TAIWAN: FOREIGN INVESTMENT

In this page: FDI in Figures | What to consider if you invest in Taiwan | Protection of Foreign
Investment | Procedures Relative to Foreign Investment | Office Real Estate and Land
Ownership | Investment Aid | Investment Opportunities | Sectors Where Investment
Opportunities Are Fewer | Finding Assistance For Further Information
 

FDI in Figures
According to UNCTAD's World Investment Report 2020, FDI flows to Taiwan stood at USD 8
billion in 2019, up from USD 7 billion in 2018. In the same year, FDI stock was about USD 100
billion, an increase of USD 40 billion when compared to 2010 level. The Netherlands, the British
Virgin Islands and Japan are the largest investors in the country (excluding investment from
Mainland China). Manufacturing, financial services, and IT attract most foreign investment.
According to UNCTAD’s latest Global Investment Trends Monitor released on 27 October 2020,
Global foreign direct investment (FDI) flows fell 49% worldwide in the first half of 2020
compared to 2019, but remained stable in East Asia. In this global context, Taiwan's FDI results
were impressive. According to the statistics, 1,220 foreign direct investment (FDI) projects with
a total amount of USD $2.96 billion were approved from January to April 2020. This indicates
an increase of 8.93% in the number of cases and an increase of 48.68% in FDI amount compared
to the same period of 2019 (Ministry of Economic Affairs, Taiwan, 2020).
Taiwan is an attractive destination for foreign direct investment (FDI) as its economy benefits
from regional economic dynamism, a population with high purchasing power and the
prominence of high-tech. However, the global economic crisis, the subsequent Eurozone crisis
and the slowdown in China have negatively impacted FDI flows. Speculative activities, rising
house prices, excessive bureaucracy and the rigidity of the legislative framework are all obstacles
to investment. Nonetheless, Taiwan's business environment remains very attractive, as the World
Bank ranks its economy 15th out of 190 in its Doing Business 2020 rankings, losing two spots
compared to the previous year. Taiwan has one of the world’s best regulatory system for
protecting minority investors (transparency). In 2019, Taiwan made paying taxes costlier by
increasing the corporate income tax rate, explaining the loss of points in the ranking. Moreover,
Taiwan also re-entered the AT Kearney Foreign Direct Investment Index 2019 after a two-year
hiatus, being ranked as the 22nd most attractive economy for foreign investment in the world.
 
Foreign Direct Investment 2017 2018 2019

FDI Inward Flow (million USD) 3,291 6,998 8,213

FDI Stock (million USD) 93,949 92,387 100,600

Number of Greenfield Investments* 72 88 81

 Foreign Direct Investment 2017 2018 2019

Value of Greenfield Investments (million USD) 2,970 7,606 3,711

Source: UNCTAD, Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent
company starts a new venture in a foreign country by constructing new operational facilities
from the ground up.
 

FDI STOCKS BY COUNTRY AND INDUSTRY

Main Investing Countries 2019, in %

China 27.2

British Virgin Islands 20.4

The Netherlands 15.0

Japan 8.1

Germany 3.1

United Kingdom 1.9

Main Invested Sectors 2019, in %

Manufacturing 38.3

Financial and insurance 19.4

Information and 11.2

communication

Wholesale and retail trade 9.5

Professional, scientific and 9.2

technical services

Electricity and gas supply 4.2

Source: Taiwan Investment Commission - Latest available data.
 
Form of Company Preferred By Foreign Investors
Public limited company.
Form of Establishment Preferred By Foreign Investors
Joint venture in the case of a partnership.
 Main Foreign Companies
For a list of foreign companies who invested in Taiwan, refer to the "Success Stories"
section on the Invest Taiwan portal.
Sources of Statistics
Investment Commission (MOEAIC)
National Statistics

