Taiwan Bolsters Business Support Amid Global Trade Shifts

Executive Yuan Expands Investment Programs to Navigate US Tariffs and China Trade Dynamics

In response to evolving global trade conditions, particularly US tariff policies and the shifting dynamics of the US-China trade war, the Executive Yuan (EY) in Taiwan is poised to significantly enhance its support for businesses. Plans are underway to broaden existing action plans aimed at promoting investment within Taiwan and to inject additional funding into these crucial initiatives, according to a source.

The backdrop for these developments includes the imposition of tariffs by the United States. While a pause was initially announced, a global 10 percent tariff was implemented, impacting numerous imports, including those from Taiwan.

Recognizing these challenges, the Executive Yuan is expanding its existing programs and boosting available funding. The focus will be on the "five trusted industry sectors", with a particular emphasis on the service and health industries, and applicants will be encouraged to integrate artificial intelligence (AI) technologies.

The three key programs, namely the Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan, the Action Plan for Accelerated Investment by Domestic Corporations, and the Action Plan for Accelerated Investment by Small and Medium-sized Enterprises (SMEs), were launched in 2019 and received a three-year extension in 2022. The favored sectors encompass semiconductors, AI, military industries, security and surveillance, and next-generation communications.

Furthermore, the Executive Yuan is considering relaxing the cap on mid-level immigrant workers, allowing them to comprise more than 25 percent of the total workforce. The Ministry of Economic Affairs and the National Development Council are also in discussions about expanding preferential-rate lines of credit and exploring potential interest rate reductions.

As of last year, the Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan had a preferential rate line of credit up to NT$210 billion (US$6.5 billion), the Action Plan for Accelerated Investment by Domestic Corporations NT$120 billion and the Action Plan for Accelerated Investment by SMEs NT$100 billion. The expanded credit lines are expected to surpass the NT$430 billion previously offered across the three programs from 2022 until last year. The precise funding sources are still being determined.

The Straits Exchange Foundation (SEF) reports that more than 25 percent of Taiwanese businesses operating in China are considering ending their operations there. Furthermore, 50 percent plan to relocate investments outside of China into non-Chinese supply chains, motivated by US tariff policies. The SEF also indicates that 75 percent of Taiwanese businesses in China have witnessed a sharp decline in revenue, with certain industries, such as cement, construction, plastics, rubber, and textiles, experiencing losses exceeding 90 percent.