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New zones to ease restrictions on Taiwan investment, workers
Publication Date : 28-03-2013
Fewer restrictions on the flow of foreign investment, workers and information are among the main attractions of the highly anticipated free economic demonstration zones, the Taiwanese cabinet announced yesterday.
According to the Council for Economic Planning and Development (CEPD) Minister Kuan Chung-ming, the government has acknowledged that Taiwan's service and manufacturing sectors face challenges from more competitive markets abroad.
Taiwan has gone through different stages of liberalisation in the past few decades, bringing favourable changes in the country's economy, Kuan said. Further liberalisation can bring even more foreign investment, creating new jobs and upgrading the country's industrial structure toward more value-added products, he said.
The government has set its sights on five free trade port zones -Keelung Harbour, Taipei Harbour, Kaohsiung Harbour, Taichung Harbour and Suao Harbour - and Taoyuan Aerotropolis to begin this transformation.
Kaun said that the free economic demonstration zones will not be limited to these regions, which will only act as a starting point. The first zones should be launched between April and July, he said.
According to Kuan, the free economic demonstration zones will seek to develop high-value added, service-oriented industries, and to strengthen manufacturing sectors that can in turn promote the development of service industries.
Kuan said that although it is too early to give accurate forecasts for the results from the expansion of these areas, he hopes that the zones can bring in trillions of New Taiwan dollars in production value within two years, compared to the current annual figure of NT$500 billion (US$16.3 billion). He also said the government hopes to see the current 110 enterprises expand to more than 200.
To spur the development of the free trade zones, the government has drawn up some incentives to lure foreign investment, in particular loosening restrictions on the influx of foreign workers and lifting some tax regulations.
The government plans to ease restrictions on white-collar foreign workers who wish to work in Taiwan, reducing their Taiwan-based income tax and their foreign earned income tax .
For companies that wish to establish operational headquarters in Taiwan, the government is offering an income tax cut of 7 per cent for the first three years. The normal income tax currently stands at 17 per cent.
Other incentives include tariff cuts, commodity tax cuts and sales tax cuts on imported raw materials.
Key point in development
In creating the zones, the government plans to focus on four key points - the development of fourth-party logistics, creating value-added agricultural products, promoting international medical tourism, and fostering collaboration among different industries.
Citing Taiwan's favorable geographic location and top-quality air and water infrastructure, Kuan said that the country possesses traits suitable to becoming a fourth-party logistics provider - an integrator that assembles the resources, information and technologies of supply chains.
With the expansion of cloud technology, Kuan said that Taiwan is sure to connect cross-country, cross-industry value chains to provide the best network for enterprises.
As for value-added agricultural products, Kuan said that Taiwan's sophisticated skills in agro-processing offer a good opportunity to create an internationally recognised agricultural product brand.
Through the promotion of Taiwan's world-class medical staff and technology, the government is confident that it can attract a large number of overseas visitors for medical or cosmetic tourism.