Mayor Cheng gave a keynote speech under the topic “Taiwan Under the US-China Trade War: Our Challenges and Opportunities”, encouraging businesses to come to Taoyuan and set up research and development centers so that more businesses will be willing to invest in Taoyuan.
Taoyuan City Mayor Cheng Wen-tsan attended the event held by the American Chamber of Commerce in Taipei yesterday (23rd) and gave a keynote speech on “Taiwan Under the US-China Trade War: Our Challenges and Opportunities”. Mayor Cheng said that the US-China trade war is a trade conflict between the largest and second largest economies in the world and is impacting countries worldwide. What is concerning for Taiwan is that we rely on both the US and Chinese markets. However, Taiwan’s GDP has not decreased in the past year; instead, more US businesses have transferred their orders to Taiwanese businesses. This shows that the US-China trade war has different influences on different industries. The US-China trade war is a long-term trend, and is not just a simple issue of trade deficits. The confrontation between Chinese bureaucratic capitalism and American liberal capitalism may extend into a new currency war or a technology war where Taiwanese businesses will bear the brunt. The key for Taiwanese businesses to return to Taiwan will lie on whether the government provides sufficient assistance. Taoyuan is actively promoting flagship projects such as the “Taoyuan Aerotropolis Project” and the “Asia Silicon Valley Project” that encourage more companies to set up R&D centers in Taoyuan.
Mayor Cheng mentioned that Taiwanese businesses have a trend of “Cross-Strait division of labor”. At present, businesses that return to Taiwan for investment are mostly leading companies with high value-added products. In the future, Taiwan will be responsible for high-end production whereas China and factories in other areas will be responsible for general production. Many enterprises are still worried about the “five shortages” in Taiwan, among which land shortage is the first shortage. Mayor Cheng said frankly the development of industrial zones in Taiwan at the present stage has been slow in speed and usually takes four to six years from land acquisition to development completion. He suggested the period be shortened to two to three years to meet market demand. The central government proposed the “Three-Dimensional Development Plan for Urban Industrial Zones”; through four different methods: new investment (15%), energy management (5%), industrial space donation and feedback fund contribution (30%), businesses can get as high as 50% of building bulk awarded to them, which allows industrial zones to expand the plants on the spot. Taoyuan implemented the pre-investment model that welcomes investment before developing; and further adopted the “rent first, sell later” model where rents can deduct the selling price in the future. Regulations are also established to prevent companies to hoard lands or earn price differences. These models are found to be beneficial for enhancing the transformation of industrial zones.
Mayor Cheng pointed out that the second “shortage” is water shortage. At present, water in Taipei City, New Taipei City and Taoyuan City come from Feitsui Reservoir and Shimen Reservoir. In the past, Feitsui Reservoir provided only the household water of Taipei citizens and its water consumption was only 35%. Shimen Reservoir had to provide household and industrial water for both New Taipei City and Taoyuan City and had to change water four times a year with huge water consumption. To extend the life span of Shimen Reservoir, the Amuping desilting tunnel was built along with the implementation of the Banxin project. In the future, water demand of New Taipei City will mainly be provided by Feitsui Reservoir to reduce the burden of Shimen Reservoir. Shimen Reservoir can also supply water for Taoyuan and Hsinchu Science and Technology Park regions to meet the goal of better water management and centralized water right.
Mayor Cheng also said that the third “shortage” is electricity shortage, which is also the most focused issue for businesses. Taiwan has cheap electricity prices; however, coal-fired power generation has air pollution concerns, natural gas power generation requires the construction of receiving stations, and at present, solar power and wind power generate not enough electricity, which poses great challenges to the energy transformation of Taiwan. Nuclear-free homeland is already the consensus of the people and therefore, under the premise, the percentage of power generated by green energy should be increased gradually to tackle the problem of pollutions caused by coil-fired power plants. Last year (2018), the number of days where reserve capacity decreases down to below 6% had significantly lowered, indicating that the people have had increased awareness on energy. The government needs to do more in green energy and energy transformation policies and ensure that electricity shortage will not be an issue so that the people and businesses can be more confident.
Mayor Cheng pointed out that the fourth “shortage” in “five shortages” is talent shortage. In the past, the government did not have comprehensive policies and regulations on the recruitment of foreign high-level talent. Through the Act for the Recruitment and Employment of Foreign Professionals, the government has relaxed regulations on visa, residence, insurance, taxation, retirement, and other treatments for foreign professionals; in addition, the government has also worked on the amendment of the Immigration Act so that overseas talent can “come in and stay”. Regulations on residence and long-term stay for overseas Taiwanese and the second generation of overseas Taiwanese are also relaxed. Income tax rates and employee remuneration and bonus policies for foreign professionals are also moderately adjusted to assist multinational companies in retaining talent.
