Minister Kuo Jyh-Huei's oral administrative report to the 1st session of the 11th Congress of the Legislative Yuan
Date: 2024-6-5
(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 circumstances and the focus of the MOEA’s administration. Please advise as necessary.
I. Current Economic Situation
The global economic outlook is releasing positive projections this year. The International Monetary Fund (IMF), the Organization for Economic Co-operation and Development (OECD), etc. are projecting a global growth ranging from 2.7% to 3.2% for the first half of this year. Nevertheless, geopolitical conflicts between Russia and Ukraine, and the Middle East region, compounded by the anti-dumping investigations and tariff barriers imposed by the European Union (EU) and the United States (US) against China, and countermeasures taken by China thereto, are adding uncertainties to the global economy.
Meanwhile, the opposition between blocs led by the US and China is restructuring the global political, economic and trading landscapes. The opposition has since spread to the fast-growing artificial intelligence (AI) applications market. Taiwan’s advantages in the semiconductor industry, as well as a mature telecommunications supply chain, are putting us in a competitive position in the AI era. As business opportunities of AI continue to grow, our exports are also recovering steadily. Major forecasting agencies are optimistic that Taiwan economic growth would exceed 3% this year.
II. Direction and Implementation of the MOEA's Administration
In the face of increasingly unstable world politics, by adhering to the innovation-driven economic model and development policies of the Five Trusted Industry Sectors, the MOEA works to accelerate AI innovations and applications by leveraging our advantages in the semiconductor industry. These efforts are part of our endeavor in making Taiwan an island of AI. Furthermore, using dual transition of digitization and net-zero emissions, the MOEA seeks to help small and medium enterprises (SMEs) upgrade, as well as delivering stable power supply and handling other precarious livelihood issues. The MOEA is committed to achieving the 2050 net-zero transition goals.
1.Rejuvenating Development of Semiconductor, AI, Next-Generation Trusted Communications Industries
To fortify Taiwan’s leading position in the semiconductor technology, the MOEA will proactively invite international semiconductors and AI enterprises to invest in Taiwan and collaborate with domestic businesses in technical cooperation. With the growing demand in advanced manufacturing and packaging, the MOEA will help domestic companies in developing key semiconductor equipment, components and materials. We aim to self-produce 25% (output value) of the semiconductor packaging equipment and 35% (output value) of the semiconductor materials by 2028. Meanwhile, we will launch a cross-agency program, namely the Taiwan Chip-based Industrial Innovation Program, to encourage domestic IC designers to venture into emerging AI applications.
In the coming five years, AI is foreseen to enter into a high-growth period. Therefore, we must accelerate our AI innovation and applications. The MOEA will expedite the creation of core technology of generative AI that is proprietary to Taiwan, as well as assisting businesses in developing demonstration cases of generative AI applications. These efforts will help Taiwan achieve the AI industrialization goals. Furthermore, the MOEA works to collaborate with guilds, international enterprises, universities and training institutions in establishing AI courses. It is estimated that in 2028, these courses would cultivate 200 thousand AI talents. Meanwhile, companies would be guided in adopting AI applications. All of which would enhance the AI penetration rate in industry for at least 50%.
5G and the space industry are the main driver for smart living in the future. By subsidizing businesses in developing proprietary technology for domestic 5G and next-generation communication systems, the MOEA is striving to make Taiwan part of the global supply chains of next-generation communications, and Medium Earth Orbit (MEO), and Low Earth Orbit (LEO) satellites.
2. Economy that Never Falls: Attracting Investments to Taiwan and Making Global Investments
The MOEA is formulating two major development strategies, namely “Enriching Domestic Businesses with Global Trade Relations” and “Pursuing Global Opportunities with Domestic Supply Chains.” For which, internally, more investments are made and the consumer market is expanded. Externally, manufacturing parks in Taiwan are embracing global opportunities to rejuvenate the development of Taiwan economy.
For Enriching Domestic Businesses with Global Trade Relations, the future focus lies on the Five Trusted Industry Sectors. More efforts would be made to attract foreign investments. One such effort is establishing preliminary and expedited review mechanisms to create a more conducive environment for investment. Furthermore, targeting on countries whose lifestyle and cultural attributes are similar to Taiwan’s, such as Japan, the Philippines, Vietnam and other neighboring Asian countries, we plan to invite the top 100 international brands to invest in Taiwan. Meanwhile, using Taiwan gourmet, big health, elderly healthcare as attraction, the MOEA will provide guidance to starred restaurants with potential. In four years, we seek to increase to 500 stars, thereby fostering high-quality service industry.
