Taiwan takes steps to plug brain drain

Morning rush hour in Taipei. Taiwan is rolling out a series of measures to recruit and retain foreign talent, both professionals and blue-collar workers.
Morning rush hour in Taipei. Taiwan is rolling out a series of measures to recruit and retain foreign talent, both professionals and blue-collar workers.PHOTO: REUTERS

Exodus of up to 30,000 white-collar workers each year 'a national security issue'

Four years ago, Malaysian Beh Jia Xin packed her bags for Taipei, where she earned a degree in nutritional science at National Taiwan Normal University.

After graduating in January last year, she worked at a local confinement centre, drawing up menus for women who had just given birth.

But after switching companies, she had to return home to Selangor. It turned out that her new employer's capital and sales revenues were too low to allow it to hire foreigners under Taiwan's existing rules.

  • Trade secrets 'end up in Chinese hands'

  • The six Taiwanese men were hired by smartphone giant HTC Corp. But they worked in secret with local governments in China to set up a rival phone design company, using technology stolen from HTC.

    One of them, HTC chief designer Chien Chih-li, leaked key designs of a new HTC smartphone interface to the Chinese officials.

    In 2013, the six were indicted under Taiwan's Trade Secrets Act. Under the law, offenders may be jailed for up to five years and fined between NT$1 million (S$41,500) and NT$10 million.

    Since then, there have been at least four known cases of commercial secret leaks to China - a risk that has increased as more Taiwanese live and work in the mainland.

    According to a study by the Ministry of Labour in 2012, there are between 500,000 and one million Taiwanese working in China, most of whom are senior professionals and managers.

    That Chinese companies may be poaching Taiwanese talent and exploiting their knowledge of their former employers' secrets was a risk highlighted in a National Development Council paper on Taiwan's new population policy.

    Overseas governments are "actively seeking to recruit talent in Taiwan - especially large-scale headhunting from enterprises in China".

    "The result has been that, in recent years, Taiwan's companies have faced talent loss, leaking of commercial secrets and other problems," it warned.

    This is even as the Taiwan-China economic relationship evolved. Taiwanese businessmen in the past were factory owners and investors in China. But their Chinese vendors are now their competitors.

    Li Xueying

Her story is hardly uncommon.

"Among my Malaysian friends who studied in Taiwan, just one or two out of 10 continue living and working there, because it's too troublesome to get a work permit," said Ms Beh, 24, who has since found a similar job in Kuala Lumpur. "Many end up working in Singapore instead."

Fewer may go to Singapore in the future. Taiwan is taking steps in the hope of plugging a debilitating brain drain and to recruit and retain foreign talent, both professionals and blue-collar workers.

For a start, the capital and revenue criterion for employers is jettisoned. Also, under a draft law approved by the Cabinet last December, white-collar workers will no longer need to meet strict requirements such as at least two years' work experience and a minimum salary of NT$47,971 (S$2,000). It will also be easier for blue-collar workers who have worked in Taiwan for at least nine years to stay on, and for longer.

BEING POACHED

Different countries are poaching from Taiwan, using it as a talent bank.

MS KAO SHIEN-QUAY, deputy minister of Taiwan's National Development Council, who frames the island's human resources problem as a "national security issue". Each year, 20,000 to 30,000 white-collar workers leave Taiwan for better prospects abroad.

  • Measures to stem workers' exit

  • BLUE-COLLAR WORKERS

    • Under a proposed Bill awaiting legislative approval, those who have been in Taiwan for at least nine years and who fulfil certain criteria, such as Chinese-language proficiency, can switch their status to "skilled workers", allowing them to stay longer in Taiwan.

    • This is expected to add at least 1,000 more to the labour force annually, with most coming from Indonesia, Vietnam and the Philippines.

    WHITE-COLLAR PROFESSIONALS

    • Under a proposed Bill awaiting legislative approval, they will no longer need to meet existing prerequisites for a work permit, such as two years' work experience and a minimum wage of NT$47,971 (S$2,000).

    • Strict requirements to be replaced by a points system based on various criteria.

    RETAINING FOREIGN STUDENTS

    • Since 2010, they have been allowed to remain in Taiwan after graduation. Previously, they had to leave Taiwan to gain two years' work experience elsewhere.

    • The number of such workers in Taiwan has increased to 1,700 a year.

    • As many are from South-east Asian countries such as Malaysia, Indonesia and Vietnam, they will help Taiwan companies diversify in markets beyond China, says National Development Council deputy minister Kao Shien-quay.

