Investments under Taiwan's New Southbound Policy Account for Over 50% of Outbound Investments in January

In a bid to reduce reliance on China, investments in countries under Taiwan's New Southbound Policy have made up more than half of the country's approved outbound investments in January. This data comes from the Ministry of Economic Affairs (MOEA) and highlights a significant shift in Taiwan's investment strategy.

Taiwanese Firms Pledge Approximately NT$310 Million in Investments

According to the MOEA, Taiwanese firms have pledged approximately NT$310 million in investments in countries targeted by the New Southbound Policy in January. This represents a 29.97% increase compared to the previous year, indicating growing interest in these regions.

New Southbound Policy Prioritizes Trade and Exchanges with 18 Countries

The New Southbound Policy, initiated by the Taiwanese government, places a strong focus on enhancing trade and exchanges with 18 countries in Southeast and South Asia, as well as Australia and New Zealand. This policy aims to diversify Taiwan's investments and strengthen ties with these nations.

Vietnam, Thailand, and Malaysia: Top Destinations for Taiwanese Outbound Investments

In January, the top three destinations for Taiwanese outbound investments were Vietnam, Thailand, and Malaysia. Notably, investments in the Thai market experienced a significant increase of 243% compared to the previous year, largely due to a large single investment plan. Overall, the number of investment plans under the New Southbound Policy increased by 166.67% compared to the previous year.

Decline in Investments Bound for China

Conversely, investments bound for China saw a decline of 66.3% from the previous year. The number of approved investment applications also decreased by 14.81%. This shift in investment destinations indicates a change in strategy for Taiwanese firms and a move away from the Chinese market.

Key Sectors Attracting Investments in China

While overall investments in China decreased, the support service industry, which includes travel agencies, received the most significant investments from Taiwan in January. This suggests that Taiwanese firms are still interested in specific sectors within China despite the overall decline.

Increase in Foreign Direct Investments in Taiwan

In contrast to investments from Taiwan into other countries, foreign direct investments in Taiwan experienced a substantial increase in January. Notably, there was a significant rise in investments from the United Kingdom and Samoa. However, investments from countries targeted by the New Southbound Policy decreased by 83.21% compared to the previous year, although the number of investment applications increased.

Chinese Investments into Taiwan on the Rise

On the other hand, investments from China into Taiwan showed a considerable increase compared to the same period last year. Sectors such as local wholesale and retail, electronics components, and banking were the driving forces behind this growth. Since lifting the ban on Chinese investments in June 2009, the Taiwanese government has approved a substantial amount of funds from China.

In summary, Taiwan's New Southbound Policy is proving successful in diversifying the country's investments and reducing reliance on China. With investments in targeted countries accounting for over half of Taiwan's outbound investments, it is clear that Taiwanese firms are shifting their focus towards these regions. At the same time, investments in China are declining, demonstrating a change in investment strategy.

Analyst comment

Positive news: Investments in countries under the New Southbound Policy increased by 29.97% in January, with the top three destinations being Vietnam, Thailand, and Malaysia. The number of investment plans under the policy also increased by 166.67%.

Negative news: Investments bound for China decreased by 66.3% from the previous year, with a decline in approved investment applications. Investments from countries under the New Southbound Policy into Taiwan decreased by 83.21% from the previous year.

Neutral news: Approved foreign direct investments in Taiwan increased in January, particularly from the United Kingdom and Samoa. Investments from China into Taiwan also increased.

As an analyst, I expect the market to continue to see increased investments in countries under the New Southbound Policy, while investments from China into Taiwan may remain stable or continue to increase.