The Republic of China will continue to modernize its economy in the years just ahead to achieve a higher standard of living for its people.
This was the policy statement of government officials as they reviewed the economic activities of 1965, the first year of the nation's fourth four-year economic development plan.
The officials said that in agriculture the country will make better use of land and water resources, increase the supply of fertilizers and other farm chemicals, improve seed quality and irrigation, and undertake research to increase productivity.
In industry, they said, immediate emphasis will be placed on the development of the petro-chemical, steel, and electronics industries. Private enterprise will be further expanded and competition encouraged.
Trade promotion will be given priority. Exports will be stepped up through supply of more varied products, diversification of trading areas, and improvement of sales techniques.
Despite the cut-off of U.S. aid, economic growth reached 9 per cent in 1965, surpassing the target of 7 per cent. Agricultural and industrial production and trade volume registered large increases.
Rice, the staple food of Taiwan, broke all records at 2,348,041 tons. Bananas, mushrooms, and asparagus, all large foreign exchange earners, also showed sizable gains.
Such technical advances as more intensive utilization of land, labor, and capital contributed to the increases. In 1966, Taiwan completed a new multipurpose dam and reservoir and started construction of another.
Government has helped drill a number of deep wells to reinforce the irrigation system. Projects have been undertaken to recover tidelands and make mountainous slopes arable.
Last year Taiwan completed a new fishery fleet of three 1,000-ton and thirteen 300-ton ocean-going boats. They are now operating in the Atlantic and Indian Oceans.
In industry, the government has plans to build a large steel mill that will cost US$180 million. Annual capacity is set at 800,000 tons of steel sheets and ingots.
For the development of a petrochemical industry, the Chinese Petroleum Corporation plans immediate construction of two plants, a naphtha cracking installation and an aromatic extraction plant.
In 1965, a large lubricating oil factory with capitalization of US$11 million began production. It is jointly financed by the Chinese Petroleum Corporation and the American Gulf Oil Corporation. About 70 per cent of its daily output of 1,500 barrels of lubricants is exported.
Other new plants set up in 1965 include two polyester fiber plants, two wool top plants, a galvanized iron sheet factory, a tin plate plant, and a natural gas processing plant.
To encourage industrial development, the government revised its import tariff schedule last September. It also published last April a set of regulations allowing exemption or installment payment of import duties and fees on machinery and equipment imported by productive enterprises for their own use. On October 1, 1965, the Executive Yuan (Cabinet) announced the Rules for the Establishment of Bonded Warehouses and Factories to facilitate the import of raw materials by export processors.
The government revised regulations governing the registration of foreign sales last March, allowing more flexibility for foreign manufacturers and suppliers.
To promote trade relations with other countries, the Republic of China held trade conferences with the Ryukyus, Korea, and Vietnam, and sent trade missions to Australia and Latin American countries. International trade fairs were entered at New York, Tokyo, Berlin, Lisbon, Barcelona, and San Salvador.
Taiwan attracted about US$50 million of overseas investment last year, most of it in banking, electronics manufacturing, and chemical production. Three foreign banks opened branches in Taiwan and one expanded an existing branch.
The Chinese government has announced that for the fourth four-year economic development plan (1965-68), the total capital requirement is around US$2,700 million. Approximately US$410 million, or more than US$100 million a year, must be attracted from abroad in both investments and loans.
The Republic of China stepped up its own technical assistance to a number of countries in Asia, Africa, and Latin America. Technical cooperation agreements were signed with Vietnam, the Philippines, Gabon, Chad, Upper Volta, Sierra Leone, and the Dominican Republic. Exports went to the Ryukyus, Libya, Singapore, Brazil, and Nigeria. Chinese industrialists have entered into cooperation with investors in Singapore and Thailand.
To achieve a balanced growth not only of agriculture and industry but also of social well-being, the government is pushing advances in education, public health, and social welfare programs. Last year, Taiwan was announced as the first area in Asia to have eradicated malaria, a disease which has killed millions of Chinese in recorded history.
Asparagus Export
Strict quality control has been announced by the Chinese government for the production and processing of asparagus for export. The Foreign Exchange and Trade Commission has asked local suppliers not to export more than 1,000,000 cases this year.
