Taiwan to attract $1.34 billion in investment by foreign tech firms
The investment in research and development activities seeks to create more than 6,300 jobs a year amid an upheaval in global supply chains
Taiwan hopes a new programme will attract T$40 billion ($1.34 billion) of research and development investment by foreign tech companies, creating more than 6,300 jobs a year amid an upheaval in global supply chains, the government said.
Taipei will spend more than T$10 billion in subsidies over the next seven years to attract the investment, Lin Chuan-neng, the island’s vice minister of economic affairs, said on Thursday.
“We will target three investment in three areas, which are 5G, artificial intelligence and semiconductors,” Lin told a news conference in Taipei.
“We hope to get them to Taiwan to do research and development,” he added. “We hope to boost related supply chains in Taiwan.”
Taiwan’s central bank (CB) has room for further interest rate cuts, Governor Yang Chinlong said recently, but he cautioned economic growth could be less than 1% this year due to the impact of the coronavirus pandemic.
In March, the central bank cut interest rates for the first time in more than four years to a low of 1.125%, and reduced its growth forecast for the economy amid growing fears the pandemic will trigger a deep global recession.
The export-reliant island is home to tech behemoths like Taiwan Semiconductor Manufacturing Co, the world’s biggest contract chipmaker and supplier to US tech giants such as Apple.
Lin said the government wants to turn Taiwan into a “global hub for high technology” under the programme, in a bid to “seize the opportunity” amid a global reshuffle of the technology supply chain following Us-china trade tensions.
The United States has taken aim at Chinese tech companies, telecoms giant Huawei in particular, as security risks.
Taiwan has close ties with the United States, and has welcomed US tech firms like Alphabet Inc’s Google to operate on the island, free of the restrictions they may face in China.
Taiwan’s government is in talks with international companies for future investments, Lin added, declining to give details.
Taiwan, a key part of global technology supply chain, has been offering incentives, including tax breaks, to lure production home from China in a move to reduce economic dependence on its giant neighbour, Taiwan’s top trading partner and a major geopolitical rival.
Taiwan Premier Su Tseng-chang said it was an
“irreversible trend” for companies to speed up divestment in China, which presented a “great opportunity” for the island.
The new programme comes amid rising tensions between Taipei and Beijing, which claims the democratic island as its territory to be taken by force if necessary.
Investment returning to Taiwan from China will reach over T$320 billion this year, boosting its economy, the government said.
Taiwan said on Tuesday that planned “stimulus coupons” for its coronavirus-hit economy could boost consumer spending by T$100 billion ($3.3 billion) this year.
In its latest move to spur the trade-reliant economy, Taiwan’s cabinet announced a budget of nearly T$50 billion for the coupons, part of a stimulus package worth T$1.05 trillion.
Citizens will have to pay T$1,000 to the government to get T$3,000 worth of cashequivalent coupons, the economic ministry said.
The coupons can only be used until the end of this year and can be spent in most shops, but there are some exceptions, including tobacco purchases.
“We will not be giving out cash directly. If people get cash, they might just put it in their pockets without spending,” Premier Su Tsengchang told reporters. Lower-income families will be given T$1,000 in cash along with the coupons, he said, adding that the programme would start in mid-july.
The island’s main opposition party, the Kuomintang, questioned the effectiveness of the programme, saying it was “inconvenient” for people to spend money before they receive the coupons. The party urged government to give out cash instead.
Taiwan’s economy, a key part of the global technology supply chain, is likely to grow 1.67% this year, as the pandemic hits the island’s consumption, especially the services sector and tourism. Unemployment also hit a more than six-year high in April.
The impact, however, was partly offset by still-strong global demand for electronics thanks to the growing need for telecommuting as more people work from home to reduce the risk of infections.
Meanwhile, Asia’s factory pain deepened in May as the slump in global trade caused by the coronavirus pandemic worsened, with export powerhouses Japan and South Korea suffering the sharpest declines in business activity in more than a decade.