Special Address by Dr. Shih Yen-shiang, Vice Minister, Ministry of Economic Affairs

Mr. Vikram Kapur (Chairman of India-Taiwan Business Cooperation Committee), Mr. Ferng-chin Lin (Chief Delegate of the Taiwanese Delegation), Representative Chien, distinguished guests,

Good Morning,

It is my great pleasure and honor to attend the Ninth Joint Meeting of India-Taiwan Business Cooperation Committee. This is my first visit to India, I am glad to have the opportunity to exchange ideas with you and I would also like to thank you for coming here today. India and Taiwan are both situated in Asia, but compared with the level of trade and investment between Taiwan and other East Asia countries, it is quite evident that there is still much room for growth in our bilateral economic and trade relationship and I hope that our meeting here will help to stimulate that growth.

I would like to say a few words about Taiwan's industries. During the late 1940s, Taiwan still in the process of recovery and reconstruction after the war. The 1950s and 1960s we saw the rapid development of light industries such as textile and garments. During 1970s and 1980s, more capital and technology-intensive industries developed including steel and petrochemicals. We consider that through the 1990s up to the present, Taiwan has been in a period of industrial restructuring and upgrading.

What happened in the last decade? First, Taiwan's technology-intensive industries have, through the collective effort of the private sector and government, performed. In the information industry, for example, while the multinationals controlled market demand and established product specifications, Taiwan's businesses were responsible for the manufacture and global logistics of the products and they established production bases not only at home but also in Mainland China and elsewhere in Southeast Asia. And most IT products made in China are managed by Taiwan Companies. Thus, from 1999 to 2002, Taiwan was the world's fourth-largest IT producer in the world in terms of product value, surpassed only by the US, Japan and China

The second thing that occurred was that Taiwan developed a complete industrial infrastructure and supply chain for semiconductors - this includes their design, manufacture, packaging, testing and so on. As a result, Taiwan became the fourth-largest semiconductor-producing country in the world and the city of Hsinchu in Taiwan joined California's Silicon Valley as one of the world's most important centers for semiconductor design, manufacture and technical development.

In addition, to enhance industrial competitiveness and economic development, our Government has been promoting various measures to upgrade industry for a long time, so the total production value of our domestic high-tech industry has been increasing each year. In 2002, we had 25 product items such as integrated circuits, notebooks, Liquid crystal devices, compact discs, scanners, etc. that, in terms of global market share, ranked Taiwan among the top three countries in the world. According to 2002 statistics compiled by the Institute for Information Industry of Taiwan, the total production value of the IT hardware industry was US$ 48 billion, the semiconductor industry was US$ 18 billion, the LCD Panel industry was US$ 5.6 billion, the communication industry was US$ 5.4 billion, and the software and software service industry reached US$ 4.3 billion. Meanwhile, Taiwan is the world's leader in terms of the number of cellular phones per capita. We are number 2 in terms of boardband Internet use and based on a Brown University study of USA comparing levels of e-government around the world, we are number 1 in the world. Needless to say, high-tech has become Taiwan's most important industry, and Taiwan occupies a position of leadership in that sector.

Ladies and Gentlemen,

In the future, Taiwan's industry must continue developing toward high-value activities. As we know, the value-added at either end of the manufacturing process is higher. This includes research, development, and design at one end and marketing and logistics on the other. That is why Taiwan is going to put much of its future effort on developing the industrial activities that occur at both ends of the chains.

According to the Global Competitiveness Report 2002, published by the World Economic Forum based in Switzerland, the main reason why Taiwan's overall competitiveness rank increased from 7th in 2001 to 3rd in 2002, is because of its technological competitiveness, in which we ranked 2nd. If we examine US patents granted in 2002 and break them down by the nationality of patent-holder, then Taiwan ranked 4th behind the US itself, Japan, and Germany. Obviously, as a result of absorbing technology, Taiwan has gradually transformed itself from a technological imitator to a technological innovator.

To promote the newly emerging industries, that will eventually assume the position of leadership that the IT industry enjoys today. My Government in May 2002 announced the "Challenge 2008 National Project for Focused Development". This project puts emphasis on investment in education talented people, conducting innovative research and development, building global operation channels and creating a sustainable living environment.

Four of the primary measures within this six-year plan relate to innovative research and development. The first is adding momentum to the semiconductor and TFT LCD display industries, so that the annual production value of each can break the US$ 30 billion mark in 2006 and developing the "twin star" industries of biotechnology and digital content which are just emerging and have a great deal of potential. The second is establishing college programs capable of training people who are talented in IC design and digital content. Thirdly, supporting the development of knowledge-based service industries such as information application services, in order to balance the development of technology-intensive manufacturing. Fourthly, establishing ten "innovation centers" for upgrading innovative capacity. It is hoped that these measures will upgrade and update Taiwan's industrial structure.

Ladies and Gentlemen,

In recent years, India's rapidly growing software industry and its real strengths in R&D have gained an excellent reputation in the global IT industry. India has a very large, excellent software design workforce and Banglore in particular has become one of the world's most famous software centers. I firmly believe that there will be plenty of opportunities for cooperation between the industries of our countries. IT means not only for Information Technology but also means India-Taiwan. Lets work together.

Starting in 1991, when India's market was gradually opened, India's trade with Taiwan steadily increased. This became especially true after 1995 when we established representative offices in each other's countries, because then it became easier to apply for visa. As a result, bilateral trade and tourism have made remarkable progress. Our bilateral trade increased from US$400 million in 1991 to US$1.2 billion in 2002.

In the area of investment, India statistics show that as of June 2003, there have been 123 cases of investment in India by Taiwan business, totaling US$115 million.

Given the complementary nature of our economic and industrial structure, I think we should take advantage of each other's strengths and continue building our bilateral ties in investment and trade. We warmly welcome Indian companies to invest in Taiwan and we will encourage our own business to explore and expand India's potential. Let us combine our strengths, work together and assist each other as best as we can. Let us create a free and open trade and investment environment, to maximize the fruits of our cooperation. That way, we can both be assured of bigger gains, better progress and heightened economic prosperity.

Ladies and Gentlemen,

The economic and trade relationship between Taiwan and India is fundamentally sound and full of abundant potential. No matter what obstacles may fall in our path, we can be sure of overcoming them if we maintain a spirit of close and constructive cooperation.

To conclude, I wish an enduring friendship and partnership between Taiwan and India. I wish also success to this conference and the best of health to you all.

Thank You.