According to the Ministry of Economic Affairs, one of its goals for the year is to boost the local economy to the tune of NT$35 billion (US$1 billion) through investments made by overseas Taiwanese firms relocating to the island. Industry analysts anticipate that around 4,500 jobs will be created in the process. "This is an ambitious goal, but one that is achievable," MOEA Deputy Minister John Deng said Feb. 2.
Ministry officials explained that they expected to meet this target primarily on the strength of Taiwan's investment environment, which the government has enhanced by offering tax breaks, subsidized loans and rent reductions on land. However, the global economic recession and rising production costs in mainland China remain key determinants in many companies' decisions to shift home.
One of the first steps toward attaining the MOEA's goal was taken Feb. 2 after the ministry announced an easing of penalties on Taiwanese firms that had invested in the mainland without authorization. In return for paying the minimum fine, businessmen must report their ventures to the government and make new investments at home. According to the MOEA, a similar move implemented in March last year saw 309 cases totaling US$1.58 billion reported, with the individuals involved making new investments in Taiwan.
The ministry's efforts to secure Cabinet approval for a one-year extension of its land lease program, which expired at the end of 2008, is also seen as playing an integral role in convincing more companies to invest in Taiwan. Under the scheme, businesses setting up in local industrial parks are exempt from land rent for the first two years of operations. The following four years are then discounted by an average 30 percent per annum.
"This program will help increase the number of Taiwan's overseas companies that are relocating their production bases back home," Deng said. "We are confident of winning support for this measure as it highlights the government's commitment to spurring growth in the economy at a time of international financial turmoil."
The deputy minister stated that the government would also provide tax breaks of up to five years for businesses shifting to Taiwan. "As long as these firms' investments are realized by the end of the year, they will be eligible for this incentive," Deng said. He added that last month, this exemption was extended to all participants in the nation's manufacturing industry, whereas it was previously restricted to industries of "strategic importance."
Chang Tsung-kai, an MOEA official, explained that another reason for Taiwanese businesses to invest in the island is a program that offers discounts of 10 to 30 percent on industrial zone land purchases. Additional incentives include NT$10 billion from the Cabinet's National Development Fund, which is authorized for capital injections into small and medium-sized businesses.
The government's efforts to normalize cross-strait economic relations are also expected to have a positive effect. The deputy minister explained that lifting the ceiling on mainland-bound investments last year smoothed capital flows between the two sides of the strait, making it easier for companies to invest in Taiwan. "The establishment of direct air, sea and postal links was also important," Deng said.
Bringing Taiwanese businesses home has been a recurring issue for those charged with overseeing the country's economic development. From September 2006 to the end of last year, an MOEA task force has handled a total of 228 investment projects totaling more than NT$37.6 billion. Of this amount, NT$33.5 billion involved Chinese mainland-based firms.
Write to Adela Lin at adela2009@mail.gio.gov.tw