On February 1, FETC served notice to all exporters that they may not accept orders from foreign buyers until the government announces a production and export plan. On February 15, it set the asparagus export quota at 1,000,000 cases and ordered growers to report to farmers' associations and canneries to report to the Taiwan Provincial Association of Food Canning Industries.
The FETC order said that the government will help farmers' associations check the quality of asparagus.
Asparagus is classified in three categories: special large size, large size, and medium size. Buying prices will be decided by farmers' association and the Taiwan Provincial Association of Food Canning Industries with approval of the government.
Facilities of canneries are subject to government inspection, the order said, adding that asparagus must be kept in cold storage if not processed immediately. Water used in processing must be sterilized and samples of the product must be sent to government laboratories for examination.
Canned asparagus is a new Taiwan export. In 1963 sales were less than US$3,000. The 1,000,000 cases for this year, figured at an average export price of US$16 per case, will earn some US$15 million in foreign exchange.
Asparagus is following in the footsteps of canned mushrooms, which in five years has attained an annual foreign exchange earning ability of about US$20 million.
K. H. King, vice chairman of the Foreign Exchange and trade Commission, said the quality control enforced on asparagus production and processing is to assure the good reputation of Taiwan products in the international market.
He said because of decreased production in the United States and Japan, many foreign buyers have turned to Taiwan for canned asparagus. Planted area has been expanded from 1,500 to 10,000 hectares and there are 80 canneries engaged in processing. Asparagus is grown twice a year, the first season being from April to June and the second from September to November.
Most Taiwan asparagus is exported to the Federal Republic of Germany, followed by Holland, Thailand, and Switzerland. The government is urging growers and processors to establish a joint production and export organization.
The Taiwan Asparagus & Orange Packers Export Corporation in Taipei accepts orders at unitary prices. The government wants this organization expanded.
Electronic Components
Electronic components made in Taiwan are selling well in Southeast Asia, according to a report from Singapore.
This was the first report on sale of components there since Taiwan began the development of an electronics industry about three years ago.
Components available in the Southeast Asian market include such items as condensers, loudspeakers and resistors. An estimate by a government agency gave the total value last year at US$150,000.
The U.S. Department of Commerce reported in February that for 1965 the United States imported 1,312 million square yards of cotton textiles. Among suppliers, Taiwan ranked fourth after Hongkong, Japan, and Brazil.
Another report from Singapore said Taiwan canned foods and fresh vegetables and fruits are popular there. The best sellers are mushrooms, asparagus, cabbage, and oranges.
Sewing machines are a promising Taiwan export, according to a survey of the China Productivity and Trade Center.
CPTC reported that Taiwan had increased sewing machine exports from US$6,000 in 1965 to US$104,000 in 1964. Last year's sales are estimated at more than US$200,000.
Most of the machines were sold to Thailand, Vietnam, and the Philippines. A report from Osaka said Taiwan sewing machines are outselling Japanese competitors in Southeast Asia. German importers and retailers are increasingly inclined to prefer to buy cheaper sewing machines from Taiwan rather than Japan.
Taiwan also is importing fewer sewing machines from Japan and the United States.
Leading sewing machine manufacturers in Taiwan include the American-financed Singer Industries (Taiwan) Ltd. and such Chinese enterprises as Lih Tzer Sewing Machine Manufacturing Company.
Record Tea Exports
Taiwan exported a record 20 million kilograms (44 million pounds) of tea last year, according to the Taiwan Tea Exporters' Association.
Exports represented about 93 per cent of production and were up 35 per cent from 1964.
Largest gain was registered in the sale of black tea, with expanded exports to the United States, Canada, England, Holland, Ireland, and Kenya. Kenya is a new market. It previously bought tea from India and Pakistan.
The association says two factors created a favorable market for black tea, which in the past was less in demand than green tea. These were the conflict between India and Pakistan and an increasing world demand for black tea.
Green tea, which used to lead exports, last year was in second place with only 4.5 million kilograms, about 8.4 million kilograms less than black tea. Morocco, which for many years was the leading buyer of Taiwan tea, cut its purchases of green tea.
