Taiwan: Republic of China - interview on foreign investment and business climate with government representative Mou-Shih Ding - Special Advertising Section - includes related articles - Interview

Nation's Business, Oct, 1994

American businesses of all sizes remain keenly alert to trade and investment opportunties in the Asia-Pacific region, which for the past 30 years has led the world in economic growth.

As the geographic and business heart of that region is the Republic of China on Taiwan (ROC). Taiwan is situated on the doorstep of central and southern mainland China, with its 1.2 billion consumers, and midway between the vibrant economies of Japan and South Korea on the north and the emerging economies of the Philippines and Vietnam on the south. The closeness of present commercial ties between the American and Tawanese business communities is evidenced in the fact that, although the ROC has but 21 million people, it is America's sixthlargest trading partner.

In view of continuing strong U.S. interest in the ROC as a business destination, Mou-Shih Ding, representatives of the Coordination Council for North American Affairs' office in the U.S. and theROC's de facto ambassador, responds on the following pages to questions that he is frequently asked about foreign investments and political affairs in his country.

The ROC tops many wellrespected lists of desirable places to invest. Why is Taiwan such an attractive home for foreign investment?

The ROC on Taiwan is, indeed, very attractive to foreign investors. Business Environment Risk Intelligence (BERI), a privatesector research organization, consistently ranks Taiwan among the very top countries in investment environment. And according to BERI's five-year forecast of Profit Opportunity Recommendation (POR), in which it compares the investment outlook of all nations, the ROC is No. 2 in the world in terms of favorable business climate.

The ROC is attractive first and foremost because of its economic strength. People around the world are familiar with our economic success story. In the space of three decades, we were able to transform ourselves from a mainly agrarian community into a highly productive, consumer-oriented society on a par with enterprising countries in the West. Our gross national product was $210 billion at the end of 1993, 20th-highest in the world. Per-capita income increased from $150 in 1950 to $10,570 in 1993 and is expected to reach $20,000 by the year 2000. We are now the world's 13th-largest trading nation and the sixth-largest trading partner of the U.S. Our foreign-exchange reserves now stand at almost $90 billion, ranking second globally.

Furthermore, we are maintaining a high level of economic growth. Our GNP growth over the past four years has averaged 6 percent per year and is expected to remain at close to this level. At the same time, the economic growth of the ROC has been balanced. We have managed to keep inflation and unemployment under control; disparities in income distribution have remained among the lowest in the world.

Recently, we have been making a successful transition from manufacturer of Iow-tech items, such as textiles, toys, and footwear, to producer of high-tech products like computers and fiber optics. In fact, more than half the world's personal-computer components are made or assembled in Taiwan, including 70 percent of all motherboards and 80 percent of computer mice.

A second crucial factor is political stability. Seven years ago, the ROC commenced a peaceful transition to full democracy. All members of its representative bodies have been popularly elected within the past two and a half years, and a multiparty political system has taken root. We often refer to our democratization as the "quiet revolution," because it has proceeded gradually and smoothly.

Our ultimate goal is to create a system in which private entrepreneurship, national prosperity, and democracy can continue to flourish. in this way, we can ensure that the ROC remains a top choice for foreign investors for decades to come.

Why is the ROC a more desirable investment destination than neighboring nations, especially mainland China with its extremely low labor costs?

The ROC has a solid economic foundation that includes vast amounts of capital, a large number of experienced entrepreneurs, a well-developed industrial system, and a comprehensive external economic and trade network.

Mainland China may have lowcost labor, but the ROC labor force is far better educated and more highly skilled. For example, 93 percent of our population is literate, and more than 11 percent have higher education.

Our infrastructure is also superior to that of the mainland and many other countries in the region, and we are now in the process of making major infrastructure improvements. Our SixYear National Development Plan, set for completion in 1996, has a budget of $223.7 billion. Top priorities include improving our transportation and telecommunications systems and constructing industrial and commercial parks.

Economic liberalization is yet another advantage for potential investors. In 1990, we applied for membership in the General Agreement on Tariffs and Trade (GATT) as a developed economy. In preparation for accession to the GATT, which we expect to gain in the near future, we have been liberalizing our economy to bring it into line with international standards. We have lowered tariffs and opened our financial industries to foreign investment. We have also greatly strengthened protection for intellectual-property rights.