Hong Kong, Korea, the Philippines, and Singapore are among Taiwan’s most important competitors for foreign investment. Excluding Singapore, Japan and the United States are the primary sources of foreign investment funds for the above-mentioned countries.
How foreign investment is utilized is, of course, a vital concern. Below is a listing of some of the industries which have become targets for foreign investment in these countries: electronics and electric appliances (Hong Kong, Korea, Singapore, and Taiwan); petroleum and petroleum products (Singapore); textile garments and footwear (Hong Kong); mining (the Philippines); hotels, tourism, banking, and other services (Korea, the Philippines, and Taiwan).
At the present time, the government in Taiwan is promoting foreign investment in capital-intensive and technology-intensive industries and also in industries notable for their high value added, low energy coefficients, and extended linkages.
Taiwan and its competitors are all pursing foreign investment policies that help firms to lower product costs, increase after-tax profits, and generate opportunities for further investment. A brief description of the specific policies and the investment climate in each of the countries in question is presented in the paper.
Recently, the government in Taiwan has been actively looking for ways to make foreign investment more flexible. Another goal is how to catch up with Hong Kong and Singapore.
A few of the conclusions reached in the paper are outlined below:
1)The government should respect the free-market mechanism and accordingly reduce its market controls and interference;
2)Erecting preferential tariff walls is not an appropriate means of protecting those industries that have attracted foreign investment. While there is room for some form of optimal protection for those industries employing transferrable technology, that protection should still be gradually phased out;
3)It is unnecessary for the government to establish local-content requirements and export ratios for industries receiving foreign investment.
