4.1.1 Tax credits for R&D and personnel training
The MOEA is chiefly responsible for industrial technology research and its application. Apart from the MOEA’s directly subordinate research units, the R&D department of state-owned enterprises and independent research institutes undertaking commissioned projects are also engaged in industrial R&D and technology transfer. Research institutes are employing technology acquisition, joint research, foreign direct investments and strategic alliances to interact with foreign companies, and research institutes as mechanisms to accelerate the industry’s technological development. In addition, the government relies on administrative measures like subsidies, matching grants and investment tax incentives to encourage industry to engage in R&D activities.
4.1.2 Small Business Innovation Research
In accordance with the Knowledge Economics Development Act, the Department of Industrial Technology (DoIT) of Ministry of Economic Affairs (MOEA) launched Taiwan’s SBIR promoting program, mostly referring to the US version of the SBIR, in Nov. 1998, in order to enhance the private sector’s R&D competitiveness through promoting technological innovation and utilizing Information Technology on one side, and providing tax incentives and a subsidy of up to half of the
cost of development and matching funds to resolve market failures and uncertainties of technology development on the other side.
The types of research encouraged by this programme include: 1) Developing a brand new idea, concept or new technology; 2) Applying an existing technology to a new application; 3) Applying a new technology or business model to an existing application; 4) Improving an existing technology or product upon various aspects. By 2010, the SBIR promoting programme may assist in achieving the nationwide goal of Taiwan’s R&D rising to 3% of GDP; and private sector R&D increases up to 60%, including 70% from knowledge-based industries.
4.1.3 Technology Development Programs
The Department of Industrial Technology (DoIT) is Taiwan’s science and technology development flagship. Its primary mission is to promote industrial technology development to help create new national industries and help upgrade Taiwan’s existing industries. Therefore, in cooperation with the Executive Yuan’s promotion of the “scientific and technical development scheme”, the government began to implement “the given-case program of MOEA scientific and technological research development” in 1979 (TDP for short). The DoIT takes charge of examining and allocating the subvention funds as the main overall promotion unit of scientific and technological given cases. In the initial stage of planning, the contracted research institution (TDP-contracted Research Institutes for short) is authorized to assist in industrial innovation, introduce each perspective, critical and compatible technology, and to bring about the cooperation between manufacturing and studying in order to help industries upgrade and change their type, strengthen their innovative R&D abilities, and increase their international competitiveness. To sum up, TDP-contracted Research Institutes are to adjust domestic industries to R&D innovation and prospective technology. On the contrary, the non-profit research institutes, involving DoIT contracts with the private sector and academic organizations respectively, carry out and develop basic and pioneer technologies that are then licensed to Taiwan’s industries.
The major goals of this TDP are as follows:
1. To implement focused national research projects.
2. To direct non-profit research institutes to conduct “industry-demand” oriented research projects.
3. To develop a national science & technology innovation system.
4. To use electronic invoices (e-invoices) to integrate supply chain logistics with cash-flow system technologies.
5. To promote the development and use of innovative value-added services from patents owned by non-profit research institutes.
6. To promote the dissemination and use of imported technology, thereby supporting domestic research momentum.
7. To coordinate and fund joint research ventures between domestic and international universities.
8. To integrate university research findings with industrial development.
9. To balance regional industrial development by planning and constructing industrial science
parks that complement local characteristics.
