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S&T Policies

Chinese Taipei hopes to become one of the research strongholds of the Asia-Pacific region, by possessing a number of world-class researchers and research institutions capable of making first-rate contributions in several important fields by 2010. Chinese Taipei's information hardware industry is the world's fourth largest in terms of output value. Chinese Taipei's semiconductor industry is second only to that of the US in terms of design output and third in the world in terms of manufacturing. Chinese Taipei's IC contract manufacturing value was the highest in the world. And for many important information-related products, Chinese Taipei is in either first or second place. The total output of Chinese Taipei's manufacturing sector reached US$300 billion in 2000, and 40% of this was contributed by technology-intensive industries.

Intellectual Policies

R&D promotion

Medium-term economic policy is aimed at the continued upgrading of Chinese Taipei's manufacturing industry and development of the services industry. However, the relocation of lower-end manufacturing capacity offshore - a consequence of this upgrading - does create problems for the government. Many firms have moved manufacturing operations to mainland China. Mr Chen has pledged to continue easing investment and trade restrictions in regards to China, following the recommendations of the Economic Development Advisory Conference. The government will also concentrate on minimising the negative effects of entry into the World Trade Organisation, likely to occur in early 2002.

S&T policies and plans

One of the objectives of the "National Six-year Mid-term Science and Technology Development Project" and the "Twelve-year Long-term Plan was to raise the standards of science and technology" The Fifth National Science and Technology Conference was held in 1996. Besides revising science and technology development targets for the years 2000 and 2010, this conference also proposed the following:

Furthermore, the Executive Yuan Science and Technology Advisory Conference has convened 17 times since it was established in 1980. In cooperation with foreign advisors and domestic experts and organizations, this conference has, over the years, made a significant contribution to the promotion of scientific and technological development. For example, in 1980 the conference suggested that surveys of the state of science and technology be actively conducted from that time onward, and in 1983 it formulated the "Technical Manpower Cultivation and Recruiting Project" and the full-scale implementation of hepatitis-B prevention. In 1995 the Executive Yuan approved the "Biotechnology Industry Promotion Program," the "Program for the Increased Utilization of High-level Technological Personnel," and actively promoted the National Information Infrastructure (NII) program. These actions have made a profound contribution to accelerating the pace of scientific and technological development in the Chinese Taipei

Chinese Taipei’s Economic Stimulus Program was implemented in order to improve the investment environment and stimulate private investment; encouraging private participation in major public construction projects in order to effectively utilize private resources and lessen the government's fiscal burden.

The Comprehensive National Development Plan was revised in 1995. It included measures promoting industrial upgrading and the development of technology- and knowledge-intensive industries, the promotion of ten major emerging industries, and the nurturing of eight key new technologies.

Also included is the energetic development of the Changpin and Yunlin offshore industrial districts, the Hualien Hoping Cement Industrial District, and the Hsinchu, Taichung, and Tainan science-based industrial parks..

S&T initiatives

Ministry of Economic Affairs is committed to industry-oriented scientific advancement in order to maintain continuous growth of manufacturing, expedite the transformation of traditional industries and promote technology-intensive industries. In 1998, the MOEA allocated some US$436 million to public and private nonprofit research institutes for applied industrial research as part of its broad-ranging Sci-tech R&D Project. MOEA appropriations for the Electronics Research and Service Organization (ERSO) under the Industrial Technology Research Institute(ITRI) amounted to more than US$49.7 million for fiscal 1999. Excellent results have been obtained in various technologies. Science-based Industrial Parks like the Hsinchu Industrial Park has put Chinese Taipei on the world map of such high-tech industries as IC manufacturing and key information industry components. Over the past decade, the park has witnessed remarkable growth in both the number of companies set up in the park and the combined sales these firms have achieved. The park represents part of the government's plan to build Chinese Taipei into a "science and technology island." Presently, plans call for the Tainan Industrial Park to initially focus on serving companies from six major industries: semiconductors, computers and peripherals, telecommunication, optoelectronics, precision machinery, and biotechnology. Various other initiatives by different research or S&T organisations help in making Chinese Taipei achieve its goal.

