WORLD TRADE
ORGANIZATIONG/SCM/N/71/TPKM
19 June 2002
(02-3420)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
New and Full Notification Pursuant to Article XVI:1 of the GATT 1994
and Article 25 of the Agreement on Subsidies and
Countervailing Measures
SEPARATE CUSTOMS TERRITORY OF TAIWAN,
PENGHU, KINMEN AND MATSU
The following communication, dated 10 June 2002, has been received from the Permanent
Mission of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.
_______________
TABLE OF CONTENTS
Page
I. AGRICU LTURE.................................................................................................................. .....3
A. S UPPORT FOR RICE ......................................................................................................................3
B. S UPPORT FOR SORGHUM , CORN AND SOYBEANS .........................................................................4
C. M EASURES FOR SWEET POTATOES , ADZUKI BEANS , MUNG BEANS , AND OTHER
MISCELLANEOUS CROPS ..............................................................................................................5
D. S UPPORT FOR TOBACCO LEA VES .................................................................................................6
E. S UPPORT FOR VEGETABLES .........................................................................................................8
F. S UPPORT FOR SUGAR .................................................................................................................10
II. FISHERY..................................................................................................................... ............11
A. F ISHING VESSEL BUY -BACK PROGRAMME ................................................................................11
B. F ISHING VESSEL MONITORING SYSTEM PROGRAMME .............................................................12
C. E XTENSION OF THE REUSE OF POND WATER IN AQUA-CULTURE PROGRAMME .......................14
D. T HE MARINE INSURANCE ON FISHING VESSELS AND FISHERMEN .............................................15
E. T HE AQUA-CULTURE FACILITIES LOAN PROGRAMME .............................................................16
III. INDUSTRY................................................................................................................... ...........17
A. T AX CREDITS OR TAX EXEMPTIONS FOR DESIGNATED ENTERPRISES .....................................17
1. Five-year tax exemption for the emerging , important and strategic industries................17
2. Tax credit for investment in disadvantaged region .............................................................18G/SCM/N/71/TPKM
Page 2
B. L OANS ........................................................................................................................ .............20
Loans for Small and Medium Enterprises......................................................................................... 20
1. Specific and urgent financing and loans intended for promoting competitiveness,
for plant site relocation, for working ca pital needed during periods of economic
crisis and recession, and  for recovery plans from damage caused by majornatural di sasters.............................................................................................................. ........20
2. Medium and long term loans for pro duct marketing, and loans for overseas
investment and construction projects ...................................................................................22
3. Specific loans for mu tual cooperation...................................................................................23
Loans for Private Enterprises.................................................................................................. ...........24
4. Loans at lower market interest rate s for small and medium enterprises and
private ent erprises ............................................................................................................ ......24
C
. DUTY AND TAX EXEMPTIONS GRANTED TO ENTERPRISES LOCATED
WITHIN A DESI GNATED Z ONE ..........................................................................................28
1. Duty and tax exemptions for high-technology industries....................................................28
2. Duty and tax exemptions fo r in-zone enterprises.................................................................30
IV. RESEARCH AND DE VELOPMENT ..................................................................................32
A. F UNDS GRANTED FOR DEVELOPMENT OF PRODUCTS OF THE TEN NEW LEADING
INDUSTRIES ............................................................................................................................... 32G/SCM/N/71/TPKM
Page 3
I. AGRICULTURE
A. SUPPORT FOR RICE
1. Title of the programme
Support for rice
2. Period covered by the notification
1998-2000
3. Policy objective and/or purpose
The policy objectives are to ensure the security of the food supply by balancing the supply
and demand for rice, and to stabilize rice prices for the maintenance of farmers’ income.
4. Background and responsible authorities
(1) Law- Statute for Agriculture Development
- Food Management Law
(2) Responsible authorities
Council of Agriculture
5. Form of the subsidy/ to whom and how the subsidy is provided
There are two types of purchases: planned purchase and supplementary purchase. The
planned purchase is made at the guaranteed prices. Guaranteed prices are determined with taking into
account production costs. The prices have been set at NT$21 per kilogram for Japonica type rice and
NT$20 for Indica type rice. The quantity of the planned purchase has been limited at 1,920 kg per
hectare for the first crop and 1,440 kg for the second crop. Supplementary purchases have been madeto supplement shortage from the planned purchase quantity. Supplementary rice purchase prices are
set at NT$18 per kilogram for Japonica type rice and NT$17 for Indica type rice. The quantity of the
supplementary purchase has been limited to 1,200 kg per hectare for the first crop and 800 kg for the
second crop.
Planned and supplementary rice purchases are made available to the farmers who produce rice
in paddy fields and follow the government seasoned rotation for planting and not planting.  For whose
who produce rice in both the upland areas and the paddy fields but do not follow the government
scheduling for planting, only supplementary purchase is permitted. Farmers are free to decide whether
they want to sell products to the government.
6. Amount of the subsidy
NT$1,062, NT$875 and NT$1,778 million for 1998-2000 respectively.G/SCM/N/71/TPKM
Page 4
7. Duration of the subsidy and/or any other time-limits attached to it
Duration of the subsidy is not clearly specified.
8. Statistical data
           Unit: 1,000 MT.
Item Year Production Consumption Import Export
1998 1,489.4 1,565.1 4.7 77.3
1999 1,558.6 1,538.6 6.1 140.6Rice
(brown)2000 1,540.1 1,488.7 7.7 157.1
B. SUPPORT FOR SORGHUM , CORN AND SOYBEANS
1. Title of the programme
Support for sorghum, corn and soybeans
2. Period covered by the notification
1998-2000
3. Policy objective and/or purpose
The policy objectives are to maintain sorghum, corn and soybeans production and to facilitate
the implementation of the adjustment of paddy field utilization.
4. Background and responsible authorities
(1) Law- Regulation for the Purchase and the Sale of Dryland Food Crops(2) Responsible authorities
Council of Agriculture
5. Form of the subsidy/ To whom and how the subsidy is provided
Purchase prices were determined by adding net profits of rice to the production costs of each.
The purchase quantities are set at the limit of 5,000 kilograms per hectare for feed corn and sorghum,
and 2,500 kilograms for soybean.  The purchase prices have been set at NT$15 per kilogram for corn,NT$14 for sorghum and NT$25 for soybeans. When the actual yield per hectare is above the purchase
limit, farmers may sell their products to the government at the import price.
The purchases are made available to the farmers whose production of feed corn, soybeans or
sorghum had been purchased by the government in the base year (1994-96) and the year preceding thecurrent year. In 1999, the purchase for sorghum was limited to the first crop grown in the western
plain area; for feed corn in the western mountainous area and the eastern region, the first and second
crops were purchased, which in the western plains only the second crop of feed corn was purchased,
and for soybeans it was limited to the second crop. The farmers are free to decide whether they want
to sell products to the government.G/SCM/N/71/TPKM
Page 5
6. Amount of the subsidy
NT$1,297, NT$1,052 and NT$836 million for 1998-2000 respectively.
7. Duration of the subsidy and/or any other time-limits attached to it
Purchase for soybeans has been eliminated since July 1999. For sorghum and corn, duration
of the subsidy is not clearly specified.
8. Statistical data
           Unit: 1,000 MT.
