Not without Its Obstacles
Potential investors face a number of hurdles, however. According to a 2008 white paper published by AmCham, U.S. construction firms have found it difficult to compete for public projects. “Taiwan has yet to sign the Agreement on Government Procurement under the World Trade Organization, which would level the playing field, imposing rules that everyone must abide by in bidding for government contracts,” the paper said. “Although Taiwan has a government-procurement market of close to $30 billion a year, the nature of the bidding process and other regulatory issues have discouraged many foreign companies from pursuing government contracts.”
In terms of the ease of doing business, Taiwan ranks 61st out of 181 countries in an annual World Bank and International Finance Corporation report. For example, gaining a construction permit to build a warehouse in Taiwan involves 29 different procedures over 193 days. In South Korea, by contrast, it takes just 34 days. Whereas it takes 42 days and eight procedures to start a business in Taiwan, in New Zealand it takes just one procedure in one day; in Hong Kong, it requires five procedures over 11 days. In addition, industry experts say that Taiwan’s financial regulations need to be amended and strengthened before the country can hope to become a financial center. Currently Taiwan restricts mergers and acquisitions, and until recently has had tight rules for allowing work permits for foreigners.
Still, Taiwan is the U.S.’s ninth-largest bilateral trade partner. It remains one of the most important global markets for U.S. exports, and with just 23 million people is the world’s sixth-largest buyer of U.S. agricultural products. U.S. business has invested over $16 billion in Taiwan, making the United States the largest single foreign investor in the Taiwan economy. Trade between Europe and Taiwan is also substantial, amounting to $47 billion in 2007; companies from various European countries have more than $22 billion invested in Taiwan. This year, however, foreign investment has been dropping, in line with the global economic crisis. “Unfortunately, with the largely reduced export orders, shippers don’t see a bright future for 2009, with or without the direct link,” says AmCham’s Wu. “For the same reason, I don’t think we will see a major influx of new business due to the worldwide financial crisis. However, the further relaxations between China and Taiwan will help Taiwan position itself much better regionally.” And the companies able to strategically invest now will be well-placed for Taiwan’s — and Asia’s — vibrant economic recovery.
Sheridan Prasso is a contributing editor at Fortune, an associate fellow at the Asia Society, an adjunct professor at Columbia University, and the author of The Asian Mystique: Dragon Ladies, Geisha Girls and Our Fantasies of the Exotic Orient (Public Affairs, 2006).