Taiwan, known as a semiconductor and electronics hardware-manufacturing hub of the world, is now looking to learn from India’s experience to transition itself into a software-led economy. India, long considered as a back office to the world, witnesses a lot of bilateral communication with Silicon Valley of the US in terms of movement of talent and capital. “I think Taiwan can learn a lot from India in terms of how we should do collaborations internationally, both easier movement of talent to and from, and also about how we redefine ourselves as a software place,” said Taiwan’s digital minister Audrey Tang, who worked for Apple for six years before joining the government.
However, the island nation’s transition will be a hard process as it will lead to redistribution of resources from manufacturing to software development, said Chiou Jiunn-Rong, deputy minister, National Development Council, a government think-tank. Taiwan is looking to use its competitive advantage in hardware to boost its digital transformation drive. The country has already announced plans to invest $550 million over the next five years to boost the country’s artificial intelligence (AI) capabilities in the fields of medicine, self-drive vehicles, manufacturing and services.
The economic shift assumes importance in the backdrop of Taiwan’s plan to trim its economic reliance on China, with whom it has tense political ties. China accounted for over 40% of the island’s annual exports. “We expect to have less trade with China,” Chiou said.
Taiwanese companies such as iPhone’s contract manufacturer Foxconn Technology have huge manufacturing lines in China. Foxconn is reportedly toying with the idea to invest up to $5 billion in India to make the country a parallel manufacturing hub to China for export to key markets across the world.
FDI inflows from Taiwan, which stood at only $242 million since 2000 until June 2017, will likely see a massive surge in the coming months.
“India is a very valuable partner in terms of future development and in terms of talent exchanges,” Chiou said. Taiwan is providing a lot of incentives to attract foreign talents including from India. The minister said many Taiwanese companies are currently exploring investment opportunities in India.
During the 2017 World Congress on Information Technology during September 11-13 held in Taipei, Taiwan President Tsai Ing-wen said her government has been liberalising laws and regulations, and promoting industrial innovation programs such as the Asia Silicon Valley programme.
In the aftermath of the global slowdown, India-Taiwan bilateral trade had declined from $7 billion in 2012-13 to $5.32 billion in 2016-17. “I am not satisfied (with the scale of business ties with India) because whenever government officials visit India, they see a lot of people from Japan and South Korea in India, that demonstrates that we have not done enough,” Chiou said. He was hopeful that as the economic recovery gathers momentum around the globe, trade recovery will also take place.
(Travel for this report was sponsored by the government of Taiwan)