Given that Taiwan is a relatively small market, Taiwanese companies are often moved to deploy globally to explore the unlimited overseas markets. In recent years, the trend toward regional economic integration has surged. Many countries are making efforts to expand their market domain by integrating their economy with other countries. To help companies attain overseas business opportunities and manage investment risks, the Department of Investment Services (DOIS) of Ministry of Economic Affairs (MOEA) held the "Symposium on the Impact of Regional Economic Integration on Taiwanese Companies' Global Deployment" on the afternoon of May 5, 2015 at the Taipei International Convention Center. This event cited Malaysia and Vietnam, both members of the TPP and RCEP, as examples and described in detail their investment environment and business opportunities. Taiwanese businessmen invested in these two countries were also invited to share their experiences.
During the event, Ms. Yu-Ping Lien, Director General of DOIS, pointed out that Taiwanese companies have now deployed their overseas investment for an extended period of time. The trend of Taiwanese companies' investment deployment has changed from labor-intensive industries toward more capital-intensive industries, and from export-oriented business into local and regional-market focused operations. As the patterns of Taiwanese outward investment have changed, the risks encountered in both economic and non-economic areas have also become more complicated. The 513 riots that occurred in Vietnam last year resulting in great losses to Taiwanese companies is an obvious example. When this incident happened, the Taiwanese government immediately provided assistance through such measures as protecting personnel safety, helping the factories rebuild and re-establishing production lines. As for the losses suffered by Taiwanese companies, the government conducted three negotiations with the Vietnamese government through a cross-ministerial working group. Of the 33 demands communicated by Taiwanese companies, the Vietnam government committed to implement 24 substantially-effective measures for compensation. The Vietnamese government did not consent to measures involving cash reimbursement citing financial difficulties. At present, all Taiwanese companies negatively affected by the riots have re-opened their production lines. The MOEA will continue to urge Vietnam, through a regular monitoring and examining mechanism set by the Taipei Economic and Cultural Office in Hanoi and Vietnam's Ministry of Planning and Investment, to facilitate compensation commitments. The government will also endeavor to provide Taiwanese businesses more substantial and comprehensive investment protection through agreements such as the bilateral investment protection agreement and the Economic Cooperation Agreement (ECA).
Ms. Ying-Hua Ku, Director of the Regional Development Study Center of the Chung-Hua Institution for Economic Research (CIER) expressed during her "Development and Trend of Regional Economic Integration" presentation that, as of March 2015, there were approximately 260 Free Trade Agreements (FTA) in existence globally, 70 percent of which were signed after the year 2000. Among the countries close to Taiwan in terms of economic and trade relationship, Singapore has made the most rapid progress in economic integration. Just following Singapore are Japan, Malaysia and Thailand. Taiwan is lagging behind in this competition. The scope of regional economic integration covers not only tariff reduction, but also rules of origin and the openness of service industries. Taiwan is a country formed on a base of international trade and must expand export markets to maintain economic growth momentum. Integrating into regional economies is a necessary and inevitable choice, and Taiwan must therefore adequately open and liberalize its agriculture, industries and services.
Mr. Jason Lin, partner of KPMG in Taiwan, said during the meeting that regional economic integration partnerships such as AEC, RCEP, etc., present opportunities as well as challenges. Malaysia, for example, due to rapid economic development is no longer suitable for developing labor-intensive industries. Malaysia has, in recent years, largely adjusted its industrial policies and loosened foreign investors' share-owned percentage in service industry investments. Investment opportunities exist in the solar photovoltaic, electronic, halal food and e-commerce industries, but there are also investment challenges in such areas as Malay protection policies, restrictions on hiring foreign workers, and lack of skilled workers. In Vietnam, the TPP agreement, with its strict rules of origin, has helped the nation attract investment from foreign textile manufacturers. Vietnam is also attracting foreign investment in such industries as automobile and motorcycle components and retailing channels, but investors must still face such substantial challenges as the imperfection and uncertainty of regulations, frequent labor strikes, and outdated infrastructure.
Mr. Eric Hsu, Honorable President of Taiwan Chamber of Commerce in Binh Duong Province, Vietnam, mentioned that, in response to the strike problems caused by Vietnamese workers vulnerable to incitement, companies may wish to consider establishing brands and distribution channels to expand the domestic market and reduce the impact of strikes. Dato' Lee Hung Lung, Chairman of Malaysia's Hotayi Electronic (M) SDN. BHD., said that Malaysia was once colonized by the British and, as a result, established a sound legal system. The fact that its government administration is run by the rule of law has attracted investment from large European and American companies such as Intel which has in turn helped Malaysia cultivate high-tech personnel. Since Malaysia is currently facing labor shortage problems, Taiwan businessmen should implant automation manufacturing systems in local production to maintain sustainable development.
At the end of the symposium, Director General Lien concluded by emphasizing that Taiwanese companies should maintain risk awareness when conducting overseas investment deployment and should join the local Taiwanese Chamber of Commerce to fight for their rights and benefits with local government through organizational power. At the same time, overseas Taiwanese businessmen should keep in close contact with local representative offices of Taiwan government and establish emergency contact channels with these offices.
Spokesperson of Department of Investment Services:
Mr. Bennet Wen-bin Chen, Deputy Director General
Telephone: (02) 2389-2111 ext. 810
Mobil Phone: 0978-619-241
E-mail: wbchen@moea.gov.tw
Contact person:
Ms. Su-ling Lin, Senior Specialist
Tel: (02) 2389-2111 ext. 820
Mobil Phone: 0910-383-235
E-mail: sllin2@moea.gov.tw