10. To facilitate innovative industrial technology development with resources from the TDP.
Table 4.1: TDP expenditures 2001/04
Fields of R&D 2001 2002 2003 2004 Telecom & Optoelectronics 37.48
（23.63%） 35.73
（25.37%） 34.85 (19.26%) Machinery & Aerospace 30.62
（19.3%） 26.10
（18.54%） 26.44 (14.61%) Materials & Chemicals 22.86
（14.41%） 26.25 Pioneer Innovation program 32.52
（20.50%） 34.58
（24.56%） 19.81 (10.95%)
Others 17.04
(9.42%) TDP for Corporation 135.64
（89.4%） 137.59
（86.73%） 140.81
（81.93%） 143.22 (79.14%) TDP for Private Sector 16.08
（10.6%） 19.55
（12.32%） 27.35
（15.91%） 30.82 (17.03%) TDP for Academia 0
（0%） 1.5
（0.95%） 3.72（2.16%） 6.94 (3.83%) Total 151.73 158.64 171.88 180.98 Unit: NT$ million
Source: DoIT/MOEA (2005)
4.1.3.1 TDP for Research Institutes
Table 4.2: Research Institutes, TDP Performance and Benefits (2001-2004)
2001 2002 2003 2004 R.O.C Patent Granted (cases) 634 499 508 850 Overseas Patent Granted (cases) 305 344 289 363
Patent Applications (cases) 160 500 450 513 R.O.C Technical Paper (articles) 1132 1474 1701 1807 Overseas technical Paper (articles) 334 343 489 720 Technical Reports (articles) 4395 4573 4774 4791 Technology Introduction (cases) 129 54 51 73 Technology Transfer (cases) 954 1071 1061 1184
Project Subcontract (cases) 533 573 622 780 Contracts and Industrial Services (cases) 1381 1728 1595 1969 Enterprise Investments (cases) 483 542 618 630 Technical Conferences (numbers) 623 788 871 763 Source: Annual Report of Technology Development Program , MOEA, 2001-2004
Taiwan’s industry consists of mainly SMEs running on limited capital, so beginning in the 1970s, the government established a series of technology research institutions, the most important of which
is the Industrial Technology Research Institute, responsible for carrying out innovative R&D in key common industrial technologies. Furthermore, it was responsible for implementing the MOEA’s TDP in 1979. The objectives of the TDP include stimulating industrial technology development and consolidating industry competitiveness, while assisting research institutions in their roles of industrial technologies. Thus, for a long time R&D has been delegated to Industrial Technology Research Institute, Institute for Information Industry and Chung-shan Research Institute of Science and Technology, etc., and then the technological achievements transferred to the private sector.
4.1.3.2 TDP for the Private Sector
DoIT/MOEA launched a serious of technology research programmes for the private sector in 1997.
The TDP was opened to state enterprises, which could also apply for contract research, so long as they were certified for qualified research management. The second wave of the TDP for Private Sector was strengthened in 1999. The TDP became available to private sector enterprises, provided that private firms supplied matching funds.
These programmes allow direct government support to be given to the private sector in an effort to stimulate overall industrial research. The goal of this programme is to use such research to help upgrade and transform Taiwanese industries. DoIT has developed a broad range of industrial R&D support programmes, allowing the private sector greater ability to select appropriate support from the government. Furthermore, the private sector can share in the intellectual property rights generated by research results. Current ongoing programmes are described below (DoIT website, 2005). For details of Industrial Research & Development Programmes (see Appendix 2).
Table 4.3: TDP for the Private Sector, 1999-2004 Patents Research
Reports
Confs Essays Technology Introductions
Cooperation of I-U-R
apply granted case NT$ case NT$
Private Sector Technology Development Support Program
562 300 1890 239 248 75 754,652 295 1,050,353
Small Business Innovation Research Program (SBIR)
886 534 N/A 171 190 74 77,002 313 198,929
Source: TDP Yearbook 2004 (2005)
4.1.3.3 TDP for Academia
The “TDP for Academia” was launched in 2001 and began accepting contract research applications from universities in which basic academic research resources could be integrated to develop innovative, pioneering industrial technology. Academia has traditionally had very weak long-term integrated research projects, not to mention poor results in developing industrial technology. DoIT
therefore is conducting the TDP for Academia to try to release academic research resources to industry and create greater competitive advantages. These projects are focused on developing new technologies with creative innovations at specialized academic/university research centres.
Future efforts will focus on intelligent robotics, medical devices, electronic vehicles, moulds, auxiliary tool and digital arts, as well as research projects proposed by specialized arts and technology related universities. The programme can also help to upgrade and transform the traditional industries. As of September 2005, 50 projects and 47 long-term specialized research centres had been granted under the TDP for Academia.
Academic research institutes change individual and independent research patterns in academic circles and promote trans-field or trans-school R&D cooperative mechanisms; therefore, unlike the traditional cooperative patterns of manufacturing and studying, they regard forming large-scale integrated R&D groups as the main goals.
In the TDP for Academia, the applications for patents amounted to 410 by 2004, the patents obtained 46, the applied patents 8, the cooperation projects of industry-university-research institutes 20, the international cooperations 37, cases of technological transfer 49, transferable technology of industry 206, and spin-off commissions 87.
