Taiwan’s rapid economic development and industrialisation in the latter half of the 20th century have been lauded as the Taiwan Economic Miracle and have played an integral role in making Taiwan one of the ‘Four Asian Tigers’ within the region. The development of export-oriented manufacturing has resulted in Taiwan’s economy being heavily focussed on urban and industrial production. Taiwan is set to further innovate and transform its economy through an ambitious 5+2 Industrial Innovation Plan.

Taiwan, however, still faces challenges in socioeconomic development. Poverty has nearly been eradicated, but there are demographic problems which challenge its ability to continue to provide social protection for its rapidly ageing population. Other challenges include heavy reliance on imports for its fossil fuel-based energy supply and increased vulnerability to climate change.

Taiwan’s social economy is growing due to private investor and government support. While the social enterprise sector remains relatively immature, the government has introduced legislation to drive social entrepreneurship, CSR and green finance. Impact investing and crowdfunding are emerging as additional sources of financing for social enterprises. The green bond market has had several notable listings and innovative sustainable investing opportunities, including an ESG stock index and a sustainability-focused PE fund, have been introduced.

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Taiwan’s 2018 Fact File

World Giving Index Rank

2017
52 50 in 2016
  • 35%giving money
  • 19%volunteering time
  • 54%helping a stranger

Population

2017
23.6 million

GDP (PPP)

2017
USD 1,189 billion

GDP Growth

2017
2.9%

Per capita GDP (PPP)

2017
USD 50,450

Number of Millionaires

2017
381,000

Poverty

2019
1.4%

Global Competitiveness Index

2017-2018
15/137 Global Competitiveness Rank (2016-2017) - 14/138

Ease of Doing Business Rank

2019
13/190 Ease of Doing Business Rank (2018) - 15/190

Source: : ADB, Charities Aid Foundation, Credit Suisse, World Economic Forum, World Bank. Figures are accurate as of March 2019

SDG Dashboard

Although Taiwan is not a member of the UN and therefore not a signatory to the UN’s Sustainable Development Goals (SDGs), the government of Taiwan voluntarily integrated the SDG framework into its national development plan in 2017. In its 2018 SDG progress report, Taiwan identified its priority issues as energy transformation, sustainable resource management, ecological conservation, and small and medium enterprise (SME) development. Due to a steadily declining birth rate with a total fertility rate of just over one child per woman, Taiwan will transition to what the World Health Organisation (WHO) calls a “super-aged society” by 2026. This indicates that Taiwan will soon be facing problems such as labour shortages, falling domestic demand and productivity, and declining tax revenues.

The Taiwan 2018 National Development Plan seeks to combat these socio-economic issues. In relation to climate change and enhancing energy access, the government plans to use energy storage technology and a smart grid system to improve overall efficiency and autonomy. The 5+2 Industrial Innovation Plan is set to further spur SME development through innovation development and the circular economy.

Note: Development indicators and SDG dashboard are not published separately for Taiwan.

Source: sdgindex.org (2018)

Note: The "traffic light" colour scheme (green,yellow, orange, red) illustrates how far a market is from achieving a particular goal

Government Initiatives to Address Development Gaps

Impact Area Gap Government Initiatives
Climate action
Gap
  • In the United Nations Framework Convention on Climate Change’s Global Climate Risk Index 2018, Taiwan was ranked as the 7th most at-risk during extreme weather events.
  • In the Climate Change Performance Index 2019, Taiwan dropped 2 spots to 56th and was rated as “very poor”.
  • In 2018, Taiwan was the 7th largest CO2 emitter per capita, surpassing peers like South Korea and Japan. Coal-burning power plants made up 46% of its power production.
Government Initiatives
  • Taiwan’s Master Plan on Energy Conservation and GHGs Emission Reduction (2018) includes measures to reduce the amount of carbon dioxide emissions to 2% below 2005 levels by 2020 and 10% by 2025.
  • The government is targeting a nuclear-free homeland, 20% renewable energy generation, and 80% thermal power generation by 2025.
  • The 2018 National Development Plan aims to build a ‘Green Silicon Island’, which includes developing energy storage technology, constructing a smart grid system, and promoting renewable energy through the Shalun Green Energy Science City.
Energy access
Gap
  • In 2017, 98% of Taiwan’s energy supply was imported.
  • Despite a referendum in November 2018 that demonstrated majority public support for nuclear power, the government will continue to phase it out by 2025. Without nuclear power, the Ministry of Economic Affairs warns Taiwan may face power shortages in 2021 due to increasing demand.
Government Initiatives
  • In 2017, the Financial Supervisory Commission of Taiwan approved the Green Finance Action Plan, designed to assist green energy operators obtain funds while promoting green investment principles in the financial industry.
  • Offshore wind subsidies were cut by 5.7% in January 2019, potentially affecting industry investment from international developers.
SME development
Gap
  • SMEs accounted for 97.7% of total enterprises in Taiwan in 2016 and employed 78.4% of the labour force.
  • In the GEM Global Entrepreneurship Monitor, Taiwan tied for 49th out of 54 countries in “entrepreneurial spirit”, ranking in the bottom 10% for perceived opportunities and capabilities.
Government Initiatives
  • Government special loans for SMEs totalled NT$7.3 billion (USD 235 million) and guidance resources for SMEs totalled NT$27.6 billion (USD 890 million) in 2017.
  • The 2018 White Paper on SMEs contains several initiatives:
    • The government has earmarked NT$5 billion (USD 160 million) to assist SMEs to engage with more countries across the Asia-Pacific region.
    • The Start-up Demonstration Development Program was established in 2018 to guide start-ups through the government market and encourage government purchase of start-up products and services.
Social protection
Gap
  • In 2018, Taiwan officially became an aged society with people over 65 years old accounting for 14.1% of the total population. It is estimated that this percentage will exceed 20%, making Taiwan a ‘super-aged society’ by 2026.
  • National Health Insurance expenditure is expected to grow 4.7% annually and was 6.3% of GDP in 2016.
Government Initiatives
  • The 2018 National Development Plan continues to promote the 10-year Long-Term Care 2.0 plan started in 2016. Goals include comprehensive community-based care system and completing preventive and dementia care systems.
  • Social welfare constitutes the largest proportion of the government’s 2019 fiscal budget at NT$2 trillion (USD 64 billion). At 24.3%, it represents a modest increase from 22.3% in 2016.

