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2022-09-07
Business Environment Risk Intelligence (BERI) in the United States published its 2nd report this year, in which Taiwan ranked as the sixth-best destination for investment. The Ministry of Economic Affairs (MOEA) pointed out that Taiwan still ranked 3rd in the Operations Risk Index and 2nd in the Remittance & Repatriation Factor, but ranked 36th in the Political Risk Index due to recent geopolitical risk and China’s military exercises. Hence, Taiwan’s overall ranking dropped 3 places compared with the previous report. The MOEA stressed that geopolitical risk caused by China’s military exercises is a short-term factor that does not affect the economy, sea and air transport, and energy safety. However, it has brought global attention to Taiwan’s key position in supply chains. After the military exercises, foreign companies such as the American company Air Products & Chemicals invested NT$27 billion, and domestic semiconductor, tire, and power cable and wire companies continued to invest NT$22.2 billion. This shows that Taiwan remains a stable, important, and irreplaceable destination for investment.
The MOEA pointed out that BERI has always used the Operations Risk Index, Remittance & Repatriation Factor, and Political Risk Index to assess overall investment risk, in which Taiwan remained in the top 3 worldwide in the Operations Risk Index and Remittance & Repatriation Factor, but its overall ranking decreased due to the Political Risk Index. The report clearly pointed out that this was due to the higher tension across the Taiwan Strait after foreign guests visited Taiwan. The MOEA reiterated that Taiwan’s economy, transportation, and energy was not affected after the military exercise, despite the global attention drawn by the tension at the time. Taiwan protected its sovereignty without provocation, and made the world notice Taiwan’s key position in global supply chains.
Observing actual investments by foreign companies and statistics of the MOEA Investment Commission, average foreign direct investments (FDI) in Taiwan over the past 4 years (2018-2021) increased 49% compared with the past (2002-2017). Moreover, FDI in January to July 2022 significantly increased 201.84% compared with the same period last year. Furthermore, purchase orders from the United States, Europe, and ASEAN in January to July this year were all record highs, growing 12.6%, 5.7%, and 28.6%, showing that foreign investors remain optimistic about Taiwan’s industries and excellent investment environment under the impact of US-China trade competition, restructuring of international supply chains, and the COVID-19 pandemic.
Contents of the 2nd BERI Report in 2022 are summarized below:
I. Profit Opportunity Recommendation: 6th in the world and 3rd in Asia
Taiwan ranked 6th in the world (3rd in the 1st BERI Report in 2022) in Profit Opportunity Recommendation (POR) with a total score of 58 points (62 points in the 1st BERI Report in 2022). Among the 50 countries rated, Taiwan was behind Switzerland, Norway, Canada, China, South Korea, and tied with Denmark and the Netherlands. (see Table 1 and Table 2).
II.Operations Risk Index (ORI): 3rd in the world and 1st in Asia
Taiwan ranked 3rd in the world with a score of 62 points (previously ranked 2nd with 65 points) in the ORI, only behind the United States (1st worldwide with 66 points) and Australia (2nd worldwide with 64 points), and tied with Canada and Switzerland. Taiwan ranked 1st in Asia, higher than other Asian countries, such as South Korea (6th worldwide with 69 points), China (14th worldwide with 53 points), Singapore (20th worldwide with 47 points), and Japan (21st worldwide with 46 points).
Taiwan ranked in the top 5 in 6 of the 15 sub-indices under the ORI in this report: monetary inflation (1st), currency convertibility (3rd), enforceability of contracts (2nd), communications and transportation (2nd), labor cost and productivity (3rd), professional services and contractors (2nd), policy continuity (9th), balance of payments (6th), administrative efficiency (6th), local management and partners (6th), and long-term loans and venture capital (7th).
III.Political Risk Index (PRI): 36th in the world and 9th in Asia
Taiwan ranked 36th worldwide with a score of 36 points (previously ranked 24th with 42 points) in the PRI. Taiwan ranked 9th in Asia, behind Singapore and China (both 4th worldwide with 57 points) and Japan (8th worldwide with 55 points).
BERI indicated that this was mainly due to the war between Russia and Ukraine raising concerns about whether or not China will take the same action, and rising tensions across the Taiwan Strait due to Nancy Pelosi, Speaker of the United States House of Representatives, visiting Taiwan.
IV.Remittance and Repatriation Factor (R-Factor): 2nd in the world and 1st in Asia
Taiwan ranked 2nd worldwide with a score of 76 points (1st with a score of 80 points in the previous report), higher than other Asian countries, such as South Korea (7th worldwide with 68 points), China (8th worldwide with 66 points), Singapore (9th worldwide with 65 points), and Japan (14th worldwide with 61 points).
Among the 4 sub-indices under the R-Factor announced in the report, Taiwan ranked 2nd in legal framework, accumulated international reserves, and foreign exchange generation; ranked 3rd in foreign debt assessment.
In summary, foreign investors are still optimistic about the technical capabilities and superior manufacturing of Taiwan’s industries, as well as the stable investment environment. Their continued investment is proof of their recognition of Taiwan’s investment environment. The MOEA explained that BERI mainly survey’s multi-national corporations and references the economic data of each country. The survey is provided as reference when assessing the profit opportunity and risks of companies that do business overseas.
Spokesperson: Counselor Hsieh Hsiu-Ping
Telephone: 02-2331-6361, 0970-431-205
E-mail: hphsieh@moea.gov.tw
Contact Person: Chuang Wen-Chang; Section Chief
Telephone: 02-2389-2111#110, 0922-007-093
E-mail: wcchuang@moea.gov.tw
Source: Department of Investment Services, MOEA
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