TAIWAN’S ECONOMIC

SITUATION AND OUTLOOK

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• According to the Ifo World Economic Survey (WES) of

the 1st quarter of 2014, the six-month economic outlook

remains bright. Furthermore, most Purchasing

Managers’ Indexes (PMIs) in expanding territory (above

50 points), the global economy is expected to

continue its recovery, which is helpful for Taiwan’s

exports.

• On the domestic demand front, semiconductor

manufacturers’ continuing to invest in advanced

technologies, plus telecom companies’ gradual build-up

of the 4G LTE system, should bolster private investment

growth.

• Private consumption is expected to gain some

momentum, as consumer confidence is improving.

• The government will accelerate the development of Free

Economic Pilot Zones (FEPZs) and the project to

strengthen promotion of investment in Taiwan by

overseas Taiwanese businesses.

• In addition, in order to create a sound business and

investment environment, the government will move

forward with the implementation of market liberalization

and deregulation.

Free Economic Pilot Zones

• Currently major economies are aggressively speeding up

signing FTA in order to lower trade barriers and attract

investments.

• Taiwan has only completed signing of 7 FTAs so far, far

less than its competitors did.

• Taiwan has to respond actively and efficiently in order to

avoid marginalization under the wave of economic

liberalization.

Time Line

PHASE 1 PHASE 2PLANNING

FEPZ’s Framework approved on Apr. 29, 2013

Action Plan approved onAug. 16, 2013

2013

Amendment of 13 regulations to be completed by Dec. 2013

Special Act submitted to Executive Yuan for approval in Oct. 2013

Special Act reviewed by Legislative Yuan

Special Act enacted

2014

Key Ideas

Liberalization:

Deregulation

market opening

Internationalization:

Institutional reform

international alignment

Forward looking:

Industries with new business models

Ultimate Goal

FEPZs as “trial” and “pioneer” areas

To demonstrate the usefulness/benefits of economic

liberalization and internationalization

From partial to general

From small-scale to large-scale

Ultimate goal: toward a free economic island

Strategies

Promoting the free movement of people, goods, and

money

Opening market to align with other economies

Providing Tax incentives and convenient land acquisition

Promoting cross-border industrial cooperation

Building a high-quality business operating environment

Tax Incentives

For business

Tax exemption– overseas profits repatriated to Taiwan by overseas

Taiwanese companies for real investment in FEPZs

– agricultural and industrial raw materials

– goods exported after storage and simple processing in FEPZs (but if sold to domestic market, only 10% exempted)

For foreign professionals

Tax exemption– income earned overseas

– half of first-3-year’s income

Value-Added Agriculture Processing

Fully utilizing Taiwan’s sophisticated agricultural

technologies and talents to Innovate agricultural products

Increasing agriculture value-added by extending whole

value chain from individual products

Marketing Taiwan’s innovative agricultural products

under MIT brands worldwide

Education Innovation

Encouraging cooperation between domestic and

overseas universities to set up university branch schools

or departments, independent academies, degree

courses or professional programs

Relaxing rules and conditions for school establishment

and operation, student enrollment, staff recruitment, etc.

Physical Locations

Phase I

7 FTZs & 1 agri-biotech park Extending FTZs by “shop onsite,

factory offsite” operation

Taipei Port FTZ

Pingtung Agricultural Biotechnology Park

Anping Harbor

Kaohsiung Port FTZ

Keelung Port FTZ

Taoyuan Airport FTZ

Su’ao Port FTZTaichung Port FTZ

Private investment to increase by NT$21 billion in 2014

Gross output to increase by NT$30 billion in 2014

Creating 13,000 new jobs in 2014

FTZs to see trade value multiplying and surpassing

NT$1 trillion in 2015

New business models

Potential Benefits

Concluding Remarks

FEPZs to prepare us for further economic liberalization

and internationalization.

FEPZs include but are not limited to 8 FEPZs; more

FEPZs will be set up in the future.

We welcome new ideas and proposals that can be

applied to FEPZs.