Official statistics released by the Foreign Exchange and Trade Commission show that Taiwan did business with 101 countries in 1965. Ninety-eight nations bought goods from Taiwan and imports came from 74.
Asia is the major trading area. On the export side, 57.77 per cent of Taiwan's foreign sales were in this area, followed by North America, 22.6 per cent, and Europe, 10.63 per cent.
Largest buyers were Japan, the United States, Vietnam, Germany, and Hongkong. Their share was 72.48 per cent. Then came such countries as Thailand, Canada, Iran, Morocco, Singapore, Malaysia, the Netherlands, the Philippines, Korea, and Australia.
On the import side, Asia was also the leader. It accounted for 44.45 per cent, followed by North America, 35.44 per cent, and Europe, 9.76 per cent.
Three countries — Japan, the United States, and Germany - supplied Taiwan with 75.27 per cent of its imports. Other leading suppliers included The Philippines, Australia, United Kingdom, Kuwait, Hongkong, Malaysia, Canada, Mexico, and Switzerland.
This means Taiwan is trading mainly with countries of the Pacific area and Europe. Efforts have been made to increase trade with Africa and Latin America but lack of shipping connections remains an obstacle.
Trade partners may be placed in three categories: those selling more to Taiwan than they are buying, those buying more than they are selling, and those whose transactions are of a transshipment nature.
Generally speaking, those selling more to Taiwan than they are buying include industrially developed countries. Japan and the United States are the most prominent examples. In 1965, they sold about US$400 million worth of goods to Taiwan but bought only US$150 million worth.
These two countries supplied Taiwan with industrial raw materials and machinery and equipment. Statistics show that for 1965, more than 90 per cent of Taiwan's imported electrical components and parts as well as man-made fibers came from Japan and the United States. From these two countries came more than 80 per cent of machinery and tools, ores, metals and manufactures, and vehicles, vessels, and parts.
Major Taiwan exports to Japan and the United States were agricultural or processed agricultural products and light manufactures. Included were bananas, rice, sugar, plywood, textiles, and canned foods.
This trade pattern also applies to such countries as Great Britain, France, Italy, and Switzerland but on a smaller scale. The only exceptions are the Federal Republic of Germany, Canada, and the Netherlands. Although industrialized nations, they did not sell more goods to Taiwan than they bought. They bought sizable quantities of consumer goods from Taiwan but for lack of trading connections did not sell an equivalent amount of capital goods. However, Taiwan has substantially increased its purchases from Germany as a result of technical cooperation projects. Last year's imports from Germany totaled US$21.5 million as compared to US$14.3 million in 1964.
Those countries buying more from Taiwan than they sell are mostly developing nations of Asia and the Middle East. The leading example is Vietnam, which bought US$44.5 million worth of goods but sold almost nothing. This, of course, is principally attributable to the war there. Other countries in this group are 'Thailand, Iran, Singapore, Korea, and Ceylon.
Hongkong is one of Taiwan's top trading partners but its purchases and sales are mainly of transshipment nature.
The largest buyer of Taiwan's green tea is Morocco. So the African nation has an unfavorable balance in trade with Taiwan, although it has increased local sales of phosphorous ores.
Most of Taiwan's raw materials for making plywood and other timber manufactures come from the Philippines and those for the woolen industry from Australia. For this reason, trade favored those two countries. Taiwan buys crude oil from the Middle East and had an unfavorable balance with such countries as Kuwait, Saudi Arabia, and Iraq.
Company law Revision
To promote trade with Latin America, the Chinese government in 1965 bought corn and wool from Argentina and corn and wheat [from Mexico. They bought little in return.
A new revision of the Company Law of the Republic of China was made in July to prevent over-concentration of wealth and provide the legal basis for sound industrial management.
The Company Law, promulgated December 26, 1929, and first amended April 12, 1946, was revised by the Legislative Yuan, highest lawmaking body, July 5 after five years of study.
The revision is in keeping with the national policy that no persons or groups shall dominate the nation's economy. A new article (13) stipulates that no company can be a shareholder of unlimited liability in other companies, nor can it participate in a business organized on a partnership basis.
If the company is a limited liability shareholder in another company, such investment shall not exceed a fourth of its own paid-up capital. This limitation does not apply to companies whose exclusive business is investment.
To provide for sound industrial management, the revision states in Article 203 that companies must publish profit and loss statements annually. It also provides for competition among industrial enterprises to spur economic growth.
According to the revision, shareholders shall have the power to control and directors the power to operate a company.
In Article 184, the revision says that at annual meetings, shareholders shall have the right to question any statement and report submitted by the board of directors or the board of supervisors. Only with consent of a majority of two-thirds of the total shareholders can a company sell or lease properties to other companies. This also applies in the purchase of properties from other companies.
The revision says in Article 202 that except for the rights specifically given shareholders, the directors are free to run the company as they wish.
To protect the interests of shareholders, the revision stipulates in Article 240 that any distribution of surplus or issuance of new shares must be agreed by a majority of shareholders representing two-thirds of the total shares. A shareholder may not represent more than three per cent of total voting power other than his own shares.
To promote sound management, the new Company Law stipulates in Article 14 that a company should increase its capitalization instead of seeking loans to expand its facilities or purchase new fixed assets. At least 10 per cent of any increase in capitalization should be offered to employees.
The Chinese government is encouraging the establishment of new productive enterprises. So the revised Company Law says in Article 156 that a new company may start operations after one fourth of the shares are issued and sold. Minimum capitalization can be determined by competent government authorities.
