Minister of Economic Affairs Shih Yen-shiang (施顏祥) yesterday urged local petrochemical companies to invest at least 2 percent of their annual revenue in research and development (R&D) by 2020, up from the current 0.32 percent.
Shih said that would translate to NT$40 billion (US$1.4 billion) of the projected industry revenue of NT$2 trillion in 2020, which would propel the development of higher value-added products.
For the past five years, value-added products — such as thin films for solar cells and specialty chemicals — accounted for only 14.6 percent of the products made by the domestic petrochemical industry. While the figure was similar to that of South Korea and slightly higher than Singapore’s, it lagged far behind Japan’s 30 percent, Shih told a petrochemical forum.
The Ministry of Economic Affairs aims to raise this figure to 20 percent by 2020, he said.
“The wind is blowing toward Taiwan now for an industrial transformation,” Shih said, urging petrochemical firms to explore and develop new and quality materials and products that can be used as an import substitute by the local tech industry.
Shih said Formosa Petrochemical Corp (台塑石化) and CPC Corp, Taiwan (台灣中油) had given their word that they would support the government’s policy on promoting industrial upgrading.
CPC is planning to establish a green energy technology development center by 2015.
Executives from Formosa, which was holding its annual shareholders’ meeting, were not present at yesterday’s forum, sparking speculation about its strained relationship with the ministry.
Formosa reportedly turned down the ministry’s proposal to set up a high-end research and development center in Taiwan.
Industry upgrades were critical because emerging economies and Middle Eastern countries were venturing into the petrochemical business, with aggressive production plans in the pipeline, Shih said.
Taiwan — which sees an annual production of 4 million tonnes of ethylene used in electronics, plastics and other industries — will have to supply higher-end materials locally, while producing lower-end materials overseas to stay competitive, he said.
The government in April scrapped a plan to build a US$20 billion petrochemical plant in an ecologically sensitive area of Changhua County amid disputes over health and environmental hazards.
Petrochemical Association of Taiwan (台灣區石油化學工業同業公會) chairman Preston Chen (陳武雄) said the association would again call on the government to relax its ban on Taiwanese firms investing in China’s petrochemical sector.
Some firms are interested in setting up facilities in Fujian Province, but couldn’t move forward given government restrictions, he said.
Ministry officials said earlier this week that the government has yet to review the current ban.
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