When President Tsai Ing-wen promised to help Taiwan’s startups, it wasn’t just all talk. The island has strengths in artificial intelligence, advanced manufacturing, robotics, and biotechnology, but experts say the ecosystem of Taiwanese start-ups is lagging behind other parts of the world, in particular, its Asian neighbors due to lack of adventurism, lack of international talent and strict regulations. The entrepreneurial scene in Taiwan is growing but still small, according to Peng Mao-Jung, head of the strategy center at the Government of Taiwan’s Industrial Technology Research Institute.
Many of those trying to start new businesses said they have often encountered the conservative mentality that forces younger people to take low-risk positions in established companies. Entrepreneurs also face a labyrinth of regulations. The Tsai government is putting in place measures that should allow new businesses on the island to reach a new level. Among them, Tsai told the Taiwan Global Chamber of Commerce in September that it would be tax credits, laws that encourage foreign talent, and plots of land reserved for startups.
Asian Startups thriving
Taiwan has enviable peers in Asia. Beijing now excels as a startup hub in Asia. The city attracts talent from all over China, allowing many entrepreneurs to build relationships with venture capitalists. Shanghai, with its 70,000 startups, is distinguished by its innumerable incubators, networking events and venture capitalists. The Chinese government supports startups by providing funds, training and lowering regulations. Singapore’s startup ecosystem ranking third in Asia after Beijing and Shanghai. The country was ranked first in terms of talent and recruitment rate for startups.
The Singapore government provides funding and education. But Taiwan enjoys stronger intellectual property rights protections than China. It costs less than Japan, another home for startups. The World Economic Forum ranks Taiwan as the world’s No. 4 in terms of innovation capability. Chalk this up to its history of producing high tech equipment. In general, Taiwan has a well-developed and globally competitive ICT sector, making it one of the best partners for the development of entrepreneurship in many countries, according to a spokesman for the country’s Ministry of Economic Affairs.
Taiwanese authorities and measures
The administration of President Tsai has adopted a series of measures to encourage the development of the ecosystem of startups of the island since taking office in 2016. In July, the act on the companies of the island has been modified for the first time in 17 years. The Tsai administration has also overseen the launch of a start-up area near Taipei and the allocation of public funds for what has been dubbed the Asian Silicon Valley – a separate area reserved for companies specializing in the Internet of Things. To encourage R & D, a unit of the Ministry of Economic Affairs grants startups financial subsidies to develop their technology and help them formulate their business models.
In December, the Parliament approved a law on sandbox regulation so that new Fintech companies could avoid some of the regulations that normally cover more established companies providing financial services. Taiwan’s Foreign Recruitment and Employment Act, which is one year old, provides tax benefits, health benefits and retirement benefits to qualified foreign workers. It is hoped that their work in Taiwan will allow local startups to expand into overseas markets, where they may not know the language or the customs. Taiwan is still lagging behind other Asian regions that have not produced its first unicorn, the term for a private startup valued at $ 1 billion or more. But in February, Prime Minister William Lai said that Taiwan would try to create one within two years, hence the search for talent, foreign involvement, and less stringent regulation. Taiwanese startups received public funding of $ 341,000 last year, and the National Development Board hopes to increase this amount by $ 161,720 a year over the next five years.