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2007 Year In Review |
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The year 2007 was Chen Shui-bian's second and last term as the president of the Republic of China (Taiwan). Although Chen has made independence from mainlaind China a major theme for his Taiwanese Democratic Party (DPP) since his election in 2000, the end of his tenure signals a different direction for the island. The DPP's seven-year stint as the ruling party is likely to see a challenge this year from the Kuomintang (KMT) party, which favours closer ties to its neighbour. The candidates for 2008 are pursuing a new course, placing the emphasis on economic development and the strengthening of strategic trading alliances with China.
On the home front, credit card defaults eased in 2007 due to legislation that allowed borrowers to apply for 'rehabilitation' if they were unable to pay back debt. The bill, initially passed in April, allowed borrowers to pay back interest on mortgages during a 10-year period without fear of losing their property. This was a boon to consumers wrestling with repayment, although many banks, still struggling from the consumer credit defaults in 2006, worried the bill would increase mortgage credit abuse and hinder their profitability.
The past year was full of changes for banks on the island. The crowded banking sector - in April there were some 43 banks catering to a population of 23m - is roughly 50% state-owned, down from around 60% in previous years. Taiwan's government has been encouraging consolidation in the banking market and has taken swift action over failing banks.
Several international institutions entered the island in 2007, winning bids from the government for debt-ridden banks. The Chinese Bank of Taiwan was taken over by the government's bad debt agency in early January after affiliated subsidiaries of its parent company filed for bankruptcy protection, triggering a run on the bank as customers withdrew a reported $500m in one day. The bank was later sold to HSBC for NT47.5m ($1.5bn). US-based Citibank acquired the Bank of Overseas Chinese for NT14.1bn ($426m) in April and the Amsterdam-based ABN AMRO Holding obtained Taitung Business Bank for NT6.9bn ($209m) in June.
Exports continued play a major role in the country's economy, accounting for half of the country's GDP. In the third quarter of 2007 GDP rose 6.9% and the ministry of economic affairs reported that exports increased by 18% to a record $32.2bn. China was Taiwan's largest export destination in 2007, followed by Hong Kong and the US, although exports to the US slipped slightly following an economic slowdown in that country. Exports were also up to oil-producing countries and emerging economies.
Products for shipment overseas came mostly from IT and computer and liquid crystal display (LCD) manufacturing. In 2007, Taiwan exported 80% of the world's notebooks, 90% of the world's computer motherboards and 40% of the world's flat panel displays.
The island's position as a leader for IT-related manufacturing was cemented when Taiwan's Acer acquired Gateway, the US-based computer manufacturer, for $710m in October, making it the world's third-largest PC vendor. The company said it expected its sales to double in the next four years.
Keeping things running smoothly on the domestic scene, early in 2007 Taiwan introduced a new $15bn transportation project linking the north and south regions of the island. In January, Taiwan's long-awaited high-speed bullet train, launched into service. With speeds up to 315 km per hour, travelling from Taipei Panchiao to Tsoying in Kaohsiung in 90 minutes, the new system has transformed transportation on the island. The Taiwan High Speed Rail Corporation will manage the service for 35 years and then turn it over to state control.
Taiwan has also taken steps to invest heavily in renewable energy, including wind and most notably, solar power. Following on from its expertise in LCD manufacturing, the island is home to companies using these technologies to create solar panels. Taiwan intends to position itself as a major solar cell source by 2020, integrating 'green' energy into residential and business spaces.
As the presidential candidates are aware, improving relations with China, as well as boosting the business climate at home, will be predominant themes for 2008. The European Chamber of Commerce in Taipei, in its position papers for 2007-08, outlined the major steps necessary for the island to continue its economic development, including removing barriers to investment in and imports from China, deregulating the financial services sector and improving the tax system.
This article was provided courtesy of Oxford Business Group, a leading publisher of economic and political intelligence on the emerging markets of South East Europe, South East Asia, North Africa, the Levant and the Gulf. |
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Taiwan Business
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Busy Signal |
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Taiwan's crowded telecommunications sector is likely to get even more competitive in the coming months as rival firms strive to woo customers away from each other and launch new services, at a time of economic upheaval.
The telecommunications sector... |
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Marketing Capital |
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Taiwan's main capital markets have felt the pinch of the global financial turmoil in 2008, with the stock market plunging in the second half of the year and bond yields approaching all-time-lows. However, the underlying strength of the economy... |
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Neighbourhood Competition |
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Taiwan's ranking has slipped slightly in the latest World Bank report on ease of doing business, dropping three places to 61st among global economies, though there is a good chance it will bounce back next year.
The World Bank's... |
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Riding Out The Storm |
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Taiwan's computer industry is looking to shrug off the effects of the economic downturn in the US, hoping that new products and strong sales in other countries will take up the slack caused by the slowdown in the sector's... |
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Hot Times for Real Estate |
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Buoyed by incoming head of state Ma Ying-jeou's commitment to closer economic ties with mainland China, Taiwan's real estate sector is looking optimistically at the future.
