1. National Development Council August 2015

2. 1 Outline Introduction Ideas and Goals Strategies Target Activities Location and Time Line Concluding Remarks

3. 2

4. 3 Introduction (1/2) Economic liberalization is being promoted all around the world Major economies are stepping up FTA negotiations for bringing down trade barriers and enhancing trade and investment flows Taiwan has completed only 7 FTAs, far behind its major competitors To avoid being marginalized, Taiwan must speed up the pace of liberalization and internationalization

5. 4 Taiwan Being Isolated during Regional Economic Integration Accounting for 56.6% of Taiwan’s total trade Accounting for 35.0% of Taiwan’s total trade

6. 5 Introduction (2/2) Free Economic Pilot Zones (FEPZs) Plan to further Taiwan’s liberalization and globalization  Internally To help ease doubts and fears of economic opening for entering FTA talks To promote the economic growth  Externally To show Taiwan’s determination to advance further in liberalization toward regional economic integration To harmonized laws and administration measures with international standards  Focusing on deregulation and institutional innovation

7. 6

8. 7 Key Ideas Liberalization, internationalization Loosening restrictions on the free movement of personnel, goods, capital, and information. Forward looking Promoting innovative industrial activities and new business models

9. 8 Ultimate Goal FEPZs as “trial” and “pioneer” areas  To demonstrate the usefulness/benefits of economic liberalization and internationalization  From partial to general  From small-scale to large-scale Ultimate goal: If the FEPZs do well, the measures of liberalization and internationalization will promote all around the Taiwan.

10. 9

11. 10 Strategies Facilitating the free movement of people, goods, and money Providing Tax incentives and convenient land acquisition Opening market to align with other economies Promoting cross-border industrial cooperation Building a high-quality business operating environment

12. 11 Foreign professionals short term visa exemption or landing visas Mainland Chinese professionals Exempt from documentation review on business stay 3-year multiple-entry permits Liberalization of entry and exit of personnel No previous work experience required No business turnover requirement for personnel recruitment Relax restrictions on foreign white-collar employment Allowing foreign white-collar professionals to provide services on a commissioned or contracted undertaking basis All measures NOT involving blue-collar workers

13. 12 Controlled items are permitted to enter the FEPZs for processing, and the finished goods are required to all export Exempt from import taxes and duties for machinery and equipment imported for own use Innovating customs mechanism to speed entry and exit of goods Establishing electronic logbooks and remote monitoring systems to simply spot checks Establishing Maritime Express Handling Units to facilitate goods flows and provide 24-hours services

14. 13 For international goods owners engaging in goods storage or simple processing in FEPZs, 100% of the export and 10% of the domestic sale will enjoy business income tax exemption ( exclusive of agriculture products) Foreign professionals worked in FEPZs are exempt from reporting foreign source income under the Alternative Minimum Tax (AMT) system, and for the first 3 years only half of the salary would be taxed. Profess- ionals Oversea dividends and earnings repatriated by FEPZs’ companies are exempt from income tax if the companies substantially invest in FEPZs Goods Cash

15. 14 Dual-Track Pilot Mechanism Industries with clear physical location will be piloted within physical zone areas and linked with companies outside the zones via a “shop onsite, factory offsite” operation model. Industries not suitable for being confined to physical zone areas will be conducted at designated trial-points, with loosened pilot operation scope and separate-grade management. Physical Zone areas (shop onsite) Designated trial-points (factory offsite) Pilot models to be defined by competent authorities Industries not feasible for implementation in physical zone areas Approved FEPZ businesses Stratified management Geographically defined location Approved FEPZ businesses Any location outside the zone Outsourced processing

16. 15 One-stop Services Project managers will assist FEPZ businesses in administrative and regulatory matters. Tax Land acquisition and use Business registration Comprehensive one-stop services Construction Labor administration, safety and hygiene Environment protection

17. 16

18. 17 Taiwan’s advantages: geographic location, industrial technologies, human resources etc. Integrating Taiwan’s advantages with potential industries and new business models  Smart Logistics  International Health Care  Value-added Agriculture  Financial Services: e.g. Wealth and Asset Management  Education Innovation Target Activities

19. 18 Smart Logistics  Promoting faster and freer goods flows and increasing the value-added of goods with top logistics services, enabled by electronic account book, innovative customs administration and cloud platform.  employing the “shop onsite, factory offsite” operation model to expand the scope and depth of processing. International Health Care  Simplifying entry procedures for foreign visitors, and setting up international medical service centers in airports to provide medical consulting and hospital liaison services.  Establishing “International Healthcare Industrial Park” to promote industries such as medical care, biotechnology, pharmaceuticals, rehabilitative care, health enhancement etc.

20. 19 Value-added Agriculture  Fully utilizing Taiwan’s sophisticated agricultural technologies and talents to innovate agricultural products, and increase agricultural value-added.  Marketing Taiwan’s agricultural products such as Taiwanese teas, orchids, animal vaccines, ornamental fishes etc. under MIT brands worldwide. Financial Services  Allowing financial institutions to develop wealth and asset management services through Offshore Banking Units (OBUs) and Offshore Security Units (OSUs) to provide a diverse range of financial products and services to non-residents  Restrictions on scope and categories of financial products have been greatly relaxed, and negative-list approach has been adopted.

21. 20 Education Innovation  Encouraging cooperation between domestic and overseas prestigious universities to set up branch campuses, independent colleges, and degree programs and professional courses, etc.  Relaxing rules and conditions for school establishment and operation, student enrollment, faculty recruitment, etc.

22. 21

23. 22 Schedule of the Two-Phase Liberalization Phase 1  FEPZs Phase 1 Promotion Plan launched in August, 2013.  Draft of the Special Act for Free Economic Pilot Zones passed by the Executive Yuan in December 2013 and sent to the Legislative Yuan for review. Phase 2  To be activated after the special law being enacted by the Legislative Yuan.  During Phase 2 of the promotion plan, new FEPZs could be created either through central government’s planning or via the applications issued by local governments.

24. 23 Time Line PHASE 1PHASE 2PLANNING FEPZs Framework approved in April 2013 FEPZs Plan approved in Aug. 2013 2013 Special Act submitted to Executive Yuan for approval in Oct. 2013 Special Act reviewed by Legislative Yuan Special Act enacted 2014

25. Physical Locations More FEPZs will be set up in the future! Phase I 7 FTZs & 1 agri- biotech park ChangPin Industrial Park Taipei Port FTZ Pingtung Agricultural Biotechnology Park Anping Port FTZ Kaohsiung Port FTZ Keelung Port FTZ Taoyuan Airport FTZ Su’ao Port FTZ Taichung Port FTZ ChangPin Industrial Park

26. 25

27. Concluding Remarks The FEPZs Plan is to prepare Taiwan for further economic liberalization and internationalization. The Plan will help  align Taiwan’s economy with the world in the shortest period of time  Taiwan gain admission to The Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP) Being runways to a new take-off for Taiwan’s economy, the Plan will eventually turn Taiwan into a free economy island.

28. 27 Contact Details For enquiries or services, please contact InvesTaiwan Service Center Address 8F, 1 Xiangyang Road, Taipei 10046, Taiwan Tel 886-2-2311-2070 e-mail service@invest.org.twservice@invest.org.tw For more information, please visit www.fepz.org.tw

29. 28