Launch of ECCT's 2023 Position Papers
The ECCT launched its 2023 Position Papers at a Premium Event lunch, which was attended by around 90 members and guests. Read the position papers.
At the event, ECCT Chairman H Henry Chang presented an overview of the papers after which he officially handed over a copy of the chamber's annual publication to the Taiwan government, represented by National Development Council (NDC) Deputy Minister Kao Shien-Quey. The lunch was followed by a press conference, where the chairman and chairpersons of the ECCT committees presented a summary of their most important issues to the media.
Through the theme "Recognising Taiwan's Success - Seizing Opportunities in the Changing World Order," the ECCT acknowledged Taiwan's exceptional economic progress in recent years and called on the government to take action to ensure Taiwan's continued success in a world undergoing seismic shifts.
This year's publication includes separate submissions from 25 of the ECCT's industry and support committees and raises 161 issues, 108 from previous years and 53 new issues.
In his presentation to NDC Deputy Minister Kao and ECCT members at the launch, Chairman Henry Chang acknowledged the government's efforts that led to progress on over 21% of the issues raised in the previous year's paper. He went on to give a summary of the Position Paper Overview and highlight some of the major issues facing ECCT members.
Summary of the 2023 Position Paper overview
Taiwan has been a major beneficiary of the post-World War II world order. It has derived enormous benefits as an export-driven economy and its contract manufacturing model. Taiwan has also emerged relatively strongly from the global coronavirus pandemic. However, the global economic order is undergoing some seismic shifts in which geopolitical issues play an increasingly more prominent role and business decisions are no longer made on their economic merits alone. In this environment, those countries and companies that maintain flexibility and are able to adapt to the changing needs of their trading partners and clients are best placed to thrive. While efforts by the Taiwan government and companies to diversify investments and trade have already shown results, more could be done to push diversification efforts even further and seek stronger partnerships, especially with like-minded countries, such as those in Europe. With the real prospect of slowdowns or even recessions in key export markets, coupled with geopolitical tensions, Taiwan will need to seek out and seize new opportunities to increase resilience and maintain economic momentum. To create the right conditions for success in the changing world order, actions will be needed by the government to speed up Taiwan's energy transformation, attract and retain talent, enhance the conditions for developing innovative technologies and pursue further internationalisation.
Taiwan's Energy Transformation
ECCT members have welcomed the government's commitment and preliminary roadmap to reach net zero greenhouse gas emissions by 2050. However, policymakers are falling far behind their original 2025 timetable goals for renewable energy. Speeding up Taiwan's energy transformation will require translating commitment into action through coordinated and effective leadership and flexibility in balancing local development objectives with the need for speedy results.
Renewable energy: For Taiwan to remain an attractive investment destination, the deployment of sufficient green energy is of utmost importance. The recent reduction by authorities of onshore wind and geothermal energy targets runs counter to the government's objectives while the rigid insistence on local content requirements, and the lack of action to reduce red tape in the permitting and other administrative processes for renewable energy projects together pose significant obstacles to renewable energy development. To speed up the pace of renewable energy capacity expansion, the chamber is urging the government to develop all types and forms of renewable energy to the maximum extent possible, remove the cap on offshore wind energy auction prices, shift from itemised localisation to a market-driven percentage of capital investment approach and streamline the permitting process for wind energy projects, including creating "green zones" with simplified permitting requirements.
Support for electric mobility: As part of its net zero roadmap, the government has set targets for the electrification of mobility. The industry fully supports this objective but assistance from government is needed on several fronts to meet these goals. This includes modifying incentive schemes and tax policies to spur the sales of EVs and build charging infrastructure, and reform of existing land and building use regulations to allow charging stations to be built on rural land as well as in cities.
Future energy developments: In addition to existing solar and wind energy technologies, Taiwan should be looking at the potential of other renewable energy production and storage options, such as geothermal energy, floating offshore wind and hydrogen. All have great potential to be developed in Taiwan but require government support to get off the ground.
Talent & Education
In the changing world order, Taiwan is in competition with countries across the globe for talent. To improve its ability to attract and retain talent, action is needed on the following issues:
Fit for purpose labour laws: Taiwan's labour laws require reforms that take into account the complexities of both modern workplaces and remote working. This should include exempting remote workers from the strict requirements to record working hours and attendance records and creating a new category of hybrid worker under Taiwan's labour laws that addresses the overlap of employee and independent contractor.
Childcare friendly workplace policies: The lack of childcare facilities, the expensive cost of childcare where it is available, and the lack of flexibility in labour regulations have increased the economic and social costs of raising children. This could be alleviated by allowing employees to choose to work from home as an alternative to unpaid parental leave, and by providing subsidies or tax incentives to encourage enterprises to provide childcare spaces and facilities in their workplaces.
Incentives for foreign talent: The qualifications for Taiwan's Employment Gold Card scheme under the Act for the Recruitment and Employment of Foreign Professionals are overly strict and should be adjusted in order to attract a larger and more diverse range of foreign talent from Europe, the Americas and elsewhere in Asia.
