Taiwan Today

        Taiwanese businessmen have been investing in Southeast Asia since former President Lee Teng-hui launched the ROC government's "Go South" investment policy in the mid-1990s in a bid to diversify investment destinations and reduce the economy's escalating over-reliance on China. Although that policy failed to divert a significant amount of investment away from China, it has been reinstated in recent years, giving companies in Taiwan's traditional industries another chance to relocate to countries, other than China, where labor and land are much cheaper and production costs are greatly reduced.

        Due to a host of favorable factors that include geographical as well as cultural aspects, Vietnam has been one of the more successful investment destinations for Taiwanese entrepreneurs outside of China. Vietnam's economy has gained strength and momentum, especially following the economic reforms of the late 1980s, and since then, the country has been a magnet for Taiwanese investment, reaching US$7.9 billion, it was reported at the beginning of 2006. This makes Taiwan the largest source of foreign direct investment in that country.

        There are many practical reasons why Taiwanese entrepreneurs have set their sights on Vietnam. Its population of 84 million potential consumers is surely something to be considered, as well as other significant factors such as a booming stock market, a rising per capita GDP, rich natural resources, a diligent workforce, a stable political environment and a government committed to development and growth.

        Unquestionably, Vietnam's admission to the World Trade Organization, as well as its participation in the forthcoming ASEAN Free Trade Area giving access to more than 500 million potential consumers of Taiwanese goods, have also been tempting reasons for ROC businessmen to invest there. The opening of reciprocal representative offices in Hanoi and Taipei has greatly facilitated the management of relations between the two states.

        Moreover, reports indicate that the investment environment in China is worsening. The competence of Chinese workers has been found lacking, electricity is in increasingly short supply, and other factors raising production costs have compelled Taiwanese investors to look elsewhere to set up their offshore operations, with Vietnam reaping the rewards.

        In addition to increased trade and investment, cultural and other informal interaction has flowered as a result, with people moving back and forth between Taiwan and the rest of the region. In short, it can be argued that Taiwan's "Go South" investment policy has earned a passing grade, especially with regard to Vietnam.