Free Trade Zones in Taiwan

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Free Trade Zones in Taiwan
Linking you to Asia and beyond
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Briefing
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Globalization of world economy bolsters the
increasing importance of international trade and
the roles of ports and MNCs.
Technological advances in networking,
telecommunication, information
The importance of international trade
Globalization
The importance of port economics
Economic liberalization
The role of multinational corporations
Capital market formation
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The increasing importance of air-/ seaports
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?Revise Economic Developing Position
Global Logistics
Knowledge Economy
Economic Strategy
Globalize
Develop High-Tech Fabricating Ability
Regionalize
Localize
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Core value-added we have
Innovation
RD
Manufacturer
Assembly
Marketing
Services
ResourcesMIT. Donald R.Lessard,CEDI, CEPD
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Locate at the Transportation Hub of Asia

• The shortest average sailing time to 5 major
  regional harbors 53 hours

• The shortest flying time to 7 main cities of the
  Western Pacific 2hrs 55 mins

Taiwan
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Various Worldwide Leading Products Made by Taiwan
Source MIC/III, April 2008
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Abundant Capacity for Innovation and RD Growth
(2) RD Growth
(1) U.S. Patents Granted
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Full Functioning of the Industrial Clustering
Effect
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Various Incentives for Attracting Businesses to
FTZs
Facilitating business activities (streamlining
procedures for granting entry and issuing landing
visas to business personnel providing exhibition
facilities and services)
Allowing in-depth value-added processing (e.g.
assembling, packaging, manufacturing)
Free Trade Zones
Ease of financial operations (permitting setup of
holding companies for offshore investment, and
allowing OBUs to handle foreign-currency
transactions)
Relaxing hiring ratio for foreign workers
Rooting deeply in Taiwan while deploying globally
Duty tax exemption (exempt from customs duties,
commodity tax, sales tax, tobacco and wine excise
tax)
Within physical territory, but outside the
customs territory (autonomous management
exempted from customs checking and inspection, as
well as cargo tracking and escort)
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?Convenient cargo logistics
Report
Other FTZs
Clear customs by rules
Report
Gates
Bonded areas Export processing zone Science Park
Businesses in port
FTZ area
Businesses In port
Report
Clear customs according to rules
Tariff-liable areas
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?Taxes reductions, exemption and rebates
Exemptions
Other FTZs
According to Rules for Bonded Goods
Duty free goods, machinery and equipment
Gates
Bonded areas Export processing zone Science Park
Businesses in port
FTZ area
Businesses in port
0 Business Tax
Goods exported according to rules
Tariff-liable areas
1.Taxed as imported good 2.Special rules for -
inspection, processing - Re-export port-return
area
Gates
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• ?Tax Incentives (II)
• Current business income tax incentives
• When an FTZ enterprise takes custody of foreign
  goods and those goods are subsequently
  reconsigned directly to a buyer overseas,
  business income tax will be levied only on the
  value added to the goods in the FTZ.
• When an owner of foreign goods, in accordance
  with Article 14-1 of the Statute for Upgrading
  Industries, self-establishes or commissions an
  FTZ enterprise to establish a distribution hub
  for storage and simple processing of goods,
  income from the consignment of such goods to
  domestic customers will be exempt from business
  income tax.

