Taiwan government has implemented “Administration Rules on Venture Capital” since 1983 and provided a number of incentives for investments. However, the subjects of these capitals are concentrated on the matured industries. The capital invested into the emerging industries only represents 10% of total capital. That is against the requirement of investment in the hi-tech industries with high-risk and high-profits. The investment in information, semi-conductor, consumer electronics and communications represents 70% of total fund, showing a tendency of over-concentration. Therefore, the government needs to evaluate the current investment policy.
(2) Establishment of Technomart
The government should set up, or assist private sector to set up technologies trade center. This center will provide a marketplace where the firms with the intention to sell technologies and the buyers for technologies can exchange efficiently. This very kind of mechanism also will accrue to the diffusion of technology and knowledge.
(3) Provide preferential financing measures
The government has a number of incentives to encourage the businesses. However, these measures are not fully implemented thoroughly, so the effects are not satisfactory. Such as tax break designed to encourage the investment in R&D, the criteria for R&D expenses is too loose, some
businesses would fill R&D expenses includes irrelevant expenses, thus this policy is not working satisfactorily. The government needs to re-examine the incentives and gradually abolish the necessity of incentives in order to resume the essence of free competition.
(4) Augment the capability of the industrial information center
There are as many as 1 million small and medium businesses in Taiwan, representing 98% of the total number of businesses. Their abilities to collect, summarize, and apply information are relatively weak. In this regard, the government should assist the establishment of an industrial information system to increase their competitiveness. In recent years, the government set up, either by itself or assisted the private sector to set up, a number of industrial information centers, such as the the China External Trade Development Council, the Industrial Technology Information Service center, and associations for all industries. However, all these centers are not integrated, and thus are unable to provide really useful information or intelligence to users. Meanwhile, the government should reinforce the performance of all existing centers, especially in assisting them to establish a complete industrial database and intelligence, which can become the reference in decision-making.
5. Conclusions
During the first quarter of 2001, Taiwan has witnessed massive layoffs and restructuring of major corporations. A global economic depression seems imminent and is causing concern for corporate and national leaders. It looks as if globalization and cyber-space based movements of goods and capital are the first to blame. While globalization and cyber-space based activities continue to take the stance, development of common international practices and legal infrastructure are still burgeoning. Interdependence in a global economy will continue to move ahead at full steam,
and only those who learn quickly to embrace the new world will prevail. Those who fail to do so will be left behind and isolated from the prosperity of the world.
The recent slow down in the global economy and the plunge of global capital markets reflect a continuous restructuring of the global economy. By no means, these trends are a result of a burst or overheating of a “bubble economy”. Rather, this restructuring will lead to an outcome where those companies, or nations, that have the greatest efficiency and nichmanship, are the most deregulated and most flexible, and that have the most adaptable infrastructure will gain a greater advantage over the long run. Cost-cutting and restructuring will represent an important complementary weapon for staying healthy in bad times for firms operating in the new economy. Investment in public works and controlling cross-border capital flow (into the Mainland) cannot guarantee success. (Look what has happened to the Japanese!) Economic prosperity and better quality should be the prevailing goals for the government and corporate leaders. Knowledge-intensive industries should be the focus.
In this arena, flexibility, and non-standardized, externalized operations with an emphasis on dynamic thinking and global manipulation are all prerequisites. Development of knowledge-intensive service industries with a deregulated infrastructure that allows Taiwanese businesses to fully take advantage of their flexibility, pragmatism, and dynamic thinking, should be encouraged. Moreover, construction of needed infrastructure and bylaws is also very urgent.
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