Item Year Production Consumption Import Export
1998 1.5 2,143.6 2,002.6 22.8
1999 0.4 2,122.9 2,357.7 3.3 Soybean
2000 0.3 2,190.8 2,302.6 2.9
1998 120.2 5,075.1 4,871.3 0.5
1999 89.0 5,022.4 4,920.2 0.4 Feed corn
2000 72.7 5,225.9 4,998.6 0.5
1998 43.8 124.0 80.2 0.0
1999 33.6 76.3 42.7 0.0 Sorghum
2000 26.5 64.5 38.1 0.0
C. MEASURES FOR SWEET POTATOES , ADZUKI BEANS , MUNG BEANS , AND OTHER
MISCELLANEOUS CROPS
1. Title of the programme
Measures for sweet potatoes, adzuki beans, mung beans, and other miscellaneous crops
2. Period covered by the notification
1998-2000
3. Policy objective and/or purpose
The policy objectives are to facilitate the implementation of the adjustment of paddy field
utilization, and to strengthen farmland environmental conservation plan for sustainable use of
farmland as the structure of agricultural production undergoes adjustment.
4. Background and responsible authorities
(1) Law- Statute for Agriculture Development
(2) Responsible authorities
Council of AgricultureG/SCM/N/71/TPKM
Page 6
5. Form of the subsidy/ To whom and how the subsidy is provided
(1) Diversion Payment
Eligibility for receiving the diversion payment is given to those who follow the diversion
programme.  The diversion programme relates to diverting from rice production to so called diversion
crops.  Recipients of the diversion payment produce diversion crops in the following areas:
(a)  growing rice in the base year (1994-96); or,(b)  growing guaranteed price purchase crops of soybeans, feed corn, sorghum or
sugarcane in the base year; or,
(c)  registering as set-aside or diversion in the "Rice Production and Ricefield Diversion
Projects" in the base year.
Diversion crops are selected taking into account supply and demand conditions for such crops
as sweet potatoes, adzuki beans, mung beans, and other miscellaneous crops (yam, buck wheat, millet,
sesame, and etc.). Diversion payments are made at NT$22,000 per hectare.
(2) Bonus payment
In addition to diversion payment, there is a bonus payment of NT$4,000 per hectare for the
group diversion.
6. Amount of the subsidy
NT$1,328, NT$1,232 and NT$1,185 million for 1998-2000 respectively.
7. Duration of the subsidy and/or any other time-limits attached to it
Duration of the subsidy is not clearly specified.
8. Trade effect
After the three stages of the rice diversion programme had been implemented, the acreage
planted in rice went down from 645,855 hectare to 353,122 hectare; that is a decrease of 45.0 per cent
from the year prior to the implementation of the projects, which was from 1983 until 1999. The
production of rice was also reduced from 2.48 million tons to 1.56 million tons, or a decline of 37 percent.  The quantity of rice purchased by government was down from 1.1million tons to 0.45 million
tons, or a decrease of 59 per cent. Measures for sweet potatoes, adzuki beans, mung beans, and other
miscellaneous crops have contributed to reducing the production of rice.
D. S
UPPORT FOR TOBACCO LEA VES
1. Title of the subsidy programme
Support for Tobacco Leaves
2. Period covered by the notification
Fiscal years 1996/7-1998/9 (July 1996- June 1999)G/SCM/N/71/TPKM
Page 7
3. Policy objective and/or purpose
The purposes of the programme are to mainta in the tobacco and wine monopoly and improve
the quality of tobacco leaves produced.
4. Background and responsible authorities
(1) Law
Provisional Statute for Monopoly of Tobacco and Wine in Taiwan province
(2) Authorities
- Taiwan Tobacco and Wine Monopoly Bureau
- Ministry of Finance
Note:  The Provisional Statute for Monopoly of Tobacco and Wine in Taiwan province was
eliminated on 1 January 2002.
5.  Form of the subsidy/to whom and how the subsidy is provided
(1) guaranteed price purchase:
Taiwan Provincial Tobacco and Wine Monopoly Bureau (TWMB) purchases tobacco leaves
from domestic producers at the guaranteed price which is preliminarily determined in the Committee
for Evaluating the Tobacco Leaves Price, and then approved by the Provincial Finance Department.Both the production costs and quality of tobacco leaves are taken into account during the price
determination process. Producers need to get permission from the bureau and contract with it before
planting. For the purpose of monopoly, the farmers are obliged to sell all produced tobacco leaves to
TWMB according to the Provisional Statute. Permission to plant depends on the demand and planting
conditions.
(2) Interest grants:
The Taiwan Provincial Tobacco and Wine Monopoly Bureau prepays the payment for tobacco
leaves during the growing season and makes a loan to tobacco farmers.
(3) Fertilizer grants:
The Bureau also provides tobacco farmers with fertilizer based on the needs in different areas,
to control the quality of tobacco leaves.
6. Amount of the subsidy
NT$1,316.7, NT$1,267.7 and NT$1,220.9 million for the fiscal years 1996/97-1998/99
respectively.
7. Duration of the subsidy and/or any other time-limits attached to it
The support for tobacco leaves will end in July 2002.G/SCM/N/71/TPKM
Page 8
8. Statistical data
    Unit: Ton
Item YearProduction
(crop year)Consumption Import Export
1997 10,472 24,369 9,334 980
1998 10,120 22,246 13,552 86 Tobacco leaves
1999        9,685 20,029 11,421    72
E. SUPPORT FOR VEGETABLES
1. Title of the subsidy programme
Support for Vegetables
2. Period covered by the notification
1998-2000
3. Policy objective and/or purpose
The purpose is to stabilize the supply and demand through the holding of the summer
vegetables during the summer (Typhoon) seasons.
4. Background and responsible authorities
(1) Law
- Statute for Agriculture Development
- Contracting Guaranteed Price Marketing Plan for Summer Season Vegetables
(2) Responsible authority
- Taiwan Provincial Departme nt of Agriculture and Forestry (TPDAF), before June
1999
- Council of Agriculture, after July 1999
5. Form of the subsidy/to whom and how the subsidy is provided
(1) Eligibility conditions for Farmers’ Organizations participating in the plan:
(a) those with sound organization, and whose products’ variety and quality meet the
market demand; and
(b) who help with the grading and packaging; and,
(c) who have the ability to supply more than 50 per cent of the season’s target supply
quantity allocated to them, or whose monthly supplies met 60 per cent of the target
quantity for at least three months in the preceding year.
(2) Criteria for Selection of Contract Vegetable and Guaranteed PriceG/SCM/N/71/TPKM
Page 9
(a) Guaranteed price is determined on the basis of 90 per cent of the weighted averaged
prices of Taipei Agricultural Products Marketing Corporation in the same month of
the most recent five years, but in any case would not exceed the guaranteed price set
for the preceding year by more than two dollars.
(b) The vegetable varieties for the Plan are selected taking supply and demand into
account.
(3) Contracted Supply Target:
(a) The contracted supply target is set based on demand for vegetables each month (June-
October).
(b) Each contracting fruit and vegetable wholesale market would determine the monthly
requirement of various vegetable varieties and quantities according to the target set
up by the Committee.
(4) Price Difference Subsidy ：
Each fruit and vegetable wholesale market will calculate the averaged price of each product
which is shipped through the joint-marketing on a weekly basis. If the averaged price is lower than the
guaranteed price set up for the relevant month, the price difference will be subsidized according to the
following formula; on the other hand, if the averag ed price is higher, no subsidy will be granted;
provided, however, the subsidy amount shall not exceed 50 per cent of the guaranteed price:
(a) the price difference would be subsidized by 100 per cent and the contracted quantity
would be eligible for such subsidy, if the actual supply quantity is located at between
100 per cent and 120 per cent of the contracted quantity.
(b) the price difference would be subsidized by 100 per cent and the actual supply
quantity would be eligible for such subsidy, if the actual supply quantity is located at
between 80 per cent and 100 per cent of the contracted quantity.
