Taiwan YOUR GATEWAY TO ASIA Taiwan External Trade Development Council

Taiwan YOUR GATEWAY TO ASIA Taiwan External Trade Development Council
Ladies and gentlemen, welcome to the “Invest in Taiwan—Access the World” seminar, presented by the Taiwan External Trade Development Council and its Strategic Marketing Department Business Alliance Section. Taiwan External Trade Development Council Business Alliance Section Strategic Marketing Department

Outline Economic Development Vision for 2015 Taiwan’s competitiveness
Investment & trade figures Why invest in Taiwan Investment cost analysis tax structure Investment incentives Commercial offices costs Human resources (Hi-tech & working labor by sector) Procedures of setting up companies Site selections TAITRA’s business alliance services Related Contact windows Industrial investment opportunities

Economic Development Vision for 2015

Unemployment rate below 4% Income gaps below six-fold
Economic Development Vision For 2015 Targets to be Achieved GDP growth: 5% in 2015 GDP per capita: US$15,000 in 2005  US$20,000 in 2009  US$30,000 in 2015 CPI less than 2% Unemployment rate below 4% Income gaps below six-fold

Financial Market Manpower Social Welfare
Economic Development Vision For 2015 Five Master Plans Industrial Development Public Construction Financial Market Manpower Social Welfare

Project Structure Economic Development Vision For 2015
Industrial Development Project Structure Improve Investment Climate Develop & Upgrade Industries

1 2 3 4 5 Economic Development Vision For 2015 Provide land incentives
Improve Investment Climate 1 Provide land incentives 2 Sufficient supply of manpower 3 Offer financing assistence 4 Improve the EVP inspection flow 5 Build mechanism to drive FDI inward

Strategic Industries Upgrading Balancing
Economic Development Vision For 2015 Develop and Upgrade Industries WLAN& ICT, digital home, healthcare & medical devices, green industries, autotronics Strategic Industries Create brand, marketing value and innovation Upgrading Assisting SME (small & medium size companies) Develop local industries Balancing

A B C Economic Development Vision For 2015
Industrial Manpower Integrate the sources of incubation centers/universities/industries A Recruit international talents B Train skilled and professional talents for strategic and services industries C

TAIWAN’S COMPETITIVENESS

Taiwan’s Competitiveness
Overall Ranking Asian WEF Global Competitiveness Report (among 125 countries) 13th 4th Global Competitiveness Index: Basic Requirements 21st Global Competitiveness Index: Efficiency Enhancers 14th 3rd Global Competitiveness Index: Innovation Factors 9th 2nd Business Competitiveness Index 5th WEF: Global Information Technology Report (among 115 countries) 7th

18th 19th 6th 5th Taiwan’s Competitiveness
IMD: 2005 World Competitiveness Ranking (4th in Asia) EIU: 2006 Business Environment Ranking (among 82 countries) 19th (3rd in Asia) BERI: Investment Environment Risk Assessment Report 2006 6th (3rd in Asia) ACGA Corporate Governance Watch 2006 Ranking 5th

Investment & Trade Figures

TAIWAN Investment & Trade Figures Basic Statistics Capital Taipei
Location East Asia Land 35, 980 km2 Population 22,876,527 (Dec. 2006) Labor Force 10,616,000 (Nov. 2006) Literacy 96.1%

Fact Book Investment & Trade Figures Basic Statistics 23 18 16 20 82 3
Ranking GDP US$ Billion (2007 forecast) 23 Real Growth Rate 4.14% 18 GDP (PPP) US$ 719 Billion 16 Per Capita US$ 30,874 20 Industrial Production Growth Rate 4.1% (Est. 2005) 82 Reserves of Foreign Exchange US$ Billion (Nov.2006) 3

2007 Economic Growth Forecast
Investment & Trade Figures Basic Statistics 2007 Economic Growth Forecast 2006 Estimates 2007 Forecast World 3.8% 3.2% USA 2.2% EU 2.5% Japan 1.7% China 10.2% 8.9% India 7.7% 7.9% Taiwan 4.1% 4.2% South Korea 5.0% 4.3% Singapore 7.0% 5.5% Source: UN “World Economic Situation and Prospects 2007” annual briefing

BASIC STATISTICS Taiwan's External Trade Value 1994-2006
(in Billion USD) This is a chart of Taiwan’s External Trade from , showing a steady growth throughout the years, with 2 dips back in 1998 and Nevertheless, we can observe that, overall, Taiwan’s external trade value grows with year, with exports leading the country’s external trade. Source: Bureau of Foreign Trade (BOFT), MOEA

BASIC STATISTICS Taiwan's External Trade in 2006 (Exports and Imports/By Country) And here’s the graph of Taiwan’s main external trade partners. Our biggest partners are Japan, China and the United States, which, the sum of trade with these countries exceeds 45% of the entire external trade. Hong Kong, South Korea, Germany, Singapore, and Malaysia and other Southeast Asian countries are also important partners. Source: Bureau of Foreign Trade (BOFT), MOEA

Investment & Trade Figures
Basic Statistics Approved Overseas Taiwanese and Foreign Investments (in Million USD) Source: Investment Commission, MOEA

Investment & Trade Figures
Basic Statistics Approved Overseas Taiwanese and Foreign Investments in 2006 (By Industry) Source: Investment Commission, MOEA

WHY INVEST IN TAIWAN Now… some of you may wonder, of all the countries around the world why invest in Taiwan? Why should it be Taiwan?