While on the hustings for the March 22 election, Ma promised to improve... |
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Riding Out the Subprime Frenzy |
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Taiwan is confident it can ride out the worst effects of the US credit crisis and any slowing of the world's biggest economy, with its exposure to various markets providing a safety net.
On March 18, the cabinet-level Financial... |
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Steeling Itself For Higher Prices |
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Taiwan has responded to soaring international metals prices by announcing it will temporarily suspend exports of some processed steel products, with the possibility of extending the ban to include other items in the future.
On February 20, the Ministry... |
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Airlines Scaling Back |
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Taiwan's Civil Aeronautics Administration (CAA) on January 28 approved a request by UNI Airways to end flights by March 1 between the northern city of Taipei and the southern city of Kaohsiung. This is the third approval for flight... |
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Building Up Technology |
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On January 14 officials at the Central Taiwan Science Park (CTSP) said they anticipate the park's annual business revenue will reach almost $31bn in the next 10 years, up from a little over $8bn in 2007. They predicted that... |
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HSBC takes over Chinese Bank |
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The competition for a larger piece of Taiwan's banking market has further heated up. The Central Deposit Insurance Corp (CDIC), which handles failed financial institutions in Taiwan, stated on December 14 that it will pay HSBC NT$47.49bn ($1.5bn) to... |
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Losing Ground |
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After decades of enjoying a reputation as one of Asia's strongest economic forces, Taiwan has received warning signals that its competitive edge is under pressure.
On November 5 the European Chamber of Commerce in Taipei (ECCT) presented its position... |
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Bright Forecast for LED |
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From its humble beginnings as a small light indicator in electrical devices such as hi-fis and clock radios, the light emitting diode (LED) has grown into a multi-application global industry of which Taiwan is keen to secure an even... |
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Assuring the Future |
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In Taiwan's highly competitive insurance market, foreign insurers are increasingly tapping bancassurance as a means of reaching out to customers. The model, which involves the selling of insurance products through a bank's branches, provides a mutually beneficial arrangement to... |
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Bio Full of Brio |
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Last month, the government reiterated its pledge to invest almost $610m of its National Development Fund in the development of biotechnology and said it would raise an additional $922m for a venture capital fund in the biotechnology business.
The... |
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Hi-Tech Edge |
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Taiwan ranks sixth in the world in terms of the competitiveness of its information technology (IT) industry, according to a white paper issued this month. "The means to compete: Benchmarking IT industry competitiveness" awarded Taiwan a score of 65.8... |
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Direct Flight Talks Resume |
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Chen Ming-tong, the chairman of the Mainland Affairs Council (MAC), the decision-making body on cross-Strait policy, said on June 21 that Taiwan and China would resume talks over lifting the ban on direct charter and cargo flights across the... |
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Fuelling the future |
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On May 24, CPC Corporation, Taiwan (CPC) and Taiwan Fertilizer announced they would form a join venture to produce ethanol fuel. W Pan, chairman of CPC, said the details of the joint venture would be formally announced in June.... |
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Fuelling the Future |
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On May 24, CPC Corporation, Taiwan (CPC) and Taiwan Fertilizer announced they would form a join venture to produce ethanol fuel. W Pan, chairman of CPC, said the details of the joint venture would be formally announced in June.... |
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Merging Markets |
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The Taiwan Stock Exchange announced on May 9 that it is planning to merge with the island's smaller exchange and futures market, GreTai. It is hoped this merger will increase efficiency and make it more attractive for companies to... |
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Airlines Looking Abroad |
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Taiwan's two biggest airlines, China Airlines and Eva Air, suffered first quarter losses at a time when there is increased domestic competition from the high speed train and a fall in cargo volumes.
In a filing to the Taiwan... |
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Mobile Taiwan |
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The government's M-Taiwan (mobile Taiwan) plan to build up wireless broadband technology looks set to push WiMAX to the top of the telecoms agenda in 2007. As the government hopes Taiwan can become a major centre for the development... |
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Rebar group financial debacle may speed up reforms |
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On January 4, two subsidiaries of Rebar Asia Pacific Group filed for bankruptcy protection, triggering a bank run on an affiliated bank. This has highlighted corporate governance concerns, in a sector where many investors see potential, and could increase... |
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High speed hope |
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On January 4, Taiwan\'s high-speed rail network opened to the public for the first time. Once fully completed, the train will take passengers from Taipei in the north to Kaohsiung, the island\'s second biggest city in the south, in... |
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Goal of $30,000 per capita GDP by 2015 |
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Taiwan is aiming for a per capita gross domestic product (GDP) of $30,000 by the year 2015. This would be double the $15,271 registered in 2005, according to a cabinet-hosted economic conference.
Meanwhile, the island will try to keep... |
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Chicago trade office opened |
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The government of Taiwan has reopened a trade office on Michigan Avenue in Chicago to seek business from Midwestern companies. The new Taiwan Trade Center at 225 N. Michigan, operated by the Taiwan External Trade Development Council, will work... |
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