Minister Kuo Jyh-Huei 's oral administrative report to the 3rd session of the 11th Congress of the Legislative Yuan, the 3rd Plenary Meeting of the Economics Committee
Date: 2025-03-20
(The following content is a translation of excerpts from the Minister's oral administrative report)
Dear Chairman and Legislators,
It is such a pleasure for me to deliver the Administrative Report of the Ministry of Economic Affairs (MOEA) before the Economics Committee. I will briefly explain the current economic situation and the focus of the MOEA’s administration. Please advise as necessary.
I. Current Economic Situation
The global economy is showing a moderate growth trend this year as inflationary pressures ease and countries cut interest rates to stimulate demand. However, the new U.S. tariff policy has caused global trade frictions, which will increase uncertainty in the global economic outlook. According to the latest forecasts of S&P Global, International Monetary Fund (IMF), and Organisation for Economic Co-operation and Development (OECD), the global economy will grow between 2.7% and 3.3% this year.
Business opportunities brought forth by artificial intelligence (AI) applications, and the required software and hardware industries remain the core driving force of global economic growth. The International Data Corporation (IDC) pointed out that the contribution of AI to global economic output will increase from US$1.2 trillion in 2024 to US$4.9 trillion in 2030.
Taiwan benefits from the demand for AI applications, and information and communications technology (ICT) products that remains strong. The complete domestic industrial supply chain is expected to boost exports and private investments. Coupled with strong domestic consumption, Taiwan’s economy will steadily grow by 3.14% this year.
II. Direction and Implementation of the MOEA's Administration
To consolidate the competitive advantages of Taiwan’s industries, the MOEA will promote a global alliance for the AI chip industrial chain according to the President's initiative on semiconductor supply chain partnerships for global democracies, and establish a new position for the development of the semiconductor industry through international cooperation. We will also implement the strategy of “Pursuing Global Opportunities with Domestic Supply Chains, Enriching Domestic Businesses with Global Trade Relations” to help companies expand overseas, while attracting consumers from neighboring Asian countries to visit Taiwan, which will create momentum for domestic demand. Furthermore, we will invest NT$11.6 billion this year to support the digital and net-zero transition of micro, small and medium enterprises (MSMEs), and help enterprises reduce costs and achieve deep energy savings through energy service companies (ESCOs). Meanwhile, we will continue to strengthen the resilience of energy and resource supply to meet the needs of industrial development and domestic consumption.
1. Promoting the global semiconductor democratic supply chain and developing the Five Trusted Industry Sectors
Playing a key role in the development of advanced technologies around the world, Taiwan's semiconductor industry leads the world in advanced 7 nm and below processes in terms of market share, as well as in advanced packaging. The overseas production strategy of Taiwan's major foundries aims to enhance competitiveness and respond to the needs of customers across the world. They seize business opportunities by being close to the market and hiring local high-level tech talents to widen their lead. To meet the rapidly growing global demand for AI, the semiconductor industry will continue to invest in Taiwan, and the most advanced processes will go into mass production in Taiwan first. We will maintain close contact with the industry and deepen cooperation with the United States, Japan, the European Union, and other democratic countries to ensure Taiwan's key position in global semiconductors.
In terms of strength in AI, Taiwan ranks first in the world in chip and server manufacturing technologies. Our goal is to cultivate 200,000 AI talents in four years. We will recruit students from overseas through the 2+4 Talent Cultivation Program to solve the domestic manpower shortage problem. In the future, we will improve productivity through the integration of robots and generative AI. The MOEA is organizing AI industry-related training courses and work to cultivate 62,000 domestic AI talents. We launched the "Best AI Awards" in February this year, in hopes of inspiring the younger generation to create more innovative applications.
In the drone industry, the Taiwan Excellence Drone International Business Opportunities Alliance (TEDIBOA) was established in 2024. TEDIBOA has since integrated 190 domestic companies to form a national manufacturing team, leading alliance members to build a "non-red" supply chain, while driving the transition of fastener and metal processing industries, so that they can become members of the supply chain. The output value of drones is expected to increase from NT$5 billion in 2024 to NT$30 billion in 2028. In terms of Unmanned vessel segment, the Ship and Ocean Industries R&D Center (SOIC) developed an AI Identification Navigation Assistance System and won the Edison Awards in January 2025. The SOIC has also helped domestic companies successfully enter the supply chain of international corporations, for which mass production is expected to commence in the first quarter of 2026.
The MOEA is proactively investing in 6G prototype systems and low Earth orbit (LEO) satellite equipment. Taiwan has begun building and testing the 6G prototype system in Spain as of the end of February 2025. We are also continuously negotiating with leading international satellite companies on R&D cooperation opportunities for LEO satellite ground equipment, aiming to advance Taiwan's next-generation communications industry.
2. Leading industries in global deployment with “Pursuing Global Opportunities with Domestic Supply Chains” strategy, while creating a medical and health and wellness industry ecosystem with "Enriching Domestic Businesses with Global Trade Relations" strategy
The MOEA implemented the “Pursuing Global Opportunities with Domestic Supply Chain” strategy to lead Taiwanese businesses to expand their global presence, focusing on trading partners such as the United States, Japan, and Central and Eastern Europe. The Taiwan Trade and Investment Service Center was established in the Czech Republic in December 2024, marking the first overseas service center for "Pursuing Global Opportunities with Domestic Supply Chain." The second center will be established in Fukuoka, Japan in April this year. In response to the new U.S. tariff policy, the MOEA has set up a task force to provide immediate support to businesses, and plans to establish a trade and investment service center in the U.S. to assist businesses in evaluating the investment environment and matchmaking them with partners.