Why Invest in Taiwan Strengths of TAIWAN
Industry clusters & complete supply chain Strong R&D capabilities An emerging capital market Abundant resource of skilled talents Efficient logistics operation Gateway to China and the ASEAN markets Sourcing and marketing through Taiwanese Taiwan offers several strengths, in which, combined, make Taiwan a very adequate place for investments, not only for the production of electronics, but for other key industries as well. Some Taiwan’s strengths include: Industry clusters located on different regions of the island and a complete supply chain linking every segment of the chain for a better production and service Taiwan has high literacy rate and large amount of highly educated manpower, creating abundant skilled talents eager to perform and excel in their professions Strong R&D capabilities. Both government and the industry sector have strong incline in increasing the emphasis of R&D Effective logistics operation, that speeds up the pace of operations, bringing better service. Many foreign companies have created logistics centers, some of which I will mention later in the presentation Strategic geographical location allows Taiwan to be considered as an important gateway to China and the ASEAN markets. In addition, Taiwan shares similar background culture and language with other Asian countries, which makes Taiwan the place to invest for future expansions in Asia. Sourcing and marketing through Taiwanese: Taiwan keeps close commercial ties with Southeast countries through a large amount of investments in this region. Taiwan is a major investor in ASEAN markets, particularly in Vietnam, Cambodia, Thailand, Malaysia, and Indonesia, as well as in China

Automobile & Motorcycle
Why Invest in Taiwan Distribution Map of Industry Clusters Hat Automobile & Motorcycle Hosiery Automobile Parts Machinery Bicycle Optoelectronics Ceramics & China Petrochemical Clothing/Fabrics Saxophone Dye Industry Screw Fabrics/Cloths Semiconductor Faucet Shipbuilding & Steel Fishnet Synthetic fiber & Yarn Floriculture Foods Towel Glass Wood-carving

#1 #1 #1 #1 #1 #1 #1 #1 #2 #1 Why Invest in Taiwan
Complete supply chains of ICT products Source: IDB, Taiwan (2006) Provider of LCD Monitors Market Share: 68% Worth: $96.87 BILLION Provider of Chip Foundry Service Market Share: 69.2% Worth: $11.6 BILLION Semiconductor Packaging Market Share: 44.8% Worth: $5.5 BILLION #1 #1 #1 Provider of Cable Modems Market Share: 73% Worth: $838 MILLION Provider of Notebook PCs Market Share: 78.3% Worth: $30.3 BILLION Provider of Mask ROMs Market Share: 91.2% Worth: $280 MILLION #1 #1 #1 I can tell you some reasons why Taiwan can be a good investment location for your company. Taiwan is the number 1 provider of many important items, most of those pieces have become a irreplaceable part in our daily lives: Taiwan is the number 1 provider of LCD monitors with 68% of the world’s market share worth $14 Billion, and the number 1 provider of Chip Foundry Service, with a 70% of the market share. Number 1 in semiconductor packaging, with 36% of the market share worth of 1.8 billion dollars. Taiwan’s also the number 1 producer of cable modems, notebook PCs, PDAs, and wireless LAN equipment. The astonishing 72% of market share in the notebook industry brings Taiwan a market value of 22 billion dollars. The market share for PDAs is of 79%, and 83% for the wireless LAN equipment sector. With these numbers, there’s no doubt that Taiwan is number 1 supplier in the world. Taiwan is also the 2nd largest provider of TFT-LCD panels and servers, with market shares over 30% worth billions of dollars. These indicators show Taiwan’s strength as a top supplier in the computer electronics industry as well as the electrical manufacturing sector. Yet it doesn’t mean that Taiwan is competent in the production of those sectors only. There are other factors that indicate Taiwan’s advantageous investment environment. I will explain further in the upcoming slide… Provider of Wireless LAN Equipments Market Share: 88% Worth: $1.9 BILLION Provider of ADSL Modems Market Share: 78% Worth: $1.1 BILLION Provider of Analog Modems Market Share: 86% Worth: $227 MILLION #1 #1 #2 #1

Why Invest in Taiwan Strong R&D Capabilities
Research institutions & incubation centers R&D expenditures from 2.4% of GDP in 2004 to targeted 3% of GDP in 2008 In 2005, Taiwan ranks 4th in number of patents filed and granted with the U.S. Patent and Trademark Office (USPTO) In 2005, Taiwan filed patent applications to JPO and 679 applications to EPO 27 multinational companies establishing 30 R&D centers in Taiwan: Taiwan has strong R&D capabilities, with R&D expenditures equivalent to 2.6% of the country’s GDP. Taiwan is also host of research institutions and incubation centers. Multinational companies that have set R&D centers in Taiwan include: Synopsys, Intel, HP, Dell, Sony, IBM, Motorola, AIXTRON, Microsoft, Ericsson, Dupont, Alcatel, NEC, and many others. Source: Directorate-General of Budget, Accounting and Statistics, USPTO, and Intellectual Property Office

691 534 223 219 Why Invest in Taiwan US$572.8 Billion
An Emerging Capital Market Taiwan Stock Exchange (Dec 2006) Listed Companies 691 Market Capitalization US$572.8 Billion Over-the-Counter／Venture Capital (Dec. 2006) Listed Companies of OTC Market 534 Listed Companies of OTC- Emerging Market 223 Listed Venture Capital Companies 219 On the capital side, Taiwan has an emerging capital market. Based on June 2006 data, Taiwan has 691 companies listed on the Taiwan Stock Exchange with a market capitalization of US$523 billion. As for the OTC and the Venture Capital section, there are 519 companies listed on the OTC market, 257 under OTC Emerging market companies, and 228 companies listed as venture capital companies. Source: Taiwan Stock Exchange Corp., GreTai Securities Market, Taiwan Venture Capital Association

Major International Bank Alliances
Why Invest in Taiwan An Emerging Capital Market Banks (Dec 2006) Domestic Banks／Branch Offices 43／3,276 Foreign Banks／Branch Offices 33／65 Citibank, Bank of America, Societe Generale, ABN AMRO, Deutch Bank, American Express, JP Morgan Chase, BNP, UBS, ING, MUFG, SMBC, HSBC, Bangkok Bank, etc. Major International Bank Alliances Foreign bank Domestic bank Shinsei Bank Jih Sun Financial Holdings Co. Standard Chartered Bank Hsinchu International Bank AIG Taiwan Central Insurance HSBC Far Eastern International Bank GE Consumer Finance Cosmos Bank In the banking and insurance sector, Taiwan has 47 domestic banks operating with 3223 branch offices island-wide and 36 foreign banks such as Citibank, Bank of America, ABN AMRO, Deutch Bank, American Express, JP Morgan Chase, UBS, HSBC, with a total of 68 branch offices. There are a total of 37 domestic insurance companies, 16 of which covering non-life insurance and 21 companies covering life insurance, and 16 foreign insurance companies, 9 of which are non-life and 7 life insurance companies. Among the foreign insurance companies we can find entities such as ING, MetLife, Alico, Manulife, Winterthur, Zurich, BNP’s Cardif, Mitsui Sumitomo, among others. Source: FSC, Executive Yuan