(c) the price difference would be subsidized by 90 per cent and the actual supply quantity
would be eligible for such subsidy, if the actual supply quantity is located at between
70 per cent and 80 per cent of the contracted quantity.
(d) the price difference would be subsidized by 80 per cent and the actual supply quantity
would be eligible for such subsidy, if the actual supply quantity is located at between
60 per cent and 70 per cent of the contracted quantity.
(e) the price difference would be subsidized by 60 per cent and the contracted quantity
would be eligible for such subsidy, if the actual supply quantity is located at between
120 per cent and 150 per cent of the contracted quantity.
6. Amount of the subsidy
NT$56.3, NT$69.1 and NT$40.9 million for 1998-2000 respectively.
7. Duration of the subsidy and/or any other time-limits attached to it
Duration of the subsidy is not clearly specified.G/SCM/N/71/TPKM
Page 10
8. Statistical data
  Unit: 1,000 MT.
Year Production Consumption Import Export
1998 2,420.7 2,546.4 222.2 96.5
1999 2,942.2 3,043.4 218.5 117.3
2000 2,732.3 2,849.2 222.6 105.7
F. SUPPORT FOR SUGAR
1. Title of the subsidy programme
Support for Sugar
2. Period covered by the notification
Fiscal years 1996/97-1998/99(July 1996- June 1999)
3. Policy objective and/or purpose
The purpose of the programme is to develop the sugar industry in cooperation with the
farmers.
4. Law-Authorities-Background
(1) Laws or Regulations
Regulation for the Sugarcane Planting Contract
(2) Authorities- Taiwan Sugar Corporation
- Ministry of Economic Affairs
5. Form of the subsidy/to whom and how the subsidy is provided
(1) Guaranteed purchase
Taiwan Sugar Corporation contracts farmers for the purchase of sugarcane and sugar sharing.
The sugarcane farmers share 55 per cent of sugar made from sugarcane. If the domestic selling price
of sugar is higher than the prepaid contract price,  the sugarcane farmers are paid the domestic selling
price. If the domestic selling price is lower than the prepaid contract price, the farmers are paid the
prepaid contract price. The contract price is set taking domestic price and marketing costs into
account and has been frozen since 1990.
(2) Other grantsThe corporation provides grants to sugarcane farmers such as interest subsidy for loans for
purchase of inputs, insurance premium for sugarcane farms, fees for pest and disease control,inspection fees for sugar brix and others.G/SCM/N/71/TPKM
Page 11
6. Amount of the subsidy
NT$411.0, NT$410.5 and NT$352.2 million for the fiscal years 1996/97 - 1998/99
respectively.
7. Duration of the subsidy and/or any other time-limits attached to it
Duration of the subsidy is not clearly specified.
8. Statistical data
   Unit: raw sugar 1,000 MT.
Item Year Production Consumption Import Export
1997 370.6 521.3 157.2 24.8
1998 331.2 529.0 195.3 13.7 Raw Sugar
1999 292.7 524.9 268.6 13.2
II. FISHERY
A. FISHING VESSEL BUY -BACK PROGRAMME
1. Title of the Programme
Fishing vessel buy-back programme.
2. Period Covered by the Notification
March 2000 to December 2000
3. Policy objective and /or purpose
Due to the crisis in global fishery resources from over-exploitation, the UN has issued an
urgent demand requesting states concerned to do their best to reduce fishing capacity. This subsidyprogramme is aimed at relaxing the pressure on fishery resources for the purpose of ensuring that
there will be a sustainable use of marine resources.
4. Background and responsible authorities
(a) Laws and regulations
In accordance with the bulletin entitled: “The fishing vessel buy-back procedures for the latter
half of 1999 and the year2000”.
(b) Responsible authorities
Fisheries Administration, Council of Agriculture, Executive Yuan
5. Form
GrantG/SCM/N/71/TPKM
Page 12
6. To whom and how assistance is provided
All kinds of fishing vessels with valid fishing licenses, including recreational fishing vessels,
but not including sampans and rafts.
The buy-back amount was calculated
(1) at NT$15,000 per gross ton, or(2) at NT$18,000 per gross ton for vessels which had been in operation at least 60 days
before the bulletin on this subsidy was made public.
7. Amount
The funds for the buy-back of 5 trawling fishin g vessels in the said fiscal year totalled
NT$12 million.
8. Duration
March 2000 to December 2004
9. Statistical data
Statistics of fishery production, consumption and trade
  Unit : metric ton
1998 1999 2000
Production 1,348,152 1,363,867 1,356,295
Import 282,738 417,473 435,563
Export 455,669 418,755 489,508
Consumption 1,175,221 1,362,585 1,302,350
B. FISHING VESSEL MONITORING SYSTEM PROGRAMME
1. Title of the Programme
Fishing Vessel Monitoring System Programme
2. Period Covered by the Notification
Fiscal years 1996-2000July 1995 to December 2000.
3. Policy Objectives and/or Purpose
The programme is to encourage and promote the deep sea fishing vessels to install the
"Fishing Vessel Monitoring System VMS" equipment.  This system instantaneously relays the
vessel’s position to a monitoring center so as to track the position of a fishing vessel in real time.  As
such, the purpose of this programme is to comply with the recommendations from international and
regional fishery organizations for the conservation and management of marine resources.G/SCM/N/71/TPKM
Page 13
4. Background and Responsible Authorities
(1) Regulations:
“Cross – Century Agricultural Development Programme”(2) Responsible authorities:Fisheries Administration, Council of Agriculture, Executive Yuan
5. Form /to whom and how the subsidy is provided
(1) In 1996/1997, the government commenced this programme. An award of
approximately NT$130,000, which covered all cost of installing VMS on one vessel, was subsidized
to each vessel owner, totalling NT$1.44 million. A total number of 11 vessels were subsidized during
the fiscal year.
(2) In 1997/98, an award of NT$50,000 was subsidized to each vessel owner to cover
part of his VMS costs, if the vessel had reported its position and catch for at least 60 days after the
installation of the VMS.  A total number of 100 vessels were subsidized during the fiscal year.
(3) In 1998/99, an award of NT$50,000 was subsidized to each vessel owner to cover
part of his VMS costs, if the vessel had reported its position and catch for at least 60 days after the
installation of the VMS.  A total number of 60 vessels were subsidized during the fiscal year.
(4) In 1999/00, an award of NT$50,000 was subsidized to each vessel owner to cover
part of his VMS costs, if the vessel had reported its position and catch for at least 60 days after theinstallation of VMS.  A total number of 13 vessels were subsidized during the fiscal year.  In addition,
an award of NT$100,000 was subsidized to each vesse l owner to cover part of his VMS costs, if the
vessel had reported its position and catch for at least 120 days after the installation of the VMS. There
is only one vessel which qualified for that this year.
6. Amount
NT$1.44 and NT$3 million for the years 1996/1997-1997/1998 respectively.
NT$5 and NT$0.75 million for year 1998/99-1999/2000 respectively.
7. Duration
Fiscal years 1996-2000.
8. Statistical data
Statistics of fishery production, consumption and trade
  Unit : metric ton
1998 1999 2000
Production 1,348,152 1,363,867 1,356,295
Import 282,738 417,473 435,563
Export 455,669 418,755 489,508
Consumption 1,175,221 1,362,585 1,302,350G/SCM/N/71/TPKM
Page 14
C. EXTENSION OF THE REUSE OF POND WATER IN AQUA-CULTURE PROGRAMME
1. Title of the programme
Extension of the Reuse of Pond Water in Aqua-culture programme
2. Period covered by the notification
Fiscal years 1996-2000 (July 1995 to June 2000)
3. Policy objective and/or purpose
To reduce groundwater consumption in order to prevent the deterioration causing land
subsidence
4. Background and responsible authorities
(1) Laws and regulations:
Agricultural Development Act, Article 62
(2) Responsible authorities:
Fisheries Administration Council of Agriculture, Executive Yuan
5. Form
Grant
6. To whom and how assistance is provided
Beneficiaries: Fishermen who raise and rear fish.
