to promote the industry and provide subsidies; also allocating NT$20 billion for R&D; by 2012, production is projected to reach NT$475.2 billion 48 Source: http://www.ey.gov.tw/policy/3/index.html

  49. Photovoltaic Industry: Vision and Development Production: NT$450 billion Workforce: 45,000 Establish a cluster and/or global hub for PVs Develop Taiwan into one of the world’s top 3 producers of solar energy batteries Occupation of a strategic or key position in global PV technology Green Energy Industry The world’s 10 largest solar cell makers (by revenue): Total Production (Billion NT$) • Market Position • Up-stream: 7 silicone wafer makers • Mid-stream: 45 battery module makers • Down-stream: 29 application system makers • Production value in 2008 was NT$101.1 billion • Solar cell production is 4th biggest in the world; Taiwan’s Motech is the 8th largest producer in the world • Solar cell comprise 98% of exports, with Europe as the major market 4500 Effective Strategies 2300 Source: PV News, Photon International, IEK (2009/04) 1011 NOW 49 2012 2007 2008 2015 Year Source: MOEA

  50. LED Lighting and Optoelectronics: Vision and Development Production: NT$540 billion Workforce: 54,000 Development into the world’s largest producer of LED lighting materials & modules Production base for high-value LED lighting Green Energy Industry • Market Position • Upstream: 50 lighting makers • Midstream: 50 module makers • Downstream: Over 100 firms in lighting applications • Production of LEDs 1st in the world, 2nd in output value (16%); Taiwan’s “Epistar” is the world’s biggest producer of LED lighting • Output value of back modules is 1st in the world • Taiwan accounts for 72% of global LED lighting exports with China as the major market Total Production (Billion NT$) 5400 Effective Strategies 1600 460 50 NOW 2008 2012 2007 2015 Year Source: MOEA

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