Taiwan has become a leader in the global supply chain, as an increasing number of its overseas companies have been investing more funds at home, economists said on Saturday.
Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) president Chang Chien-yi (張建一) said that the government’s incentive programs for Taiwanese investors, launched last year, have attracted many top-tier Taiwanese manufacturers to return.
In their wake, second and third-tier industries have also returned, helping the nation reshape its production structure, Chang said.
“The move by these Taiwanese investors to come home has helped Taiwan assume the position of commander, or the brain, of the global supply chain,” he said. “This development is expected to boost Taiwan’s status in global trade.”
The incentive programs were launched as companies were seeking to move some of their production out of China to avoid the US’ increased tariffs on Chinese-made products during a trade dispute.
As of Friday, 473 Taiwanese companies have pledged to invest a combined NT$989.1 billion (US$33.1 billion) in the home market under the incentive programs, while 56 more are waiting for approval, the Ministry of Economic Affairs said.
Even Taiwanese companies that operate businesses in China and Southeast Asian countries have been able to use Taiwan as a hub while mapping out global expansion strategies to meet the needs of various clients, Chang said.
Earlier last week, Minister Without Portfolio Kung Ming-hsin (龔明鑫) said that NT$200 billion of the nearly NT$1 trillion in pledged returning funds had been invested last year.
Companies this year are expected to invest an additional NT$325.3 billion, which amounts to 1.7 percent of the nation’s NT$19 trillion GDP and boosting the economy, Kung said.
Taiwan’s GDP grew 1.54 percent in the first quarter of the year, outperforming many nations as the global economy was being affected by the COVID-19 pandemic, the Directorate-General of Budget, Accounting and Statistics said.
Pledged investments are expected to reach about NT$500 billion this year, which would improve Taiwan’s status in the global supply chain, the ministry said.
Listed manufacturers’ combined sales last year fell 2.8 percent from a year earlier to NT$16.5 trillion amid the US-China trade dispute, the ministry said.
Their total net income fell 19.8 percent annually to NT$1.23 trillion, it said.
However, manufacturers’ spending on research and development (R&D) last year rose 7.9 percent to a five-year high of NT$460.8 billion, with the electronic components industry spending the most at NT$266.3 billion, followed by the computer and optoelectronics industry at NT$123.8 billion, according to ministry data.
The two industries accounted for 84.7 percent of total R&D spending in Taiwan’s manufacturing sector last year, the ministry said.
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