What to consider if you invest in Taiwan

Strong Points
Advantages for FDI in Taiwan include:
 The country has a very internationally oriented economy and the trade balance is largely
in surplus
 A strategic geographical location: the country is a gateway to China and to the ASEAN
markets
 Taiwan has a large industrial base (being for example the 4th largest electronics producer
in the world) and strong R&D capacity (supported by public spending)
 Robust external financial position
 Support for R&D through public expenditure
 The workforce is abundant, skilled and affordable
 The financial markets are booming and present many opportunities for foreign investors.
 Overall, the business environment is very positive and Taiwan ranked in the 15th place in
the World Bank's Doing Business 2020 report is a good indication of its strengths.
Weak Points
With an export-oriented economy, Taiwan is dependent on the global economy and is
particularly vulnerable to the development of trade with China and the USA, its main
trading partners. Some of the disadvatages for the FDI include :
 Lack of a direct channel of communication with Mainland China
 Reduced size of the domestic market, which considerably limits local opportunities
 Poorly protected intellectual property
 A lack of diversity in the economy (low competitiveness of the services sector for
example)
 Delays of infrastructure projects compared to other advanced Asian economies.
Government Measures to Motivate or Restrict FDI
Taiwan welcomes and actively promotes foreign direct investment. Local authorities
offer investment incentives and support to foreign investors in the form of tax incentives,
tariff exemptions, low-interest loans, R&D subsidies and other favourable terms.
Current regulations provide preferential tax incentives to foreign professionals employed
in Taiwan, and are aimed at improving the overall environment for recruiting and
 attracting professionals from other countries (Foreign Talent Retention Act). A network
of science and industrial parks, export processing zones, and free trade zones has been
developed. Furthermore, in 2019 Taiwan launched a reshoring incentive program to
attract Taiwan firms operating in mainland China to return to Taiwan, receiving positive
responses from ICT manufacturers.
The national agency Invest Taiwan is responsible for promoting investments and acts as a
single-window service provider. For investments of over NTD 500 million (around USD
17 million), the authorities will assign a dedicated project manager to the investment
process.

Protection of Foreign Investment

Bilateral Investment Conventions Signed By Taiwan
To see the list of investment treaties signed by Taiwan, consult UNCTAD's International
Investment Agreements Navigator.
International Controversies Registered By UNCTAD
Refer to UNCTAD's Investment Dispute Settlement Navigator.
Organizations Offering Their Assistance in Case of Disagreement
Chinese Arbitration Association, Taipei
ICCWBO , International Court of Arbitration, International Chamber of Commerce
ICSID , International Center for Settlement of Investment Disputes
Member of the Multilateral Investment Guarantee Agency
Taiwan is not a signatory of the MIGA convention.
 
East
Country Comparison For the Protection of United
Taiwan Asia & Germany
Investors States
Pacific

Index of Transaction Transparency* 9.0 5.0 7.4 5.0

Index of Manager’s Responsibility** 5.0 5.0 8.6 5.0

Index of Shareholders’ Power*** 7.0 6.0 9.0 5.0

Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The
Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index,
the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the
Higher the Level of Investor Protection.
Procedures Relative to Foreign Investment
Freedom of Establishment
Foreign entities are entitled to establish and own business enterprises and engage in all
forms of remunerative activity as local companies. However, Taiwan maintains
a negative list of industries closed to foreign investment for reasons related to national
security and environmental protection (e.g. public utilities, power distribution, natural
gas, postal service, telecommunications, mass media, and air and sea transportation).
Acquisition of Holdings
A majority holding interest in the capital of a Taiwanese company is legal. However the
foreign ownership limit on wireless and fixed line telecommunications firms is 60%,
including a direct foreign investment limit of 49%. A foreign ownership cap of less than
50% applies on airport ground services firms, air-catering companies, aviation
transportation businesses (airlines), and general aviation businesses (commercial
helicopters and business jet planes), with a separate limit of 25% for any single foreign
investor. Foreign investment in Taiwan-flagged merchant shipping services is limited to
50% for Taiwan shipping companies operating international routes. Furthermore, there is
a foreign ownership limit of 49.99% for satellite television broadcasting services and
piped distribution of natural gas, and a 49% limit for high-speed rail services.
Specific restrictions apply to Chinese investors.
Obligation to Declare
The Investment Commission screens applications for FDI, mergers, and acquisitions.
Foreign investors must submit an application form containing the funding plan, business
operation plan, entity registration, and documents certifying the inward remittance of
investment funds. If an investment fails review, an investor may re-apply once the reason
for the denial has been removed.
Competent Organisation For the Declaration
Investment Commission (MOEAIC)
Requests For Specific Authorisations
All investments are subject to screening, with the approval time generally ranging
between two to four days for small investments (under TWD 500 million) to 20-30 days
for foreign investments involving cross-border mergers and acquisitions or other special
situations. The screening process may also include an assessment of the impact of
proposed investments on a sector’s competitive landscape and protection of the rights of
local shareholders and employees.
Learn more about Foreign Investment in Taiwan on Globaltrade.net, the Directory
for International Trade Service Providers.

