Challenge 2008
The Six-year National Development Plan

The government of the Republic of China has formulated the "Challenge 2008" comprehensive six-year national development plan as the latest effort to foster the creativity and talent Taiwan needs to transform itself into a "green silicon island."

Premier Yu Shyi-kun said that the development projects cover wide-ranging areas focusing on economic growth and environmental protection. Internationally, Taiwan faces technological challenges and a loss of investment and skilled managers to the Chinese mainland. Thus, the Executive Yuan has formulated three major reforms and four major investments in the national development plan.

The three major reforms include government, banking, and finance. The four major investments include cultivating talent; research, development, and innovation; international logistics; and a high-quality living environment.

The six-year national development plan will cost an estimated NT$2.6 trillion (approximately US$75 billion) and will have the following results: (1) expanding the number of products and technologies which meet the world's highest standard to 15; (2) doubling the number of foreign visitors; (3) increasing R&D expenditures to 3 percent of the GDP; (4) reducing the average unemployment rate of the next 6 years to less than 4 percent; (5) increasing the average economic growth rate of the next 6 years to over 5 percent; (6) increasing the number of broadband internet users to over 6 million; and (7) creating approximately 700,000 jobs.

The highlights of the ten major areas of emphasis are as follows:

1. Cultivate Talent for the E-generation

The first project of the 6-year national development plan is the cultivation of talent for the e-generation, since manpower is the basis of all development. To meet the future challenges of globalization and internationalization, the ROC should first enhance the abilities of its people. Concurrently, the government will establish an environment for internationalizing learning.

This project emphasizes the ability to master foreign languages, especially English, and the use of Internet. Since English is the language that links the world, the government should designate English as a quasi-official language and actively expand the use of English as a part of daily life.

In addition, physical health and culture is the foundation for the next generation of society. Therefore, education in culture, art, sports, and civility is an important goal for the new government. Since it is necessary for the entire society to enter the new era with the e-generation, we must make concerted efforts to establish a comprehensive life-long learning system, promote voluntary social services, and integrate learning resources, including those in the civil service system, to immerse ourselves in cultural, social transformation, and reconstruction.

2. Develop the Cultural Creativity Industry

Taiwan's economy has entered a new phase of industrialization, and the existing production model of large-scale manufacturing has gradually lost its competitive advantage. In addition to high-tech development, Taiwan must build a more flexible productive organization system to increase the competitiveness of the knowledge-based economy. In fact, the value-added model of the knowledge-based economy should be the core of innovative design in production, especially artistic and esthetic creation, which has been ignored during the past.

This plan includes the following:

1. Cultural arts industry: fine arts, such as performing arts (music, drama, and dance), visual arts (painting, sculpture, public art), and traditional folk arts.

2. Design industry: Application of cultural arts, such as popular music, costume designing, layout design, imaging and broadcasting production, and game software design.

3. Peripheral industries: The relevant sectors that support the above industries, such as management of exhibition facilities, professional exhibitions, agency, program planning, publishing, advertising planning, and pop culture packaging.

The strengths of these industries include diversity, miniaturization, and dispersion. However, their personnel and productive values enhance the quality of life and the environment. All advanced countries, such as Northern Europe, Great Britain, and Japan, have promoted these industries.

This plan mainly focuses on integration of resources form various sectors of society to promote the cultural art industries, such as cultivating talent, R&D, supplying facilities and financial support, marketing publicity, and reducing taxes. The goal is to double the employment and triple the production value, while building Taiwan's cultural creativity in the Chinese world.

4. Develop an International Base for Research, Development, and Innovation

The government will encourage national R&D expenditures to reach 3 percent of the GDP in 6 years, making Taiwan the ideal Asian base for research, development, and innovation.

The government will adopt vigorous measures to encourage businesses and the academics to increase research, development, and innovation, while introducing research and development (R&D) resources from overseas. This will help Taiwan develop its own R&D community, foster innovative high-tech industries, and eventually promote Taiwan as the regional R&D headquarters for domestic businesses and multi-national corporations. The government will ensure that businesses receive sufficient technological support for globalization strategies and high value-added production.

To effectively develop Taiwan into Asia's ideal R&D base, the government will fully support supply, demand, and environmental policies. Furthermore, to ensure that businesses from the Internet, manufacturing, and technology service sectors obtain sufficient research funding, the government will allocate NT$50 billion (US$1.44 billion) in low-interest loans to R&D activities. Taiwan's total expenditure on R&D will increase from the current 2.05 percent of the GDP to 3 percent in 6 years, thus reaching the standards of most advanced nations.

