Fixed investment in Taiwan passed the NT$6 trillion (US$197 billion) mark for the first time in 2022, up more than 6 percent from a year earlier, with semiconductor suppliers keen to expand production and upgrade technologies and firms rushing to invest in 5G applications, according to the Ministry of Economic Affairs (MOEA).
MOEA said the increase in fixed investments also reflected moves by Taiwanese investors which have operations overseas to invest in Taiwan amid escalating tensions between the United States and China.
Data compiled by MOEA's Department of Statistics showed the country's fixed investments, referring to the accumulation of physical assets such as machinery, land, buildings, installations, vehicles, or technologies, totaled NT$6.27 trillion in 2022, up 6.2 percent from a year earlier after being adjusted for inflation.
From 2018-2022, fixed investment in Taiwan grew at a compound annual growth rate (CAGR) of 8.2 percent, well beyond the CAGR of 3.3 percent from 2013-2017, MOEA said.
In 2022, fixed investments accounted for 27.6 percent of Taiwan's gross domestic product, up from 26.1 percent in 2021. With investment in Taiwan on the rise, the ratio was the highest since 1994, MOEA said.
Taiwan's fixed investments made up 21.8-27.6 percent of the country's GDP from 2018-2022, compared with 21.1-22.7 percent from 2013-2017, with the higher ratio over the past five years, indicating fixed investment served as a driver to local economic growth, the ministry said.
In 2022, MOEA data showed, semiconductor suppliers poured about US$36.3 billion into production equipment imports, up 13.1 percent from a year earlier. In addition, the US$36.3 billion accounted for 48.3 percent, the highest ever of Taiwan's total capital equipment imports worth US$75.3 billion in 2022, indicating tech companies are keen to expand production and upgrade technology.
MOEA said the private sector served as the major source of fixed investment in Taiwan, adding that since 2014, private companies have accounted for more than 80 percent of Taiwan's fixed investments.
From 2021-2022, the private sector accounted for 84.6 percent of total investment in the wake of an increase in investments by the semiconductor industry, while the public sector accounted for just 15.4 percent in 2022, MOEA said.
The manufacturing sector was the largest fixed asset investor in Taiwan with fixed investments hitting NT$2.77 trillion in 2021, up 25.7 percent from a year earlier, marking the third consecutive annual record high, while the manufacturing sector made up 48.8 percent of the country's total fixed investments in 2021, up 5 percentage points from 2017, according to the ministry.
Looking ahead, MOEA said as the global economy faces uncertainty, it is possible enterprises in Taiwan could scale back their investments in 2023.
Source: Focus Taiwan