In 2005, graduates of higher education in Taiwan:
Why Invest in Taiwan An Abundant Resource of Skilled Talents In 2005, graduates of higher education in Taiwan: > 210,763 with Bachelor’s Degree > 42,334 with Master’s Degree > 2,165 with Ph.D. or Doctorate Degree HiRecruit Recruiting overseas hi-tech talents to work in Taiwan In Taiwan, hundreds thousands of people receive high-education degree each year. In 2004, there were over 192,000 students graduated with a bachelor’s degree, over 35,900 people got their master’s degree, and over 1,900 people received their Ph.D. or Doctorate degree. This means that there were over 230,000 people who received higher education certificates. HiRecruit, a recruiting organization operated by the Ministry of Economic Affairs of the government of Taiwan, actively recruits hi-tech talents from overseas to work in Taiwan’s industrial sector. The number of hi-tech recruits has grown from 599 in 2003 to 667 in 2005, inserting talented expertise in Taiwan’s labor force. Hire + Recruit Hi-tech + Recruitment Human Resource Source: Department of Statistics of Executive Yuan

Advantageous geographic location in Asia-Pacific region
Why Invest in Taiwan Efficient Logistics Operation Advantageous geographic location in Asia-Pacific region Taipei 2h 55m Seoul 4h Tokyo 4h 15m Shanghai 3h 25m Hong Kong 3h 05m Manila 3h 30m Singapore 4h 55m Sydney 6h 15m Average Flying Time to 8 major Asia-Pacific cities Average Maritime Navigation to 6 major Asia-Pacific harbors Tokyo 110h Shanghai 78h Hong Kong 54h Kaohsiung 53h Singapore 124h Manila 68h I think I’ve mentioned quite a few times about Taiwan’s advantageous geographical area, now I have quantitative information to support my claim. As you can see, locating at an advantageous geographic location allows Taiwan to travel within a short period of time to 7 other Asia-Pacific cities of Hong Kong, Manila, Seoul, Shanghai, Singapore, Sydney, and Tokyo. Taiwan has the lowest average flying time of 2hours and 55 minutes, compared to 3 hours and 25 minutes from Shanghai, 4 hours from Tokyo and Seoul, and 6 hours 15 minutes from Sydney. On the other side of the chart, it shows the average navigation time of the 6 major Asia-Pacific harbors Hong Kong, Kaohsiung Manila, Shanghai, Singapore and Tokyo. Kaohsiung also has the shortest average maritime navigation time of 53 hours to other harbors, while it takes 78 hours from Shanghai and up to 124 hours from Singapore.

World Port Handling Capacity Ranking
Why Invest in Taiwan Efficient Logistics Operation Unit: 10,000 TEU World Port Handling Capacity Ranking Ranking Harbor Country Capacity Growth Rate 2005 2004 1 2 Singapore 2,319 2,133 8.7% Hong Kong China 2,260 2,198 2.8% 3 Shanghai 1,808 1,456 24.2% 4 Shenzhen 1,620 1,365 18.7% 5 Busan South Korea 1,184 1,149 3.1% 6 Kaohsiung Taiwan 947 971 -2.5% 7 Rotterdam The Netherlands 929 829 12.0% 8 9 Hamburg Germany 805 700 14.9% 10 Dubai UAE 762 643 18.5% Los Angeles USA 748 732 2.2% Source: Ministry of Transport and Communications

Why Invest in Taiwan Efficient Logistics Operation Almanac (2006):
2004 Air Cargo Volume Ranking 1 Memphis-MEM (U.S.) 2 Hong Kong-HKG (China) 3 Tokyo-NRT (Japan) 4 Anchorage-ANC (U.S.) 5 Seoul-ICN (Korea) 6 Los Angeles-LAX (U.S.) 7 Frankfurt-FRA (Germany) 8 Singapore-SIN (Singapore) 9 Miami-MIA (U.S.) 10 Louisville-AIZ (U.S.) 11 Taipei-TPE (Taiwan) 12 New York-JFK (U.S.) 13 Chicago-ORD (U.S.) 14 Shanghai-SHA (China) 15 Paris-CDG (France) On this next slide, Time Almanac shows the 2004 world’s Air cargo volume ranking, and Taiwan’s Taipei TPE Chang-Kai-Shiek airport ranked 11 in the world. Source: CAA, MOTT

Why Invest in Taiwan Efficient Logistics Operation
Transportation hubs to Southeast Asian countries, Europe and USA (Weekly) 582 Freighter Flights ,582 Passenger Flights Not only is Taiwan efficient in air cargo, it is also considered as a important hub of transportation to 31 cities in Southeast Asia, 12 cities in Europe and 13 cities in North America, with 582 freighter flights and 2582 passenger flights weekly. 34 cities in Asia 11 cities in Europe 14 cities in America 3 cities in Oceania cities in Middle East Asia Source: CAA, MOTT

Why Invest in Taiwan Efficient Logistics Operation
Global Distribution Centers in Taiwan 13 multinational companies set up global distribution centers Taichung Harbor Kaohsiung Harbor Keelung Harbor C.K.S. Int’l Airport Central Int’l Airport Kaohsiung Int’l Airport There are also 9 multinational companies who set up their distribution centers in Taiwan, playing an important role in the logistics operations chain, they are: Samancor, Fujitsu, Intel, IBM, SmartLink, Hitachi, Bayer, Applied Materials, and Medion. There are 3 major harbors and 3 international airports in Taiwan, they are Keelung Harbor and TPE Chang-Kai-Shek International Airport located on the north, Taichung Harbor and the Central International Airport in the central region, and Kaohsiung Harbor and Kaohsiung International Airport situated at south of the island, all providing effective and efficient logistics and transportation means for goods and services coming in and going out of Taiwan. Source: IDB, MOEA

