by
EBR
The country finished alongside Norway, but behind Singapore and Switzerland in the triannual study released at the end of last year. With a combined score of 72, Taiwan achieved a second best investment rating of 1B, equal with Austria, Germany, the Netherlands and Norway. Only Singapore and Switzerland achieved the top 1A rating.
In the three rankings that make up the overall score, Taiwan trailed only Singapore in operations risk and finished No.1 in remittance and repatriation, or the R Factor.
While sluggish private consumption and overall weakness in demand took its toll on the local economy, “contribution from exports will gain pace next year contributing to faster economic expansion,” BERI said.
In particular, the banking industry will maintain its growth trajectory in 2014-15, with the majority of banks having adequate capital bases and enjoying healthy profitability, the report added.
BERI attributed Taiwan’s impressive R-Factor performance to a third-quarter improvement in the current account surplus on the back of a greater contribution from the trade and services account.
Taiwan’s investment prospects look bright going forward, BERI said, adding that despite an 8.4 percent decline in foreign direct investment for the first 10 months of 2013, “projects in the pipeline point to an increase.”
The report also said the Ministry of Economic Affairs plans to transform Taiwan into a regional hub for foreign businesses, with more firms selecting the country as a base for Asia-Pacific operations last year.
But Taiwan’s political ratings have weakened since the last report, BERI said, citing public concern about a lack of consistency on the part of the government regarding major policy initiatives.
According to the Council for Economic Planning and Development, Taiwan’s strong standing in the report is partially due to its internationally acclaimed industrial clusters. These play a key role in sustaining the country’s global competitiveness and luster as an investment destination.
“Taiwan’s industrial clusters have received recognition from global organisations, with the World Economic Forum rating their development as No. 1 in the world for three years running,” a CEPD official said.
Citing a report by the World Bank, the CEPD said a 10 percent increase in local manufacturing cluster jobs may result in between 3 percent and 7.5 percent more jobs in other sectors.
This healthy state of affairs is reflected in a Directorate-General of Budget, Accounting and Statistics survey showing industrial clusters as contributing more than 25 percent of Taiwan’s total output in 2011, and providing 10 percent-plus of new jobs created during the year. (SFC-JSM)
By: N. Peter Kramer
