Author: US-Taiwan Business Council

MOEA is the ministry within Taiwan’s government that is tasked with managing the island’s economy. The ministry devotes its efforts not only to guiding Taiwan’s economy through the short-term obstacles it faces, but also to laying a solid foundation for long-term economic growth. Much of the framework that fostered Taiwan’s rapid economic growth was created and implemented by this organization.

15 Fuzhou Street
Taipei 11015, Taiwan
Phone: (886) 2 2321-2200
Email: minister@moea.gov.tw
Website: www.moea.gov.tw

Industrial Development Bureau (IDB)

41-3 Hsin-yi Road, Section 3
Taipei 106, Taiwan
Phone: (886) 2 2754-1255
Email: service@moeaidb.gov.tw
Website: www.moeaidb.gov.tw

Committee for Aviation and Space Industry Development (CASID)

5F, 162-20 Hsin-yi Road, Section 3
Taipei 10658, Taiwan
Phone: (886) 2 2755-6157
Email: jackftang@casid.org.tw
Website: www.casid.org.tw

Industrial Cooperation Program (ICP)

Industrial Cooperation programs, commonly known as “offset” programs, are an obligation imposed on a foreign contractor under a government procurement project, where the contractor agrees to undertake local investment, local procurement, or technology transfer activities amounting to a certain percentage of the overall project. In Taiwan, the Industrial Cooperation Program (ICP) under the Industrial Development Bureau (IDB) within the Ministry of Economic Affairs (MOEA) manages the government’s outstanding offsets.

When Taiwan acceded to the Agreement on Government Procurement (GPA) under the WTO in 2009, it agreed to phase out industrial offset requirements for non-military public procurement. Taiwan therefore fully eliminated offset practices for non-military procurement in 2012. Since 2010, military procurements contracts from Taiwan that exceed the threshold of US$5 million produce offsets requirements, with the minimum offset amount for these contracts at 40%. That ratio can increase beyond 40% – the offset ratio in 2009 reached 70% in several military procurement cases due to legislative pressure.

The Taiwan government, unlike many European governments, does offer multipliers (between 1 and 10, generally), depending on the project. In the Taiwan ICP Office, three working groups manage five categories of offset programs: national defense, aerospace, consumer electronics/computer & communication (3C), transportation & precision machinery, and environmental & biological technology.

Generally speaking, ICP proposals from the foreign contractors is prefered to be consistent with Taiwan Government’s industrial policies as well as the needs of domestic industries. The foreign contractor may choose to carry out any one of, or a combination of, the categories of eligible ICP transactions as described below. Any other ICP transactions that are conducive to the development of domestic industries can be executed upon the approval from the Executive Committee.

1.Technology Transfer
Foreign contractors may transfer technologies to local institutions or companies that are conducive to the development or upgrade of domestic industries. Relevant examples include bogies for the railway vehicles, small turbine engine design, and Photo Inkjet Printer. The credits to be granted for technology transfer will be the sum of the following items: (i) the estimated fair market value of the technology to be transferred multiplied by a factor ranging from one(1) to ten(10); and (ii) the actual direct time-material costs plus other direct costs for the activities of technology transfer, multiplied by a factor ranging from one(1) to ten(10).

2.Research and Development
Foreign contractors may initiate joint R&D projects with local institutions and/or companies or establish R&D centers that are conducive to the development or the upgrade of domestic industries. For example, the development of computerized training for CBT, research on acoustic suppression of fan blade flutter, and the 16G seat development. The credits to be granted for research and development will be the actual direct time-material costs and other actual R&D direct costs shared by the Contractor, multiplied a factor ranging from one(1) to ten(10).

3.Local Investment
Foreign contractors may set up a sole proprietorship or subsidiary in Taiwan or participate in a joint venture with government entities or private companies in Taiwan; for example, the investment in ACX and the investment in Pacific Communications Services Co., Ltd. The credits to be granted for direct local investment will be the amount of the Contractor’s paid-in equity investment, multiplied by a factor ranging from one(1) to ten(10).

4.Training
Foreign contractors may provide personnel training programs to local institutions or companies in engineering, management, operation, examinations, testing as well as services. The FAA test flight pilot training is one such program; and so are the training programs for composite boarded structure fabrication, precision casting of engines, incinerator operation, management and industrial safety technology, quality assurance and certification, and environmental protection, health and safety. The credits to be granted for training will be the sum of the following items: (i) the estimated fair market value of the training to be given, multiplied by a factor ranging from one(1) to five(5); and (ii) the actual direct time-material costs plus other direct costs for the activities of training, multiplied by a factor ranging from one(1) to five(5).

5.International Marketing and Trade Promotion Assistance
Foreign contractors may provide local manufacturers with assistance in international marketing such as market research, market survey, establishment of a price evaluation system, drafting of sales contracts, and expansion of sales channels. In addition, foreign contractors may make unrestricted gifts to independent organizations recognized to be dedicated to expanding and enhancing trade with Taiwan. Through these activities, the competitive edge of local enterprises in the international market is enhanced. Relevant examples include the evaluation of the Asia-Pacific maintenance center, and the manufacture of composite interpolators. The credits to be granted for international marketing assistance will be the actual direct costs incurred by the Contractor for such assistance, multiplied by a factor ranging from one(1) to five(5).

