Real Industries in Taiwan’s FTZ

Compared with real industries in Taiwan’s FTZ, there were some different. Up to the end of 2009, there were five authorized FTZs in Taiwan. From the first FTZ is permitted (2004) to the collected data year (2008), there are only 4 years. Although there are not enough statistics data, this study still tries to show real operating situation in Taiwan’s FTZ.

As shown in figure 4.7, there are four seaports: Keelung, Taipei, Taichung and Kaohsiung;

and one airport: Taoyuan. However, the outcome of investment promotion and operational benefits have not been as encouraging as expected so far, and there are still only a limited number of operating enterprises within the FTZs. There are two types of logistics companies that have established operations in the FTZs. One type are logistics companies transformed from shipping companies, and the other type are logistics companies expanded from subsidiary logistics departments of manufacturing industries, and this type of company usually only handles cargo from the parent company. However, the FTZs in Taiwan attract shipping and logistics services which were formerly handled within the ports rather than new companies. Furthermore, real trading data or industries of the FTZs is limited and the volume of trading is extremely low when compared with their related port.

Figure 4-7 FTZs in Taiwan: Permitted Locations

Keelung Harbor(2004.3/2004.9)

Taichung Harbor (2005.2/2005.10) Taipei Harbor(2005.5/2005.9)

Taoyuan Air Cargo Park (2005.5/2006.1)

Kaoshiung Harbor (2004.3/2005.1)

*Permitted time/operation time Keelung Harbor(2004.3/2004.9)

Taichung Harbor (2005.2/2005.10) Taipei Harbor(2005.5/2005.9)

Taoyuan Air Cargo Park (2005.5/2006.1)

Kaoshiung Harbor (2004.3/2005.1)

*Permitted time/operation time

Table 4-5 Operating of FTZ Enterprises in Taiwan in 2008

Operating of FTZ enterprises in Taiwan Compared with it’s related port FTZ area Number of Firms Volume of cargo

(10000 ton) Volume of cargo (10000 ton)

Keelung Harbor 10 1.96 2989.49

Taipei Harbor 2 4.80 905.28

Taichung Harbor 26 118.19 5220.31

Kaoshiung Harbor 25 11.95 14672.89

Taoyuan Air Cargo

Park 33 0.59 149.31

total 96 137.49 23937.28

Source:

1. Center for Economic Deregulation and Innovation, Council for Economic Planning and Development, 2009

2. Ministry of Transportation and Communications, 2009

Figure 4-8 Trading Volume in Different FTZs Export and Import trading values of FTZ

0.0 50,000.0 100,000.0 150,000.0 200,000.0 250,000.0 300,000.0

NT$100 million

Import of Keelung 0.0 501.9 7,131.9 9,162.2

Export of Keelung 0.0 310.2 11,063.4 9,250.4

Import of Taoyuan 0.0 827.5 205,968.4 230,443.4

Export of Taoyuan 0.0 9,862.5 176,402.4 230,576.0

Import of Taichung 7,496.3 44,610.5 79,873.8 259,973.5

Export of Taichung 0.0 37,682.8 49,808.3 189,462.5

Import of Kaoshiung 4,279.0 7,153.1 17,825.1 60,783.8

Export of Kaoshiung 11.8 4,098.2 13,753.2 29,818.9

Import of Taipei 47.4 31,012.4 19,193.3 13,734.6

Export of Taipei 0.0 16,791.1 33,370.4 25,187.4

2005 2006 2007 2008(predicted)

Figure 4-9 Import Volume and Industries in Keelung FTZ

Figure 4-10 Export Volume and Industries in Keelung FTZ

0.00 articles of stone, glass and glassware

base metals and its products

machinery and electronic base metals and its products machinery and electronic

articles of stone, glass and glassware Miscellaneous

Plastics and its product

Figure 4-11 Import Volume and Industries in Taoyuan FTZ (Air)

Figure 4-12 Export Volume and Industries in Taoyuan FTZ (Air)

0.00

base metals and its products

0.00 9774.89

base metals and its products machinery and electronic

Figure 4-13 Import Volume and Industries in Taichung FTZ

Figure 4-14 Export Volume and Industries in Taichung FTZ

0.00

articles of stone, glass and glassware

base metals and its products

machinery and electronic base metals and its products machinery and electronic

Figure 4-15 Import Volume and Industries in Kaoshiung FTZ

Figure 4-16 Export Volume and Industries in Kaoshiung FTZ

0.00 base metals and its products machinery and electronic articles of stone, glass glassware

base metals and its prod machinery and electron

Figure 4-17 Import Volume and Industries in Taipei FTZ

Figure 4-18 Export Volume and Industries in Taipei FTZ

0.00

articles of stone, glass and glassware

base metals and its products machinery and electronic articles of stone, glass and glassware

base metals and its products machinery and electronic

It is difficult to perform statistic analysis on the operational data regarding FTZs because it covers a period of less than 4 years. According to real trading data, the major industries in the Keelung FTZ are ′base metals and its products′ and ′transport equipment′ (as shown in Figure 4-9 and Figure 4-10). In the Taoyuan FTZ, the major export and import industries are ′machinery and electronic components′, such as semiconductors, DRAM, electronic products, communication products, photographic equipment, and monitors (as shown in Figure 4-11 and Figure 4-12). There are specialized firms in the Taichung FTZ, the major firms being oil logistics and golf car logistics corporations. (as shown in Figure 4-13 and Figure 4-14) There are more categories of firms in the Kaoshiung FTZ, the major industries being ′plastic and its products′, ′base metals and its products′, and ′machinery and electronic components′ (as shown in Figure 4-15 and Figure 4-16). There are very few firms located in the Taipei FTZ (only 2 firms), the major industry being car equipment logistics corporations. (as shown in Figure 4-17 and Figure 4-18). In most of the FTZs, the real industries are limited to only one major industry, and no industry clusters are formed as I discussed in my literature review.

Although five FTZs have established in Taiwan, there were few companies move into FTZs. Lots of them are the traditional maritime firms in seaport FTZ. It might be offered too few incentives to attract FDI or domestic companies. It might be too little hinterland to operate. Government should check the strategic plan of FTZ and modify ‘Act for the Establishment and Management of Free Trade Zone’. Then, give more incentives or special services which could lower the operating cost of companies or enhance their efficiency thereby enabling companies to operate more easily and prove smoother logistics.

So, their cooperation partners (supplier or demander) might cluster in or near FTZs.

If the data for detail industry categories are available, it is suggested in the future study that the core industries should be selected from detail industry categories. The empirical study conducted in this study is based on the current industries data and assumed no change in industrial tendency. Since there may be some future potential industries that did not show up in the statistical data or under new technological innovation, the future research may include the potential industries in anticipated way.