Why Invest in Taiwan Gateway to China and the ASEAN Markets
And here’s a table of the amount of Taiwanese investments in China, approved by the Ministry of Economic Affairs since the 90s up till January 2006. The number of investment applications was at its peak in 2004 with 2004 applicants, and the investment amount reached over US$7000 million. Source: DOIS, MOEA

Why Invest in Taiwan Gateway to China and the ASEAN markets
Our next slide shows the growth in the amount of overseas Taiwanese investors in the ASEAN countries. From approximately 1000 investments in the early 90s, it as more than doubled by the end of So Taiwanese investors have really devoted their investments in the Southeast Asia, and as you can see, there’s a steep increase in investment in Vietnam since 2000. Sources: DOIS, MOEA

Why Invest in Taiwan 1st 3rd 6th 7th
Gateway to China and the ASEAN markets Taiwanese Investors in Major ASEAN Countries (up to November 2006) Unit: Million US$ 1st in Vietnam US$8,050.06 3rd in Cambodia US$524.00 in Thailand US$11,852.64 in Malaysia US$9,719.83 6th in Indonesia US$13,844.37 in Philippines US$1,343.89 7th in China US$53,657.19 In a nutshell, this is the ranking of Taiwanese investors in major ASEAN countries until 2005. And Taiwan is ranked pretty much on the top 3 for most of the countries except in Indonesia and in the Philippines, but it’s the number 1 investor in Vietnam, 2nd when it comes to investing in Cambodia, and 3rd in Thailand and in Malaysia. Source: DOIS, MOEA

Why Invest in Taiwan Gateway to China and the ASEAN markets
And this slide tells us the amount of the investments over the years, with a leading investment in Indonesia of over US$14 billion. That is a huge amount, and I guess it shows how much capital the Taiwan has and how much capital Taiwanese investors are willing to put in in countries that prove its potentials. Sources: DOIS, MOEA

Sourcing with TAIWANESE
Why Invest in Taiwan Sourcing & Marketing through Taiwanese Based in TAIWAN Sourcing with TAIWANESE investors all over ASIA Access ASEAN Markets Access CHINA Market Access EUROPEAN Markets Access AMERICAN Markets Well… Maybe you will wonder, how does this information benefit my company? What is the relationship or connection that exists between Taiwanese investments and investing in Taiwan? Here’s how the investment channel goes: When you invest in Taiwan, you can set up any type of office, a subsidiary, a branch office, a representative office, an R&D center, a plant or any other forms of entity, this base in Taiwan will allow you to be in contact with other local Taiwanese companies, thus source with Taiwanese investors who have previously invested all over Asia. This, will lead you to have access to the ASEAN and Chinese market as well, helping you and your company to indirectly expand in the Asian market by just settling in a single country, which is Taiwan. But this does not mean that your investment in Taiwan will only limit you to Asian access. Taiwanese investors also have their investments set in the European and American countries, and therefore, aiding you to map around the globe.

Total Procurement in Taiwan
Why Invest in Taiwan Sourcing and Marketing Through Taiwanese 2006—Top 20 IPOs Total Procurement in Taiwan US, CJK and European Estimates of total Procurement in Taiwan Unit: US$B IPO 2006 Procurement Breakdown TOP 9 US IPO's TOP 8 CJK IPOs Top 3 European IPOs TOP 20 IPOs & Growth 2005 41.0 19.3 3.7 64.0 2006 Est. 44.1 22.43 4.4 70.93 2006/2005 Growth (%) 7.6% 16.2% 18.9% 10.83% Total IPO procurement in 2006—US$73.3 billion Top 20 IPO procurement in 2006—US$70.93 billion, a 10.83% increase from 2005 Source: Respective companies’ IPOs in Taiwan, OCIID/MOEA, MIC/III, Survey of IPO Purchasing in Taiwan in 2006, December 2006

United States China, Japan, Korea European companies
Why Invest in Taiwan Sourcing and Marketing Through Taiwanese 2006—Top 20 IPOs in Taiwan United States China, Japan, Korea European companies This graph shows the top ICT-IPO companies to Taiwan in the year 2005, and these companies are graphed according to their procurement amount. Source: Industrial Development Bureau, MOEA

Investment Cost Analysis

Investment incentives Commercial offices costs
Investment Cost Analysis Enticing Incentives for Investments Tax structure Investment incentives Commercial offices costs Human resources (Hi-tech & working labor by sector) Site Sections

Source: Deloitte& Touche Taiwan Compile
Investment Cost Analysis Tax Structure (6-1) Classification of taxes and collection Authority NTA/National Taxes City/County Tax Office/Municipal Taxes Income Tax Land Tax Estate and Gift Tax Building Tax Business Tax (VAT and Non-VAT) Deed Tax Commodity Tax Amusement Tax Tobacco and Wine Tax Stamp Tax Securities Transaction Tax Vehicle License Tax Mining Lot Tax Source: Deloitte& Touche Taiwan Compile

Profit-seeking enterprise income tax rates
Investment Cost Analysis Tax Structure (6-2) Profit-seeking enterprise income tax rates Taxable Income Bracket (NT$) Tax Rate Under $50,000 None $50,000-$100,000 15% of total taxable income but the income tax liability shall not exceed 50% of the portion of taxable income over $50,000 Over $100,000 25% on the portion of taxable income over $100,000 Source: Deloitte& Touche Taiwan Compile

Source: Taxation Agency, Ministry of Finance
Investment Cost Analysis Tax Structure (6-3) Taiwan Double Taxation Agreements (Comprehensive)-1 Country Date of Signing Effective Date Australia 5/29/1996 10/11/1996 Gambia 7/4/1998 11/4/1998 Indonesia 3/1/1995 1/12/1996 Macedonia 6/9/1999 Malaysia 7/23/1996 2/26/1999 New Zealand 11/11/1996 12/5/1997 The Netherlands 2/27/2001 5/16/2001 Singapore 12/30/1981 1/1/1982 South Africa 2/14/1994 9/12/1996 Source: Taxation Agency, Ministry of Finance