Content: Grants providing 40 per cent of the am ount necessary for the cost of the water re-
circulation equipment (e.g. mechanical filter) .
7. Amount
The total amount of subsidy in FY 1996, FY1997, FY1998, FY1999 and, FY2000 is
NT$123,000,000.
8. Duration
Fiscal years 1984-2004G/SCM/N/71/TPKM
Page 15
9. Statistical data
Statistics on fishery production, consumption and trade
  Unit : metric ton
1998 1999 2000
Production 1,348,152 1,363,867 1,356,295
Import 282,738 417,473 435,563
Export 455,669 418,755 489,508
Consumption 1,175,221 1,362,585 1,302,350
D. THE MARINE INSURANCE ON FISHING VESSELS AND FISHERMEN
1. Title of the Programme
The marine insurance on fishing vessels and fishermen
2. Period Covered by the Notification
Fiscal years 1996-2000 (July 1995 to June 2000)
3. Policy objective and/or purpose
(a) To insure fishing vessels and fishermen against marine disasters(b) To protect fishermen’s families livelihoods in the event of a marine disaster.
4. Background and responsible authorities
(a) Laws and regulations:  The regulation of The marine insurance on fishing vessels and
fishermen
(b) Responsible authorities:  Fisheries Administration, Council of Agriculture, Executive
Yuan
5. Form
Grant
6. To whom and how assistance is provided
Beneficiaries: fishermen
Content:  The grants to provide for part of th e insurance coverage costs for fishermen in case
of death or injury at sea and for owners of fishing vessels which are damaged at sea.
7. Amount
NT$97,108 million yeas:  Average of 1996-2000G/SCM/N/71/TPKM
Page 16
8. Duration
Since 1987
9. Statistical data
Statistics on fishery production, consumption and trade
   Unit:  metric ton
1998 1999 2000
Production 1,348,152 1,363,867 1,356,295
Import 282,738 417,473 435,563
Export 455,669 418,755 489,508
Consumption 1,175,221 1,362,585 1,302,350
E. THE AQUA-CULTURE FACILITIES LOAN PROGRAMME
1. Title of the Programme
The Aqua-culture Facilities Loan Programme
2. Period Covered by the Notification
Fiscal years 1999-2000 (July 1999 to December 2000)
3. Policy objective and/or purpose
To assist fishermen in improving their aqua-culture facilities (fish farming)
4. Background and responsible authorities
(1) Laws and regulations:
The Regulations for Aqua-culture Facilities Loan Programme
(2) Responsible authorities:
Fisheries Administration, Council of Agriculture, Executive Yuan
5. Form
Loan
6. To whom and how assistance is provided
(1) Beneficiaries: Fishermen who raise and rear fish.(2) Content: Banks and Fisherman Associations offer low-interest loans to fishermen
based on the sizes of their farms. The Agricultural Development Foundationsubsidizes the gap between the guaranteed loan rate and the commercial bank interest
rate.G/SCM/N/71/TPKM
Page 17
7. Amount
NT$100 million Year
8. Duration
Since 1993
9. Statistical data
Statistics on fishery production consumption and trade
   Unit : metric ton
1998 1999 2000
Production 1,348,152 1,363,867 1,356,295
Import 282,738 417,473 435,563
Export 455,669 418,755 489,508
Consumption 1,175,221 1,362,585 1,302,350
III. INDUSTRY
A. T AX CREDITS OR TAX EXEMPTIONS FOR DESIGNATED ENTERPRISES
1. Five-year tax exemption for the emergi ng, important and strategic industries
1. Title of the programme
Five-year tax exemption for the emerging, important and strategic industries
2. Period covered by the notification
Fiscal years 1999-2000
3. Policy objective and/or purpose
The primary goal of the tax incentives is to promote the development of hi-tech and high
value-added industries.
4. Background and responsible authority
(a) Laws:1999 amendment to the Statute for Upgrading Industries, Article 9 on five-year tax exemption
(b) Responsible authority:
The responsible authorities are the Industrial Development Bureau, the Ministry of Economic
Affairs and the Ministry of Finance.
Note: The SUI was promulgated on December 29,1990, followed by an amendment on
10 January 1995, and re-amended on 31 Dec. 1999.G/SCM/N/71/TPKM
Page 18
5. Form
Tax exemption
6. To whom and how assistance is provided
An emerging, important and strategic industry may apply within two years from the
beginning date for payment of the capital contributions by its shareholders and with the approval of its
shareholders meeting, to be exempted from corporate income tax.
To qualify for “the emerging, important and strategic industries,” the following three criteria
should be met: (1) products to be produced under the investment plan should belong to the emerging,
important and strategic industries;  (2) the paid-in or increased paid-in capital for the investment plan
should be over NT$200 million;  and (3) the amount of the fund available for the purchase of brand-
new machinery/equipment in the investme nt plan should be over NT$100 million.
In the case of a newly incorporated enterprise, the tax exemption is for a period of five
consecutive years from the date on which it begins to market its products or to render services.
In the case of the expansion of an existing enterprise, the exemption applies to the corporate
income tax levied on the increased income derived as a result of such expansion for a period of fiveconsecutive years from the date the newly added equipment starts to operate or the rendition of
services begins; provided, however, that the exemption applies only to an expansion in the form of the
establishment of additional independent production or service units, or for increase of major
production or service equipment.
An eligible enterprise applying the tax exemption may, within two years from the date on
which it starts to market its products or to render services, defer, at its own discretion, the
commencement date of the tax exemption period.  The maximum period of such deferment is four
years.  Furthermore, the commencement date of such deferred tax exemption period should be the
beginning date of a fiscal year.
7. Amount
The amount is not available, since it was a new clause added in December 1999.
8. Duration
The programme was initiated in 2000. Chapter 2 of the Statute for Upgrading Industries
concerning tax benefits will expire in 2009.
9. Trade effects or related statistical data
In light of the scope and nature of the programme, it is not possible to determine what, if any,
trade effects  may result from this programme.
2. Tax credit for investment in disadvantaged region
1. Title of the programme
Tax credit for investment in disadvantaged region.G/SCM/N/71/TPKM
Page 19
2. Period covered by the notification
The fiscal year 1999-2000.
3. Policy objective and/or purpose
With the aim of achieving balanced economic growth within the terr itory of the Separate
Customs Territory of Taiwan, Penghu, Kinmen and Matsu, the means of tax credit is used to
encourage investment in disadvantaged geographic regions.
4. Background and authority
(a) Law:Statute for Upgrading Industries (hereinafter referred to as the "SUI"), Article 7.
(b) Responsible authority
The Industrial Development Bureau, Ministry of Economic Affairs.Note: The SUI was promulgated on 29 De cember 1990, amended on 10 January 1995, and
re-amended on 31 December 1999.
5. Form
Tax credit against corporate income tax.
6. To whom and how assistance is provided
Any company incorporated under the Company Law, which makes investment in designated
industries in a region with scanty natural resources or with slow development, may gain credits of up
to 20 per cent of the total amount of its investment against the corporate income tax levied in the then
current year, provided it meets the threshold of capital or the threshold number of employees.  If theamount of corporate income tax levied in that year is less than the tax credit, the balance of the tax
credit may be applied against the corporate income tax levied in the ensuing four years.