In the face of grouping and regionalization trends in the global economy, companies must equip themselves with the capabilities of competing for market share. As for Pursuing Global Opportunities with Domestic Supply Chains, the MOEA works to extend the economic national power of Taiwan. By letting large supply chains take lead of smaller ones, advantageous industries in Taiwan, such as the semiconductors and AI sectors are integrated when major national or regional industrial parks are established. One-stop services for overseas market are also provided to expand the economic territory of Taiwan.
3. Stable Power Supply as Top Priority while Promoting Green Energy, Energy Conservation
The MOEA attaches much importance to stable power supply. With the continuous development of AI investments, cloud computing and semiconductor plants, we will forecast the growth of electricity with a practical manner. Revisions to the power demand for the next five to ten years will be made based on rolling reviews to lower error in predicting power supply. To curb power outages occurred in recent period, Taipower prioritizes the equipment repair in old districts, as well as equipment replacement of power consumption households and power consumption which are growing at a higher rate than that of the feeder lines.
To promote in-depth energy conservation, the MOEA strengthens the development of energy service companies (ESCOs), in which we launched the ESCO Credit Guarantee Scheme to direct financing into the energy conservation sector. This will accelerate energy conservation actions for enterprises. For household consumption, the MOEA is attempting to secure funding for the next four years (2025 - 2028) from the Executive Yuan to expand subsidies for equipment replacement.
The development of wind and solar power is fairly mature in Taiwan. Through the selection of service providers for Phase 2 Zonal Development of Offshore Wind, we seek to assist wind power providers resolving challenges. For rooftop photovoltaic system and compound usage, we will accelerate its installation. Moreover, we will hasten the development of other types of forward-looking energy such as the hydrogen energy. State-owned enterprise will take lead in validating the effectiveness of hydrogen energy, and expanding its applications in industry, transportation and power generation.
Achieving nuclear-free homeland is our official goal. The MOEA shall remain persistent with our efforts in developing green energy. We hold our commitment to providing safe and stable power supply with the utmost solemnity. As for the decommissioning of nuclear power plants and its regulatory issues, the law has delineated the period of use, time of decommissioning of power plants, etc. The MOEA respects the review and discussion processes of the Legislative Yuan. Nevertheless, with ensuring the safety of nuclear power plants and nuclear waste disposal, as well as reaching societal consensus on these issues, as our premises, we will continuously pay attention to the development of new nuclear power plant technologies.
4. Dual Transition of Digitization and Net-Zero Emissions for SMEs to Rejuvenate Startup Investments
Small and medium enterprises (SMEs) are the cornerstone of a steady economic development in Taiwan. To assist SMEs in coping with the restructuring of the global supply chain, AI and net-zero emissions challenges, the MOEA helps SMEs in adopting cloud solutions or AI tools. Going forward, with the amendments to Article 10-1 of the Statute for Industrial Innovation, AI technology and investment tax credit for high efficiency equipment will be incorporated to transform individual enterprises and supply chain production processes into low-carbon and digital ones. These efforts will cultivate their carbon management ability, expediting the initiation of the second curve for SMEs.
In the future, we will continue to cultivate more startups with potential. The National Development Fund has set aside NT$10 billion to help startups and SMEs secure adequate operational funding when they grow. Furthermore, in different stages of their development, we will provide comprehensive training and consultation to look for the next-generation hidden champions in Taiwan.
III. Conclusions
The MOEA works to consistently enrich the semiconductor ecosystem in Taiwan. Based on our advantage in this regard, we seek to expand AI applications in industry, so that Taiwan can retain its leading position amid the global AI trend. By letting large supply chains take lead of smaller ones, we will extend the reach of Taiwan supply chain overseas. Meanwhile, apart from satisfying the future development needs of industry, we also work to ensure stable power supply, and accelerate the diverse development of green energy. These are part and parcel of our efforts to foster a good investment environment, so that we are able to attract foreign talents and capital and elevate enterprise competitiveness. We are determined to venture into the world and we welcome investments and exchanges from the global community.