Objectives, strategies and measures

The ultimate goals of technological and scientific development are to raise technological standards as a whole and use the results of research to promote economic growth, improve people’s standard of living, and improve the nation’s autonomous defense capability. The following targets have been formulated for the first stage of development (until 2010): Within five years the nation will possess a number of world-class researchers and research institutions capable of making first-rate contributions in several important fields. In this way, Chinese Taipei will become one of the research strongholds of the Asia-Pacific region.

Within the next ten years, Chinese Taipei will witness several key developments:

These will help make the Chinese Taipei an Asia-Pacific regional manufacturing center.

Industrial Park

In Chinese Taipei , many significant improvements were initiated in the early 1980’s. In view of the importance of high technology and high added-value industries, science parks such as the Hsinchu Science based Industrial Park (HSIP) were established in order to foster an infrastructure to support the high technology industry. Since it was established in 1990, the Hsinchu Science-Based Industrial Park (SIP) has been one of Chinese Taipei ’s most outstanding models of industrial development. By 1995, 174 firms had already begun operations. Of these, 152 firms (87.4%) perform their own R&D work. The aggregate turnover of SIP firms was NT$299.2 billion in 1995. The aggregate in-house R&D spending of SIP firms was NT$12.57 billion in 1995, a 53.2% increase over the NT$8.2 billion spent in 1994 and 4.4% of aggregate turnover. This is roughly three times the average R&D spending of Chinese Taipei ’s industrial sector. The highest R&D spending was made by the integrated circuit industry. Integrated circuit firms spent NT$7.428 billion on R&D, or approximately 60% of all R&D spending by SIP firms.

When IBM reviewed economies in Asia for potential investments, this park stood out because of the large pool of engineering talent, low engineering costs, infrastructure to support high-technology industry, and government support of R&D. The interesting point is that over the last decade, the number of graduates in the electronics industry has grown by a factor of almost twenty times in Chinese Taipei.

S&T development strategies

The following twelve strategies will be implemented in order to achieve the nation’s objectives for the development of science and technology:

MOEA-supported Initiatives

Ministry of Economic Affairs is committed to industry-oriented scientific advancement in order to maintain continuous growth of manufacturing, expedite the transformation of traditional industries and promote technology-intensive industries. In 1998, the MOEA allocated some US$436 million to public and private nonprofit research institutes for applied industrial research as part of its broad-ranging Sci-tech R&D Project. The funds were distributed among the Industrial Technology Research Institute, with special emphasis on electronic and information technology research, the Chungshan Institute of Science and Technology and the Institute for Information Industry.

MOEA appropriations for the Electronics Research and Service Organization (ERSO) under the ITRI amounted to more than US$49.7 million for fiscal 1999. The main projects undertaken by ERSO include the Five-year Deep Sub-micron Technology Development Program, the Four-year Flat Panel Display Technology Development Program, and the Four-year Microelectronics System Key Technology Development Program, and the Four-year RFIC Technology Development Program. These four programs consumed nearly 56 percent of the total budget of ERSO, reflecting the high priority placed on continued development in these fields of high-tech industrial growth in the Chinese Taipei .

The ERSO has enjoyed notable success in its Sub-micron Process Technology Development Project (from the fiscal years 1990-95), which attracted over US$15 billion in investment in 8 inch wafer fabrication as well as memory production capabilities in the local semiconductor industry.

Excellent results were achieved in the following areas of research: dual damascene etch technology; post-etch cleaning technology for the Cu process; low K polymer etch technology; the DUV photolithography process; low K dielectric process technology; CMP process technology; multilayered Cu interconnect process integration; and low K dielectric process integration.

Public Sector Research Facilities

Science-based Industrial Parks

The first of what is envisioned to be a series of high-technology industrial parks, the Hsinchu Science-based Industrial Park, has been in operation since 1980. Located near National Chiao Tung University, National Tsing Hua University, and the Industrial Technology Research Institute, the park is designed as a comprehensive research environment. It contains educational, sports, entertainment, residential, and shopping facilities designed to appeal to engineers of Chinese origin with overseas educational and working experience--especially that gained in the United States. Financial incentives are offered to induce companies to set up operations in the park.

