Taiwan works out plan to boost traditional industries

This article was published by the Taiwan Headlines on August 30, 2006. It reports that the Ministry of Economic Affairs in Taiwan recently proposed a plan to boost 18 industrial segments, as part of its efforts to reinvigorate the nation's traditional industries.

Specifically, the Ministry of Economic Affairs will increase financial aids to the 18 industrial lines, including steel-making, metal-product, flat-panel display manufacturing equipment, machine-tool, intelligent-robotic, and auto-parts manufacturing. With the ministry's preferential aids, these 18 industrial sectors are expected to have combined revenue of NT$10.6 trillion (US#331 billion) in 2015, up from NT$2.9 trillion (US$92 billion) in 2005.

According to the Ministry of Economic Affairs, there are currently 66,800 old-economy manufacturers around Taiwan, which account for 85 percent of the nation's total number of traditional manufacturers. Their combined revenue is about NT$7.2 trillion (US$22.5 billion), which accounts for 66.8 of Taiwan's total traditional revenue.

Because tax incentives for Taiwan's traditional industries have been rather limited, manufacturers are discouraged from keeping their investments at home. Now, in order to counter this problem, the Ministry of Economic Affairs has decided to overhaul its tax preference measures for traditional manufacturers.

The ministry's proposal includes doubling research and development subsidy to NT$400 million (US$12.5 million). The money will be earmarked not only for technology development programs, but also for marketing, added-value and product make-up programs.

The ministry will also increase technology-development funds to traditional industries. While the ministry's Department of Industrial Technology (DIT) will boost its funding to traditional industries to about 45 percent of its total funding in the future three years, the Industrial Development Bureau (IDB) will boost its funding in this area to about 40 percent.

Indeed, the Department of Industrial Technology's funding to traditional industries fell to 38.8 percent in 2005, from 42.3 percent five years ago. The Industrial Development Bureau's funding in this area fell to 33.3 percent in 2005, from 56.5 percent five years ago.

Finally, in the aspect of land and worker supplies, the Ministry of Economic Affairs is proposing a NT$30 billion (US$937.5 million) fund that is dedicated for subsiding enterprises in land acquisition. The ministry also proposes that the government should allow foreign laborers to work 24-hour shifts.

The Ministry of Economic Affairs will submit its proposal to the Executive Yuan for approval.