The "county or township areas with scanty natu ral resources or slow development" referred to
in Article 7 of the SUI, except for the villages  in Chinmen County, Lien-chiang County, Penghu
County, and the Lanyu Village and the Green Island Village of Taitung County, as well as Ryukyu
Village of Pingtung County must satisfy either of the following requirements:
(a) A village in the first eight (8) Counties as arranged in sequence based on the
aggregate amount of score of each of the 16 Counties in Taiwan, from the lowest tothe highest, as calculated based on the following ten index items available in the
preceding two years: population growth rate, society increase rate, proportion of the
secondary and tertiary workers to total employment population, tax revenue, average
regular income of each household, proportion of urban population to total population,
availability of tap water supply, availability of telephone to every one hundredhouseholds in the city, highway density, and number of educational facilities of
college level or higher.G/SCM/N/71/TPKM
Page 20
(b) A village in the territory of Taiwan island where the average national consolidated
income filed in the last three years fell w ithin the lower half of all of the average
national consolidated incomes filed by all villages island wide in the same period.
The designated industries referred to above include all manufacturing industries and several
service industries.
The threshold capital means the total amount used in procuring brand-new machinery,
equipment and building aggregates to NT$25 million. The minimum number of employees means the
monthly average of the number of newly employed employees in a full year amounts to fifty (50)
persons or more.
The criteria used by the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu
are more stringent than those under Article 8 of the SCM Agreement. The reason for the Separate
Customs Territory of Taiwan, Penghu, Kinmen and Matsu’s adoption of factors other than the two
economic indicators prescribed by the SCM Agreement is mainly based on the consideration that
these criteria reflect the real condition of scanty resources and the slow economic development in the
areas concerned. If the SCM’s index were applied, more regional zones would be eligible for tax
credits.
7. Amount
(a)  For the fiscal year 2000:
NT$1,695,320,000
(b) Statistical data available for the two most recent years:
FY 1999 FY 2000
1,153,290,000 1,695,320,000
8. Duration
The programme was initiated in 1990, and Chapter 2 of the Statute for Upgrading Industries
concerning tax benefits will expire in 2009.
B. LOANS
Loans for Small and Medium Enterprises
1. Specific and urgent financing and loans intended for promoting competitiveness, for
plant site relocation, for working capital n eeded during periods of economic crisis and
recession, and  for recovery plans from damage caused by major natural disasters.
1. Title of the programme
Specific and urgent financing and loans intended  for promoting competitiveness, for plant site
relocation, for working capital needed during periods of economic crisis and recession, and  for
recovery plans from damage caused by major natural disasters.G/SCM/N/71/TPKM
Page 21
2. Period covered by the notification
Fiscal year2000
3. Policy objective and or/purpose
The qualified SMEs which meet the following conditions are entitled to apply for the
financing and loans:
(a) Specific financing is provided for management plans to enhance competitiveness,
expand R&D, prevent environmental contamination, invent new products, and
upgrade product quality, etc.
(b) Urgent financing is provided for the provision of working capital during periods of
significant financial crisis, recession, and major natural disasters.
(c) The loans are provided for helping enterprises restructure during periods of economic
crisis and recession, replace machinery, and purchase new automated equipment.
4. Background and responsible authorities
(a) Laws:-  Statute for Development of Small and Medium Enterprises (Articles 9,15,16,17,18)
- Procedure for Income-Expenditure Safeguarding and Utilization of SME
Development Fund
 - The SME Development Fund was established based on Article 9 of Statute for the
Development of Small and Medium Enterprises.
(b) Responsible authorities:
The responsible authority  is the Ministry of Economic Affairs.
Note: While the SME Development Fund was planned to be NT12 billion, its
accumulated amount reached 9.1 billion as of the end of fiscal year 1997.5. Form
Financing and loan.
6. To whom and how assistance is provided
All enterprises which meet “the Standards for Identifying a Small and Medium-Sized
Enterprise” set by Executive Yuan are eligible for application.
According to “the Standards for Identify ing a Small and Medium-Sized Enterprise,”
published by the Ministry of Economic Affairs, SME refers to an enterprise which is a company or
commercial enterprise registered in accordance with  the law with capital or operating revenue below
the following thresholds:
(a) for enterprises engaged in manufacturing, construction, mining, or excavating
business, paid-in capital of less than NT$80 million.G/SCM/N/71/TPKM
Page 22
(b) for enterprises engaged in agriculture, logging, fishing, the raising of livestock,
utilities, commerce, transport, warehousing, communications, finance, insurance, real
estate, commercial, social or individual services, with annual operating revenue of
less than NT$100 million.
The loan granted is shared by the SME Development Fund and other participating banks on a
25/75 per cent basis.  The ceiling interest rate is 1 per cent above the prime rate of Bank of Taiwan.
7. Amount
Statistics for Specific Programmes: Loaned by the SME Development Fund
       Unit: million NT
Title of Programme FY2000
Specific financing for enhancing competitiveness 667
Loans for helping enterprises restructure and plant site relocation 64
Urgent financing for the provision of working capital during periods of significant
financial crisis, recession0
Urgent financing for major natural  disasters 8
8. Duration
The programmes are not subject to any fixed completion date.
9. Trade effects or related statistical data
Given the fact that in the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu
98 per cent of enterprises can meet the criteria set by the Executive Yuan and be termed as SMEs, it is
difficult to estimate the trade effects of these programmes.
2. Medium and long term loans for product ma rketing, and loans for overseas investment
and construction projects
1. Title of the programme
Medium and long term loans for product marketing, and loans for overseas investment and
construction projects
2. Period covered by the notification
Fiscal year 2000
3. Policy objective and or/purpose
Those programmes are implemented with the purpose of providing SMEs with financial
assistance in exploring new markets for their machinery and equipment, in investing and establishingplants in foreign countries, and in undertaking the overseas contracts for construction projects.
4. Background and responsible authorities
(a) Laws:G/SCM/N/71/TPKM
Page 23
- Statute for Development of Small and Medium Enterprises (Article 9,15,16)
- Procedure for Income-Expenditure, Safeguarding and Utilization of SME
Development Fund
(b) Responsible authority:
The responsible authority is the Ministry of Economic Affairs.
5. Form
Loan
6. To whom and how assistance is provided
(a) All enterprises which meet “the Standards for Identifying a Small and Medium-Sized
Enterprise” set by Executive Yuan are eligible for application.
(b) The approved application for loans are implemented by commercial banks; however,
the capital needed is provided entirely by the SME Development Fund.
7. Amount
Loaned by the SME Development FundFY 2000         NT$205 million
8. Duration of subsidy
The programmes are not subject to any fixed completion date.
9. Trade effects or related statistical data
Given the fact that in the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu
98 per cent of enterprises can meet the criteria set by the Executive Yuan and be termed as SMEs, it is
difficult to estimate the trade effects of these programmes.
3. Specific loans for mutual cooperation
1. Title of the programme
Specific loans for mutual cooperation
2. Period covered by the notification
Fiscal year 2000
3. Policy objective and/or purpose
The programme is implemented to encourage SMEs’ prosperity through their mutual
cooperation.G/SCM/N/71/TPKM
Page 24
4. Background and responsible authority
(a) Law
- Statute for Development of Small and Medium Enterprises (Article 7, 9, 25)
- Procedure for Income-Expenditure, Safeguarding and Utilization of SME
Development Fund
(b) Responsible authority
The responsible authority is the Ministry of Economic Affairs.