Figure 4.1: TDP for Academia
Materials &
Chemicals 12 Projects
Biomedical Field 8 Projects Machinery &
Aerospace 5 Projects Telecom &
Optoelectronics 21 Projects
Technology Management 4 Projects
Source: DoIT website, 2005
4.1.3.4 TDP for Innovative Service Business
The “Strategic Service Oriented Technology Development Program” was changed to the
“Innovative Service Oriented Technology Development Program” in 2005. Its mission is to aggressively promote the development of innovative service business. TDP-contracted research
organizations have already developed a significant number of key technologies. In addition to being commercialized, these key technologies have the potential to change service industry operating models. DoIT will make its best efforts to direct research momentum in the direction of creativity and service.
Furthermore, DoIT will direct newly developed technologies to be applied in the consumer market based on new business models and new brand names. Under the direction of the Executive Yuan in 2006, DoIT will coordinate new applications research in service areas such as financial services and health passport certifications. New concept certifications and innovative services will be made in conjunction with joint private sector efforts.
4.2 Major new policies
The Executive Yuan’s current main tasks of policy implementation are to speed up the execution of major national development projects and to advance toward the goals set out in the Challenge 2008 Six-Year National Development Plan. The CEPD is pushing forward the implementation of this plan in line with the concept of “positioning globally and cultivating Taiwan deeply” and the blueprint set out in the National Development Plan for the New Century. On the one hand, this involves taking active steps to modernize basic infrastructure, expand domestic demand, pep up local economies, revitalize the national economy, create jobs, and advance people’s welfare, while highlighting Taiwan’s unique and distinctive features. On the other hand, it calls for the strengthening of Taiwan’s comparative advantages in R&D, innovation, global logistics and management, to raise national competitiveness, secure a significant role for Taiwan in the global economic system, and meet the challenges of the new century.
4.2.1 Supply side
4.2.1.1 ABCDE program
Recognizing the importance of information technology towards the upgrading of Taiwan’s industrial competitiveness, in June 1999 the Executive Yuan expanded its existing industrial automation project into a new “Industrial Automation and Electronic Business Program”. While continuing to promote automation in production, warehousing, transportation and sales, the Ministry of Economic Affairs (MOEA) was instructed to give priority to the establishment of B2B (Business to Business) e-commerce systems, in order to build model e-business systems for both the supply chain and the demand chain. In 1999 the Department of Industrial Technology (DOIT) of the MOEA formulated and began implementation of two pilot projects for promoting e-business in the IT sector – Projects A and B.
1. Project A paired 31 Taiwanese electronics manufacturers with computer giants IBM, Compaq and HP in order to establish an e-business procurement centre in Taiwan. Implementation began in July 1999 and was completed in December 2001. In Project B, assistance was given to 15 leading Taiwanese IT manufacturers and more than 1800 of their component suppliers with multinational
corporations such as Compaq, HP and IBM to establish e-business supply chains covering the stages from procurement through to manufacturing. By creating a hub for e-business transactions, individual companies can avoid investing high sums of money in a network of their own. The hub links the companies to others for the purposes of sharing information on cash flow and shipping (“Projects ABCDE,” 2003; FIND, 2004).
In brief, the e-business supply chain linkage operations undertaken as part of Projects A and B have stimulated demand for e-business applications in global cashflow and delivery, encouraging the private sector to invest in these areas. The projects have thus helped to establish a solid foundation for the e-enabling of global logistics in the Taiwanese semiconductor and IT industries in the future.
After implementation of Projects A and B had been completed, in 2001 the MOEA began implementation of Projects C, D and E as a continuation of Projects A and B. The aim of these new projects was to ensure the provision of e-business services covering payment, accounts receivable management, on-line financing, global inventory management, delivery tracking and collaborative design services in order to maintain the competitive advantage of Taiwanese industry and meet industry’s evolving needs. The existing e-business supply chain system would be used as the foundation for further integration of cashflow, delivery systems and engineering collaboration, with the aim of strengthening the global logistics management capability of Taiwanese industry and its competitiveness in international markets (Figure 4.2).
Figure 4.2: Relationship between Projects A,B,C,D,E
Source: IT Applications Promotion Project, III / sponsored by DOIT, MOEA
2. Project C: Achieving e-business integration for information exchange and cashflow operations