Other major Taiwan exports included Pouchong and Oolong, which together made up about 2.6 million kilograms.
Tea was sold to 55 countries and areas in every corner of the world. Seventeen buyers bought more than 100,000 kilograms each. They included the United States, Kenya, England, Morocco, Hongkong, Sweden, Japan, Thailand, and Pakistan.
About 64 per cent of last year's sales was black tea, 22 per cent was green, and 12 per cent was Pouchong. The United States bought about 20 per cent of all teas, followed by Kenya, 14 per cent, and England, 13.4 per cent.
In the first two months of this year, Morocco bought 4.3 million pounds of green tea from Taiwan.
The Taiwan Tea Exporters' Association has just celebrated the 100th anniversary of the island's first tea export.
Overseas Investment
Overseas investments approved by the Chinese government in 1965 amoun4ed to US$48,154,632, according to the Industrial Development and Investment Center.
It said the figure represents a 100 per cent increase compared with an average of US$25 million in the last six years. The 1964 amount was US$30,363,825.
Of 1965 investments, IDIC said, US$9,242,846 came from overseas Chinese, mostly in housing and chemicals. The rest, US$38,911,786, came from foreign nationals, mostly in electronics and chemicals.
The largest investment project approved last year was the US$24 million project of the U.S. Philco Corporation to build plants for making television and radio components. Construction has begun at Tamsui near Taipei.
The Chinese government approved 709 overseas investment projects totaling US$224,496,347 during the period from April, 1951, through December, 1965.
The government has announced that it will continue to welcome overseas investment but with conditions. Generally speaking, investment is welcome only in new industries or in existing industries with inadequate production or substandard products.
The New York Times on February 7 published a report that Taiwan is attracting an increasing amount of foreign business capital to its shores.
It said that in the last six years, the "gentle drizzle of overseas investment dollars has turned into a warm shower. The government now feels the climate is ready for rain and is offering new incentives."
A plentiful supply of labor and a wage scale about 50 per cent under that of Hongkong are among the reasons why US$160 million in foreign capital has been committed in Taiwan, the paper said. The minimum wage for semi-skilled factory workers is US$11.25 a month but the average is a little higher, it added.
The paper said that to attract new capital, the Chinese government has plotted a course offering investors everything from five-year tax holidays to factories ready for leasing and land with utilities already available. A law that limited foreign ownership to 49 per cent was rescinded and the business tax was reduced from 32.5 to 18 per cent.
Zipper Factory
A Sino-Japanese company is building a large zipper factory in Taiwan. Annual capacity will be 4,360,000 pieces and initial production has been set at 3,360,000, with half for export to Southeast Asia and Africa.
The Taiwan Zipper Company, with investment from the Yoshida Kogyo Kabushiki Kaisha of Japan, is building its plant at Chungli, Taoyuan. Some machinery and equipment have been brought from Japan and production is expected to begin this summer.
The company was first organized in 1964 under the name of Chih Chang Industrial Corporation. Chinese investors are led by a Mr. Yan from Hongkong, Chih Chang was reorganized into the present company.
The company will also produce 40 million yards of zipper cloth, mostly of nylon, a year. Both zippers and cloth are made of local materials.
The Industrial Development and Investment Center reports that another Sino-Japanese enterprise is going to make umbrellas for export to North America and other areas.
The company, Taihua Industrial Company Ltd., is a joint organization of the Taiwan Umbrella Company and two Japanese companies, C. Hoh and the Fukou Rubber Industry Co.
Annual production has been set at 84,000 dozen, starting this year. Most umbrellas will have plastic ribs and nylon covers. Plant site is near Taipei.
The two Japanese companies, Hoh and Fukou, have cooperated with another Taiwan firm, the Pei Hwa Plastics Fabrication Company, in the production of rubber foot-wear. With annual capacity of 1.2 million pairs, most of the output goes to North America.
IDIC says another Japanese company, Ricoh Kabushiki Kaisha, has established a subsidiary, the Taiwan Ricoh Company, to make cameras and photostat machines. In the first year of production, about 60 per cent of parts and accessories will be imported from Japan. Construction of the plant has begun in Changhua, a county in central Taiwan.