5. Form
Loan
6. To whom and how assistance is provided
(a) All enterprises which meet “the Standards for Identifying a Small and Medium-Sized
Enterprise” set by Executive Yuan are eligible for application.
(b) The granted loans are provided by the SME Development Fund and other undertaking
banks on a 50/50 basis. The interest rate is 1 per cent lower than the prime rate of
Bank of Taiwan.
7. Amount
No loan has been granted during fiscal year 2000.
8. Duration
The programme is not subject to any fixed completion date.
9. Trade effects or related statistical data
No data available
Loans for Private Enterprises
4. Loans at lower market interest rates for small and medium enterprises and private
enterprises
1. Title of the programme
Loans at lower market interest rates for small and medium enterprises and private enterprises
2. Period covered by the notification
The year of 2000G/SCM/N/71/TPKM
Page 25
3. Policy objective and/or purpose
The programmes are implemented with the purpose of improving production technology and
product quality, promoting industrial upgrading and achieving environment protection through lower
interest rate loans for the procurement of automation equipment, pollution control facilities, energy-saving facilities and to assist in the upgrading of small and medium enterprises.
4. Background and authority
(a) Laws and regulations:Statute for Upgrading Industries (hereinafter referred to as the “SUI”), Sub-paragraphs(2)(3),
Paragraph 1 of Article 21.
(b) Responsible authorities:- The principle of the loan is made by the Development Fund, Executive Yuan
- The loan is granted by public/private banks
5. Form
Lower interest rate loans: the financial sources of the loans are the Development Fund (25 per
cent) and the bank (75 per cent) for each loan.
6. To whom and how assistance is provided
(a) These lower interest rate loans are available to all enterprises and are not limited to a
specific industry or enterprise.
(b) Different ceilings are set for different types of loan. In addition, only a percentage of
the total procurement amount is eligible for the loan. The amount of the granted loan
is decided by the bank, based on the financial situation of the applicant.
7. Amount
There are no official statistics with respect to the programme.
8. Duration
The projects will be implemented until the expiration of the SUI.
9. Trade effects or related statistical data
(a) Trade effects:The programme is mainly used in promoting industry upgrading, in light of the scope and
nature of the programme, it is not possible to determine what, if any, trade effects which may result
from this programme.
(b) Related statistical data:G/SCM/N/71/TPKM
Page 26
Total amount of loans granted in 2000
   Unit: hundred million NT$
Name of Project Number of granted
casesTotal amount of granted
loans
Loans for the procurement of automation
equipment586 246.50
Loans to assist in the upgrading of small and
medium enterprises1,431 10,365
Loans to private enterprises for the procurement
of pollution control facilities40 19
Loans for the procurement of energy-saving
facilities8 12.35
Loans Provided for the Procurement of Automation Equipment
  Unit: thousand NT
Total
Industry Cases Amount
Machinery 15 93,032
Electronics Information 206 31,744
Precision Machinery 3 110,520
Transport Parts 2 166,203
Metal 40 4,863,168
Chemicals & its Processed Products 14 1,269,244
Petrochemical 0 0
Textiles & Processing 32 3,852,926
Paper & Paper Products 4 402,179
Utility (includes water, electricity and gas) 1 173,970
Wood & Bamboo Products & Furniture 0 0
FOODS 2 239,810Manufacturing
Other Manufacturing 24 3,205,597
Sub Total 343 46,958,087
Transport, Warehousing and Communications 5 806,290
Mining 0 18,650
Construction 3 90,600
Commerce 1 30,000
Industry & Business, Social and Individual Services 4 870,149
Other Industries 3 577,000
Total 359 49,350,776
Note 1: The granted loan is provided by the Development Fund (25 per cent) and the bank (75 per
cent) for each loan.
Note 2: The numbers provided above clearly indicate that funding is granted to all types of industry
and is not limited to a particular type of industry.G/SCM/N/71/TPKM
Page 27
Loans Provided to Private Enterprises for the Procurement of Pollution Control Facilities
 Unit:  thousand NT
Total
Industry Cases Amount
Machinery 1 4,200
Electronics Information 8 17,180
Precision Machinery 0 0
Transport Parts 0 0
Metal 3 149,387
Chemicals and its Processed Products 4 74,082
Petrochemical 3 205,588
Textiles and Processing 12 256,030
Paper & Paper Products 1 154,080
Utility (includes water, electricity and gas) 0 215,000
Wood & Bamboo Products & Furniture 0 0
FOODS 9 485,976Manufacturing
Other Manufacturing 0 0
Sub Total 0
Transport, Warehousing and Communications 0
Mining 0 0
Construction 0 5,400
Commerce 0 0
Industry & Business, Social and Individual Services 0 10,000
Other Industries 0 0
Total 40 1,952,373
Note 1: The granted loan is provided by the Development Fund (25 per cent) and the bank (75 per
cent) for each loan.
Note 2: The numbers provided above clearly indicate that funding is granted to all types of industry
and is not limited to a particular type of industry.
Loans for the Procurement of Energy-Saving Facilities
  Unit: thousand NT
Total
Industry Cases Amount
Machinery 0 0
Electronics Information 0 0
Precision Machinery 0 0
Transport Parts 0 0
Metal 1 1,400
Chemicals and its Processed Products 0 0
Petrochemical 1 10,800
Textiles and Processing 0 0
Paper & Paper Products 0 0
Utility (includes water, electricity and gas) 0 0
Wood & Bamboo Products & Furniture 0 0
FOODS 0 0Manufacturing
Other Manufacturing 0 0
Sub Total 2 12,200G/SCM/N/71/TPKM
Page 28
Total
Industry Cases Amount
Transport, Warehousing and Communications 5 721,801
Mining 0 0
Construction 0 0
Commerce 0 0
Industry & Business, Social and Individual Services 0 0
Other Industries 0 0
Total 7 73,400
Note 1: The granted loan is provided by the Development Fund (25 per cent) and the bank (75 per
cent) for each loan.
Note 2: The numbers provided above clearly indicate that funding is granted to all types of industry
and is not limited to a particular type of industry.
C. DUTY AND  TAX  EXEMPTIONS  GRANTED  TO ENTERPRISES  LOCATED  WITHIN  A
DESIGNATED  ZONE
1. Duty and tax exemptions for high-technology industries
1. Title of the programme
Duty and tax exemptions for high-technology industries
2. Period covered by the notification
Fiscal year 1998-2000
3. Policy objective and/or purpose
This programme is implemented with a view to stimulate the research and innovation of
industrial technology and to promote the development of advanced technology industries in the
Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu. The “Science-Based Industrial
Park”(“the Park”) has been established by introducing the sophisticated industries and personnel withadvanced technological background within a designated zone.
4. Background and the responsible authorities
(a) Law and regulation:- Statute for the Establishment and Administration of a Science-Based Industrial Park
(Articles 18 and 20);
- Implementing Regulation of Statute for the Establishment and Administration of a
Science-Based Industrial Park
(b) Responsible authorities:- The Park is managed by the Park Administration;
- The policy-making body is the National Science Council of the Executive Yuan.G/SCM/N/71/TPKM
Page 29
5. Form
The subsidy programme will be implemented in the form of duty and tax exemptions.
6. To whom and how assistance is provided
(a) Effective from 1 January 2000, the merged Park entities in accordance with domestic
Company Law or surviving or new Park entities after mergers shall succeed the tax
benefits, which are not yet terminated nor fully offset, originally enjoyed by the
dissolving science-based industry before mergers.  As for succeeding the exemption
of profit-seeking income tax as investment incentives from the dissolving Parkentities, the surviving Park entities in the scope of science-based industries under the
merger/consolidation projects shall continue to produce identical products produced
or identical services provided by the dissolving Park entities and such tax benefits
shall apply only to the portion of income derived from products or services
independently produced or provided by the original dissolving Park entities.  If thetax benefits are provided in the manner of investment offset or deduction, such tax
benefits shall apply only to the payable tax portion of the surviving or new Park
entities after mergers of the dissolving science-based industries.