Investment Cost Analysis Tax Structure (6-4) Taiwan Double Taxation Agreements (Comprehensive)-2 Country Date of Signing Effective Date Vietnam 4/6/1998 5/6/1998 Swaziland 9/7/1998 2/9/1999 UK 4/8/2002 12/23/2002 Paraguay 4/28/1994 - Senegal 1/20/2000 9/10/2004 Thailand 7/9/1999 Sweden 6/8/2001 11/24/2004 Philippines 5/29/2002 Belgium 10/13/2004 initialed Source: Taxation Agency, Ministry of Finance

Investment Cost Analysis Tax Structure (6-5) Taiwan Double Taxation Agreements (Shipping or Air Transport) Country S: Shipping A: Air Transport Date of Signing Effective Date Canada A 7/10/1995 Date of signing EU S 8/1/1990 Germany 8/23/1988 Israel 6/30/1998 Japan S&A 9/4/1990 Korea 12/10/1991 Luxembourg 3/4/1985 Macau 12/18/1998 2/26/1999 The Netherlands 6/7/1989 1/1/1988 Norway 6/7/1991 Thailand 6/30/1984 United States 5/31/1988 Source: Taxation Agency, Ministry of Finance

Investment Cost Analysis
Investment Incentives Tax Incentives Government Participation in Investment Non-Tax Incentives Low-Interest Loans Web Information Source: Industrial Development Bureau & Department of Industrial Technology, MOEA

Tax Incentives Company Emerging, Important, and Strategic Industries Private Participation in infrastructure Projects Establishment of Logistics and Distribution Centers Free Trade Port Establishment of Operation Headquarters Indirect Tax Incentives for Science-Base Industrial Park/Economic Processing Zones And more

1 2 3 Company Investment Cost Analysis Tax Incentives
Incentive for Research & Development 2 Incentive for Personnel Training 3 Incentive for New Equipment or Technology

Incentives for New Equipment or Technology (Tax Reduction Rates)
Investment Cost Analysis Tax Incentives Incentives for New Equipment or Technology (Tax Reduction Rates) Industry For Automation, Greenhouse Gas Emissions Reduction, and Promotion of an Enterprise’s Digital Efficiency New Equipment New Technology Minimum Investment Telecommunication, manufacturing, technical services 11% 10% NT$600,000 Construction 8% 5% NT$2,000,000 Communication, movie production, agriculture, waste recycling, wholesale and retail

Emerging, Important, and Strategic Industries
Investment Cost Analysis Tax Incentives Emerging, Important, and Strategic Industries Investment Tax Credit for Shareholders Incentive Five-Year Tax Holiday for Companies

Tax Incentives Emerging, Important, and Strategic Industries For more information Please go to Information Industry Aerospace Biotechnology Digital Content Telecommu- nications Industry Source: Industrial Development Bureau

Private Participation in Infrastructure Projects
Investment Cost Analysis Tax Incentives Private Participation in Infrastructure Projects Five-Year Tax Holiday for a Private Institution Indirect Tax Incentives New Equipment or Technology or Research & Development or Personnel Training Investment Tax Credit for Shareholders

Establishment of Logistics and Distribution Centers
Investment Cost Analysis Tax Incentives Establishment of Logistics and Distribution Centers A confirmation letter from the IDB & Tax return reviewed by the CPA 1. 2. 3. Please go to for detailed information 4. The sales of products stored shall be over USD6,060,5610 for distribution The export sales is over US$3,030,300 or 10% of the total sales

Tax Incentives Free Trade Zone Free Trade Zone Ship or airplane arrival Area for simple processing, warehousing, and transshipping Movement of imported or exported goods Customs territory, bonded zone In-depth value-added processing area Business Service center Movement of people The breakthroughs: 1.Exemption from customs clearance 2.Tax exemption 3.Granting selective landing visa for foreign business personnel 4.Autonomous management

Tax Incentives The incentives for attracting businesses to free trade zones Facilitating business activities (streamlining procedures for granting entry and issuing landing visas to business personnel; providing exhibition facilities and services) Allowing in-depth value-added processing (e.g. assembling, packaging, manufacturing) Free Trade Zones Ease of financial operations (permitting setup of holding companies for offshore investment, and allowing OBUs to handle foreign-currency transactions) Relaxing hiring ratio for foreign workers Rooting deeply in Taiwan while deploying globally Duty & tax exemption (exempt from customs duties, commodity tax, sales tax, tobacco and wine excise tax) Within physical territory, but outside the customs territory (autonomous management; exempted from customs checking and inspection, as well as cargo tracking and escort) Source: CEDI, CEPT, Executive Yuan

Tax Incentives Tax exempted Taxation measures for Free Trade Zones In compliance with regulations for bonded goods Other free trade zones Tax exemption for transshipping goods and facilities used by the businesses Gate Bonded zones, EPZs, Science parks Free Trade Zone FTZ enterprise FTZ enterprise 0 Sales Tax Exempted taxes： Customs duties, commodity tax, sales tax, tobacco and wine excise tax, public health and welfare dues on tobacco products, trade promotion service fees, and harbor service dues In compliance with regulations for exported goods Customs territory 1. In compliance with regulations for imported goods 2. Special regulations for goods processed within FP and transported back to FP Gate

1 2 3 Investment Cost Analysis Tax Incentives
Establishment of Operation Headquarters 1 2 3 A confirmation letter from the IDB & Tax return reviewed by the CPA Incentives for Provision of Talent Please go to for detailed information

Acquisition of Related Technologies on Operation and Production
Investment Cost Analysis Tax Incentives Acquisition of Related Technologies on Operation and Production Tax Exemption on the Payment of Royalty A Deferment on the Payment of Income Taxes on Stock Acquired in Exchange B Stock Options on Stock Acquired in Exchange C

Source: Deloitte& Touche Taiwan
Investment Cost Analysis Tax Incentives Indirect Tax Incentives for Science-Based Industrial Park/Economic-Processing Fee/Bonded warehouse Indirect Tax Incentives Economic Processing Zone Science-Based Industrial Park Bonded Factory/ Warehouse Import of raw materials, fuel, supplies, semi-finished material from foreign country Duty-Free/ VAT-Free Import of machinery Dutiable 5% VAT (refundable) Export of its product/service to foreign country 0% VAT Purchase of raw materials, fuel, supplies, semi-finished material, machinery from ROC tax area Source: Deloitte& Touche Taiwan

