Sat, Jun 17, 2017 - Page 4 News List

New Southbound Policy: Local firms look to boost regional clout

‘COLLABORATION’:Taiwanese firms should not deem Southeast Asian nations backward economies or try to cut corners, Deloitte Taiwan partner Jerry Gung said

By Kuo Chia-erh  /  Staff reporter

Kenda is also considering an expansion of its footprint in India in light of the high number of motorcycle users there, the official said, without providing a timetable.

TEXTILE INDUSTRY

Two leading Taiwanese companies from the labor-intensive textile and apparel industry — Eclat Textile Co (儒鴻) and Makalot Industrial Co (聚陽) — plan to expand their operations in Southeast Asia, eyeing lower personnel costs and emerging industry clusters in the region.

Eclat in December last year dissolved its wholly owned clothing plant in China, primarily due to soaring labor costs.

However, the company said it plans to raise output at two of its Vietnamese plants this year, which is expected to boost its monthly production capacity from nearly 6.2 million units of clothing to 7.5 million.

Meanwhile, Makalot said it is building new production lines at its Vietnamese and Indonesian plants, which are expected to lift its overall capacity by 10 percent this year from last year’s 13 million units of clothing per month.

ONLINE SERVICES

Some online service providers have also expressed interest in Southeast Asian markets, saying the expanding middle class in the region is expected to be the next growth driver.

“Given increasingly tough competition in Taiwan’s saturated market, we are seeking business potential in new markets,” said Sega Cheng (程世嘉), chief executive officer of iKala Interactive Media Inc (愛卡拉互動媒體), which offers live-streaming cloud services.

It is still not too late for Taiwanese service providers to expand their presence in Southeast Asia, Cheng said by telephone on Friday last week, citing a lack of Internet infrastructure and experienced talent in the region.

The Taipei-based service provider plans to tap into Indonesia’s and Thailand’s booming Internet service market in the coming years, due to wider consumer acceptance of foreign brands there, Cheng said.

The firm is also looking to collaborate with other Taiwanese firms, especially those that have been running businesses in Southeast Asia for decades, to capitalize on existing social networks, he said.

“Our business partners [in Indonesia and Thailand] might be in the human resources or manufacturing industries, as they are also eager for transformation,” Cheng said.

Addressing the challenges of expanding the firm’s footprint in emerging markets, Cheng said one key problem for Taiwanese service providers is a lack of financial support, which hampers the development of promising start-ups.

“It is not easy for small and medium-sized service providers to obtain corporate loans from banks, as the design of financial systems [in Taiwan] is not friendly to start-ups,” he said, referring to the absence of angel investors.

Apart from considering financial risks, Taiwanese companies should develop strategies to benefit from tax incentives offered by the governments of Southeast Asian nations, Deloitte Taiwan partner Jerry Gung (龔則立) said on Tuesday.

Gung, who provides consulting services to Taiwanese firms planning to expand their business in Thailand, said some Southeast Asian nations — such as Thailand, Malaysia and Vietnam — have been trying to attract foreign investment by providing tax exemptions.

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