Ensuring equal treatment: While progress has been made in recent years, there remain a number of areas where legal foreign residents are treated differently from citizens, which need to be addressed. In addition, permanent residency status could be made truly permanent by removing the requirement to reside in Taiwan for six months every year while there should also be a clear path to dual nationality.
Improving the English language environment: The chamber has welcomed the government's aim to become a bilingual nation by 2030 and initial steps to translate policies, legislation, regulations, rulings, or public announcements into English. However, more could be done towards increasing the scope and improving the quality of government online and offline resources, achieving a greater level of bilingualism in government agencies and enhancing English fluency in education and the private sector.
Technology & Future Industries
Taiwan has made progress in a number of areas over the past year, which is reflected in several international surveys and reports while the global pandemic and geopolitical tensions have served to highlight to the world the importance of Taiwan's leadership in semiconductors and other high tech industry sub-sectors. However, there are a number of areas where there is room for improvement to spur innovation and new industry development in the changing world order.
Digitalisation: Taiwan maintains regulations that restrict digital platforms from supporting non-credit card payment options, banks from opening corporate accounts and processing corporate loan applications online or outsourcing IT, data processing and cloud computing functions. Meanwhile Taiwan's FDA lacks digital options for e-submissions of registrations for cosmetics. For food importers, there is currently no digital system for the organic import review process. In addition, regulations still require importers to submit hard copy application forms and other relevant documents. Addressing all of the above-mentioned issues would relieve the administrative burden and speed up the use of digital financial services, and the import process for food, cosmetics, and other consumer goods. The government should lead by example by digitalising aspects of its own services that remain analogue, both in government ministries and state-controlled enterprises.
Innovative and sustainable healthcare: Many international pharmaceutical and medical device companies are actively investing in the field of smart healthcare and have successfully developed several disease prediction modules by using big data and AI. Given the fact that Taiwan has world-leading ICT companies and one of the world's best healthcare systems, there is enormous potential for the development of smart and precision healthcare. However, pharmaceutical and medical device manufacturers continue to face problems of long review times needed for the approval of new medicines and devices, as well as low reimbursement prices, which continue to be subject to periodical price cuts.
Meanwhile, there is no clear definition of “digital health” under Taiwan law and authorities have not yet put in place specific digital health regulations, funding schemes and platforms to enable and encourage cooperation between healthcare providers and industry players that would benefit patients. If authorities were to put in place the necessary regulations, address the administrative bottlenecks and place more emphasis on the quality and efficacy of medicines and devices, rather than being overly focused on their prices, it would send a signal to international investors in these fields that Taiwan places a high value on innovation, which would make them more willing to invest and accelerate the development of precision medicine and smart health in Taiwan.
Aligning with international standards and best practices: There are still instances where local standards and practices deviate from the best international examples. The BSMI, for example, still requires additional tests for wheels and rims supplied by vehicle manufacturers. In the electrical engineering and equipment industry, authorities in Taiwan do not yet enforce the adoption of the newest international standards for switchgear that are more advanced and safer, while importing IEC certified electrical switchgear is complicated by double-testing requirements under Taiwan's 401 regulation. In addition, Taiwan's arbitrary width limitations on electric buses and trucks effectively blocks the adoption of the most advanced electric vehicles made to international standards. There are also many instances where Taiwan's regulations deviate from international norms and where regulations are not implemented or enforced uniformly or consistently across government agencies and regions. Taiwan's food labelling requirements are overly strict while Taiwan's protectionist approach and complex approval and inspection procedures serve as technical barriers to the importation of European food products, which reduces consumer choices.
The failure to follow international standards and best practices acts as a deterrent to foreign investment and talent. It also puts companies in Taiwan at a competitive disadvantage in the international marketplace. In contrast, innovation flourishes in an open economy connected to the world. Authorities would therefore do well to address all issues mentioned above and expedite international harmonisation in all aspects of the regulatory environment.
The overview concludes that, with a diverse economy, strong talent pool and advantages in key technologies, Taiwan is well placed to thrive in the changing world order. In addition to its effective handling of the pandemic, the government has demonstrated a will to tackle other difficult problems and made progress in resolving some of the challenging issues facing businesses over the past year. However, the world has become much riskier and more unpredictable. Maintaining economic dynamism and momentum will require careful navigation. Just as Taiwan's best companies have become global industry giants by constantly evolving, authorities will need to remain flexible and ready to adjust legislation and regulations to enable and encourage the development of existing players and rising stars. Despite efforts to chip away at the post-World War II international order, there is no alternative for Taiwan but to remain open and pursue further integration with the world.
Following the recommendations in the papers would help Taiwan to overcome diverse challenges, advance the energy transformation, enhance Taiwan's attractiveness for talent and investment in innovative technologies and industries of the future and capitalise on the emerging economic opportunities in the changing world order.