A B Investment Cost Analysis Measures for Encouraging the Development
Non-Tax Incentives A B Measures for Encouraging the Development of Leading New Products Corporate Participation in the Development of Technology

Source: DOIT http://innovation.tdp.org.tw
Investment Cost Analysis Non-Tax Incentives Industrial Technology Development Program (ITDP) A B Industrial Technology Development Alliance Program (ITDAP) Corporate Participation in the Development of Technology Strategic Service Oriented Research & Development Program (SRD) Industrial Technology Innovation Center Program (MNCD) Multinational Innovative R&D Centers in Taiwan (MNCF) Small Business Innovation Research Program (SBIR) Source: DOIT

Source: Development Fund, Executive Yuan
Investment Cost Analysis Low Interest Loan And more….. Loans for improving the industrial structure or upgrading industries Loans for entire economical development Loan-Tern Loans for promoting private participation in infrastructure projects environmental protection and energy conservation strengthening R&D & financing economic plans Source: Development Fund, Executive Yuan

Investment Cost Analysis Low Interest Loan Website Information Development Fund of the Executive Yuan Council for Economic Planning and development (CEPD), Executive Yuan Small and Medium Enterprise Administration, Ministry of Economic Affairs Industrial Development Bureau, Source: Development Fund, Executive Yuan

Investment Cost Analysis Government Participation in Investment Not exceed 49% of the total equity of the invested enterprise Principles Historically focused on Industries such as petrochemicals & semiconductors Priority-1 Lately focused on 10 emerging industries such as information, telecommunications, aerospace, digital contents & biotech Priority-2 Currently on strengthening venture capital investment in innovative industries. Priority-3 Source: Development Fund, Executive Yuan

Website Information Authorities Website Development Fund, Executive Yuan Industrial Development Bureau Department of Investment Services Council for Economic Planning and Development, Executive Yuan Small and Medium Enterprise Administration, Ministry of Economic Affairs

Source: Jones Lang LaSalle Research
Investment Cost Analysis Major Asian City Property Rate 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Hong Kong Tokyo Seoul Shanghai Singapore Beijing Taipei Bangkok Jakarta Kuala Lumpur 2005 Q2 2006 Q2 Rent (ping/month) *1 ping = m² *Currency: NT$ Source: Jones Lang LaSalle Research

Non-core Business District Source: Jones Lang LaSalle Research
Investment Cost Analysis 2006 Grade A Office Market Area Occupancy rate Rent (1 ping = NT$/month) Hsin Yi District 77.0% $2,490 Min Sheng/ Tun Hwa North District 87.1% $2,270 Tun Hwa South District 94.0% $2,320 Non-core Business District 90.5% $2,110 Taipei City 85.4% $2,330 Notes to slide: 1. This is a reference to our strategic capabilities in Global Consulting and within our business units. You should be prepared to back up the call out with reference to white papers, awards and research publications 2. This is just one aspect of TPM, the one that is most important to clients, but this point can serve as a talking point on the whole TPM initiative. 3. This point sets the stage for the rest of the presentation, which is divided into Investor Services and Corporate Solutions. 4. Call out—it is also important to emphasize that because we are not a loosely assembled group of affiliates our high-quality service delivery is going to be more consistent. *1 ping = m² Source: Jones Lang LaSalle Research

Investment Cost Analysis Market Trend for Business Properties in Taipei City $1,800 $2,000 $2,200 $2,400 $2,600 $2,800 $3,000 1992 1994 1996 1998 2000 2002 2004 2006 2008 F Rent (ping/month) 0% 4% 8% 12% 16% 20% 24% 28% Actual Contract Rate Vacancy Rate Notes to slide: 1. This is a reference to our strategic capabilities in Global Consulting and within our business units. You should be prepared to back up the call out with reference to white papers, awards and research publications 2. This is just one aspect of TPM, the one that is most important to clients, but this point can serve as a talking point on the whole TPM initiative. 3. This point sets the stage for the rest of the presentation, which is divided into Investor Services and Corporate Solutions. 4. Call out—it is also important to emphasize that because we are not a loosely assembled group of affiliates our high-quality service delivery is going to be more consistent. *1 ping = m² *Currency: NT$ Source: Jones Lang LaSalle Research

Investment Cost Analysis Office Rates and More… According to studies conducted by Jones Lang LaSalle Research, grade A business offices in central and southern Taiwan offer very competitive prices. Top office prices range from NT$400~800/ping per month, an average lease of NT$500~600/ping per month. Please contact Jones Lang LaSalle Research in Taiwan for additional information: Jones Lang LaSalle Tel: Fax: 20F-1, Taipei 101 Tower, No. 7, Xinyi Rd., Sec. 5, Taipei 11049, Taiwan Source: Jones Lang LaSalle Research

Key Labor Indicators 2005 2006 Economic Growth Rate (based on GDP) 3.63% 4.32 % GNP Per Capita US$ 15,455 US$ 16,024 Minimum Wage NT$ 15,840 (US$465) NT$15,840 (US$ 465) Average Wage NT$ 26,074 (average worker) NT$ 50,469 (executive-level) NT$ 26,266 (average worker) NT$ 47,630 (executive-level) Labor Force 10.3 Million 10.6 Million Participation Rate 57.63% 58.15% (November 2006) Unemployment Rate 4.12% 3.86% (November 2006)

Start-up Salary Graduate school degree University degree Commercial College degree High school degree (and below) Administration NT$32,104 NT$28,238 NT$26,286 NT$22,463 Finance Accounting NT$33,345 NT$29,334 NT$26,335 NT$22,652 Production Quality control NT$34,531 NT$29,575 NT$27,144 NT$25,409 R&D NT$36,504 NT$30,352 NT$27,097 NT$22,925 Sales NT$33,371 NT$30,143 NT$27,589 NT$23,932 Marketing Customer Relations NT$34,534 NT$29,799 NT$27,324 NT$22,970 Operations NT$33,271 NT$25,374 NT$23,371 NT$20,895 Average NT$33,951 NT$28,974 NT$26,449 NT$23,035 Source: Hrfun Management Consultant

Major Industries Monthly Income Source: Directorate-General of Budget, Accounting and Statistics

Application Procedure

WHERE TO INVEST IN TAIWAN
If the presentation has drawn your attention so far, I’m glad that I did a good job in introducing the opportunities in investing in Taiwan. And now I shall describe the different areas and regions where you can consider investing in Taiwan.