To prevent bankruptcies, the revision stipulates that the government may give emergency assistance to any important industry, public utility or transportation enterprise whose products or services are necessary to the country, or whose products have established foreign markets, or which has a large number of employees. Such aid has been given in the case of the Tang Eng Iron Works, which is the largest steel manufacturer in Taiwan.
The new Company Law, like its predecessors, divides companies into those of unlimited and limited liability. The limited liability is equal to the amount of capital subscribed by each stockholder.
Minister of Economic Affairs K. T. Li said the revision is designed to protect the interest of investors as well as to promote sound management.
The revised law has 449 articles as compared with the previous 360. It has been proclaimed by the President.
Plastic Exports
Taiwan exported about US$13 million worth of plastic products and imported about USS10 million of plastic materials in 1965, the Foreign Exchange and Trade Commission said.
According to a FETC survey, about 80 per cent of the exports are manufactures, including toys, flowers, window shades, raincoats, and slippers. Major buyer is the United States, followed by Canada.
The rest of the exports, mainly plastic powders and compounds, were sold in Hongkong, Thailand, Vietnam, and elsewhere in Southeast Asia.
On the import side, FETC said, the largest item was polyethylene, accounting for some US$6 million, followed by polystyrene, US$600,000, and polypropylene, US$400,000.
The plastic raw materials came principally from Japan, the United States, and West Germany. Of the US$10 million total, Japan supplied about US$5 million, the United States US$4.5 million, and West Germany US$0.5 million.
FETC said Taiwan has begun producing polystyrene in addition to polyvinyl chloride. Last year plastic output reached a high of 100,000 metric tons, including nearly 50,000 tons of processed goods.
The I Fan Plastics Corporation plant began operations in July. This is the third maker of polyvinyl chloride to begin production this year. Three others-Formosa, China, and Cathay — produce the same plastic raw material. They have total daily capacity of 200 tons.
For the production of polystyrene, the Taita Chemical Company has completed a plant at Kaohsiung and the Lings Petrochemical Ltd. is building another at Shihtse near Taipei. The Taiwan Polymers Corporation, a subsidiary of the U.S. National Distillers and Chemical Corporation, is constructing a large plant at Kaohsiung for the production of polythylene and propylene. Production will begin in 1968.
Tea Sales Gain
For the first half of 1966, Taiwan exported 9,173,447 kilograms of tea, a little more than the 9,156,437 kg. registered in the same period last year, the Taiwan Tea Exporters Association reported.
Of this amount, the association said, 44.2 per cent was green tea, 43.4 per cent black tea, 11.2 per cent Souchong, and 1.2 per cent Oolong.
The largest buyer was Morocco with 1,970,964 kg., followed by the United States, 1,676,125 kg.
The association said Taiwan has opened large tea markets in Libya and Afghanistan. Libya used to import tea from India, Ceylon, and the Chinese Communist-held mainland. Since Chinese technical personnel went to Libya to work in agricultural, industrial, and medical care projects, Libya has been buying tea from the Republic of China in larger quantities.
Afghanistan also used to buy tea from the Chinese mainland. But as a result of the poor quality and irregular supply, the Communists are losing out to Taiwan.
The Far Eastern Superintendence Company of Taipei in July served notice on members of the Taiwan Tea Exporters Association that it had been appointed by the Office National du The et du Sucre (ONTS) of Casablanca, a government tea procurement agency of Morocco, as its official surveyor in Taiwan.
Tea suppliers were requested to make available four samples of about 200 grams each. After the samples are certified by the Moroccan government, delivery will be accepted, the surveyor said.
New Locomotives
The August arrival of 43 diesel locomotives in Taiwan marked an important step in the USS20 million modernization program of the Taiwan Railway Administration.
The locomotives cost US$6 million and were built by the Electro-Motive Division of General Motors Corporation at La Grange, Illinois. They were shipped to Taiwan aboard a Norwegian vessel, the M.S. Christen Smith.
The shipment included 22 locomotives of the 1,425-horsepower class and 21 of the 950-hp. class.
TRA obtained a loan of US$20 million from the International Bank for Reconstruction and Development, better known as the World Bank, in May, 1965. It calls for purchase of 55 diesel and electric locomotives, 150 coaches 1,065 freight cars, and yard facilities and signals.
The program will more than double the capacity of TRA, which already has 215 locomotives, of which 52 are diesels. Taiwan has two railways networks — one belonging to TRA and the other to the Taiwan Sugar Corporation.
According to a dispatch from Chicago, the shipment of 43 locomotives to Taiwan was the most valuable ever handled by that port. The Norwegian ship has the largest single hatch in the world - 102 feet long by 26 feet wide - and two smaller hatches. Though the vessel is designed to accommodate locomotives below decks, 15 of them had to be carried on deck.
TRA sent 12 mechanics and mechanical engineers to the Electro-Motive Service School in La Grange for six weeks of training. The group was headed by Chen Ching-fu, TRA's deputy chief mechanical engineer.
Development of transportation and communications has played an important role in Taiwan's economic success story of the last two decades. Railways are the principal means of transportation. They move more than four-fifths of the island's freight and nearly half the passenger traffic.
Taiwan has some 2,800 miles of standard and narrow gauge railroads. The 1965 traffic figures were 2,800 million passenger-miles and 1,500 million ton-miles on standard lines. Passenger traffic is growing at an annual rate of three per cent and freight at two per cent.