The American Chamber of Commerce in Taipei (AmCham) is urging the government to boost the nation’s sluggish economy by fostering a more attractive business environment for foreign investment.
The editorial in this month’s edition of the chamber’s Taiwan Business Topics magazine said that Taiwan needs to take advantage of all possible ways to reinvigorate its economy in an increasingly unfavorable environment of falling exports and anemic domestic consumption.
“One policy suggestion that appears on almost every list of potential solutions is to heighten Taiwan’s capability to attract foreign direct investment [FDI],” the editorial said.
“FDI is often thought of as a source of capital, even more significant for Taiwan is that it creates job opportunities, introduces innovative technologies and new business platforms, while tying Taiwan more closely to the regional and global economy,” the editorial said.
However, Taiwan has in recent years lagged most other major economies in the region in terms of FDI, it said.
With US$5.8 billion in FDI last year, Taiwan was last among 12 leading Asian locations, according to data compiled by the Hong Kong-based Political and Economic Risk Consultancy. The data showed that FDI in Taiwan was surpassed by China, Hong Kong, Singapore, India, Indonesia and South Korea, as well as Thailand, Malaysia, Japan, Vietnam and the Philippines.
The editorial listed numerous reasons for the relative lack of investment interest, including the difficulties Taipei faces in entering into bilateral and multilateral free-trade agreements. It is crucial for Taiwan to join the nascent Trans-Pacific Partnership (TPP) when it expands beyond the founding 12 parties, the editorial said.
Improving regulatory coherence by tackling many of the problems raised in the chamber’s annual Taiwan White Paper would also create a more welcoming investment environment, it said.
AmCham’s Private Equity Committee said Taiwan’s investment approval process is widely considered to be opaque, leaving potential investors uncertain as to whether a project would be found acceptable, but a series of meetings over the past few years between representatives of the committee and Investment Commission and the Financial Supervisory Commission officials have proved encouraging.
The committee members were assured a number of vague criteria previously used to evaluate investment cases — such as the possible impact of the deal on supply chains or capital markets — would be either clarified or dropped, the editorial said.
“Once investors are confident they know what the rules are, they can shape a project to fit those parameters. But in the absence of transparency, Taiwan will be hard put to attract the FDI levels it needs to boost the economy,” it said.
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