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Originally published:
Mar-18-2004
Legal System
Based on civil law system; accepts compulsory ICJ jurisdiction, with reservations
Economy
Currency: Taiwan Dollar (TWD)
Inflation: 0.2% (1999), 1.3% (2000), 0.0% (2001), -0.2% (2002), -0.2% (2003), 0.5% (2004 projected)
Real GDP Growth Rate: 5.4% (1999), 5.9% (2000), -2.2% (2001), 3.5% (2002), 3.2% (2003) 5.4% (2004 projected), 4.9% (2005 projected)
GDP Per Capita: $21,200 (1999), $22,740 (2000), $22,590 (2001), $23,420 (2002), $18,000 (2003)
Leading Markets (2003): United States ($29.8 billion), PRC and Hong Kong ($40.8 billion), Japan ($12 billion)
Leading Suppliers (2003): Japan ($27.3 billion), United States ($18.1 billion)
Taiwan dollar per US dollar: 31.6 (1999), 33.09 (2000), 34.74 (2001), 34.88 (2002), 34.4 (2003), 33.081 (as of 03/18/2004)
Top Industries: Electronics, petroleum refining, chemicals, textiles, iron and steel, machinery, cement, food processing
General Economic Situation
Taiwan has transformed from an underdeveloped, agricultural economy to an economic power, becoming the world’s leading producer of high-technology products. Although the industrial and services sectors now dwarf Taiwan’s agricultural sector, agriculture still remains a vital part of Taiwan’s economy outside the major cities. Taiwan is the world’s largest PC manufacturer and supplier of computer monitors.
Real growth in GDP has averaged almost 8% during the past three decades. Exports have grown even faster and have become the primary force for industrialization. Inflation and unemployment are low; the trade surplus is substantial; and foreign reserves are the world’s third largest.
Taiwan experienced its first economic recession in 2001 due to the global economic slowdown and weaknesses in parts of the financial sector. The economy began to recover in 2002, but was slowed by the SARS outbreak in early 2003. Growth for 2004 is expected to reach 5.4% and 4.9% the following year.
Business Climate
Taiwan is the world’s 14th largest trading economy. The accession into the WTO in 2002 has expanded its trade opportunities and further strengthened its standing in the global economy. Taiwan’s planned liberalization of its financial system will aid in adjusting its trade imbalance, attracting foreign investors.
Many foreign enterprises in Taiwan are now locally established to produce for the burgeoning domestic market. The high price of labor in Taiwan today has induced foreign investors to turn their attention to high-tech, capital intensive industries, such as electronics, computers, banking and finance, leading to a variety of new investment opportunities in Taiwan. The tightening of labor markets has led to an influx of foreign workers, both legal and illegal.
Credit and Collections
- Collection Experience: Good-Fair
- Exchange Delays: 3 months
- Preferred Credit Terms: Unconfirmed L/C
- Minimum Credit Terms: Sight Draft
Risk Assessment
Taiwan benefits from a domestic consumer spending recovery, buoyed by low interest rates, firm stock market prices, declining unemployment, as well as the start of a pre-electral period. The dynamism of companies able to adapt rapidly to changing regional and world conditions is a strong advantage to the economy.
Taiwan has remained sheltered from financial turbulence due to its very substantial currency reserves exceeding foreign debt by a wide margin. Shaky public financials in need of tax reform and a banking sector hampered by too many institutions, are weaknesses within the Taiwanese economy.
The main source of uncertainty within Taiwan is its relations with Mainland China. However, the island’s growing economic ties with the continent have helped to reduce risks of conflict. The backing of the United States and pragmatism of the People’s Republic of China’s new leadership will be conducive to maintaining the status quo.
Country Risk Rating: (A1) The steady political and economic environment has positive effects on an already good payment record of companies. Very weak default probability.
Sources for further information on doing business in Taiwan
Doing Business in Taiwan: Provides detailed information on many aspects of doing business in Taiwan including economy, government, industry information etc.
Doing Business in Taiwan: 2008 Country Commercial Guide, U.S. Department of Commerce
Economy of Taiwan on nationmaster.com: Provides information regarding the economic situation in Taiwan.
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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Taiwan. For further information, contact info@abc-amega.com.
This report represents a compilation of information from a wide variety of reputable sources including: the U.S. Department of State, the U.S. Commercial Service, CIA World Factbook and Coface North America Country Risk Assessment.
Risk Assessment information: Coface and Owens Online.
Information on credit terms and the probability of prompt payment are provided, with permission, from Overseas Press and Consultants (OP&C) as published in IOMA's Report on "Managing Credit, Receivables & Collections," December 2003.
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