6.Local Procurement
Foreign contractors may procure locally manufactured products designated or approved by the Executive Committee. In principle, locally procured products must be exported; however, products approved by the Executive Committee for use in the procurement projects are not subject to this restriction. Examples of local procurement include purchase of CNC engines, liquid crystal displays, F-16 jet fighter components. The credits to be granted for local procurement will be the sum of value of purchase orders accepted and performed, multiplied by a factor ranging from zero point two five(0.25) to two(2), depending on the technology level required for the product procured.

7.Consortium
Foreign contractors may jointly manage procurement projects with local institutions. The total credits can be deducted in proportion with the actual contract value the local consortium members take, while the execution of key items in the contract scope executed by the local consortium members can apply for eligible ICP projects, subject to the approval of Executive Committee.

8.International certification
Foreign contractors may provide local institutions with assistance in verification, validation or certification for products design, manufacturing, and maintenance, or other relevant document of potential suppliers review.

Sources:
ICP Transaction Categories
U.S. Department of State 2014 Investment Climate Statement

3F, 162-13 Shin-Yi Road, Section 3
Taipei 10658, Taiwan
Phone: (886)2 2754-0266
Email: trudy@icpo.org.tw
Website: www.icpo.org.tw/

The MND is responsible for formulating military strategy, setting military personnel policies, formulating draft and mobilization plans, delineating supply distribution policies, arranging the research on and development of military technology, compiling the national defense budget, setting military regulations, conducting court martial proceedings, and administering military law. Within the MND is the General Staff Headquarters (GSH), under which are the various services, including the Army, Navy, Air Force, Armed Forces Reserve Command/Coast Guard Command, and Military Police Command. The ministry also has other subordinate agencies such as military academies, military courts, prosecutorial bureaus, and jails.

172 Bo-Ai Road, Jhongjheng District
Taipei 10048, Taiwan
Phone: (886) 2 2311-6117
Email: mnd@mnd.gov.tw
Website: www.mnd.gov.tw/

Army General Headquarters

The Army General Headquarters is responsible for developing and maintaining the Army’s combat power, commanding and supervising all subordinate troops and units. Under its command are the Army Logistics Command, Army Commands, and the Airborne and Special Operations Command. Also under its command are the various Army units.

P.O. Box 90620, Longtan
Taoyuan County, Taiwan
Phone: (886) 3479-2111
Website: army.mnd.gov.tw/

Air Force General Headquarters

The Air Force General Headquarters is responsible for the Air Force’s combat strength and commands and supervises all subordinate troops and units. The units include the Air Force Operations Command, the Air Force Logistics Command, the Air Defense Artillery Command, and various tactical wings.

55 Ren Ai Road, Section 3
Taipei 106, Taiwan

Phone: (886) 2 2711-1101
Website: air.mnd.gov.tw/

Navy General Headquarters

The Navy General Headquarters is in charge of developing and maintaining the Navy’s combat readiness, as well as commanding and supervising its entire subordinate fleets and ground units. Under its command are the Naval Fleet Command, the Marine Corps Headquarters, the Navy Logistics Command, Headquarters of the Naval Area Command, the Area Service Office, the Naval Base Command, and the Bureau of Maritime Survey. The subordinate Navy units are under the direct supervision of the Naval Fleet Command and are organized into the fleet, group, and ship levels. The Marine Corps units, like those of the Army, extend from the Marine Corps Headquarters.

305 Bei-an Road
Taipei 104, Taiwan
Phone: (866) 2 2533-3181
Website: navy.mnd.gov.tw/

Reserve Command

The Reserve Command is the operating body responsible for the control of personnel under reserve status in the Taiwan military. In the event of a crisis is issues the call for active reserves to report for duty.

Taipei City Reserve Command General Headquarters
365 Jinhu Rd., Neihu District
Taipei 114, Taiwan
Phone: (886) 2 2266-9025
Website: afrc.mnd.gov.tw

National Chung Shan Institute of Science and Technology (CSIST)

As the leading institution for the research, development, and design of defense technology in Taiwan, CSIST employs some 6,000 scientists and more than 8,000 technicians. CSIST is divided into four major research divisions: aeronautics, missiles, electronics, and chemistry, with six centers for systems development, systems maintenance, quality assurance, materials R&D, aeronautic development, and missile manufacturing. Each research division or research center has a Director in charge of the research and development of its specialty, while planning units have project chairmen responsible for R&D program management and system integration.

CSIST was spun off from the Ministry of National Defense in April of 2014, added “National” to its name, and became NCSIST.

481 Jia-an Section, Zhongzheng Road
Taoyuan County 325, Taiwan
Phone: (886) 2 2673-9638
Website: www.ncsist.org.tw
Email: occso@csnet.gov.tw