To help domestic companies expand into overseas markets, we have expanded overseas channels under a common brand, TAIWAN SELECT. Taiwan Excellence Pavilions were also set up in 17 international exhibitions of various fields overseas, helping to put 620 brands onto the shelves of brick-and-mortar stores overseas and also on e-commerce channels, allowing high-quality Taiwanese products to be marketed around the world.
With regard to “Enriching Domestic Businesses with Global Trade Relations,” the MOEA will invite visitors from neighboring countries such as Japan, South Korea, the Philippines, and Vietnam to exhibitions in Taiwan for procurement and consumption, and will provide purchase guidance services during iconic international exhibitions of semiconductors and computers. TAIWAN SELECT Hospitality Lounge serving tea and refreshments, and dedicated sections allowing visitors to experience health checkups and cosmetic procedures will be set up, guiding foreign businessmen to make purchases in Taiwan.
The medical and health and wellness industry presents massive business opportunities. Taiwan's sports and medical device industries are deemed to be hidden champions in the global market. This will help us build a comprehensive and diverse ecosystem spanning sports to healthcare, establishing Taiwan as a nation that delivers the medical and health and wellness services. Particularly with the integration of AI technology, physical training can be conducted in a Digital Twin virtual environment,applied to smart healthcare and health management, and used to enhance disease prevention. The MOEA will promote the adoption of AI technology and innovative tech applications in the sports and medical device industries through R&D subsidies and tax incentives.
3. Expanding ESCO service capabilities to help enterprises achieve deep energy savings and cost reduction
Starting with state-owned enterprises before expanding to private enterprises, ESCO is being adopted in industries in three stages to help companies reduce carbon emissions and reduce costs. Capital investment will also be increased. This initiative saved 4.8 billion kWh of electricity last year, which was equal to 1.7% of Taiwan's electricity consumption. This year, our goal is to save 5.5 billion kWh of electricity, and we expect to save in total 20.6 billion kWh of electricity by 2027.
In addition to continuing cross-departmental efforts to improve the energy efficiency of public and private sectors, and the replacement of old home appliances with more energy-efficient models, we will also implement large-scale ESCO projects by having large ESCOs leading small and medium enterprises (SMEs). This will expand the integration of ESCOs and create a business model for large-scale projects. To expand the capacity of ESCOs, the MOEA will guide insurance companies to invest in the ESCO industry. We have established a NT$5 billion ESCO credit guarantee system to assist ESCOs in obtaining bank loans. The MOEA will also look into incentive mechanisms for ESCOs, and accelerate energy saving through public-private partnerships.
4. Helping MSMEs accelerate the digital and net-zero transitions
Micro, small and medium enterprises (MSMEs) are in need of more government support when facing challenges brought by the digital and net-zero transitions. The MOEA will invest NT$11.6 billion this year and expects to provide consulting and guidance to 193,000 companies, helping to create NT$68.9 billion in output value.
The government will provide subsidies to companies for training employees’ in digital skills and adopting digital software tools. The government will also introduce tax incentives to encourage MSMEs to continue to invest in innovation and R&D, and incorporate "employee salary raises" into the review mechanism of the Small and Medium Enterprise Credit Guarantee Fund of Taiwan (TSMEG). For preferential loans to MSMEs with fewer than 30 employees that are investing in digital and net-zero transitions, an additional loan guarantee of up to NT$35 million will be given. We hope to assist 200,000 companies in obtaining financing of up to NT$240 billion to alleviate the financial pressure on these enterprises.
5. Continuing to strengthen the resilience of energy and resource supply to meet the needs of industrial development and domestic consumption
The MOEA is proactively promoting the installation of renewable energy. In addition to solar power and offshore wind power, we are also keen to promote geothermal energy to increase the diversity and self-sufficiency of energy sources. As of the end of last year, the cumulative installed capacity of geothermal energy was 7.49MW. The target for this year is 20MW, and current project sites have the capacity of 12.6MW. We will expand deep drilling for geothermal energy through international cooperation. State-owned enterprises will take the lead in introducing foreign drilling equipment and international professional teams to accelerate the development of geothermal energy in Taiwan. The goal is to achieve total installed capacity of 1.2GW by 2030.
With Taiwan businesses returning, major foreign companies expanding investments in Taiwan, and considering the long-term electricity demand of emerging technologies, such as semiconductors and AI, we plan to increase the installed capacity of large generator units by 17.86 GW between 2024 and 2033 to ensure stable power supply. To solve the problem of unbalanced power supply between regions, we are accelerating the construction of power infrastructure in various locations. We are also implementing power grid decentralization projects to strengthen the resilience of the power grid.
In terms of water supply, we will continue to take measures to stabilize water supply, such as increasing water sources, reducing consumption, and managing dispatch and backup. We expect the overall backup capacity to reach 60% by 2028, thereby ensuring water supply for domestic consumption and industrial development throughout Taiwan. In addition, in response to the water demand of future investment projects, the water resources of major science parks or industrial parks can be mutually backed up. Important industries will be prioritized for matching with reclaimed water sources, while Hsinchu and Tainan desalination plants will be built as backup water sources for industries. The MOEA has established a platform to gather input from industries and will implement projects to address their water needs.
III. Conclusions
The international situation is volatile nowadays. Despite facing various international challenges, Taiwan has been able to turn crises into opportunities through joint efforts of the government and private sector, owing to Taiwan’s solid industrial foundation and world-leading technologies. In the face of changes in global economic and trade order, especially the impact of the new U.S. tariff policy, the MOEA will be holding more industry seminars and will provide more comprehensive support to various industries. The MOEA will also closely monitor the international economic and trade situation, help companies respond to market changes, accelerate the AI transition of industries, and explore international markets. We hope to thereby make Taiwan's industries more resilient and competitive.