    WAGE SUBSIDY PROGRAMME

    • Government to pay the salaries of foreign research-and-development talent employed by SMEs to help the companies innovate.

    • Budget of NT$2 billion to NT$3 billion set aside to fund the scheme which started last year.

    IMPROVING LIVING  ENVIRONMENT FOR NON-MANDARIN SPEAKERS

    • Provide real-time weather information and utility bills in English.

    • Improve the e-filing system of tax returns.

    • Under consideration: allowing foreign spouses and children to work in Taiwan.

    OUTREACH EFFORT

    • A one-stop portal Contact Taiwan will be set up this month.

A more flexible rating system will be adopted, where points are given for criteria such as language ability and work experience.

Opposition by labour groups had delayed the process, but the law is expected to be passed after President-elect Tsai Ing-wen takes office next month.

Measures that do not need legislative approval are already in place. For instance, allowing students who studied in Taiwan to stay on.

Another ground-breaking scheme sees the government subsidising in full the pay of desired foreign talent, such as in research and development, for small and medium-sized enterprises (SMEs) that form the backbone of Taiwan's economy.

Meanwhile, minor adjustments are being made to help non-Mandarin speakers, such as providing utility bills in English and improving the tax e-filing system.

These are unusual moves in the largely homogeneous society with 640,000 foreigners - a mere 2.8 per cent of the population of 23 million. Of these, 570 are Singaporeans.

But desperate times call for urgent measures.

In an interview with The Straits Times, Ms Kao Shien-quay, deputy minister of Taiwan's National Development Council, frames the island's human resources problem starkly as "a national security issue".

Each year, 20,000 to 30,000 white-collar workers leave Taiwan for better prospects abroad.

"Different countries are poaching from Taiwan, using it as a talent bank," said Ms Kao.

The most voracious is China, where the leaking of commercial secrets has emerged as an issue.

The number who leave Taiwan annually is equivalent to the entire pool of foreign professionals now on the island - 30,000. Of these, specialists and technical personnel form the biggest group, followed by private English-language teachers.

Meanwhile, Taiwan's population is ageing. Last year, its labour force grew a minuscule 0.9 per cent. Singapore's expanded 2.2 per cent.

The stakes to fix the problem are high. For the past decade, Taiwan has been struggling to transform its economy. It remains stuck in the contract manufacturing model of yore, designing and producing parts for Western and Japanese clients - the most famous example being Foxconn working for Apple.

Competing mainly on price and volume, Taiwan firms have been severely battered by global trends, including the rise of companies from China.

One reason Taiwan has been unable to make the transition up the ladder is that its best and brightest are fleeing, said Ms Kao. "It's a problem not just of quantity but quality."

Therein lies a vicious circle: People with options leave, the economy remains mired in torpor, further depressing spirits and salaries.

Taiwan's courting of foreign talent thus aims to break the impasse - even as fingers are crossed that Ms Tsai will successfully fulfil her pledge to innovate and upgrade the economy.

On why the government does not focus on improving the lot of local workers, Ms Kao said laws have already been changed to allow cash- strapped companies to offer share options as bonuses.

Meanwhile, foreign talent - such as retired engineers from Japan and Indian software experts - bring with them the know-how that is lacking in Taiwan.

Taiwan wants to develop industries such as cloud computing, "green" technology and the Internet of Things, said Ms Kao.

"Many of our SMEs don't have the capability to offer good compensation, so if we feel certain foreign individuals are critical to their development, they will be hired at government-sponsored technology research institutes and then seconded to the companies."

The plans have received a mixed reception.

Ms Andrea Wu, president of the American Chamber of Commerce in Taipei, said dumping requirements for recruits to have two years' experience is welcome. "Bill Gates wouldn't have qualified. It should be up to the businesses to decide what kind of workers they need."

Ms Wu added that Taiwan's workforce currently lacks "international experience".

"The mindset here is not that broad and experience is limited."

But there is unease about the impact of foreign workers on the local population.

The emerging New Power Party, which won five seats in January's legislative polls, and labour groups have opposed the plans, saying local workers' wages will be depressed.

Ms Kao countered that the foreigners targeted are skilled and earn higher wages than locals.

And even with Taiwan laying out the welcome mat, the number of people expected to come in will not have a significant impact on the island's labour landscape.

"We don't have a quota - we are hoping to attract as many as possible," said Ms Kao. "For now, as an initial target, it's 2,000 a year."

A version of this article appeared in the print edition of The Straits Times on April 11, 2016, with the headline 'Taiwan takes steps to plug brain drain'. Print Edition | Subscribe