In this page: FDI in Figures | What to consider if you invest in Taiwan, China | Protection of Foreign Investment | Procedures Relative to Foreign Investment | Office Real Estate and Land Ownership | Investment Aid | Investment Opportunities | Sectors Where Investment Opportunities Are Fewer | Finding Assistance For Further Information
Global foreign direct investment (FDI) flows in 2021 were USD 1.58 trillion, up 64 per cent from the exceptionally low level in 2020. The recovery showed significant rebound momentum, with booming merger and acquisition (M&A) markets and rapid growth in international project finance because of loose financing conditions and major infrastructure stimulus packages. However, the global environment for international business and cross-border investment changed dramatically in 2022. The war in Ukraine – on top of the lingering effects of the pandemic – is causing a triple food, fuel and finance crisis in many countries around the world. Investor uncertainty could put significant downward pressure on global FDI in 2022. The 2021 growth momentum is unlikely to be sustained. Indeed, world flows in the second quarter of 2022, the latest data available, were down 31% from the first quarter and 7% less than the quarterly average of 2021 (UNCTAD Global Investment Trends Monitor, October 2022). The negative trend reflects a shift in investor sentiment due to the food, fuel and finance crises around the world, the Ukraine war, rising inflation and interest rates, and fears of a coming recession. Expectations for the full year are for a marked slowdown. In developing Asia, despite successive waves of COVID-19, FDI rose to an all-time high for the third consecutive year, reaching $619 billion. Asia is the largest recipient region, accounting for 40 per cent of global FDI. However, inflows remain highly concentrated; six economies account for more than 80 per cent of FDI to the region (UNCTAD, October 2022).
According to UNCTAD's World Investment Report 2022, FDI flows to Taiwan stood at USD 6.05 billion in 2020, compared to 8.24 billion in 2019 and 5.40 billion in 2021. The stock of FDI was about USD 110.50 billion in 2020 and 115.91 billion in 2021. In an uncertain global environment due to the outbreak of the Covid-19 pandemic, Taiwan's FDI performance was impressive. According to Taiwan's official statistics, 1,313 foreign direct investment (FDI) projects totaling USD 2.3 billion were approved from January to June 2021. As for inbound investment from mainland China, 20 cases were approved with an amount of USD 2.7 million from January to June 2021 (Ministry of Economic Affairs, Taiwan, 2021). The Netherlands, the British Virgin Islands and Japan are the largest investors in the country (excluding investment from Mainland China). Manufacturing, financial services, and IT attract most foreign investment. While Europe and Taiwan have a wealth of similar interests, the investment relationship between the two has become decidedly lopsided in recent years. Led by the Netherlands—historically the largest single source of FDI in Taiwan—the EU has become the foremost investor in Taiwan, accounting for 38.8 percent of total FDI in Taiwan in 2021. Taiwan's finance, wholesale and retail, and electronics sectors remain top targets of inward FDI. Taiwan slso attracts a wide range of U.S. investors, including in advanced technology, digital, traditional manufacturing, and services sectors.
Foreign direct investment (FDI) into Taiwan in the first half of 2022 rose 275% from a year earlier, hitting more than USD 8 billion and paving the way for 2022's FDI to reach a 15-year high (Nikkei Asia, 2022).
Taiwan is an attractive destination for foreign direct investment (FDI) as its economy benefits from regional economic dynamism, a population with high purchasing power and the prominence of high-tech. However, the global economic crisis, the subsequent Eurozone crisis and the slowdown in China have negatively impacted FDI flows. Speculative activities, rising house prices, excessive bureaucracy and the rigidity of the legislative framework are all obstacles to investment. Nonetheless, Taiwan's business environment remains very attractive. Taiwan has one of the world’s best regulatory system for protecting minority investors (transparency). In 2019, Taiwan made paying taxes costlier by increasing the corporate income tax rate.
The latest United NationAsia-Pacific Trade and Investment Trends Report provides additional information on FDI in Asia-Pacific in 2022 and 2023.
|Foreign Direct Investment||2020||2021||2022|
|FDI Inward Flow (million USD)||6,053||5,416||10,189|
|FDI Stock (million USD)||110,746||127,065||137,254|
|Number of Greenfield Investments*||72||81||73|
|Value of Greenfield Investments (million USD)||3,061||4,649||2,648|
Source: UNCTAD, Latest data available.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
|Main Investing Countries||2020, in %|
|Main Invested Sectors||2020, in %|
|Financial and insurance||30.5|
|Professional, scientific and technical services||14.3|
|Wholesale and retail trade||12.1|
|Electricity and gas supply||12.0|
Source: Taiwan Investment Commission, Latest data available.
Advantages for FDI in Taiwan include:
With an export-oriented economy, Taiwan is dependent on the global economy and is particularly vulnerable to the development of trade with China and the USA, its main trading partners. Some of the disadvatages for the FDI include :
Current regulations provide preferential tax incentives to foreign professionals employed in Taiwan, and are aimed at improving the overall environment for recruiting and attracting professionals from other countries (Foreign Talent Retention Act). A network of science and industrial parks, export processing zones, and free trade zones has been developed. Furthermore, in 2019 Taiwan launched a reshoring incentive program to attract Taiwan firms operating in mainland China to return to Taiwan, receiving positive responses from ICT manufacturers.
The national agency Invest Taiwan is responsible for promoting investments and acts as a single-window service provider. For investments of over NTD 500 million (around USD 17 million), the authorities will assign a dedicated project manager to the investment process.
|Country Comparison For the Protection of Investors||Taiwan, China||East Asia & Pacific||United States||Germany|
|Index of Transaction Transparency*||9.0||5.9||7.0||5.0|
|Index of Manager’s Responsibility**||5.0||5.2||9.0||5.0|
|Index of Shareholders’ Power***||7.0||6.7||9.0||5.0|
Source: The World Bank - Doing Business, Latest data available.
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Latest Update: September 2023