Owner of foreign goods
Commissioning for storage / simple processing
Commissioning to store consign
FTZ enterprise
Domestic Customer
Overseas customer
Directly resold
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?Tax Incentives (III)
Regulations for Encouraging International
Logistics Enterprises in Emerging, Important and
Strategic Industries give businesses the option
of utilizing the shareholder investment credit or
5-year business tax exemption provided for in the
Statute for Upgrading Industries
Thresholds
Important note Applications must be submitted
before Dec. 31, 2009 and within six months from
the day after the approval for the establishment
of a new company or increase capital change was
issued.
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After six months in operation another assessment
will be made to decide whether or not operations
may follow the original business plan
?Quick application process for setting up FTZ
operations
Applying to establish operations in an FTZ
Review by the FTZ Management
Required documents 1. Application form 2.
Business plan (including financial plan) 3.
Freight management plan 4. Specifics of
processing for customs clearance and account
management 5. Investors proof of identification
Operations established
Approved
Qualified
Submission
Jointly with
Customs and other related departments
Dedicated specialist are assigned to provide
assistance
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? Convenience for Visa Approval
foreign business personnel
Visa-free (30 countries) Landing visa (4
countries) Visa (stay, resident) Selective
landing visa (not restricted to countries
without embassy or consulate)
Disembarkation
Documents check
Customs inspection
Luggage claims
Notifying Foreign Airline company
Arrival
(7 working days)
MOFA
Urgent cases approved and submitted via
FTZ management agency
Free Trade Zone
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Introduction of Industries
Logistics
ICT
Electronic Materials
Technical Services
Shipping
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A. Logistics Industry
State of the Industry
Scope Transport and storage apart from passenger
transport Includes sea/land/air transport,
storage, forwarding, storage/distribution, and
customs clearance

Scale
SourceDepartment of Commerce, MOEA, April 2008
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Competitive Advantages
A. Logistics Industry
Infrastructure aspects

• A good geographical location, suitable for the
  development of transshipment logistics
• A tight-knit road network
• Five FTZs
• Integrated airport and seaport transportation
• Establishment of a sound information and
  communications environment
• Training and certification of specialist personnel

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Future Prospects
A. Logistics Industry
Encouraging transnational logistics operators to
establish bases in Taiwan Recommending that star
enterprises set up global operations
headquarters in Taiwan
Adding value to services
Value-added services
Integrated supply chain services
Functional services
Asset services
Improving performance
Standardized, modularized, automated,
computerized processes
Strengthening of logistics/information /organizati
onal networks
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Current Status
B. ICT Industry

• A major procurement center for global ICT
  companies
• Ranked first in worldwide ICT product market
  share for more than 13 products
• Dominates IT hardware production value in PRC
  around 90
• Rapid growth of TFT LCD Monitor industry
  production, and ranked first with production
  value in worldwide

• Regular Internet users 16.56 million
• Home Internet connection rate - 71.7
• Mobile/wireless Internet service penetration rate
  - 26.1
• Mobile phone service penetration rate (not
  include PHS service) - 98.3

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B. ICT Industry
Taiwanese ICT Industry Statistics, 2006-2007
Note 1 Information Software covers the industry
production value for computer software and
embedded software products combined. Note 2
Communications covers the industry production
value for network-based communications, mobile
phones and PDAs combined.
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B. ICT Industry
The Taiwanese IT Hardware Industrys Production
Value, 2000-2012
Millions USD
Growth
Source MIC/III, April 2008
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C. Electronic Materials Industry
1. Development and Current Status

• Definition
• Materials used by the semiconductor, flat-panel,
  and packaging industries
• Current status
• Development conforms to the reverse integration
  model
• Products are mainly imported
• The industry must develop to meet the needs of
  improving downstream applications

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2. Competitive Advantages
C. Electronic Materials Industry
Taiwans downstream applications market is
expanding rapidly
Government policy support
Outstanding process control capability
New applications are stimulating development
of new materials
Ability to reduce costs
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3. Future Prospects
C. Electronic Materials Industry

• High demand for electronic materials used in
  flat-panel displays
• The electronic materials market is expected to
  have an overall compound growth rate of 13.5
  during the next five years
• Falling manufacturing and transport costs will
  strengthen the industrys international
  competitiveness

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1. Development and Current Status
D. Technical Services Industry

• Definition
• Includes the RD services industry, design
  services industry, information services industry,
  automation services industry, management and
  consulting industry, and other technical service
  industries supporting industrial development.
• Development and current status
• 1. The industry production value chain has been
  broken up into areas of specialization the
  strength of integrated technical services has
  expanded the scale of the technical services
  market.
• 2. The industry has seen average annual growth of
  13 in revenues over the last ten years,
  attracting foreign investment of USD 1.8 billion
  annually.
• 3. Over 90 of technical services businesses are
  SMEs.