Administered by a division of the National Science Council, the Science-based Industrial Park Administration, the park has put Chinese Taipei on the world map of such high-tech industries as IC manufacturing and key information industry components. Over the past decade, the park has witnessed remarkable growth in both the number of companies set up in the park and the combined sales these firms have achieved. In 1998, aggregate sales of the 272 firms in the park topped US$13.7 billion, a 2 percent decrease over the preceding year. The 112 IC manufacturers in the park concentrate on producing DRAM and SRAM chips, as well as the development of Application Specific Electronic Module (ASEM) and Multichip Module (MCM) foundry services. IC manufacturing at the park gets a boost from a full range of support industries that handle materials, design, testing, and packaging.

For the third phase of expansion at the Hsinchu Science-based Industrial Park, basic infrastructure on a 190-hectare site has been completed. Despite the ongoing success of the park, growth at the facility has run up against the realities of land acquisition in Chinese Taipei today. Thus, the Executive Yuan has approved plans to develop a science-based industrial park in adjacent Miaoli County as the fourth phase of the Hsinchu Science-based Industrial Park. The Miaoli facility will primarily be geared toward serving biotechnology.

Tainan Industrial Park

To ensure that high-tech manufacturers have room to grow, the National Science Council has designated a site in southern Chinese Taipei for a second science-based industrial park. The Tainan Science-based Industrial Park will be located on a 638-hectare site between Hsinshih rural township and Shanhua urban township in Tainan County. The choice of locality is meant to capitalize on the agricultural resources of Chinese Taipei's south, and the technological support of institutions nearby, such as the Asian Vegetable Research and Development Center and the Chinese Taipei Sugar Research Institute.

The preparatory office of the Tainan Science-based Industrial Park was officially set up on July 8, 1997, and the office has begun operations since June 1998. The park represents part of the government's plan to build Chinese Taipei into a "science and technology island." Presently, plans call for the park to initially focus on serving companies from six major industries: semiconductors, computers and peripherals, telecommunication, optoelectronics, precision machinery, and biotechnology. Efforts are being made to avoid the crowding experienced at the first park by selecting a much larger initial area, and to develop the surrounding neighborhood to accommodate the 70,000 personnel who are projected to eventually work in the new park. As of June 1999, 32 firms of these industries had already received approvals to move into the park, and the MOEA estimates that factories at the park will produce an annual total of US$32.72 billion in goods by the year 2010. The park is also expected to draw substantial investment from the service sector.

Industrial Technology Research Institute (ITRI)

ITRI, the largest of Chinese Taipei's non-profit research institutes, has its headquarters in Hsinchu near the Science-based Industrial Park and branch offices throughout Chinese Taipei. ITRI has about 6,073 employees, 76 percent of whom are engineers or scientists.

Founded in 1973 by the Ministry of Economic Affairs, ITRI serves primarily to develop industrial technologies and transfer them to domestic private enterprises to sharpen the competitive edge of Chinese Taipei industry in the international market. ITRI's research projects cover a broad spectrum of industries from traditional to emerging, and from labor-intensive to high-tech. One example is the integrated circuit industry. During the mid-1970s, ITRI began to provide Chinese Taipei's IC manufacturers with the technology transfers necessary to acquire seven micron CMOS technology. Today, Chinese Taipei is a major producer of eight-inch DRAM chip wafers, producing over US$2.21 billion worth of DRAM/SRAM chips in 1998. Chinese Taipei's declining textile industry is another beneficiary of ITRI's R&D commitment. With ITRI's micro-fiber technology, local textile manufacturing has been able to improve polymerization and high-speed spinning processes to raise productivity.

ITRI's 1999 budget stood at US$487 million, with 50 percent of funding coming from government-sponsored projects and the other 50 percent from the industrial sector for contract research, joint development, and technical services. ITRI has thus achieved its aim of reaching a one-to-one ratio of funding from government projects to revenue from contracts and services. In fiscal 1999, ITRI transferred new technology to 538 scientific and technical companies in Chinese Taipei, hosted over 1,104 conferences and exhibits, and published 645 reference papers and 659 conference papers. Most indicative of its success was the number of patents it was awarded in fiscal 1999--a total of 537, of which 307 were foreign patents. In the same year, the institute provided technical services to around 27,800 science-oriented and technical companies in Chinese Taipei.