In view of the shortage of science and technology professionals, the government will recruit international R&D personnel with such incentives as a better environment and intensive promotion activities. It will also integrate resources of the industrial, government, and the academic sectors to satisfy the needs of interdisciplinary professionals in a knowledge-based economy.

The increased application of semiconductors and demand for digital content has resulted in rapid product innovation, requiring constant acquisition of state-of-the-art knowledge by high-tech professionals. The government understands the need for industrial academies for professionals of all levels in key industries. It will establish an IC design academy and a digital content academy, providing training programs for short-, mid-, and long-term business needs.

The government will also encourage domestic and international businesses and research institutes to establish industrial research centers in Taiwan. Projects in progress include a genome research center at Academia Sinica, a software design center at the Nankang Software Park, a mobile communications-engineering center at the Chung-shan Institute of Science and Technology, and a research center for the application of nanotechology at the Industrial Technology Research Institute (ITRI) in Hsinchu. By introducing professionals, technology, resources, and systems as the foundations for Taiwan's manufacturing industry, businesses will be able to maintain the highest technology standards and increase international competitiveness.

Concurrently, the government will promote science and technology development plans on the national level, as well as special research programs to develop core technologies for key industries, including biotechnology, nanotechnology, system-on-chip (SoC) design, and telecommunications. With advances in core technologies and R&D capabilities, Taiwan will become the ideal R&D base in Asia.

5. Increase Value-added Production

Manufacturing is the most internationally competitive aspect of our industries; however, since all nations have been actively conducting R&D to produce and market their products internationally in recent years, we face competition from cheap labor in Southeast Asia and the Chinese mainland. Our industries must develop high value-added products to survive. The move to higher value-added production will transform Taiwan into a global center of R&D and a production and supply base for high value-added products.

In order to achieve this goal, our government will proceed in five directions: raising venture capital funds, assisting industries to develop core technologies, promoting key industries, encouraging businesses to invest in international marketing channels and promoting local brands development, and constructing industrial parks.

The government and the private sector will jointly raise venture capital funds for the new industries, with a goal of establishing 50 funds totaling NT$100 billion for well-managed companies. The Development Fund of Executive Yuan will invest up to 30 percent of fund, with the rest coming from the private sector.

The government will set up the development direction of the core industrial technologies, strengthen the innovation and research ability of the research institutes under the Ministry of Economic Affairs, and urge the industries to establish R&D alliances. Through a systematic choice of technologies as the strategic guideline, the government will concentrate R&D resources on the key areas so we can promote our prominent status in innovation.

Other goals include: strengthening R&D institutes and the innovation, research, and development of new products; registering patents for inventions; obtaining pivotal technologies; and nurturing leading, innovative industries.

The key industries include (1) high value-added traditional industries, such as high-tech textile, organic and health foods, high-grade materials, chemical products for optoelectrical applications, light metals, high-efficiency electrically powered automobiles, and sports and leisure industries; (2) high output value industries, such as semiconductors, color-image displays, digital content, and biotechnology; (3) four service industries: R&D, information applications, logistics, and care-providing services; and (4) green industries that classify, recycle, and reuse resources.

The government will provide competitive preferential measures, which include: assisting international marketing companies, developing international marketing channels for local businesses, promoting production and marketing cooperation between local and international businesses, internationalizing local brands, and building the Nankang Exhibition Hall.

The government will provide bases for industrial development, which include the Hsinchu Biomedical Park, the Hsinchu IC Design Park, the Central Taiwan Science-based Park, the Flora Biotechnology Park, the Tainan Science-based Industrial Park, the Agriculture Biotechnology Park, the Recycle Technology Park, and the Nankang Biotechnology Park.

6. Double the Number of Tourists Visiting Taiwan

The plan envisions doubling the number of foreign tourists to over five million within the next six years. Tourism, which has been called the industry without smoke, is one of the most dynamic industries in the world, just as are the sci-tech industries in the 21st century. The industry certainly creates job opportunities and earns large sums of foreign exchange. Today, every country in the world is working hard to explore resources and to promote tourism.

According to the WTGC, it is estimated that over the next ten years demand in the sector could increase with the world's travel-related expenditures growing to US$8.61 trillion from US$4.21 trillion. Tourism's share of the world's GDP will increase to 3.8 percent from 3.6 percent, and employees in the tourism sector will increase to 250 million from 198 million. Obviously, tourism would play an important role in the development of the global economy.

The special geographic position and the diversified human and natural resources of Taiwan has great potential to increase Taiwan's tourist industry as a major area of support for the domestic economy, which offers sustainable development of Taiwan into an "island of tourism."

