Foreign Investments fell by 29% YoY in Taiwan

The Investment Commission has reported that the foreign direct investment (FDI) landscape in Taiwan has witnessed a significant shift over the first seven months of this year. The approved FDI for this period amounted to $6.85 billion, marking a notable 29.29 percent decrease compared to the corresponding timeframe in the previous year. Despite this decline, it’s worth noting that this figure still stands as the second-highest within the last decade. In contrast, the FDI approved in the same period of the preceding year reached an impressive $9.68 billion.

This decline is primarily attributed to a high base of comparison with the previous year, particularly due to substantial commitments made by foreign renewable energy developers in Taiwan’s offshore wind development. Notably, companies like ORSTED Wind Power TW Holding A/S from Denmark and NP Hai Long Holdings B.V. from the Netherlands had secured approval to invest NT$87.19 billion ($2.73 billion) and NT$20.05 billion, respectively, into Taiwan’s offshore wind energy sector. Additionally, TCC International Holdings Ltd., a cement supplier registered in the Cayman Islands, also gained approval for an investment of NT$12.0 billion in Taiwan.

Over the seven-month period in question, there was a 7.36 percent reduction in the number of approved FDI applications, which amounted to 1,321 compared to the previous year.

A significant highlight is the rise in investments from countries participating in Taiwan’s New Southbound Policy, a strategy aimed at strengthening economic ties and cooperation between Taiwan and 18 countries in the Southeast Asia and South Asia regions. Investments from these countries surged by an impressive 49.88 percent from the previous year to reach $2.28 billion. Leading this trend were Singapore, Malaysia, and Thailand, which emerged as the top three contributors.

Since the inception of the New Southbound Policy in 2016, a part of President Tsai Ing-wen’s strategy to reduce Taiwan’s economic dependence on China, this initiative has sought to enhance trade and collaboration across multiple sectors with countries such as Thailand, Indonesia, the Philippines, and others.

Regarding Chinese investments in Taiwan, the commission reported a 14.57 percent increase in approved applications, reaching approximately $20.28 million over the seven months. However, the number of approved projects saw a steep decline of 57.58 percent from the previous year, totalling only 14 projects. Since the lifting of the investment ban in June 2009, the Taiwanese government has approved around $2.59 billion in Chinese investments.

On the flip side, Taiwanese companies’ outbound investments displayed robust growth. The approved amount for the first seven months amounted to $10.39 billion, marking an impressive 106.58 percent increase compared to the previous year. The number of approved applications also witnessed a moderate increase of 1.92 percent, reaching 318.

This surge can be largely attributed to significant investment initiatives undertaken by major electronics industry players. For instance, Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, secured approval for a $3.5 billion investment aimed at expanding the capacity of its plants in the United States. Notably, TSMC is already involved in a $40 billion investment project in Arizona, encompassing the construction of two wafer fabs using advanced process technologies.

Yageo Corp., a prominent multilayer ceramic capacitor (MLCC) manufacturer, also received approval for its investment plans. The company was green-lit to allocate 723 million euros (approximately $717 million) for the acquisition of Telemecanique Sensors from Schneider Electric, a French-based company.

Furthermore, during this seven-month period, Taiwanese companies secured approvals for investments totalling $2.43 billion in the countries participating in the New Southbound Policy. This represented a growth of 10.38 percent from the previous year across 115 projects, marking a 49.35 percent increase. The top three destinations for these investments were Singapore, Vietnam, and Indonesia.

In terms of investments flowing towards China, the commission approved a total of $2.01 billion, indicating a decrease of 4.78 percent from the previous year. The number of approved projects also saw a decline of 7.87 percent, amounting to 199 projects.