Public Research Enterprises

One of the largest government-run enterprises is the Chinese Petroleum Corporation, which has set up a Refining and Manufacturing Research Center and an Exploration Development Research Institute. The China Petrochemical Development Corporation conducts applied research as does the China Steel Corporation. The Chinese Taipei Power Company, usually known as Taipower, has one research institute, the Power Research Institute. The Chinese Taipei Sugar Corporation has two such organizations, the Chinese Taipei Sugar Research Institute and the Animal Industry Research Institute. The Chinese Taipei Fertilizer Company, the Chinese Taipei Salt Works, the Chinese Taipei Machinery Manufacturing Corporation, the China Shipbuilding Corporation and Aerospace Industrial Development Corporation all run research laboratories.

The Institute for Information Industry (III) serves to develop and promote the information industry as part of the overall process of spurring economic development in the ROC. With 1,212 employees (over 55 percent of whom have a master's degree or higher degree in a pertinent field), the III coordinates the efforts of government agencies, the private sector, and academic institutions to build a sound base for the development of Chinese Taipei's information industry. The significance of the III can be seen by the US$110 million in revenue it had generated by mid-1999. The III also provides a variety of training courses for school teachers, computer professionals, and employees of private companies to increase their overall knowledge of information technologies and facilitate computerization in both the public and private sectors. In the past 20 years, over 220,000 people have benefited from the III's training programs.

Private Sector Research Institutes

The numerous private research institutes in the Chinese Taipei area focus mainly on experimental development and commercialization of science and technology. Some of the more active private research institutes in the Chinese Taipei area include the Industrial Technology Research Institute, the Food Industry Research and Development Institute, the Development Center for Biotechnology, the Metal Industries Development Center, the United Ship Design and Development Center, the China Textile Institute, the Chinese Taipei Textile Federation, the Automotive Research Testing Center, the Electronics Testing Center, Chinese Taipei, and the China Technical Consultants Institute.

National Information Infrastructure

The first concrete result from the project has been the Experimental Hsinchu Broadband Network Region, which began operation on July 14, 1995. A similar network began operation in Taipei during September 1995. This project has required the cooperation of a number of government agencies. The Chunghwa Telecom Co., Ltd. (a company divided from the Directorate General of Telecommunications since July 1996) is laying a nationwide fiber-optic cable network. The equivalent of more than US$5.4 billion will be invested by Chunghwa Telecom in the project. In June 1999, 99.2 percent of Chinese Taipei's trunk circuits were converted to optical fiber, together with a full 100 percent of international submarine cable. Meanwhile, Chunghwa Telecom has completed 28.7 percent of opticalization for subscriber loops and is scheduled to reach 100 percent in 2011. The plan also calls for integrating existing narrow-band networks, including an AT&T No. 5 ESS, an Alcatel System 1240, a Taicom-T (Siemens EWSD) digital switching system, and Chinese Taipei's recently established ISDN.

One application of the network to date is a remote tele-medicine pilot system to transmit medical history images and data, as well as remote medical instructions. Developed jointly by National Chinese Taipei University Medical College, National Cheng Kung University Medical College, Veterans General Hospital (Taipei), and Taichung Veterans General Hospital, the system may ultimately be extended to provide medical consultation to the more remote parts of the Chinese Taipei area.

Another example of applying the network to everyday life is e-mail service between the public and government inaugurated in July 1995. Government agencies at every level have set up Internet homepages, allowing Chinese Taipei's growing number of Internet users easy access to information on government services and providing a convenient channel for feedback and communication through e-mail. As of July 1999, there were over 4.13 million active Internet users in the Chinese Taipei area. Although over 100 independent Internet service providers now operate in Chinese Taipei, Internet access on the island continues to be dominated by three large providers, namely HiNet (run by Chunghwa Telecom), SEEDNet (run by the Institute for Information Industry), and TANet (run by the Ministry of Education). Both HiNet and SEEDNet are commercial operations, while TANet provides access to academic and government users. HiNet leads the market with over 740,000 subscribers. SEEDNet is also a popular choice, with over 40 thousand hits per day on its homepage.