In order to double the number of tourists interdepartmental efforts must be centralized to improve the domestic environment to meet international standard, thus attracting local and overseas tourists. Additional international tourists will help solve low season problems and balance the healthy growth of the domestic market.

Basic target: The present number of persons visiting Taiwan for tourism each year is one million, and the target is two million.

Target to attain: In order to increase the number of foreign visitors to five million, necessary breakthroughs include, discovering areas in Taiwan with tourist potential; establishing a mechanism which provides incentives for holding international meetings, conventions, and exhibitions in Taiwan; unifying interdepartmental efforts to promote international tourism; and coordinating with the private sector in advertising and promotion.

In view of the target for doubling the number of international tourists in the next six years, it is expected that international tourists will fill the shortfall of tourists especially during the industry's low season.

The competitiveness of the tourism industry relies on innovations to develop, grow, and attract visitors. From now on, the industry will focus on "client-orientation" and "target management" to implement the plan, thus providing indicators to review and evaluate the progress and achievements of the plan. In order to achieve the target of doubling the number of tourists, the options provided include, the existing travel packages, newly developed travel packages, development of new scenic areas, a tourist service network, international marketing, and the enhancement of MICE (meetings, incentives, conventions, and exhibitions) in Taiwan.

7. Develop a Digital Taiwan

At the end of the 20th century, the rapid advances of such infrastructure sciences as electronics, information, and telecommunications successfully promoted the development of several new industries, including semiconductors and the 3C industries (consumer electronics, communications, and computers), helping to re-shape traditional industries. This technological revolution has exerted a revolutionary impact on economy, society, and culture.

At present, the global economic recession and the transfer of its manufacturing industries to the Chinese mainland have seriously affected Taiwan. Taking advantage of information technology to strengthen research, apply and renovate relevant technologies, upgrade industrial development, and ultimately promote a digital Taiwan has thus become an important and pressing matter for Taiwan.

The plan to develop a digital Taiwan applies information and communication technologies to quickly develop Taiwan into a new knowledge-based economy, upgrade the competitive advantages of local industries, establish a highly efficient government, and promote a high-quality information society. The ultimate goal is to transform Taiwan into the most e-nation in Asia.

The plan includes infrastructure, industrial development, application, and demand. The most important aspect of infrastructure development is to establish an information and communication environment for installing broadband Internet in every household. It is expected that six million households in Taiwan will enjoy the convenience of broadband Internet by 2008. The main point of industrial development is to actively assist the development of the new digital industry in Taiwan. The major effort in application and demand will promote the use of the Internet in government, business, and society to expand local market demand and upgrade relevant industries. This plan will transform Taiwan into a high-tech service island.

The plan to develop a digital Taiwan will take advantage of information and communication technologies to achieve a highly efficient government, upgrade the competitiveness of local industries, and establish an information society. With the application of these scientific technologies, government re-engineering can be carried out more smoothly to improve the quality of services and strengthen national competitiveness. Once an e-government is achieved, people will be able to enjoy the benefit of accessing the convenient, safe, and stable world of the Internet.

8. Develop Taiwan as an Operations Headquarters

The goal of this plan is to invest in the local infrastructure to transform Taiwan into the ideal location for Taiwan businesses and multi-national corporations to establish regional operations headquarters. This project will improve Taiwan's business environment through effective regulations and improved facilities.

Measures for implementing the project include:

A. Integrating land, sea, and air transport to meet the demands of intermodal transportation. This includes improving the links between Kaohsiung Harbor and Kaohsiung Airport and building the Taipei Harbor, Taoyuan Air Cargo Transport Park, and an international airport in central Taiwan;

B. Simplifying various customs documents and procedures. The use of electronic trade documentation will reduce the ratio of the cost of trade documents to trade costs from 7 percent to 5 percent, or NT5.7 billion annually;

C. Assisting businesses to establish e-commerce systems to strengthen the management of supply chain;

D. Encouraging Taiwan businesses to conduct R&D, design, and sales within Taiwan through a comprehensive set of preferential tax treatments; and

E. Establishing a free trade shipping zone to promote the free and rapid flow of goods and facilitate business activities.

By 2011, about 1,000 corporations will have established operations headquarters in Taiwan, providing 200,000 job opportunities.

9. Improve the Transportation Infrastructure

In response to changes in the domestic environment, the Ministry of Transportation and Communications (MOTC) formulated a set of highway and railway construction plans to ensure Taiwan's sustainable development despite its limited resources. These plans are designed to provide safe, comfortable, and convenient transport services to the people on Taiwan as well as the rapid flow of commodities for the industrial sector.

