Taiwan: Smart, Innovative, Green
Taiwan is one of the strongest economies in East Asia. It leads Asia in different industries, such as electronics, machinery and semi conductors. Furthermore, Taiwan is currently heavily investing in renewable energy, especially off-shore wind, and more innovative fields , such as Artificial Intelligence, all kinds of Smart Products and 5th-Generation Wireless Systems. Find out more!
Key Facts
Economic Growth
Taiwan's economy grew by 2.86% in 2017. The government has recently raised its economic growth forecast for 2018 from 2.29 percent to 2.42, indicating another strong year for the island's economy. Taiwan’s GDP growth rate was 2.2% in 2013 and 3.92% in 2014. In 2015 economic growth stagnated and fell by 0.65%. The Business Environment Risk Intelligence S.A. (BERI) ranked Taiwan third in terms on overall investment environment. Recently, Taiwan's economy has recovered and while slow at the start, now keeps a yearly grow of over 2%.
External Trade
In 2017, total exports amounted to USD 317.38 billion, a increase of 13.2% compared to the year before. In March 2018, Taiwanese exports totaled 30 billion, jumping up by 16.7% compared to March 2017 and beating forecasts by 7.6%. Since 2002 Taiwan – under the name of “Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu (Chinese Taipei)" – is a member of the WTO and became member of the WTO’s “Government Procurement Agreement (GPA)” in 2009. Since Taiwan’s economy is extremely export oriented, it is generally regarded as an open economy with few heavy trade barriers. Moreover, since Taiwan is one of the global leaders in the information and communication technology industry (ICT) its main export products are electronics, followed by mineral products, optoelectronics, plastics, chemicals and machinery.Nevertheless Taiwan is focusing on higher-value sectors according to its 5+2 Industrial Innovation Plan.
5+2 Industrial Innovation Plan
In 2016, the newly elected DPP government under the leadership of President Tsai Ying-wen proposed its new industrial strategy, the 5 + 2 Industrial Innovation Plan. The 5+2 Industrial Innovation plan aims to shift Taiwan Industries away from its traditional manufacturing sectors preparing it towards high value service, information and solution-oriented sectors by combining Taiwan's already established manufacturing and IT sector. Through this transformation, the Taiwanese Government wants to create jobs, improve innovation, and, most importantly, aims to establish Taiwan as a major global player. The sectors include Internet of Things (IoT), Biomedicine,Green Energy, Smart Machinery, Defense, New Agriculture and circular economy.
Green Energy / Nuclear Phase Out
In 2016 Taiwan, the newly elected DPP government led the way for a green shift in Taiwan's energy production. The proposed plan included a complete nuclear phase out by 2025 and a newly formed energy mix. It aims to raise the share of renewable energy to 20% (currently 5%), hike up the share of natural gas to 50% (currently 32%), and lowering the contribution from coal to 30% (currently 45%) until 2025.
Asian Silicon Valley
In order to connect Taiwan to global tech clusters and create new industries for the next generation, the Taiwan Government launched the Asia Silicon Valley Development Plan in September 2016. The plan has two major goals: Firstly, promoting innovation and R&D regarding the Internet of Things (IoT), and secondly, upgrade Taiwan's start-up and entrepreneurship ecosystem. The four implementation strategies are as follows: Optimize Taiwan's start-up scene, enhance connections with renowned clusters & establish R&D center, build a complete IoT supply chain by combing Taiwan's hard- and software sectors and construct demonstration sites for smart products and services.
Taiwan’s Key Industries
Electronics Industry
The electronics industry is the powerhouse of the Taiwanese economy. It has a sizeable production, a vibrant foreign trade and attracts the most investment. While the island imported US$ 54.1 bn. of electronic products in 2016, it exported US$ 120.6 bn. Not included are the orders which were produced abroad, mostly on the Chinese mainland. As the R&D and design capabilities are strengthened the island will stay a significant international player.
Chemical Industry
The chemical industry has the second biggest share of Taiwan´s export and import business with 34 bn. US$ in exports and 30 bn. US$ in imports in 2016. Taiwan´s well integrated chemical industry is expected to grow 2017 and 2018 on the back of higher international demand and higher prices of petrochemical products. This will support the process of upgrading and modernizing in order to enhance the competitiveness and the environmental impact compliance.
Machinery Industry
“Smart factory” is the new buzzword to raise the competitiveness in traditional and high-tech industries in Taiwan as well as abroad. Investment in new machines, machine tools and automation equipment is expected to rise significantly over the next few years and will give Taiwan´s machinery industry a new boost. Import and export business will profit though export should be somewhat subdued due to the strong Taiwan-dollar.
Automotive Industry
Taiwan´s automotive market will further expand. This will be mainly due to the growth in the imported car segment while the production and sales of locally assembled vehicles more or less stagnate. German and Japanese brands dominate the import segment with a share surpassing 40% in 2017. Taiwan´s automotive parts manufacturers ride the wave of high demand in both the original equipment market as well as the aftermarket. While upgrading they want to grab a bigger share of the high-margin automotive electronics business.
Biotechnology
Applied Biotechnology is one of the key emerging industries for Taiwan. The government supports ventures through incentive programs in order to establish world class research facilities and potent companies in the biotechnology field. According to latest figures from 2015, total revenues of applied biotechnology reached around USD 2.8 bn., surpassing the pharmaceutical sector. The industry is expected to grow continuously in the coming years.
Energy
Taiwan has embarked on its journey to a nuclear-free energy production with a target year of 2025. To replace the nuclear power capacities, upgrading of thermal power plants, building of new renewable energy capacities and realization of energy efficiency measures will have to be completed. The government plans on expanding the share of green energy with an installed capacity of 20 GW in solar power and 4.2 GW in wind power by 2025, relying on private investment and expertise.
