Taiwan-Australia investment soars
Both economies seek to diversify away from the mainland amid chill in ties
Investment between Australia and Taiwan has grown in both directions this year as the two try to diversify away from the mainland and eye each other’s energy sectors.
Taiwanese investors received approval to park US$411 million in Australia between January and October, dwarfing the US$15.15 million total in 2021 and US$14.17 million in 2020, according to Taiwan’s Investment Commission.
Australian investments in Taiwan rose to US$114 million in the first 10 months of the year from US$68.69 million in 2021 and US$79.83 million in 2020, the commission said.
Analysts say the mainland’s cooling economy and a chill in cross-strait ties are slowing the flow of Taiwanese money into the country and diverting it to Southeast Asia, India or further afield.
The mainland is still Taiwan’s top investment destination, accounting for US$4.16 billion of the island’s US$11.56 billion in approved outbound investment in the first 10 months. But overall, Taiwanese capital flows into the mainland are shrinking, falling by 3.2 per cent in the year to October compared to a year ago.
Beijing’s draconian Covid-19 controls have hurt export supply chains and lowered expectations for mainland growth this year. Many of the 4,200 Taiwanese companies on the mainland make goods for export.
“China’s zero-Covid policy has led to a significant reduction in economic and trade activities, so the trade relationship between Taiwan and Australia has increased,” said Darson Chiu, research fellow with the Apec Study Centre at the Taiwan Institute of Economic Research.
Australia, meanwhile, is looking to invest more in trade diversification after ties with China became strained in 2020 when Canberra called for an investigation into the origin of the coronavirus without consulting Beijing. China followed with a barrage of sanctions and import tariffs, with signs of a thaw only emerging this month.
A roughly US$50 million investment by Costco, a bigbox supermarket chain with a registration in Australia, accounted for much of this year’s inflows, according to an Investment Commission data analyst, who was not authorised to be quoted by name.
Taiwan’s six-year-old New Southbound Policy explained some of the bilateral investment with Australia, the data analyst said.
The policy encourages more trade, investment, travel and study between Taiwan and 18 Asia-Pacific countries, including Australia, although the mainland is not on the list.
“What we’re promoting now is the New Southbound Policy and its scope is broad,” the commission source said. “We want to diversify risks.”
The commission approved 127 investment projects in New Southbound countries, which also include India and Southeast Asia, from January to October, up by 21 per cent year on year.
China remains Australia’s eighth-largest foreign investor, accounting for 2.2 per cent of the total inflows.
Energy, resources and financial services underpinned the “broad” field of investment between Taiwan and Australia, the Department of Foreign Affairs and Trade in Australia said.
Biomedicine, renewable energy, food and “tourism infrastructure” had become more recent sources of two-way investment, it said.
Taiwan wanted to invest in Australian energy and minerals, while Australia was Taiwan’s largest energy supplier, Chiu said.
Taiwan is Australia’s fourthlargest market for energy and resource exports, particularly low-emission technologies.
“At the same time, [energy] also provides more opportunities for Australia and Taiwan to deepen bilateral trade and investment cooperation, including wind power, solar energy and emerging low-emission technologies of hydrogen energy,” he said.
Stuart Orr, business school head at the Melbourne Institute of Technology, said investment had grown between the economies primarily as a result of the reduction in and withdrawal of mainland investment in Australia, while the Australian economy still had some strength and investors were active.
What we’re promoting … is the New Southbound Policy and its scope is broad
TAIWAN’S INVESTMENT COMMISSION