The High-speed Railway is under construction along Taiwan's west coast. Once completed, it will reduce travel time between northern and southern Taiwan, and contribute to balanced regional economic development. The MOTC is also drawing up plans for an efficient railway and highway system connecting each of the high-speed rail stations to the surrounding area.

Since the High-speed Railway will become the primary long-distance service when it is completed in 2005, the current railway system will be transformed to provide regional transport for daily commuters and short-distance travelers. In addition to alleviating urban traffic congestion, it will provide a high-quality, seamless transport system connected to the High-speed Railway and metropolitan mass rapid transit systems.

Taipei's mass rapid transit network is partially completed, with a few routes still under construction and a number of extension routes planned. A similar system is being built to serve the Kaohsiung metropolitan area. These systems reduce urban traffic and air pollution, while providing comfortable, safe, convenient, and punctual transport.

For Taiwan's east coast, the railway improvement plan will enhance economic prosperity with shorter and faster inter-city transport services. This will subsequently stimulate industrial and economic development in Ilan, Hualien, and Taitung.

Also under construction or planning are the Second Freeway for central and southern Taiwan, the expansion of the Sun Yat-sen Freeway, the western coastal expressway, and the eastern expressways. Other plans include establishing an efficient freeway interchange system as well as improving the freeway and expressway management system.

Once Taiwan's integrated transport system is completed, inter-city travel on the west coast will be reduced to less than an hour, urban centers will be only 30 minutes' drive from satellite townships, and more people will be taking one-day trips between northern and southern Taiwan. The interconnected transportation and distribution network will better serve the industrial sector and the general public, bringing Taiwan much closer to the objective of becoming a global logistics center.

10. Conserve Water Resources and the Ecology

With a total area of 36,000 sq. km, Taiwan has 17,000 sq. km of high mountains covered by forests; 9,000 sq. km of alluvial plains where most people dwell and work; nearly 10,000 hectares of foothills as a transition zone between human habitation and primeval nature. Furthermore, Taiwan has 1,500 km of beautiful shorelines and the adjacent wetland, with more than 130 rivers, bringing vitality between sea and land.

However, Taiwan faces natural disasters, such as earthquakes, tropical torrential rainstorms, and typhoons. Rivers are short and steep, and the tremendous water flows of torrential rains weaken riverbanks. Floods carrying large amount of sand and mud often cause disasters.

The mean annual rainfall in the Taiwan area is 2,500 mm, above world mean, but the distribution of rainfall is uneven, with seventy-eight percent falling between May and October. Nearly eighty percent of the more than 90 billion cubic meters of rainfall each year flows into the sea or evaporates. Available water from rivers is only 18 percent of the total rainfall.

With the global climate changes, northeast and southeast Asia is becoming drier, so retaining, allocating, and conserving water resources to meet the reasonable demands of people, industries, and agriculture are major challenges. Moreover, Taiwan is densely populated and highly industrialized. The total water available is only one seventh of world average. Consequently, Taiwan faces water shortages.

Measures to conserve water resources include intercepting rivers; dredging reservoirs to increase storage capacity; and desalinizing seawater. Furthermore, a reasonable water price and a drought season water price increase are being introduced to raise the efficiency of water management and therefore encourage water conservation.

        Pursuing rapid economic growth has had many negative impacts on our land. The massive exploitation of slope land, land reclamation, and excessive logging of mountain areas have resulted in mudslides, floods, and erosion of riverbanks and seacoasts.

To revitalize the land, we must rehabilitate forest, slope land, riverbanks, and seacoasts; properly treat sewage; and effectively conserve water resources. Through comprehensive land use planning, we will rehabilitate and reform the urban landscape to revive Taiwan's natural beauty, thus establishing a model environment for sub-tropical countries.

11. Construct New Hometown Communities

To retain talent, it is necessary to first provide a high-quality living environment, including facilities, cultural traditions, citizen participation, and community concern. The "new hometown and new tribe movements" integrate community development, through self-reliance, community pride, common recreation, and consistent goals. By pooling common beliefs of residents and integrating cultural traditions, communities can develop local attractions, offer various employment opportunities, cultivate local identification, and establish self-support care systems based on local conditions and characteristics.

This comprehensive plan relies on small units, including villages, tribes, and small towns, and emphasizes voluntary resident participation with professional guidance and government financial support to rebuild local communities in Taiwan.

Based on local and foreign experience this plan promotes Taiwan's overall transformation, including social relations, culture, arts, facilities, and the economy to provide new employment opportunities, improve living conditions, and revive local communities.