(b) All park enterprises are entitled to the following exemptions:
(i) Customs duties, commodity tax, and business tax on imported machinery and
equipment, raw materials, commodities, fuel, and semi-finished products; and
(ii) Commodity tax and business tax on exported goods or labour services.
Note 1:  Park enterprises include high-tech industries and other enterprises in the Park
relevant to the production and sale of high-tech products. Such enterprises may include businesses
dealing with managerial or technological consultation and services.  Except the above park
enterprises, research institute or innovation incubator center may apply for the establishment in the
park.
Note 2:  According to Section 2, Paragraph 1, Article 3 of the Commodity Tax Statute and
Article 7 of the Business Tax Statute, exports can be exempt from commodity tax, and the business
tax rate on exported goods is zero. These tax treatments are not specific to enterprises located in the
Park, as they are generally available for exported goods, regardless of whether the manufacturers are
located in the Park.
7. Amount
1999-2000 Corporate Income Tax Exemption for
Imported Machinery and Equipment
Unit: USD 1 million
Year Import Value for M&E Amount of Import Duty
ExemptionAmount of Business
Tax Exemption
1999 3,572 267 178
2000 7,240 506 362G/SCM/N/71/TPKM
Page 30
Note:  The amount of import duty exemption for various tariff lines other than machinery and
equipment is not available because of the lack of statistics for imports into the Park by tariff line.
Since the duty rate applied against each tariff line differs, we can not calculate the exempted duty
amount for all the imports into the Park unless we have the import statistics of the Park by tariff line.
1999-2000 Business Tax Exemption for All Imports
         Unit: USD 1 million
Year Total Import Value Total Amount of Business
Tax Exemption
1999 11,186 559
2000 14,961 748
Note: Exchange rate in 1999: USD1.00=NT$30.36
  2000: USD1.00=NT$31.28
8. Duration
There is no time limit attached to the programme.
9. Trade effects or related statistical data
1999 2000
Number of approved park enterprises 28 26
Total import value
(million NT)339,627 467,994
Total export value
(million NT)355,421 500,481
In light of the scope and nature of the programmes granted, it is not possible to determine
what, if any, trade effects which may result from this subsidy programme.
2. Duty and tax exemptions for in-zone enterprises
1. Title of the programme
Duty and tax exemptions for in-zone enterprises
2. Period covered by the notification
Calendar year 1998-2000.
3. Policy objective and/or purpose
Economic processing zones have been established for the purpose of promoting investment
and international trade.
4. Background and responsible authorities
 (a) Laws:G/SCM/N/71/TPKM
Page 31
- Statute for Establishment and Administration of Economic Processing Zones (the
EPZ Law)( Article 1,5,13)
- Measures for the Screening of Application for Establishment of Enterprises in
Economic Processing Zones
- Categories of Industry Permissible to be established in Economic Processing Zones(b) Responsible authorities- Economic processing zones are managed by the Economic Processing Zone
Administration.
- The policy-making body is the Ministry of Economic Affairs.- The task of reviewing the eligibility of enterprises established in economic processing
zones shall be undertaken by the Economic Processing Zone Administration togetherwith the other government agencies involved.
Note: In-zone enterprises include industries authorized to be engaged in manufacture, processing,
assembly, research and development, trade, consultation, technical services, warehousing,
transportation, stevedoring, packing, repair, and other related business approved by the Ministry ofEconomic Affairs in economic processing zones.
5. Form
Duty and tax exemptions
6. To whom and how assistance is provided
All in-zone enterprises industries are en titled to the following exemptions:
(a) Import duty, commodity tax, and business tax on imported machinery and equipment.
(b) Import duty, commodity tax, and business tax on imported raw and consumption
materials, fuels, semi-finished products, samples, and finished products for
transhipment by traders and warehousing operators.
(c) Deed tax when acquiring a new standard plant building in the economic processing
zone or acquiring a building from the Economic Processing Zone Administration.
It should be noted that all machinery and equipment within five years after import and other
imported goods are not entitled to duty and tax exemptions when they are shipped to leviable areas
from economic processing zones. Moreover, products manufactured by in-zone enterprises shall besubject to customs duties, commodity taxes, and business taxes when they are shipped to leviable
areas. While customs duties would be applied on the basis of ex-factory prices minus value added
resulting from manufacturing or processing activities in the EPZs, other taxes would be based on the
ex-factory price.G/SCM/N/71/TPKM
Page 32
7. Amount
Percentage of EPZ Payable Tax to Export Value
Unit: thousand USD
Item↓                                    Year → 1998 1999 2000
Imported Machinery Equipment 508,770 609,144 1,427,425
Imported Machinery Equipment
Custom Duty12,719 15,229 35,686
Export Value Total 7,332,904 7,075,240 8,704,822
Percentage 0.17% 0.21% 0.41%
Average Percentage 0.26%
Export and Import Value Total 12,501,929 12,308,184 15,548,021
Percentage 0.10% 0.12% 0.23%
Average Percentage 0.15%
Item↓                                  Year → 1998 1999 2000
Raw Material 4,660,255 4,623,800 5,415,774
Raw Material Custom Duty 58,253 57,798 67,156
Export Value Total 7,332,904 7,075,240 8,704,822
PERCENTAGE 0.79% 0.81% 0.77%
Average Percentage 0.79%
Export and Import Value Total 12,501,929 12,308,184 15,548,021
Percentage 0.46% 0.46% 0.43%
Average Percentage 0.45%
8. Duration
There is no time limit attached to the programme.
9. Trade effects or related statistical data
1998 1999 2000
Number of approved in-zone enterprises 229 239 260
Total import value
(million US dollar)5,169 5,233 6,843
Total export value
(million US dollar)7,333 7,075 8,705
In light of the scope and nature of the programmes granted, it is not possible to determine
what, if any, trade effects may result from this subsidy programme.
IV. RESEARCH AND DEVELOPMENT
A. FUNDS GRANTED FOR DEVELOPMENT OF PRODUCTS OF THE TEN NEW LEADING INDUSTRIES
1. Title of the programme
Funds granted for development of products of the ten new leading industries.G/SCM/N/71/TPKM
Page 33
2. Period covered by the notification
The fiscal year 2000 (July 1999 to Dec 2000)
3. Policy objective and/or purpose
In order to encourage research and development of new leading products and upgrade the
technical capability of new leading industries, the programme grants funds for private enterprises.
4. Background and authority
(a) Laws and regulations:Measures for Assistance in the Development of New Leading Products, is promulgated on
26 April 1991, and is amended on 30 June 1995.
(b) Responsible authority:The Industrial Development Bureau, Ministry of Economic Affairs
5. Form
Grant and interest-free loan
6. To whom and how assistance is provided
(a) Any company incorporated under the Company Law with sound financial standing,
possessing a research and development department with sufficient R&D specialists in
the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, which have
actually made R&D achievements, may apply for the assistance fund relating to the
development of a product within the scope of one of the ten (10) newly emerging
industries, i.e., communication, information, consumer electronics, aerospace,
medical and health care, pollution control, advanced materials, semi-conductors,
specialty chemicals and pharmaceuticals, and precision machinery and automation.The ten new leading industries were selected based on six selection criteria:
1. Great market potential
2. High linkage with other industries
3. High added value4. Advanced technical level
5. Low pollution
6. Less dependence on energy supply
(b) In light of the broad nature of the industries, it is not possible to list the specific
products covered by the ten new leading industries. However, the general scope of
each industry is provided in Attachment I.
