Coming to the end of the first ninety days of the newly inaugurated administration of President Tsai, the climate in Taiwan is cautiously hopeful, after years of tepid economic growth. The government has announced a slew of projects to stimulate domestic demand and investment, including sponsoring a new sovereign investment fund to assist in business transformations, financing a government-run investment and trading company to facilitate the domestic and global expansion of domestic companies, and initiatives throughout Taiwan in the defense, biotechnology, aerospace, and machining sectors.
Changes in the regulatory landscape loom on the horizon. In addition to legislation complementing the investment stimulus, corresponding regulations governing the flow of capital and people to and from Taiwan may also be reformed. Consideration has been under way since last year to further liberalize the market for foreign white-collar workers, although the government has been cautious to heed the concerns of domestic labour groups. In 2015, steps were taken to loosen the criteria for employment of foreign workers for start-ups and other enterprises meeting certain qualifications or approved by the government. Although the regime for foreign workers may not see wholesale changes immediately, the government has already signaled a more open-minded and coordinated approach in regulating the inflow of foreign skilled labor. In particular, the government is working on plans to encourage the bilateral movement of skilled labor flows from and into South Asia and South-East Asia in trade, educational, and tourism, in unison with its strategy to stimulate cross-border trade and investment in these regions with Taiwan.
Likewise, the Statute for Investment by Foreign Nationals, a key legislation governing inbound foreign investment, has been under consideration for an overhaul since proposed revisions were circulated late 2012. On paper, these revisions indicate a fundamental change in the government’s gatekeeping mechanism for inbound foreign investment, from the current prior-approval scheme to a post-investment filing scheme, in principle. Procedures and paperwork to be submitted for filing may concurrently be streamlined. These measures are intended to strengthen coordination between government agencies and between the central and local authorities, and to inject more predictability and transparency into the government approval process for inbound foreign investment. If revisions do finally get underway, how the exceptions from this general post-investment filing scheme would be interpreted and enforced by the regulators will determine whether the heavy hand of supervision has finally lifted to allow more market forces to shape inbound investment. It should be noted that the policy for inbound investment from regions other than China would not necessarily move in step with the policy for inbound investment from China, which for the foreseeable horizon remains arbitrary and subject to case-by-case determination by the authority.
Obviously, a lot more measures remains to be done (or in some cases, undone) to propel the engine of the domestic economy and foster an environment facilitating innovation and foreign investment, in addition to monetary, fiscal and tax measures and initiatives under consideration to further strengthen Taiwan’s ties to the regional and global economies. As noted above, the new administration is keen to engage in further bilateral trade negotiations with Taiwan’s immediate Asian neighbors and in South-East Asia and South Asia to complement the efforts of businesses already or planning to trade and invest in those regions, despite obstacles not entirely in the government’s control. With China, a significant source of trade for local industry, the future direction of the trade and service pact negotiations held intermittently over the past decade, already controversial within Taiwan, will be influenced by the newly proposed bill monitoring cross-strait economic agreements and talks.
It remains to be seen whether and to what extent the new administration will carry through with its campaign pledges, and how effectively it will be domestically in coordinating with local governments and internationally with Taiwan’s trading partners in executing the necessary reforms.