The project most recently initiated as part of the NII's efforts to build the ROC's information superhighway is a trial program for the integration of cable television and telecommunications networks. The program, which was inaugurated on July 16, 1997, will employ cable modems, fiber optics and the latest telecommunications technology to test the feasibility of advanced multipurpose broadband networks. Plans call for initial small-scale trials in two districts of Taipei City.

Liberalization

With liberalization measures and the efforts of the Chinese Taipei government and people, Chinese Taipei's economy has been upgraded extremely rapidly over the past decade. Ten years ago, only 18 percent of Chinese Taipei's total exports were highly capital and technology intensive products, but today, over 40 percent are. Labor intensive products used to make up 48 percent of all Chinese Taipei's exports, but now comprise less than 20 percent. The composition of Chinese Taipei's exports more and more resembles that of developed nations. Even among traditional labor-intensive goods, Chinese Taipei's products have been markedly improved. For example, Chinese Taipei is no longer the world's largest exporter of bicycles in terms of export volume, yet remains No. 1 in terms of export value. This is primarily because the quality and design of Chinese Taipei's products is continually improving, so its export unit prices are considerably higher than those for products of developing countries. Some bicycles are even more expensive than motorcycles.

The most prominent demonstration of industrial upgrading is in the electronic information industry. Chinese Taipei is the world's third-largest producer of information products, behind only the US and Japan. And for many important information-related products, Chinese Taipei is in either first or second place. As a result of this kind of industrial upgrading, Chinese Taipei's products are absolutely unlike those produced by its labor-intensive industries of a decade ago-they are more and more high-quality high-tech products. As a result, its mix of exports is substantially different from that of East Asia's developing countries, so the depreciation of Southeast Asian currencies won't have a very large substitution effect on Chinese Taipei.

Liberalization measures, the appreciation of the New Chinese Taipei Dollar, and competition from other developing countries led to a quick loss in competitiveness for Chinese Taipei's traditional industries. Thereupon, many Chinese Taipei manufacturers adopted the approach of investing beyond Chinese Taipei's shores. Currently, Chinese Taipei businesses have invested over US$70 billion in the Chinese mainland and Southeast Asian countries. This has not only accelerated their economic development, it has also allowed Chinese Taipei firms to establish a more complete international network, making Chinese Taipei's exports to each country more convenient.

In recent years, in accord with the ROC's policies of liberalization and globalization, Chinese Taipei has adopted a policy of competition-that is, establishing a more level playing field-as its major industrial development policy. The government, for its part, is providing the necessary public funds, but only wants to minimize the damage from market failure. Consequently, early on the government moved away from a policy of choosing which industries to develop; instead, it decided upon a functional policy of providing incentives or levies to influence their external behavior. The government's two principal responsibilities are to encourage research and development, and to control and prevent environmental pollution. Not only are pollution problems being improved step by step, the ROC's research and development is producing tremendous results. The average number of patents filed in the US each year by Chinese Taipei citizens per one million people is approaching 70, behind only a handful of developed nations such as the US, Japan, Germany, Switzerland and Sweden. This is three times the number filed by its fellow high-tech "Little Dragon" economies, such as South Korea and Singapore.

With this kind of result from industrial upgrading Chinese Taipei has been able to differentiate its products from those of most developing countries. Policies centered on liberalization have allowed Chinese Taipei manufacturers to streamline operations according to global competition. As a result, they have not been overly protected or subsidized by the government and have been able to withstand the shock of fluctuations in the global economy. Government and manufacturer globalization policies have allowed Chinese Taipei even more avenues for spreading risk. However, since Chinese Taipei is a major supplier of machinery, equipment, raw materials and components for East Asia, the Southeast Asian financial crisis will still tend to be a damper on Chinese Taipei's economic performance.

The Chinese Taipei relies on exports to East Asian nations as a principal means of producing wealth, so as long as the economies of these countries do not deteriorate further, Chinese Taipei's exports to them should recover quickly. Chinese Taipei is also in the midst of conducting its first wave of liberalization and configuration reforms in order to join the World Trade Organization (WTO). Given these liberalization goals and the speed with which Chinese Taipei industries have upgraded in recent years, Chinese Taipei should be able over the next few years to meet the standards of most advanced countries in terms of its legal system, manufacturing technology, and product mix. Then the Chinese Taipei will have become a truly developed nation and can continue to support the stability and growth of its neighboring countries.