Social Economy

Taiwan’s social economy, catalysed by strong government support, has seen promising development across several sectors, including social enterprise, impact investing and green finance

Category Factor Rating Description
SPOs
Factor
Presence, size, and maturity of SEs
three-quarter
  • Taiwan has nearly 60,000 registered NGOs.
  • The Ministry of Labour and Ministry of Economic Affairs estimates that there are 384 SEs and as many 11,343 potential SEs.
SPOs
Factor
SEs' sectoral presence
three-quarter
  • SEs focus primarily on employment for disadvantaged groups, food and agricultural innovation, and services in rural areas.
Investors
Factor
Philanthropic contributions
half
  • The most recent estimate of philanthropic giving is from 2013 of NT$53.7 billion (USD 1.8 billion). The Buddhist Tzu Chi Foundation is one of the largest foundations with international operations and members. Examples of other sustained and institutionalised philanthropy are limited.
Investors
Factor
Managed funds
half
  • New options for sustainable investing include the FTSE4Good ESG Index, sustainable industry-focused PE fund, and a green bond-enhanced ETF.
  • The Taiwan Bureau of Labour Funds has allocated USD 3.8 billion for ESG investments, but there are no other examples of ESG-aligned passive investments by institutional investors.
Investors
Factor
Corporate sector
half
  • The government now mandates CSR reporting for companies on TWSE with more than NT$5 million stock.
  • A majority of companies still do not issue CSR reports and those that do are often not aligned with the SDGs.
  • Taiwan had 25 certified B Corps as of January 2019, the largest number in Asia.
Enablers and Intermediaries
Factor
Policy environment
three-quarter
  • In 2017, the government opened the Social Innovation Lab and in 2018 announced a 5-year “Social Innovation Action Plan” with substantial financial, administrative and legislative commitment.
  • Government has also encouraged the development of green finance and CSR, bringing Taiwan’s social economy in line with its international counterparts.
Enablers and Intermediaries
Factor
Incubators, accelerators, and capacity-builders
half
  • Social Enterprise Insights-iLab is a leading social incubator in Taiwan that has been in existence for 5 years. It is launching an accelerator programme in 2019.
  • The Social Innovation Lab is a shared place for social entrepreneurs and SE-related events. KPMG Taiwan is also an active capacity builder in the SE sector.
Enablers and Intermediaries
Factor
Networks and platforms
half
  • B Current has recently established a formal partnership with SE Insights to expand their SE networks. Both organisations have run impact funds and SE incubators since 2014.
  • The Social Innovation Lab is a co-working space and platform for SEs and other stakeholders in the sector to engage with one another.
Enablers and Intermediaries
Factor
Knowledge and research
quarter
  • There is limited knowledge sharing and research on Taiwan’s social economy, especially in English. Universities that conduct research on the social economy include the Social Impact Institute of Taiwan and Fu Jen Catholic University. However, there have not been any comprehensive social economy landscape reports in the past few years.
Enablers and Intermediaries
Factor
Partnerships
half
  • In early 2019, the Taipei government announced a partnership with E.Sun Bank to provide financial loans for SEs.
  • B Lab has partnered with Fu Jen Catholic University’s College of Management to launch a B Academy that will conduct research on B Corps.

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Demand & Supply of Capital in Taiwan

Note: Data is based on AVPN's analysis. If there are any inconsistencies or errors in the information listed, please let us know at knowledge@avpn.asia
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