The four big players behind the nation’s investments, the government, private business, foreign capital and state-owed enterprises, have pulled back from putting money into Taiwan, causing local investment to sputter out. Annual investment by state-owned enterprises has dipped below NT$200 billion (US$6.4 billion) for the first time in 10 years, government-run public construction funds for next year have still not reached 10 percent of the national budget, foreign capital has drifted elsewhere and Taiwanese companies are moving overseas.
Anyone with a basic understanding of the economy knows the economic implications behind investment. The multiplier effect of investment is the primary component of GDP, and it represents the economic climate and has an impact on employment, real income levels and the future of the nation’s development. Government construction projects play a pivotal role in national infrastructure and during times of economic downturn, they can be used as an important fiscal tool at the government’s disposal to boost demand.
Public infrastructure has become more integrated and demand for construction projects has weakened. In addition, government financial indicators have reached a critical point, as borrowing is approaching its legal limit. The government’s budget is fraught with structural problems, with legal expenditures at an estimated 70 percent, pushing public works down on the list of priorities.
Areas of the government’s public works budget need review and reform. For example, maintaining an annual growth rate of a minimum 5 percent while comprising at least 10 percent of the total budget, review procedures are not comprehensive, implementation must be improved, and performance evaluations are a mere formality. There are many unused venues, criticized transportation projects and abandoned industrial parks. The government’s financial resources are overstretched, causing a decline in public construction spending. Measures such as awarding private-sector collaboration and cooperation between the central government and local governments to bring added value to several sectors require further investigation to improve effectiveness.
Build-operate-transfer projects, such as the Taipei Dome, and the high-speed rail system financial reform case have been misunderstood by the public due to ineffective communication by government departments. Contractors are hesitant, and collusion between government and industry has resulted in public distrust of the governments intentions.
Not only do people have limited knowledge of central and local governments’ cross-sector value-added policies, but at the end of last year, when the leadership of local governments changed, some policies by the National Development Council were overturned by local governments. Yunlin County and Kaohsiung want to pass their own regulations, while central and local governments are cooperating to increase value across different sectors. However, the public misunderstands the situation completely.
Investment by state-owned enterprises has shown a downturn. Such enterprises have revolving funds and apart from central government subsidies, they can raise funds or issue debt on their own. A tightened national budget usually has no effect on investments by state-owned enterprises. Many state-owned enterprises are utility companies in industries such as hydro-electricity, oil, natural gas and public transportation. The four-year public works investment plan, worth NT$500 billion, targeted at boosting the economy, and the “12 i-Taiwan projects,” initiated after the 2008 financial crisis, all had an impact on investment in state-owned enterprises.
Over the past few months, water shortages, leakage prevention and recycled water have attracted considerable attention. Water prices have not been adjusted in more than a decade, and the debt-laden Taiwan Water Corp has cut back on investment in leakage prevention and pipe replacement, as central government subsides have been reduced.
The government does not need to be so hands-on. It is impossible to rely on the government and state-owned enterprises to bear all the responsibility for infrastructure projects. However, the government is still playing the role of master planner such as in developing renewable energy sources, recycling water, and running sewage networks and sewage treatment facilities, which urgently need attention. Cooperation between the central and local governments, state-owned enterprises and private enterprises, and speeding up investment, remain issues.
Government efficiency is still the most important factor to investment. The party that has a chance of winning next year’s presidential election has a responsibility to submit rational policies. Confrontations between the Chinese Nationalist Party (KMT) and the Democratic Progressive Party have caused serious damage to administrative efficiency and willingness to invest. Political factors that have a negative impact on investment must be reduced, while Taiwanese must demand that the nation’s politicians propose concrete, viable options for investment.
Lin Chia-cheng is a university professor and former minister of examinations.
Translated by Zane Kheir
Congratulations to China’s working class — they have officially entered the “Livestock Feed 2.0” era. While others are still researching how to achieve healthy and balanced diets, China has already evolved to the point where it does not matter whether you are actually eating food, as long as you can swallow it. There is no need for cooking, chewing or making decisions — just tear open a package, add some hot water and in a short three minutes you have something that can keep you alive for at least another six hours. This is not science fiction — it is reality.
A foreign colleague of mine asked me recently, “What is a safe distance from potential People’s Liberation Army (PLA) Rocket Force’s (PLARF) Taiwan targets?” This article will answer this question and help people living in Taiwan have a deeper understanding of the threat. Why is it important to understand PLA/PLARF targeting strategy? According to RAND analysis, the PLA’s “systems destruction warfare” focuses on crippling an adversary’s operational system by targeting its networks, especially leadership, command and control (C2) nodes, sensors, and information hubs. Admiral Samuel Paparo, commander of US Indo-Pacific Command, noted in his 15 May 2025 Sedona Forum keynote speech that, as
In a world increasingly defined by unpredictability, two actors stand out as islands of stability: Europe and Taiwan. One, a sprawling union of democracies, but under immense pressure, grappling with a geopolitical reality it was not originally designed for. The other, a vibrant, resilient democracy thriving as a technological global leader, but living under a growing existential threat. In response to rising uncertainties, they are both seeking resilience and learning to better position themselves. It is now time they recognize each other not just as partners of convenience, but as strategic and indispensable lifelines. The US, long seen as the anchor
Kinmen County’s political geography is provocative in and of itself. A pair of islets running up abreast the Chinese mainland, just 20 minutes by ferry from the Chinese city of Xiamen, Kinmen remains under the Taiwanese government’s control, after China’s failed invasion attempt in 1949. The provocative nature of Kinmen’s existence, along with the Matsu Islands off the coast of China’s Fuzhou City, has led to no shortage of outrageous takes and analyses in foreign media either fearmongering of a Chinese invasion or using these accidents of history to somehow understand Taiwan. Every few months a foreign reporter goes to
RSS