WHERE TO INVEST IN TAIWAN
Science & Industrial Parks Biotech Parks Free Trade Zones Export Processing Zones (EPZ) Environmental Science & Technology Parks (ESTP) Software Parks As I’ve previously mentioned before, industries in Taiwan scattered around the island in forms of industry clusters. And we can classify the clusters in: Science and Industrial Parks Biotech Parks Free Trade Zones Export Processing Zones, or as we call them, the EPZ Environmental Science and Technology Parks, or the ESTP And Software Parks

Where to Invest in Taiwan
【6-1】 Science & Industrial Parks Hsinchu Science Park (632 ha.) Optoelectronics, Biotechnology, IC, PC/Peripherals, Machinery, Telecom Keelung Harbor C.K.S. Int’l Airport Central Taiwan Science Park (509 ha.) Optoelectronics, IC, PC/Peripherals, Telecom, Machinery, Biotechnology Taichung Harbor Central Int’l Airport Southern Taiwan Science Park (1,038 ha.) Optoelectronics, Telecom, IC, PC/Peripherals, Biotechnology There are 3 science and industrial parks in Taiwan, located separately on the north, central, and south of the island, and all parks are close to international airports and harbors to facilitate the process of delivery of high-tech production. The northern park, called the Hsinchu Science Park, is the first established park with 632 hectares, close to Chang-Kai-Shek’s International Airport and the Keelung Harbor. It can be considered as the pioneer of the science and industrial parks, bringing and achieving incredible outcomes to the technology industry in Taiwan. The park has reached almost 100% in tenant capacity. Main industries in this park are optoelectronics, biotechnology, IC, PC/peripherals, machinery and telecom. The Central Taiwan Science Park, as the name indicates, is located in central Taiwan, close to the Taichung Harbor and Central International Airport. Targeted industries are optoelectronics, IC, PC/Peripherals, telecom, machinery, and biotechnology. The Southern Taiwan Science Park, with the largest land area of 1038 hectares, is close to Taiwan’s biggest harbor, the Kaohsiung harbor and Kaohsiung’s International Airport. Targeted industries to attract to the Southern Taiwan Science Park are also optoelectronics, telecom, IC, PC/Peripherals and biotechnology. For more information, please log on to these websites Kaohsiung Harbor Kaohsiung Int’l Airport

【6-2】 Biotech Parks Keelung Harbor Ilan Oceanic Biotechnology Park Hsinchu Biomedical Science Park Changhua Flower Plantation Park Chiayi Spice and Herb Biological Technology Park Tainan Orchid Plantation Park As for Biotech Parks, there are 7 Biotech Parks in Taiwan, evenly distributed along the island. We have: Oceanic Biotechnology Park in Ilan Biomedical Science Park in Hsinchu Flower Plantation Park in Changhua Spice and Herb Biological Technology Park in Chiayi Orchid Plantation Park in Tainan Biotechnology Park, that is also a Environmental Science and Technology Park, in Kaohsiung And the Agricultural Biotechnology Park in Pingtung. Except for the Oceanic Biotechnology Park, located on the northeast coast of Taiwan, the rest of the biotech parks are along the west coast. Kaohsiung Biotechnology Park (STSP) Pingtung Agricultural Biotechnology Park

【6-3】 Free Trade Zones Keelung Harbor Taipei Harbor C.K.S. Airport Taichung Harbor Several areas along the coast of Taiwan are now entitled as Free Trade Zone, and they are: Keelung Harbor Taipei Harbor C.K.S. Airport Taichung Harbor and Kaohsiung Harbor. These are the current existing free ports, while the development of 5 more free ports are on their way. Ports under process of development are: Mailiao Port, Hualien Port, Southern Free Port, Anping Free Port, and Nanshin Free Free Port. Kaohsiung Harbor

【6-4】 Export Processing Zones Taichung EPZ (26.2 ha.) Keelung Harbor Chungkang EPZ (177 ha.) C.K.S. Int’l Airport Nantze EPZ (97.8 ha.) Kaohsiung EPZ (72.3 ha.) Taichung Harbor Central Int’l Airport Linkuang EPZ (9.0 ha.) Chengkung Logistics Park (40.3 ha.) The Export Processing Zones, or the EPZ, are mostly clustered near Taichung Harbor in the central region and the Kaohsiung Harbor in the south. The central EPZs are the Taichung EPZ and the Chungkang EPZ. Southern region accommodates more EPZ, with 6 in total including the Nantze EPZ, Kaohsiung EPZ, Linkuang EPZ, Chengkung Logistics Park, Kaohsiung Software-based Technology Park, and the Pingtung EPZ. All these EPZs add up to more than 600 hectares, offering a smoother exporting process to companies domestically and internationally. Kaohsiung Software-based Technology Park (54.5 ha.) Kaohsiung Harbor Pingtung EPZ (124.1 ha.) Kaohsiung Int’l Airport

【6-5】 Environmental Science & Technology Parks (ESTP) Taoyuan ESTP 31 hectares Keelung Harbor C.K.S. Int’l Airport Hualien ESTP 22.01 hectares Taichung Harbor Central Int’l Airport Tainan ESTP 30 hectares There are also 4 Environmental Science and Technology Parks or the ESTPs in Taiwan. Named after the county they are located, they are the Taoyuan ESTP, Hualien ESTP, Tainan ESTP, and the Southern ESTP in Kaohsiung. Kaohsiung Harbor Southern ESTP 40.11 hectares Kaohsiung Int’l Airport

【6-6】 Software Parks Keelung Harbor C.K.S. Int’l Airport Nankang Software Park Location: Taipei City 8.2 hectares Taichung Harbor Central Int’l Airport 2 important software parks located in the 2 most important cities of Taiwan: the Nankang Software Park in the City of Taipei, and the Kaohsiung Software Tech Park in the City of Kaohsiung. Kaohsiung Software Tech Park Location: Kaohsiung City 8.9 hectares Kaohsiung Harbor Kaohsiung Int’l Airport

Business Alliance Services
TAITRA’s Business Alliance Services TAITRA Helps You Build Strategic Partnership to Shape Tomorrow After all this information about Taiwan and its investment environment, it’s time for me to introduce you TAITRA and my main role today in this presentation, letting you know what are the services that us, TAITRA, provide, and what we can do for you.