(c) The assistance funds granted total no more than fifty percent (50 per cent) of the
amount of the following expenses incurred exclusively for the development of newleading products:
1. Personnel costs incurred for full-time and/or part-time research personnel;
2. Costs of consumable instruments and raw materials;G/SCM/N/71/TPKM
Page 34
3. Costs for use and maintenance of R&D equipment;
4. Costs for technology transfer; and
5. Domestic and overseas travel expenses.
(d) In 1995,the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu
amended the “Measures for Assistance in the Development of New Leading
Products”. The amended Article 10 provides that: “the total amount of assistance and
matching funds to be allocated to a leading product development plan shall be limited
to no more than 50 per cent of the total amount of the budgeted development costs.”
While the assistance fund may be defined as a grant, the matching fund is an interest-
fee loan, whose repayment must be started upon the first anniversary of the
completion of R&D. In addition to the repayment term (two to five years) for thematching fund, a private enterprise receiving the matching fund must, starting from
the sale of the funded product, pay a quarterly feed-back fee, in an amount ranging
from 1 per cent to 4 per cent of the sales amount of such product. The total amount of
the budgeted development costs should be expended exclusively on the following
items:
1. Personnel costs for research personnel, technical personnel and other
assistants employed exclusively for performing research work;
2. Costs of instruments, equipment, land and buildings exclusively and
permanently used for research activities except those used for commercialbasis;
3. Costs of consultation solely for the purpose of research activities and the
same services, including expenditures for purchase of research results,
technical know-how, patents, etc.;
4. Indirect costs arising directly from research activities; and
5. Running expenses for materials, supplies and similar expenditures arising
directly from research activities.
7. Amount
(a) Since the programme's inception, the accumulated grant is NT$7,330,331,560 as at
the end of fiscal year 2000(fiscal years 1992-2000) and the accumulated interest-freeloan is NT$7,549,083,090.
(b) For fiscal year 2000: NT$973,865,000** of grant and interest free loan respectively.
A breakdown of the products involved is as follows:
Unit: thousand NT
Name of Project (or Sector) Grant Interest-free loan
Precision machinery and automation 257,790 257,790
Communication 219,530 219,530
Information 126,300 126,300
Consumer electronics 112,590 112,590
Aerospace 10,540 10,540
Medical and health care 14,150 14,150
Pollution control 0 0
Advanced materials 93,000 93,000
Semi-conductors 20,990 20,990
Specialty chemicals and pharmaceuticals 118,975 118,975
Total 973,865 973,865G/SCM/N/71/TPKM
Page 35
Note:
*In addition to the repayment of the interest-free loan, a manufacturer who receives assistance
from the Programme is also required to pay a feedback contribution in an amount equal to 1 per centto 4 per cent of its sales derived from the sale of the newly developed products.
**The average yearly exchange in 2000 is USD1=NT$34
8. Duration
There is no time limit attached to the programme.
9. Trade effects or related statistical data
It is not possible to determine what, if any, trade effects may result from this subsidy
programme.G/SCM/N/71/TPKM
Page 36
ATTACHMENT I
1. Communications Industry
General Scope:
Wired CPE
Customer Premises Equipment (CPE)
Wireless CPE
Products
Switching Equipment
Network Equipment
Transmission Equipment
Precision parts and componentsCommunications
IndustryG/SCM/N/71/TPKM
Page 372. Information Industry
General Scope:
Information software manufacturers
Software Packages
Professional services
Network services
Transmission systems
System integrationThree dimensional virtual simulation equipmnet
(3D/VR)Computer system manufacturing
Peripheral equipment manufacturing
Important precision parts & componentsmanufacturing
Information hardware manufacturers
Information software manufacturers
Software Packages
Professional services
Network services
Transmission systems
System integrationTerminal equipment
Input devices
Storage devices
Output devices
Three dimensional virtual simulation equipmnet(3D/VR)InformationIndustryG/SCM/N/71/TPKM
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3. Consumer Electronics Industry
General Scope:
Consumer Electronic Industry
Audio products
Video products
Other consumptive products
Important Precision Parts & ComponentsG/SCM/N/71/TPKM
Page 394. Semiconductors Industry
General Scope:
Semiconductors Industry
Semiconductor manufacturing industry
Wafer
Integrated circuit
Transistor
Diode
Important precision parts and components
Semiconductor material industry
Si Silicon GaP gallium phosphide GaN gallium nitride
GaAs gallium arsenide GaSb gallium stibnide ZnS zinc sulfide
InP indium phosphide InAs Indium arse nide AIGalnP Aluminum gallium indiu m
phophide
Semiconductor service industryG/SCM/N/71/TPKM
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5. Precision Machinery and Automation Industry
General Scope:
Flexible manufacturing cell (FMC), flexible manufacturing syst em (FMS), computer integrated manufacturing system (CIM)
Automatic industrial machinery
Automation parts
Industrial controller
Precision inspection
Automatic engineering service
Precision power
Co-generation equipment’s
Electrical power equipment manufacturing and system designG/SCM/N/71/TPKM
Page 416. Aerospace Industry
General Scope:
Aviation
Aerospace Industry
SpaceComplete aircraft products
(civilian aircraft, military aircraft)
Engine and parts components
Maintenance and ground support equipment
Flight control and airport information system
Training
Launch systems
Satellites (communication, meteorology, remote sensing)
Ground receiving system (radio signal, TV receiving equipment)
System equipment (communication, control, power system)
Experimental equipment (weightless condition, crystal growth)G/SCM/N/71/TPKM
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7. Advanced Materials Industry
General Scope:
Advanced
materials industry
High performance composite materials
Special alloy steels
Precision ceramics
Engineering plastics
High grade fibre materialsG/SCM/N/71/TPKM
Page 438. Specialty Chemicals and Pharmaceuticals Industry
General Scope:
Specialty Chemicals Industry
Specialty Chemicals and
Pharmaceuticals Industry
Pharmaceuticals IndustryLiquid dye,
Polymeric Surfactant
Bio-tech products
Catalysts
Silicon Compounds
Performance chemicals
High-value added key intermediates
Agricultural pesticides
Controlled-release medicines,
Scientific Chinese herbal medicines
Novel/New drugs
Bulk pharmaceuticalsG/SCM/N/71/TPKM
Page 44
9. Medical and Health Care Industry
General Scope:
Medical and Health Care Industry
Diagnostic equipment
Clinical test agent
Biomedical material and elementautomatic clinical analyzers
biomedical testing reagents
hard tissues, soft tissues, liquid tissues,
artificial organs, blood contact tubes, band
elements,G/SCM/N/71/TPKM
Page 4510. Pollution Control and Treatment Industry
General Scope:
Pollution control equipment
Pollution Control and Treatment
Industry
Environmental technical & engineering services
Waste TreatmentDetection
Waste reduction
Treatment agent
Environmental engineeringevaluation
Engineering technique
Engineering Planning and design
Construction, installation and test running
Engineering administration and supervising
Waste recovery plantG/SCM/N/71/TPKM
Page 46
ATTACHMENT II
1 Communications industry
2 Information industry
3 Consumer electronics industry
4 Semiconductors industry
5 Precision machinery and automation industry
6 Aerospace industry
7 Advanced materials industry
8 Specialty chemicals and pharmaceuticals industry
9 Medical and health care industry
10 Pollution control and treatment industry
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