Minister Wang Mei-Hua's oral administrative report to the 7th session of the 10th Congress of the Legislative Yuan, the 8nd Plenary Meeting of the Economics Committee
Date: 2023-3-29
The following content is a translation of excerpts from the Minister's 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 current economic circumstances and the focus of the MOEA’s administration. Please advise as necessary.
Current Economic Situation
With the current global economy under a multitude of disturbances, including inflation, interest rate hikes, war, and the US-China wrestling match, various international forecasting institutions, among them S&P Global, the World Bank, the International Monetary Fund (IMF), and the Economist Intelligence Unit (EIU), believe that an economic downturn is inevitable. In the face of weak demand in key markets such as the United States and Europe and ongoing interest rate hikes, in addition to the uncertainty surrounding China’s economic recovery, it is estimated that Taiwan’s economy will continue to face significant external challenges in the first half of the year. Fortunately, the domestic Covid-19 situation has improved and consumer spending has picked up. Moreover, with semiconductor factories expanding, continuing investments in renewable energy facilities as well as the expansion of public works, it is estimated that Taiwan’s economy will maintain moderate growth this year.
Furthermore, with the European Union to launch CBAM this year, the global race to net-zero has turned increasingly competitive. In particular, because Taiwan’s industries are closely linked to the global supply chain, accelerating low-carbon transition will be the key to gaining a competitive edge in the future. Through our technological advantages and industry capabilities, we are well positioned to collaborate with countries to reduce carbon emissions and seize opportunities for green business growth.
Direction and Implementation of the MOEA's Administration
The MOEA realizes that uncertainty in the global economy will become the new normal, and economic development must be built on a stable foundation to cope with crises and challenges. Thus, policies will prioritize ensuring the stable supply of water and electricity and accelerating the net-zero transition of the energy and industrial sectors. Concurrently, we will maintain our advantage in the semiconductor industry, building competitiveness in next-generation industries such as 5G, electric vehicles, and biotechnology while also actively attracting investment and deepening trade cooperation with international allies in order to bolster Taiwan's key position in the global economy. In addition, to assist enterprises through the current wave of short-term economic changes, we proposed an initiative for a special budget that will provide resources for the upgrade and transition of industries as well as project loans, thereby assisting businesses in maintaining stable operations.
- Stable Water and Energy Supply
Extreme weather events, which have given rise to the “dry gets drier and wet gets wetter” paradigm, in addition to the energy crunch brought about by the Russo-Ukrainian war, have further plunged nations into an energy crisis. Regarding the issue of water and electricity supply, of utmost concern to industries, the MOEA proposes careful planning in the short, medium, and long-term to ensure uninterrupted supply so that industries can invest and operate with peace of mind.
In the future, industrial development and improving quality of life, along with the transition to net-zero, will increase the demand for electricity. The MOEA has planned careful measures for long-term and short-term energy provision, including a flexible generation system with the capacity to quickly ramp up or ramp down output using grid-scale batteries, conventional hydropower, pumped-storage hydropower, and gas-fired peaking stations combined with new time-variable pricing programs, demand-side response, and other management strategies to ensure energy security. In a two-pronged approach to restructure the power grid toward both national integration and regional resilience, an estimated NT$150 billion will be invested to strengthen the power grid resilience, to reduce the risk of centralized generation, improve device stability, and enhance equipment security and systems defense strategies.
In response to the noticeably low levels of precipitation in the southern regions, the ministry established a drought response center on March 1 this year to increase water supply through measures such as regional water allocation adjustment, constructing new drought-resistant wells, and increasing water treatment plant output. Simultaneously, we will continue to pay close attention to the situation, expediting various drought prevention and emergency water supply allocation adjustment measures, making every effort to maintain reservoir levels, and carrying out artificial rainfall operations to ensure a stable water supply.
- Implement Green Transition
In order to provide low-carbon power to the industry, the ministry is promoting the decarbonization of energy systems and expanding wind and photovoltaic energy facilities; meanwhile, with coastal wind power saturated, the ministry is currently drafting plans for the demonstration of floating wind turbines to lay out the nation's offshore wind farm development ahead of time.
To active promote hydrogen energy, the ministry has put together a “Hydrogen Energy Promotion Alliance” to establish a hydrogen supply system for the future and develop diversified applications of hydrogen energy. Following the signing of an MoU with Siemens and Mitsubishi last year on conducting demonstrations of gas-fired hydrogen blending and coal-fired ammonia blending power generation, Taipower signed an MoU this February with Academia Sinica on a joint effort to develop "carbon reduction and hydrogen-fired" power energy technologies. In addition to collaborating with China Steel Corporation to co-produce high-value chemical products, CPC Corporation will build the first mobile hydrogen fueling station in the nation, launch hydrogen vehicle refueling services, and in the future gradually develop a hydrogen business model and create more low-carbon transport vehicles.
