Taiwan’sFree Economic Pilot Zones

National Development Council

August 2015

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Outline

IntroductionIdeas and GoalsStrategiesTarget ActivitiesLocation and Time LineConcluding Remarks

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Introduction

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Introduction (1/2) Economic liberalization is being promoted all

around the world Major economies are stepping up FTA

negotiations for bringing down trade barriers and enhancing trade and investment flows

Taiwan has completed only 7 FTAs, far behind its major competitors

To avoid being marginalized, Taiwan must speed up the pace of liberalization and internationalization

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Taiwan Being Isolated during Regional Economic Integration

Accounting for 56.6% of Taiwan’s total trade

Accounting for 35.0% of Taiwan’s total trade

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Introduction (2/2) Free Economic Pilot Zones (FEPZs) Plan to further

Taiwan’s liberalization and globalization Internally

To help ease doubts and fears of economic opening for entering FTA talks

To promote the economic growth Externally

To show Taiwan’s determination to advance further in liberalization toward regional economic integration

To harmonized laws and administration measures with international standards

Focusing on deregulation and institutional innovation

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Ideas and Goals

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Key Ideas

Liberalization, internationalization Loosening restrictions on the free movement of

personnel, goods, capital, and information.

Forward looking Promoting innovative industrial activities and new

business models

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Ultimate Goal

FEPZs as “trial” and “pioneer” areas To demonstrate the usefulness/benefits of

economic liberalization and internationalization

From partial to general From small-scale to large-scale

Ultimate goal: If the FEPZs do well, the measures of liberalization and internationalization will promote all around the Taiwan.

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Strategies

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Strategies Facilitating the free movement of people,

goods, and money Providing Tax incentives and convenient land

acquisition Opening market to align with other economies Promoting cross-border industrial cooperation Building a high-quality business operating

environment

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Attracting Overseas Professionals

Foreign professionals short term visa

exemption or landing visas

Mainland Chinese professionals

Exempt from documentation review on business stay

3-year multiple-entry permits

Liberalization of entry and exit of personnel

No previous work experience required

No business turnover requirement for personnel recruitment

Relax restrictions on foreign white-collar

employment

Allowing foreign white-collar professionals to provide services on a

commissioned or contracted undertaking

basis

All measures NOT involving blue-collar workers 

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Liberalization of Goods Movement

Controlled items are permitted to enter the FEPZs for processing, and the finished goods are required to all export

Exempt from import taxes and duties for machinery and equipment imported for own use

Innovating customs mechanism to speed entry and exit of goods

Establishing electronic logbooks and remote monitoring systems to simply spot checks

Establishing Maritime Express Handling Units to facilitate goods flows and provide 24-hours services

24 H

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Tax Incentives for Business

For international goods owners engaging in goods storage or simple processing in FEPZs, 100% of the export and 10% of the domestic sale will enjoy business income tax exemption ( exclusive of agriculture products)

Foreign professionals worked in FEPZs are exempt from reporting foreign source income under the Alternative Minimum Tax (AMT) system, and for the first 3 years only half of the salary would be taxed.

Profess-

ionals

Oversea dividends and earnings repatriated by FEPZs’ companies are exempt from income tax if the companies substantially invest in FEPZs

Goods

Cash

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Dual-Track Pilot Mechanism• Industries with clear physical location will be piloted within

physical zone areas and linked with companies outside the zones via a “shop onsite, factory offsite” operation model.

• Industries not suitable for being confined to physical zone areas will be conducted at designated trial-points, with loosened pilot operation scope and separate-grade management.

PhysicalZone areas

(shop onsite)

Designated trial-points

(factory offsite)

Pilot models to be defined by competent authorities

Industries not feasible for implementation in physical zone areas

Approved FEPZ businesses

Stratified management

Geographically defined location

Approved FEPZ businesses

Any location outside the zone

Outsourced processing

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One-stop Services

Project managers will assist FEPZ businesses in administrative and regulatory matters.

TaxLand

acquisition and use

Business registration

Comprehensive one-stop services

ConstructionLabor

administration, safety and hygiene

Environment protection

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Target Activities

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Taiwan’s advantages: geographic location, industrial technologies, human resources etc.

Integrating Taiwan’s advantages with potential industries and new business models

Smart Logistics International Health Care Value-added Agriculture Financial Services:

e.g. Wealth and Asset Management Education Innovation

Target Activities

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Smart Logistics Promoting faster and freer goods flows and increasing the

value-added of goods with top logistics services, enabled by electronic account book, innovative customs administration and cloud platform.

employing the “shop onsite, factory offsite” operation model to expand the scope and depth of processing.

International Health Care Simplifying entry procedures for foreign visitors, and setting

up international medical service centers in airports to provide medical consulting and hospital liaison services.

Establishing “International Healthcare Industrial Park” to promote industries such as medical care, biotechnology, pharmaceuticals, rehabilitative care, health enhancement etc.

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Value-added Agriculture Fully utilizing Taiwan’s sophisticated agricultural

technologies and talents to innovate agricultural products, and increase agricultural value-added.

Marketing Taiwan’s agricultural products such as Taiwanese teas, orchids, animal vaccines, ornamental fishes etc. under MIT brands worldwide.

Financial Services Allowing financial institutions to develop wealth and asset

management services through Offshore Banking Units (OBUs) and Offshore Security Units (OSUs) to provide a diverse range of financial products and services to non-residents

Restrictions on scope and categories of financial products have been greatly relaxed, and negative-list approach has been adopted.

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Education Innovation Encouraging cooperation between domestic and overseas

prestigious universities to set up branch campuses, independent colleges, and degree programs and professional courses, etc.

Relaxing rules and conditions for school establishment and operation, student enrollment, faculty recruitment, etc.

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Location and Time Line

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Schedule of the Two-Phase Liberalization

Phase 1FEPZs Phase 1 Promotion Plan launched in August, 2013.Draft of the Special Act for Free Economic Pilot Zones

passed by the Executive Yuan in December 2013 and sent to the Legislative Yuan for review.

Phase 2To be activated after the special law being enacted by the

Legislative Yuan. During Phase 2 of the promotion plan, new FEPZs could be

created either through central government’s planning or via the applications issued by local governments.

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Time Line

PHASE 1 PHASE 2PLANNING

FEPZs Framework approved in April 2013

FEPZs Plan approved inAug. 2013

2013

Special Act submitted to Executive Yuan for approval in Oct. 2013

Special Act reviewed by Legislative Yuan

Special Act enacted

2014

Physical Locations

More FEPZs will be set up in the future!

Phase I 7 FTZs & 1 agri-

biotech park ChangPin Industrial

Park

Taipei Port FTZ

Pingtung Agricultural Biotechnology Park

Anping Port FTZ

Kaohsiung Port FTZ

Keelung Port FTZ

Taoyuan Airport FTZ

Su’ao Port FTZ

Taichung Port FTZ

ChangPin Industrial Park

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Concluding Remarks

Concluding Remarks The FEPZs Plan is to prepare Taiwan for further

economic liberalization and internationalization. The Plan will help

align Taiwan’s economy with the world in the shortest period of time

Taiwan gain admission to The Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP)

Being runways to a new take-off for Taiwan’s economy, the Plan will eventually turn Taiwan into a free economy island.

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Contact DetailsFor enquiries or services, please contact

InvesTaiwan Service Center

Address 8F, 1 Xiangyang Road, Taipei 10046, Taiwan

Tel 886-2-2311-2070

e-mail service@invest.org.tw

For more information, please visit

www.fepz.org.tw

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　 Thank you！