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2. Competitive Advantages
D. Technical Services Industry















Globalization
Development opportunities in specific areas
Worldwide deployment of Taiwanese companies
Familiarity with the Chinese market
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3. Future Prospects
D. Technical Services Industry

• There is tremendous room for growth in business
  services output and employment
• Demand for external services is increasing
  steadily
• The technical services industry has enjoyed
  steadily increase in output value and employment

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Shipping Industry
I. Star of tomorrows international shipping
market Asia
Arrows indicate 9 ports in Asia
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E. Shipping Industry
2. Size of Taiwans Shipping Companies
Three of Taiwans shipping companies are ranked
in the worlds top 30 in terms of shipping
capacity, and together account for 9.73 of the
worlds shipping capacity.
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E. Shipping Industry
3. Advantageous Ports
Such well-known container shipping companies as
Maersk (ranked 1st), Evergreen (ranked 4th),
Hanging (ranked 9th), APL (ranked 10th), OOCL
(ranked 11th), Yang Ming (ranked 14th), Wan Hai
(ranked 20th), HMM, and NYK are leasing container
docks at the Port of Kaohsiung. These companies
have established a tight-knit transportation
network providing worldwide shipping services.
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E. Shipping Industry
4. Cooperation Strategy for FTZ Shipping and
Logistics Companies
Partnership between Yang Ming Lines and Yes
Logistics
FTZ
Automated checkpoint system
Tax bonded area Processing zone Science park
Automated checkpoint system
Yes Logistics port area warehouse (automated)
Sea-air forwarding
Port zone enterprise
Automated checkpoint system
Other FTZs
Privatized loading and unloading
Dedicated terminal First-come-first-served
Yang Ming Lines ship ties up at dedicated terminal
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V. FTZs in Taiwan
Scope Four Seaports and One Airport
Keelung Port FTZ
Taipei Port FTZ
Taoyuan Air Cargo Park FTZ
Taichung Port FTZ
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Kaohsiung Port FTZ
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Keelung Port FTZ
FTZ area
Map of Keelung Port
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Ideally Situated
1. Located at the intersection of trans-Pacific
and inter-Asia shipping lines, Keelung is a major
port for close-by shipping lines and a
transhipment port for distant lines. 2. More
than 30 shipping companies currently operate
close to 100 shipping lines. 3. Links to over 130
ports in more than 40 countries. 4. Nearby
northern Taiwan is the countrys political,
economic, and consumer hub, and is also the
source of 52 of Taiwans cargo.
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Companies Currently Operating in the FTZ
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Area Available for Corporate Use, and Suitable
Industries
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Taipei Port FTZ
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• Development Timetable
• Stage 1 Aug. 2005, 79 ha behind current
  restricted area.
• Stage 2 After 2008, the Port of Taipei
  container terminal will occupy approx. 110 ha
• Future development Port plans call for the total
  eventual development of 1,038 ha of land area.

• Superior Conditions
• Spacious hinterland, adequately deep basin.
• Close to metropolitan Taipei, with plenty of
  cargo sources.
• Close to Taoyuan International Airport
  convenient sea-air forwarding.

