With persistent demand from Taiwanese businesses and an anticipated wave of reshoring amid changes in the global trade and investment landscape, the Cabinet on Thursday extended the “Invest in Taiwan” initiative until 2024. The extension would provide an additional NT$430 billion (US$15.5 billion) in financing for participating firms, while holding them to standards that would advance the nation’s goal of net-zero carbon emissions by 2050.
The initiative, which began in 2019 during US-China trade tensions, has three programs: one focuses on reshoring, another helps companies deepen their roots at home, and the third assists small and medium-sized firms in upgrading. The initiative offers firms with favorable loan terms and tax incentives. It also helps participants find land, stable water and electricity, as well as talent.
To be accepted, applicants must present investment projects that are high in added value, crucial to the international supply chain and aligned with national industrial policies.
The programs have produced excellent results — much better than expected. According to the InvesTaiwan Service Center, 1,126 applications from local businesses have so far been approved, with total investment pledges of NT$1.61 trillion. Broken down by program, the scheme for reshoring has attracted 250 companies and NT$103.2 billion in investment with 80,651 jobs, the plan for accelerated investment by domestic firms has attracted NT$264.8 billion from 131 companies and 19,529 jobs, and the scheme for small and medium-sized enterprises has attracted NT$317.2 billion in investment and 28,208 jobs from 745 firms, the center reported on Friday.
The lingering US-China conflict — from trade to tariffs and now technology — has brought Taiwan unprecedented opportunities and made Taiwanese businesses think twice about predominantly channeling investment into China. Most Taiwanese companies have not shut down production in China, but have increased investment in Taiwan or set up new production lines in Southeast Asia — adopting the so-called “China plus one” strategy to diversify risk.
Investment diversification by Taiwanese businesses is likely to continue given the persistent rivalry between Washington and Beijing. The “Invest in Taiwan” initiative had to be extended because their trade tensions continue to offer Taiwan beneficial opportunities. Preferential loan terms might not be what some companies need, so the extended initiative has adjusted interest subsidies and loan durations over the next three years.
The government should closely track the progress of the pledged investments — checking whether companies fulfill promised increases in investment and jobs — but it must also be careful to fulfill its own obligations, especially as it is faced with the challenge of ensuring not only stable supplies of water, electricity and talent, but also industrial land.
Averting power shortages is likely to be the biggest challenge, especially after the Dec. 18 referendum rejected restarting construction of the Fourth Nuclear Power Plant.
Over the next four years, the Guosheng Nuclear Power Plant in New Taipei City’s Wanli District (萬里) and the Ma-anshan Nuclear Power Plant in Pingtung County's Ma-anshan (馬鞍山) are to be decommissioned, and it remains to be seen whether the construction of several large-scale liquefied natural gas generators can fill the gap.
To encourage a reduction in carbon emissions and promote a circular economy, applicants are to be screened over whether they plan to use energy-saving or low-carbon equipment, recycling processes and green architecture.
However, the government has lagged in achieving its stated goal of power generated from renewable energy, so how the nation catches up with the global net-zero trend presents the government with another challenge — and demands further collaboration between the public and private sectors.
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