With an export-oriented economy, the island is exploring more trade opportunities in the economies in which the EBRD invests.
Due to its rapid industrialisation and economic growth the island is one of the first newly industrialised economies in eastern Asia and is referred to as the “Economic Miracle”. In the last three decades the island’s exports have substantially grown due to industrial development and domestic companies having cooperated actively with their trade partners from all over the world to keep the momentum.
The island was the 17th largest trading economy in terms of merchandise trade value in 2011. The export structure has become much more diversified and the share of high-added-value products has increased.
Being famous for its hi-tech industry, the island is one of the world’s largest producers of information and communications technology (ICT) goods. There are now many world-famous household brands: HTC, a leading producer of smartphones, is one of its success stories in the global market. The world’s top technology brands, such as Acer, ASUS and GIGABYTE are also domestic products.
Besides the ICT goods, the main export products are basic metals, plastics and rubber, optical and photographic instruments and chemicals.
According to The Global Competitiveness Report 2011-2012, the island has maintained 13th position out of more than 140 economies in terms of competitiveness for the third year in a row.
Highly efficient markets and a sophisticated business sector have helped the competitiveness profile to remain consistently strong. The economy runs a large trade surplus, and its accumulation of foreign reserves is the fourth largest in the world.
The outlook for the domestic banking system is stable and well developed to meet the financing needs of industries.
The largest share of the island’s trade is with mainland China and Hong Kong and currently constitutes 42 per cent. This is followed by ASEAN (Association of Southeast Asian Nations) countries with a share of 15 per cent, the United States with 12 per cent, Europe with 11 per cent and Japan with 7 per cent.
Besides the markets above, the island’s industries and banks are eager to explore more business opportunities in the economies where the EBRD operates.
Top export destinations for the island’s goods in the region by volume include Russia, Turkey, Poland, Hungary and Azerbaijan.
Trade has been expanding particularly well since 2000, and has been driven by higher economic growth which in turn has boosted domestic demand in the importing countries.
It can also be partly attributed to the participation of the island’s banks in the EBRD’s TFP since 2002 (see case study).
So far the TFP has financed 84 export and import transactions of the island’s companies totalling €20.5 million. Business has been growing rapidly in terms of the number of transactions and trade volume.
The island has been working closely with the EBRD since its establishment in 1991. Through donations to co-financing and technical cooperation projects, the Bank strives to provide assistance to the economies where it invests on their way to further development and prosperity.
Case study: Bank of Taiwan
Bank of Taiwan was established in 1946 as the first state-owned bank. Throughout the history of the island’ economic development, from post-war reconstruction and currency reform to the implementation of successive economic and strategic industry development, we have been able to build up its efficiency and an outstanding reputation and thus contribute to domestic economic development.
Bank of Taiwan joined the TFP as a confirming bank in 2008. We are delighted to participate in the Programme and have successfully conducted several transactions with the EBRD’s countries of operations.
For example, earlier this year we confirmed a letter of credit issued by Belarusky Narodny Bank to facilitate the import of coated steel sheets to Belarus. In this instance, the island’s exporter was keen to use documentary credit as a payment instrument.
“We are pleased to continue developing business with our client, a Belarusian importer, who purchased steel sheets from us,” commented the exporter. “This is a long-term client and in February we initiated our first deal which was covered by the EBRD’s guarantee. With the backing of the EBRD we are free from commercial as well as country risk, which is an important security for us,” they added.
We at Bank of Taiwan look forward to enhancing close relationships with other issuing banks in the CIS, central and eastern Europe and other EBRD countries of operations.
Department of International Banking, Bank of Taiwan
Our client, Izomat-Stroi, requested us to issue a confirmed letter of credit to conduct a transaction with an island exporter. We had considered several banks as a confirming bank, but our choice was in favour of Bank of Taiwan who was one of the first to agree to participate in this deal, with all formal and pricing details being agreed on promptly and efficiently.
The key factor for the success of this deal was the involvement of the EBRD, who assisted us in engaging with Bank of Taiwan in this transaction.