Area available for companies
Third Bulk and General Cargo Center 1. Area 10
ha 2. Uses Storage, logistics, loading/unloading
transshipment 3. Open for occupancy after 2009
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Taoyuan Air Cargo Park FTZ
Value-added plant area
Logistics service area
Living area
Plant area developed in Stage 1
Stage 2 development area
Individualized development area
Plant area developed in Stage 1
Individualized development area
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Domestic/foreign logistics center (completed)
Fresh produce and express goods delivery and
distribution center
FTZ Plan
Warehouse/office building(completed) Provides
offices and cargo management space to airlines,
forwarders, and customs brokers.
Air Cargo Park (partially completed) Firms
occupying high-rise plant/office high-rise
buildings inside national borders but outside
customs can engage in processing, manufacturing,
assembly, maintenance, packaging, testing, and
trade.
Air cargo terminal (completed) The Far Glory Air
Cargo Terminal located here can handle a million
tons of air freight annually
MRT station
Corporate operations center (planned)
Plans call for business offices, financial
services, a conference and exhibition facility,
and a five-star business hotel, plus health and
recreational facilities and various facilities
catering to daily life.
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Convenient Transportation
Taoyuan Airport FTZ
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Speedy Customs Clearance
After arrival of aircraft
An access apron leads directly to the cargo
terminal (within 2 hours) Transfer to warehouse
(within 3 hours)
Entry to FTZ in 1 hour Quick exit in 3 hours
10 min.
30 min.
When exporting, send to area B1 before takeoff
(1.5 hours)
Value-adding plants
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Operating Models Suitable for the FTZ
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?Companies Occupying the Air Cargo Park(48
Companies)
Compiled March 18, 2008
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Airlines, Customs Brokers, and Forwarding
Companies Occupying the FTZ (55 companies)
Compiled March 2008
????97.3
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Occupancy Application Procedures
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Stage 1 Cargo Park Rental Prices

• Building height 10 stories
• B1 Cargo handover, storage, and transportation
  center
• B2 Parking facility
• Total area per floor 4,192 sq. meters

Building B Building A

• 1F NT439/sq. meters
• 2F5F NT409/sq. meters
• 6F10F NT379/sq. meters

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• Total port area
• The port has a total area of approx. 11,285 ha
• Land area approx. 2,820 ha ( not including future
  filled areas) 17 special-purpose areas for total
  1,504 ha
• Space for 83 docks

FTZ
Future fill area (approx. 413.6 ha )

• The port has a land area of 2,820 hectares
  (approximately 1,504 hectares of this is used for
  17 special-purpose areas) the entire port area
  may be included within the FTZ if circumstances
  warrant.

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Port Area Advantages
An Optimal Location

• Located in central Taiwan offers lowest land
  transportation costs
• A hub of East Asian shipping routes shortest
  average sailing time to the Asia-Pacifics five
  largest ports in the Asia-Pacific region
• Shortest distance to ports along the coast of
  China

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Port Advantages
Convenient Transportation and Access to a Large
Inland Area
Taichung Harbor Bureau

• Convenient, extensive land, air, and sea
  transportation
• Offers access to a large inland area consisting
  of central Taiwans eight cities and counties
• Proximity to numerous industrial parks, export
  processing zones, and science parks

Taichung Airport
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Central Taiwan Science Park
Changpin Industrial Park
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Port Advantages
Superb Port Facilities

• 48 existing docks of all types (total dock length
  of 11,474 meters)
• 42 public and private enterprises have invested
  NT33.7 billion in the operation of port
  facilities.
• The ports shipping channel has been dredged to a
  depth of 16 meters and widened to 400 meters. The
  port can now accommodate 4,000-TEU container
  ships and 125,000-ton capesize bulk carriers.

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Current Status
(Wharfs West 1-7, 77 ha )
Stage II, Aug. 8, 2006
Stage I, Oct. 31, 2005
(Docks 20A-46, 278 ha )
Logistics ?II ???I
Logistics area I (82.55 ha )
(Docks 1-18, 181 ha )
Logistics area II (31 ha )
1. Three areas of the FTZ are being developed in
two stages. Total area is 536 ha, of which 117.75
ha remain available for business leasing. 2.
Future expansion The entire port area may be
incorporated into the FTZ. Short-term plans call
for logistics area I (approx. 82.55 ha) to be
added to the FTZ first.
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Companies Occupying the FTZ (20)
Taichung Port FTZ
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Land Available for Lease
Area 1
Area 3
Petrochemical industry special purpose area
Logistics special purpose area ?
Area 2
Apron is a container wharf
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A variety of suitable business items
Occupant Recruiting Terms

• FTZ enterprises (17 items)
• Trade, storage, logistics, container (goods)
  consolidation, transshipment, transfer,
  forwarding, customs clearance, assembly,
  reorganization, packaging, repair, processing,
  manufacturing, exhibition, and technical
  services.
• Non-FTZ enterprises
• Financial, loading/unloading, dining, lodging,
  conferences, transportation, transshipment, and
  other approved enterprises.

