Taiwan - Foreign investment

From 1952 to 2000 cumulative foreign direct investment approvals came to $44.8 billion of which 24% was in the electronics and electrical industries. Other industries attracting relatively heavy foreign investment include banking and insurance services, chemicals, trade and basic metals. The government reported Taiwan received $3.27 billion in foreign investments in 2002, and had received an average of $2.7 billion a year 1991 to 1999. The rate of foreign investment has been rapidly accelerating as in preparation for its accession to the World Trade Organization (WTO) Taiwan has liberalized its economy and improve its investment environment. Foreign firms are generally accorded national treatment and trade-related capital flows are unrestricted. In January 2001 the 50% foreign ownership limit was lifted with exceptions in a few designated industries. Most limits on the amount of portfolio investment in companies listed on the Taiwan Stock Exchange (TSE) were also lifted. About 1% of manufacturing industries and 5% of services industries continue to have limits on foreign ownership. Investment incentives are offered for investments in emerging or strategic industries, pollution control systems, production automation, and energy conservation. Since the goal was first announced in 1995, increasing effort has been put in making Taiwan an Asia-Pacific Regional Operations Center (APROC). A goal is to have about 1,000 corporations establish headquarters in Taiwan by 2011.

The United States has been the largest source of foreign investments in Taiwan with investment approvals totaling $10.7 billion in the period 1952 to 2000, 24% of the total. Another $9.2 billion is approvals during this time from the British Virgin Islands, the Cayman Islands, and other off-shore havens in Central America, should also be largely attributed to US multinationals. Japan has ranked second with approved investments totaling $9.2 billion or 21% of the total. Twenty-seven percent has been in electronic and electrical products and 20% in services and trade. Investment approvals totaled 1,410 equal to potential investment of $7.6 billion, an increase of 80% over 1999. Most of these investment applications came from British territories in Central America (mainly the British Virgin Islands, the Cayman Islands, and other conduits of mostly US investments), the United States, Singapore, Japan and the United Kingdom.

Taiwan outward investment has been such that by 2000 over 50% of Taiwan manufacturing was being conducted outside of the country, and by 2001, 53% was being out-sourced. The top five sectors for outward investment were banking and finance, services, electronics and electrical appliances, marketing, and transportation. In 1992, investment in mainland China was legalized and despite a fall off due to tensions in 1996, by 2001 Taiwan had become China's fourth-largest source of foreign investment. In 2002, the government changes its official investment stance towards China from "patience over haste" to "active opening and effective management."