Mayor Cheng said that Taoyuan’s strategies are something worth referencing when dealing with the issues of labor shortage and low income in Taiwan. The average age of Taoyuan citizens is 39 years old, which is the youngest among the six municipalities. Taoyuan also has the highest birth rate in all of Taiwan, and after its upgrade, an average of 23,000 to 24,000 infants are born in Taoyuan every year. As for job opportunities for the youth, the city government implemented the easy employment project for the youth. Unemployed youth, once successfully matched and staying at the company for three and six months, can apply for employment bonuses as high as 21,000 NTD. Employers can also apply for an amount of 10,000 NTD subsidy. The project last year (2018) successfully matched 7,957 people and enhanced the stability of youth employment. The city government also works on reducing the burden of young families through policies such as parenting allowances, childcare subsidies, and social housing.
Mayor Cheng mentioned that once the Capital Repatriation Act is passed, the tax rate for businesses repatriating capital will be 8% for the first year and 10% for the second year. If businesses invest in “designated industries”, including industries of value-added products and key components, the preferential tax rate applied will be as low as 4% for the first year and 5% for the second year. Real estates are restricted for investment. It is hoped that through this policy, capital can be repatriated from overseas and businesses can invest in key industries while promoting the development of the finance industry.
Mayor Cheng stressed that Taoyuan has unique advantages. It is the city where Taoyuan International Airport locates and it is also close to Taipei Port. The dual-port effect gathers people, goods, and funds. The city government is active in promoting airport economics and developing industries such as logistics and aerospace maintenance and repair. Currently, Taoyuan has over 1,800 logistics companies and the international logistics center also settles in Taoyuan. It is hoped that in the future, Taoyuan can further develop the MICE industry. The second advantage of Taoyuan lies on its 32 industrial zones. The industrial clusters are comprehensive and the annual industrial output of Taoyuan is close to 3 trillion NTD, which is the number one in Taiwan. The city government also actively assists companies in acquiring appropriate industrial lands, with a more competitive land price than any other counties and cities in northern Taiwan. At present, there are seven industry parks in planning and developing, and the city government also established a one-stop service window to help solve problems for businesses.
Mayor Cheng pointed out that the Taoyuan Aerotropolis Project plans to construct the third terminal, the third runway, and a large-scale industry zone, free-trade zone, commercial zone, and residence zone. The total development area for the first phase is approximately 2,600 hectares, among which 422 hectares are for the industry zone and 120 hectares for the free-trade zone. Next year (2020), part of the land for the aerotropolis will be acquired and the project will initiate the development phase. The Taoyuan Aerotropolis Project will be an important case of Taiwan’s major construction. In addition, Tsing Hua University, Chiao Tung University, and Taiwan Ocean University are all optimistic about Taoyuan’s development outlook and chose to collaborate with Taoyuan and established biomedical R&D centers or incubators. The city government will accelerate the development speed of business investment and industry zones, realize the concept of airport economics, and share the benefits brought by the airport with citizens.
The Asia Silicon Valley Project is based in Taoyuan and connects the whole ICT (information and technology) industry in northern Taiwan. The project aims at developing the IoT (Internet of Things) industry and building an innovative start-up eco-system that is research and development based. At present, the project plans to establish the Asia Silicon Valley Innovation and Research and Development Center, and the Taoyuan Exhibition Center in Qingpu. The Qingpu Special District and Aerotropolis Planning Zone will be the demonstration sites for IoT-related industries such as 5G, autonomous cars, and smart traffic.
Mayor Cheng added by saying that Qingpu is close to Taoyuan International Airport and is not far away from cities such as Hsinchu and Taipei, making it advantageous in developing into the third core city of Taoyuan. Taoyuan International Baseball Stadium is also located in Qingpu, and in addition to hosting baseball games, the stadium also holds major concerts, attracting hundreds of thousands of people. In the future, Qingpu will be more convenient to live in and will become the demonstration site of smart city and an exchange center for innovative talent.
Mayor Cheng emphasized the fact that Taoyuan is number one in “factory operating income”, “research and development investment”, and “number of employment” in Taiwan. Taoyuan has attracted investment of 1.7 billion NTD from overseas Taiwanese businesses in the past years and enjoyed high rankings in Taiwan. Companies such as Quanta and Delta Electronics chose to establish R&D labs or expand plants in Taoyuan, showing that Taoyuan is the first-choice city for Taiwanese businesses when returning to Taiwan.
Lastly, Mayor Cheng mentioned that in the US, the developments of democratization and economy are on the same page and so are Taiwan. However, in China since its opening up in 1978, its economy is growing but so are its nationalism and military ambitions. Democratic mechanisms are still lacking in China, and economic resources and power are highly concentrated in the hands of the government. It is yet to be clear how the US-China trade war will evolve in the future and how it will end, and the promises made by China at the present stage require a verifiable execution mechanism. However, the Chinese market is too large in scale for Taiwan to give up on. It is the responsibility of the government to better construct Taiwan, enhance its government efficiently, and capture market opportunities in order to open up new paths for businesses.
President of the American Chamber of Commerce in Taipei William Foreman, Director-general of the City Government Secretariat Yen Tzu-chieh, Deputy Director of the Department of Public Information Yao Tun-ming, and Vice President of Taoyuan Aerotropolis Corporation Hsieh Huai-hui also attended today’s event.
*This news release is provided by Department of Public Information.