TAITRA TAITRA’s Business Alliance Services
TAITRA’s Roles and Functions Partially supported by the government and commercial/industrial associations TAITRA Various trade-related services tailor-made to meet business people’s needs Comprehensive database listing of Taiwan manufacturers and country information TAITRA, or the Taiwan External Trade Development Council, was founded in 1970 as a non-profit organization jointly supported by the government and by commercial and industrial associations in Taiwan. It holds a comprehensive database listing of Taiwan’s manufacturers from all industries as well as detailed country information with the most recent updates in data and statistics. TAITRA, with its headquarters in Taipei and its 4 local branch offices in Hsinchu, Taichung, Tainan and Kaohsiung work closely with its over 45 branch offices around the world, where we form and share a tight information network and comprehensive global contacts in order to promote and attract business in Taiwan. And to promote Taiwan’s trade, TAITRA offers various trade-related services that are tailor-made to meet business people’s needs for businesses of different sectors. Of course, we hope that the services we provide can exceed your expectations as well. Direct marketing channels through 45 branch offices around the world

1 2 3 4 5 Information for setting up operations
TAITRA’s Business Alliance Services TAITRA’s Roles and Functions 1 Information for setting up operations 2 Arranging fact-finding tours 3 Recommending strategic partners 4 Free CPA consultation for 1 hour 5 Evaluation for site selections

STEP3 STEP2 STEP1 TAITRA’s Business Alliance Services R&D Innovation
Positioning of FDI STEP3 R&D Marketing & Branding STEP2 Logistics STEP1 Assembly Innovation Value Chain

TAITRA’s Business Alliance Services
Strategic Investments Target: private equities & industrial integration In cooperation with: Investment banking CPA M&A Int’l Distribution Center Headquarters R&D & Innovation Center Others ITRI Incubation centers Industrial promotion entities Technology Transfer Target: Integration of resources TAITRA’s databases Industrial associations JV

America Europe Asia Oceania USA, Canada
TAITRA’s Business Alliance Services Target Market America USA, Canada Europe UK, Germany, Holland, France, Italy Asia Japan, HK, Korea, India Oceania Australia

Instant Furnished Office A one-stop service solution!
TAITRA’s Business Alliance Services TWTC International Business Center (IBC) Instant Furnished Office Good strategic location (located beside TWTC and Taipei 101) Professional consultation on investment and industrial information Trade Data Library Efficient secretarial service I hope that when I mentioned about the special introduction offer on IBC has attracted some attention from you. Now I’ll explain a bit further of what the IBC really is. The IBC, or the International Business Center has been created with the purpose to assist foreign companies interested in pursuing investment opportunities in Taiwan. Its instant offices are strategically located at the heart of Taipei’s bustling business district, besides the TWTC and the Taipei 101. Apart from offering you a standard office with the basic office equipment set ups, there is also a on-site professional consultation on investment and industrial information, and a trade data library, free access to our foreign tenants. In addition, there is also an executive secretary service that can assist you with travel, hotel and other useful information. A one-stop service solution!

Standard Office Lounge
TAITRA’s Business Alliance Services TWTC International Business Center (IBC) Standard Office Complete furnished office: 42 m2 Desks, chairs, cubicle dividers Telephone Table-top drinking water dispenser Flame-retardant carpet PC & printer Lounge Here are some pictures of the IBC’s standard office. The 42m² office is furnished with basic office furniture such as: Desks, chairs, and cubicle deviders Telephone Table-top drinking water dispenser Flame-retardant carpet PC and printer. The IBC lounge is another excellent space for the IBC occupants to gather and network with each other, exchanging information. The lounge is equipped with conference space for small meetings. There is no specific prerequisite on who can use the IBC. Basically, all qualified foreign investors can apply to lease the IBC on the 5th floor of the TWTC Exhibition Hall. 123 m2 Conference space

In order to provide a better service that caters to your business, we strongly recommend the provision of a business plan upon contacting us Suggested Contents: Brief description of the project Description of investor Site description Production plan Description of technology Investments Operation costs Profitability studies Customers profit and loss, balance sheet, or any other useful information

Our Team Members Contact Person Area-in-Charge Contact Information Ms. Emilia Shih Section Manager Ext.: 1371 Ms. Sally Sha France, Germany, the Netherlands Ext.: 1341 Ms. Jenyow Wang Canada (Vancouver), USA (San Francisco & Miami) Ext.: 1340 Ms. Angelica Hao China, India, Korea, UAE Ext.: 1320 Ms. Stella Lin Italy, United Kingdom, Scandinavian countries Ext.: 1349 Ms. Catherine Fan Canada (Toronto) USA (Chicago & New York) Ext.: 1347 Ms. Janet Hsu Japan Ext.: 1321 Ms. Claudia Lee Australia, Hong Kong, Southeast Asia Ext,: 1389

Contact Us Taiwan External Trade Development Council
Business Alliance Section Strategic Marketing Department 5th Fl., 333 Keelung Road, Sec. 1, Taipei 11012, Taiwan, R.O.C. Tel: Fax: Are you interested? Please contact us at once! Here is the contact information: Taiwan External Trade Development Council Business Alliance Section Strategic Marketing Department Our address is: 5th Floor, 333 Keelung Road, Section 1, Taipei 11012, Taiwan, Republic of China. You can call us at: , fax us at: Or you can also us at: The web sites are: and Also, you are always welcome to contact to any of our overseas offices near you.

Taiwan YOUR GATEWAY TO ASIA Taiwan External Trade Development Council

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