More than a quarter of local manufacturers expect to make further domestic investments over the rest of the year due to a warming global economy, according to an industry survey conducted by the Ministry of Economic Affairs.
The survey results, released on Thursday, found that 25.7 percent of manufacturers are planning to increase domestic investments, while only 15.3 percent are planning to make foreign investments.
Despite an improved global economic situation, which is driving up domestic production and market demand, higher production costs overseas have meant investors are more inclined to spend their money money domestically, the survey said.
Across different manufacturing sectors worth a total of NT$26.4 trillion (US$802 billion) last year, the chemicals industry had the strongest growth in investments, the survey found.
By upping domestic investments, manufacturers expect to improve their competitiveness and quality of labor, the survey said, adding that Taiwan’s healthy investment environment and research and development capabilities were factors behind the decisions.
Nearly 60 percent of respondents to the survey said they see fierce competition among other players in the industry as the most challenging aspect of investing abroad, followed by concerns over fluctuating exchange rates and a lack of skilled workers capable of implementing a viable market strategy.
As to how the government could encourage local firms to invest more in the domestic market, 56 percent of respondents said they hope for more tax benefits. A smaller percentage of respondents suggested government subsidies for research and development, assistance in land acquisition and relaxation on policies governing the hiring of foreign workers.
The survey was conducted across 3,000 randomly selected companies between April 15 and May 15.
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