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Island of Innovation

Nov 14, 2014

Taiwan Foreign Minister David Lin

Occupying a total area of only 36,000 square kilometers and with a population of 23.4 million, Taiwan wields more influence on the global economy than countries around the world with more natural resources and manpower.

“Taiwan is very important and indispensable in the global supply chain, especially for certain industries,” said Taiwanese Foreign Minister David Lin.

Taiwan’s electronics and semiconductor sectors have contributed to its role as a known contributor to the global information technology industry. The country has emerged as a leader, innovating in biotechnology, green energy, and aerospace.

Institutions such as the Industrial Technology Research Institute (ITRI) and the Metal Industries and Research Development Center (MIRDC) have consistently supported the government in its goal to maintain Taiwan’s edge in industry.

With 97 percent of Taiwanese industry composed of small and medium enterprises (SME), the government has helped local companies move up the supply chain from second-tier and third tier suppliers to tier-1 suppliers.

“We helped Taiwan transform from a labor-intensive into a technology-intensive economy. We shouldered very strong responsibilities of Taiwanese industry,” ITRI Chairman Ching-Yen Tsay explained.

2014 marks the thirty-fifth anniversary of the Taiwan Relations Act, the cornerstone of relations with the United States. Accordingly, Taiwan is pursuing ways to enhance economic ties with its third-largest trade partner and biggest source of foreign direct investment, country-wise.

“The relationship between the United States and Taiwan is comprehensive, durable, and mutually beneficial. We feel and see that this is a strong basis for the United States and Taiwan relations to enter into the next era,” said Minister Lin.

“The Trade and Investment Framework Agreement talks should be the stepping stone for bilateral investment agreements. That is still the goal we are pursuing. We are also hoping that Taiwan will participate in the Trans-Pacific Partnership (TPP) negotiations for closer regional economic integration,” Lin added.

The foreign minister believes that Taiwan’s inclusion in the TPP negotiations will strengthen the Taiwanese and global economies alike.

“The relationship between the United States and Taiwan is comprehensive, durable, and mutually beneficial. We feel and see that this is a strong basis for the United States and Taiwan relations to enter into the next era,” - Taiwan Foreign Minister David Lin

“It is very important for Taiwan to establish its value globally. We cannot deny the economic relations and political factors between Taiwan and China. For that reason, Taiwan needs to strengthen its relationship with other countries, especially with a country like the United States. At the same time, this also fits America’s interest in the Asia-Pacific region,” said Anita Chen, Managing Director of Park Strategies Co. (Taiwan), which advises local and foreign clients on investment opportunities in the region.

Though the two countries share the same interests in seeing more prosperity and security in the Asia-Pacific, Taiwan can play an important role in the United States’ so called pivot to Asia.

Taiwan’s role in global policymaking is understated, but international companies have taken note of its strengths in business, notably Taiwanese companies’ improved links to mainland China.

“We have a similar cultural background to China, but we also have a very similar background to the Western countries. If you want to do business with the Chinese, it’s very important for you to understand their market. Taiwan can be the gateway to mainland China,” Deputy Minister of Transport and Communications Men-Feng Wu proposed.

Although Taiwan’s size might be seen as a weakness, the island’s manageable scale is in fact an advantage. Its smaller market has acted as an accurate, low-risk testing ground for companies wanting to enter the massive mainland market.

Aside from being a bridge to China, Taiwan’s location on the eastern edge of East Asia makes the island an ideal hub of a regional market with more than one billion people.

“The project for the Taiwan International Airport was just completed last year. We have six major harbors and a number of which were developed into free trade zones. The ‘distance advantage’ is short to Shanghai, Tokyo, and Seoul. Taiwan can be a very important hub for the Asia-Pacific rim,” Deputy Minister Wu said.

Through its new infrastructure and ethos of innovation, as well as its vital contribution to the global supply chain, Taiwan will gain prominence in the future.


- This report originally appeared in the November/December 2014 edition of Foreign Affairs (Credit: Philippe Le Saux and Elizabeth Arcega)

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Taiwan 2014 was prepared for and originally printed in GMI Post Newspaper.

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