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Introduction to the Asian Silicon Valley plan

The ECCT's Technology committee hosted a lunch on the topic: "The Asia Silicon Valley Development Plan: From IT to IoT - Engineering a new industrial transformation for Taiwan" featuring guest speaker Dr Kung Ming-hsin, Deputy Minister of the National Development Council & CEO of the Asia Silicon Valley Plan. The speaker gave an overview of the government's Asian Silicon Valley Development plan, which was announced in September 2016 and followed soon afterwards (in December 2016) by the launch of the Asia Silicon Valley Development Agency (ASVDA) in Taoyuan.

The plan was conceived in the knowledge that while Taiwan's enterprises have strength and experience in IT hardware and communications technology, they lack data analytical capabilities and the ability to develop applications and services. Without a change in focus, Taiwan risks missing the next promising wave of economic development driven by the so-called Internet of Things (IoT), which McKinsey & Company estimates could reach an economic value of US$6.2 trillion by 2025.

The Asia Silicon Valley plan has two primary objectives: firstly, promoting innovation and R&D for IoT devices and applications, and secondly, upgrading Taiwan's start-up and entrepreneurship ecosystem. The immediate objective is to integrate resources within Taiwan, attract investors and talent from overseas, guide domestic hardware manufacturers into investing in software applications while also promoting the commercialisation of R&D innovations developed in local research institutions.

The ultimate goal is to help move Taiwan up the global value chain and capture a meaningful share of the promising global IoT market, as IoT applications make ever-increasing inroads into all areas of our lives from factories, retail stores, homes, cars to wearable devices. According to Kung, the government has a target of gaining 5% of the global IoT market share.

Kung outlined the four main layers required for IoT development: 1) object detection; 2) internet infrastructure; 3) data collection and 4) application services. He pointed out that Taiwan's robust IT hardware supply chain and infrastructure mean that Taiwan is strong in layers 1 and 2 but that more work needs to be done to make inroads into the other two layers. According to Kung, 80% of IoT business opportunities will come from services (layer 4). He identified the main bottlenecks to IoT development as follows:
A lack of comprehensive development plans: Taiwan businesses mainly concentrate on ODM in their specific domains, with little effort put into branding, marketing and R&D.
Little involvement in international standard formulation: Most Taiwan industrial IT companies are small with little connection to international IoT standards organizations, and thus are unable to capture early market opportunities.
Insufficient integration of local IoT communities: There is a lot of work done in "silos" and the consequent lack of cooperation among businesses weakens industrial strength.
Kung also pointed out a lack of cooperation between the central and local government, which needs to be addressed.

The government aims to build one ecosystem or create R&D clusters by bringing together universities, corporations, research institutes and start-ups. It aims to create a robust IoT ecosystem, construct diversified test beds for smart products or services.

To optimise the start-up and entrepreneurial eco-system, the government will work to increase talent supply, provide business expansion capital, adjust laws and regulations and build an innovation environment.

The government has set aside budgets in four areas. To optimise Taiwan's start-up and entrepreneurship ecosystem it has nine projects with a budget of NT$1.65 billion. To enhance linkages with renowned tech clusters worldwide, there are nine projects with a budget of NT$0.3 billion. To build the IoT value chain, there are 19 projects with a budget of NT$4.51 billion. To establish demonstration sites for smart products and services, there are 19 projects with a budget of NT$3.97 billion.

In terms of talent development, there are two planks. The first is to cultivate talent locally by improving university start-up regulations and incubation mechanisms, provide financial support to post-doctoral fellows to study or train overseas and learn about global innovation trends. The second plank is to attract global talent by relaxing restrictions on attracting foreign and overseas Chinese students and strengthening the functions of online talent recruitment services. Kung remarked that the "Act for the Recruitment and Employment of Foreign Professional Talent", currently subject to review by the legislature, will improve the regulatory environment for foreign talent.

In terms of the regulatory environment, new legislation is being drafted and outdated legislation will be modified with the aim of stimulating IoT development. This will include more attractive tax policies and rules governing so-called "angel investors". Kung said that many local and international companies are interested in and already investing in IoT related operations in Taiwan.

An important component of IoT development will be the construction of diversified test beds for smart products and services in the areas of augmented reality (AR), virtual reality (VR), e-commerce, smart logistics, healthcare, smart grids, smart transportation, smart manufacturing, smart energy in southern Taiwan and smart tourism.

Looking to the future, the ASVDP will concentrate on six main areas: IoT cyber security, AR/VR, artificial intelligence (AI), self-driving cars, mobile life and the new southbound policy and global linkage.