In response to the CBAM, which will enter into force in its transitional phase in October of this year, the ministry remains up-to-date on relevant provisions of the regulation, seeking to negotiate with the EU for the rights and benefits of Taiwanese manufacturers, assisting manufacturers in meeting EU declaration requirements, and actively guiding industries in reducing the carbon footprint of products. Additionally, in order to expand efforts in energy conservation, the ministry has offered a subsidy program this year to encourage consumers to replace older, energy-consuming appliances with new energy-efficient ones, while jointly announcing to operators of restaurants and conference centers and business owners a trial program limiting air-conditioning temperatures in a bid to promote a greener, energy-saving lifestyle for all.
- Assist Enterprises in Adapting to Changing Business Environment
The slowdown in global demand has impacted our exports. In order to expand assistance to industries, especially small- and medium-sized enterprises (SMES), and even microbusinesses, the ministry has sought a budget, in accordance with special post-pandemic regulations, for revitalization loans, and for upgrading and transformation. Through these and other such measures, we aim to prioritize assisting enterprises in accelerating smartization and decarbonization and catch up quickly to the pace of global recovery.
In order to support SMEs with needs for working capital due to the economic downturn, we have also offered two project loans: post-epidemic revitalization, and transformation and development, to provide funds needed for operation and transformation, and to help SMEs regain prosperity and enhance competitiveness.
In the supply chain system coaching mode, we provide on-site business consulting, diagnosis, or counseling services, guiding the industry towards smart manufacturing and low-carbon optimization. Additionally, we offer personnel training courses to conduct professional, in-depth training for in-service employees to assist in retaining core talent; moreover, a mentoring group and inter-ministerial platform are used to assist SMES in transformation and upgrading and to maintain industry operation and growth.
- Maintain Competitive Edge in Industry
Taiwan's semiconductor industry is currently the most resilient and efficient production model in the world; the ministry continuously takes stock of domestic projects with development potential based on the needs of semiconductor end consumers, pushing for the constant improvement of independently developed technologies to maintain the country's leading edge in the industry. Simultaneously, in response to global 5G telecommunication needs, vehicle smartization, high-end biomanufacturing and other mainstream trends, we are establishing an internationally-recognized 5G verification platform to assist enterprises in obtaining international certification, and building the core technology for the country's private 5G network to provide better efficiency and stability.
In addition, by subsidizing local manufacturing of whole vehicles, we strive to enter the parent factory supply chain, with full effort behind reaching the goal of electric vehicles sales having 100% market share by 2040; encourage manufacturers to develop innovative high-tech medications and high-end medical materials by offering tax incentives and R&D subsidies to strengthen access to the international CDMO supply chain and expand the nation's global market share in biotechnology and pharmaceuticals.
In line with the new post-pandemic consumer trend that has created a business model which integrates virtual reality with the real world, the ministry continues to coach retailers and food and beverage providers in the use of digital tools for precision marketing, to provide the public with convenience in their customer experience. In addition, lead food and beverage enterprises and franchises toward the global market and develop new products and services that meet consumer expectations.
- Strengthen International Trade Relations
Considering the state of the global economy in the aftermath of the US-China trade war, the pandemic, and the Russo-Ukrainian war, countries are actively seeking cooperation with like-minded partners. Taiwan will continue to deepen exchanges with the United States, Europe, Japan, and Indo-Pacific nations, jointly constructing a secure, resilient supply chain.
To actively attract investment, implement the "Three Major Programs for Investing in Taiwan" to drive investment, and focus on areas such as new-energy vehicles and a circular economy, we will screen potential foreign investors, visit and make proposals, negotiate and promote Taiwan's ICT industries, and invite investment and cooperation.
Through the existing communication channels with the United States, we will continue to deepen our partnership, while at the same time promoting trade cooperation between Taiwan, the EU and Japan to help enterprises expand overseas. In response to the international net-zero trend and the New Southbound Policy, we will continue to expand such industries as information and communications technology, green energy and intelligent manufacturing, with an eye to building a resilient supply chain with the initiative's cooperating countries.
Conclusions
International geopolitics influences the layout strategy of enterprises. However, the ministry is confident that providing enterprises with reliable access to water and power and a secure business environment in which to make investments will simultaneously continue to boost Taiwan's advantages in key industries, including semiconductors, and drive the growth of emerging industries. In the face of the net-zero challenge, we will continue to promote the decarbonization of the power sector, effectively connect industries to work together reduce our carbon footprint, and invest in forward-looking technology research and development, so as to embrace zero-carbon business opportunities and together realize a vision of green growth. Finally, despite global economic challenges in the first half of the year, the government will make every effort to hold up the economic "umbrella" of protection, especially for small and medium-sized enterprises, expanding funding and support for intelligent low-carbon transformation, accelerate economic fitness, and be ready to welcome an economic turnaround in the second half of the year.