Office Real Estate and Land Ownership

Possible Temporary Solutions
 Consult InstantOffices, CoWorker, MatchOffice, etc.
Furthermore, Invest Taiwan provides assistance in acquiring land and offers
matchmaking services.
The Possibility of Buying Land and Industrial and Commercial Buildings
Taiwan guarantees land rights to foreigners on a reciprocity base (Taiwanese citizens
have to enjoy the same rights in the country of origin of the investor). However, Taiwan’s
Land Act stipulated that forests, fisheries, hunting grounds, salt fields, mineral deposits,
sources of water, and lands lying within fortified and military areas and those adjacent to
national frontiers may not be transferred or leased to foreigners.
Risk of Expropriation
Expropriation can be justified only for public interest and fair compensation must be
given within a reasonable period.
No foreign-invested firm has ever been nationalized or expropriated in Taiwan. Under
Taiwan law no venture with 45% or more foreign investment can be nationalized for a
period of 20 years after the venture is established.

Investment Aid
Forms of Aid
FDI incentives may take the form of tax exemption, tax credit, tax deferral, low interest
loans, land lease incentives, R&D subsidies, etc.
For further information refer to the section "Investment Aid System" on Invest Taiwan's
portal.
Privileged Domains
Taiwanese authorities have been promoting the “5+2 Innovative Industries” development
program targeting industries including smart machinery, biomedicine, Internet of Things
(IoT), green energy, and national defence, as well advanced agriculture, circular
economy, and semiconductors.
Privileged Geographical Zones
Incentives tend to be focused on investment in the manufacturing sector, advanced
technology, public construction, biotechnology and R&D. For further information,
consult the section "Key Industries for Investment Promotion" on the invest Taiwan
portal.
Free Zones
There are seven free trade/free port zones:  Anping, Kaohsiung, Keelung, Suao,
Taichung, Taipei, and Taoyuan International Airport.
Taiwan has also over 70 industry clusters devoted to manufacturing products like Hsin
Chu, Tainam. Further information can be retrieved on the Economic Geographic
Information System (in Chinese).
Organizations Which Finance
Consult the section "Investment Aid System" on the website of Invest Taiwan. Further
information can be accessed here.
 
 

Investment Opportunities
The Key Sectors of the National Economy
Finance, wholesale and retail, and electronics sectors.
High Potential Sectors
Advanced technology, digital, traditional manufacturing, and services sectors.
Privatization Programmes
As of 2020, there are 17 state-owned companies with stakes by the central authorities
exceeding 50%. Taiwan authorities retain control over some formerly state enterprises
that have been privatized (often through the appointments of the boards of directors),
including: Chunghwa Telecom, China Steel, China Airlines, Taiwan Fertilizer, Taiwan
Salt, CSBC Corporation (shipbuilding), Yang Ming Marine Transportation, and eight
public banks.
n August 2017, Taiwan authorities identified CPC Corporation, Taipower Company, and
Taiwan Sugar as their next privatization targets; however, currently there is no timetable
for privatising existing state-owned enterprises.
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Taiwan Province of China
Asian Development Bank, Procurement Plans in Asia
DgMarket, Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors
Some of the 17 existing state-owned companies are large in scale and exert significant influence in their industries, especially
monopolies such as Taiwan Power (Taipower) and Taiwan Water. Furthermore, CPC Corporation (formerly China Petroleum
Corporation) controls over 70% of Taiwan’s gasoline retail market.