According to the latest WTO Trade Policy Review on Swaziland published in November last year, FDI inflow in Swaziland fell drastically from about US$67 million between 1990 and 2000 to approximately US$6.6 million between 2003 and 2007.
Swaziland statistics showed that 8 percent of its commercial industry came from Taiwan.
At present, 25 Taiwanese factories operate in Swaziland, mostly textile and garment manufacturers, with an aggregate investment of more than US$90 million, employing about 15,000 people out of a population of 1.35 million, with an unemployment rate of about 40 percent.
Like other governments, Swaziland offers a series of tax deductions to foreign investors, but one of the incentives Taiwanese businesspeople investing in Swaziland find most attractive is that most exports enjoy duty-free access to the US, the EU, as well as the Southern African Development Community and the Common Market for Eastern and Southern Africa.
Swaziland also became a signatory to the preferential trade agreement between the Southern Africa Customs Union (SACU) and MERCUSOR, the Latin American common market composed of Argentina, Brazil, Paraguay and Uruguay, last year.
However, the past decade has seen emerging concerns over gradual losses in preferential treatment granted to foreign manufacturers in African countries.
Mason Ma (馬當正), director and vice president of Tex-Ray Industrial Co, which produces dyed yarns, woven fabrics and garments, said he worried about the expiration in 2015 of the African Growth and Opportunity Act (AGOA), a US trade act that provides duty-free treatment for select apparel articles made in some Sub-Saharan African countries.
“We suffered a blow following the removal of quotas on textile and apparel trade in 2005. When the AGOA expires in 2015, we will lose another form of preferential treatment in terms of tariffs from the US market,” Ma said.
Another manager of a Taiwanese-owned textile and apparel business who wished to remain anonymous said the suspension of the Duty Credit Certificate Scheme (DCCS) in March was expected to cost his company a 15 percent drop in revenue.
The DCCS is an export subsidy for Taiwanese textile industries introduced by SACU in April 1993.
“We hope SACU will come up with new measures to replace the DCCS,” he said.
Chang Wan-li (張萬利), president of the Taiwan Business Association in Swaziland and the president of W.W. Textile, said unstable electricity supply was a major challenge for the country, while fluctuations in electricity prices were also unfavorable to investment.
Another concern for Taiwanese businesses in Swaziland is its rising labor cost, as wages have increased at an average annual rate of between 7 and 12 percent, pushing wage levels higher than in some Southeast Asian countries such as Vietnam and Cambodia, Ma said.
However, Ma said he looked at the positive side, adding that rules and regulations governing employment in Swaziland can better protect labor than those in Taiwan.
An anonymous official with the Swaziland Investment Promotion Authority (SIPA), who was not allowed to speak for the agency, said the SIPA was fully aware of the concerns of Taiwanese businesses and held regular talks to work out solutions to the problems.