Enterprises may apply to outsource processing

• As vertical or horizontal manufacturing
  integration demands, or to alleviate insufficient
  capacity, an FTZ enterprise engaging in
  processing or manufacturing may apply to
  outsource processing services from a company
  outside the FTZ.
• An FTZ enterprise engaging in logistics may apply
  to outsource distribution reorganization or
  simple processing from a company in a bonded area
  or tax zone outside the FTZ. However, the
  original state of the goods must still be
  recognizable after reorganization or simple
  processing.
• When processing services outsourced by an FTZ
  logistics enterprise have a major impact on the
  national economy, the enterprise may outsource
  substantially-altering processing services to a
  company outside the FTZ after the case is
  approved by the Executive Yuan Free Trade Zone
  Coordinating Committee.

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Investment Methods and Costs
A company wishing to invest in an FTZ enterprise
must pay rent (or user fees) and management fees
to the Port of Taichung the calculation of costs
depends on the nature of the investment.
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? Incentive Program (1)

• Implementation date
• Effective Aug. 21, 2007.
• Cargo types benefiting under this program
• Pipeline and non-containerized cargo
• How incentive is applied
• For those meeting F1 customs declaration
  requirements for FTZ inbound warehousing and F5
  export transfer, management fee (or terminal
  handling charges) and wharf passage fee is
  collected at one-fourth standard fee per
  transaction.

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?Incentive Program (2)

• Period of implementation
• Pilot program to be conducted for one year from
  Mar. 1, 2008 to Feb. 28, 2009.
• Cargo types benefiting under this program
• Pipeline and non-containerized cargo
• How incentive is applied
• Management fee (or terminal handling charges)
  and wharf passage fee is collected at one-fourth
  standard fee per transaction under the following
  conditions
• 1. when F4 customs declaration requirements for
  FTZ inbound warehousing of sea transport cargo
  and F5 export transfer are met
• 2. when F1 customs declaration requirements for
  FTZ inbound warehousing and F2 outbound shipping
  by sea to tax levy destination are met
• 3. when F1 customs declaration requirements for
  FTZ inbound warehousing and F4 outbound shipping
  to another FTZ are met.

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Container terminal No. 1-5 397.69 ha
Chungtao Commercial Port 17.72 ha
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Advantages
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Suitable Industries
Storage
Simple processing
International logistics
Transshipment
Current occupant companies (20 companies)
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Thank You!
Taoyuan Air Cargo Park FTZ Tel [phone] Fax
03-393-34560- E-mail b2921_at_farglory.com.tw
Council for Economic Planning and Development
(CEPD), Executive Yuan Tel [phone] Fax
02-2509-26830-
Department of Investment Services (DOIS),
MOEA Tel [phone] Fax [phone]-
E-mail cycheng_at_moea.gov.tw
Keelung Port FTZ Tel [phone] Fax
02-242-958260- E-mail kel_ftz_at_klhb.gov.tw
Taichung Port FTZ Tel [phone] Fax
04-2658-05470- E-mail tel5961_at_mail.tchb.gov.tw
Industrial Development Bureau, MOEA Tel
02-275-41255 Fax [phone]-
Taipei Port FTZ Tel [phone] Fax
02-2429-5826-0 E-mail kel_ftz_at_klhb.gov.tw
Kaohsiung Port FTZ Tel [phone] Fax
07-521-49030- E-mail p06092_at_mail.khb.gov.tw
Commerce Department, MOEA Tel [phone] Fax
02-2341-43950-