Prelude – Advantages of the Taiwan Capital Market

Taiwan is situated as a pivot of the Asia-Pacific markets, and enjoys a critical economic and strategic position. The development of the clustering of industries in Taiwan is ranked amongst the top worldwide. The clustering effect serves as an important vehicle constantly improving the competitiveness of Taiwanese industries. Not only does Taiwan lead the high-tech industries in many products in terms of market shares, but has also become a major technological innovation center. Moreover, Taiwan is equipped with an outstanding caliber of human resource, which fosters an ongoing upgrading of industry structure, and injects the energy needed to expand and modernize Taiwan’s capital market. Having benefited from the strongly growing emerging economies of Asia, particularly a totally new and promising cross-straits relationship, Taiwan’s capital market now certainly has ample opportunities becoming a truly regional financial center for funding, wealth management and many other new activities.

The development of Taiwan’s capital market is founded upon the competitive advantage of its overall environment. Over the past decade, the securities market in Taiwan has continued to grow on three fronts: the number of shares, the scale of the market and the share price. The overall market turnover rate has an even more impressive performance given its ranking as the number one or two of the Asia region. All of the above factors clearly demonstrate that the enterprises listed in Taiwan enjoy the favor of the investors and the added-value from their active trading. Moreover, the ratio of market cap to GDP is comparable to those of the developed markets. Clearly Taiwan has demonstrated a high degree in the deepening of its financial sophistication as well as its financial securitization. Foreign investors continue to increase their involvement in Taiwan’s capital market, thereby facilitating the onward march of Taiwan’s capital market toward globalization.

Another key characteristic of Taiwan is the development of the global deployment of Taiwanese businesses. Based on the statistics provided by the Investment Commission of the Ministry of Economic Affairs (MOEA) covering the period from 1997 to 2012, the total amount of investment abroad approved by the Competent Authority reached US$182.588 billion. Taiwan businesses have been developing their global deployment, rendering the citizens of Taiwan members of a "highly globalized" country. The Government of Taiwan is aggressively promoting foreign businesses to list in this market, and is moving gradually toward liberalizing the relevant policies.

On March 5, 2008, the Executive Yuan passed a plan for promoting “foreign businesses” to list in Taiwan. The purpose of this Plan is to promote and help facilitate the synchronization of these “foreign businesses” with Taiwan’s capital market to fulfill the local investors’ diversified needs. The purpose of this Plan is also to upgrade both the internationalization and competitiveness of Taiwan’s capital market. On May 15, 2008, the Financial Supervisory Commission of the Executive Yuan approved the relevant TWSE-initiated amendments, for example, the Taiwan Stock Exchange Corporation (TWSE) Rules Governing Review of Securities Listings and Procedures for Review of Securities Listings. On July 31, 2008, the Executive Yuan further relaxed the restrictions on the qualifications of foreign issuers, the upper limit of investments in Mainland China, and the use of raising funds. Now, as long as the foreign issuers and Taiwanese businesses established abroad meet the relevant requirements, they can all apply for listing in Taiwan. We believe this will help Taiwan to become the destination of choice for foreign issuers and Taiwanese businesses that are considering listing for the purpose of raising funds.