TAIPEI (BLOOMBERG) - Taiwan is ramping up efforts to lure bankers and other skilled workers who want to escape China's tightening grip on Hong Kong.
Just hours after the financial hub's controversial new security law came into effect on Tuesday (June 30), Taiwan officially opened an office dedicated to making migration easier for Hong Kong residents and companies. It will provide help with everything from capital raising to school enrollment and arranging accommodation.
"We hope to attract capital and professionals from Hong Kong to Taiwan, especially talent in the financial industry," Mainland Affairs Council Minister Chen Ming-tong said.
The government is also conducting a wide-ranging review of regulations that currently inhibit migration, including the income tax rate.
Taiwan's government sees a potential exodus of young Hong Kongers as a chance to reinvigorate an economy grappling with a peaking population, a worsening shortage of skilled workers and shrinking exports.
President Tsai Ing-wen is also looking to follow through with concrete measures to help the territory's residents after her support for last year's pro-democracy protests contributed to her overwhelming election victory in January.
Taiwan saw a record pace of immigration and investment from Hong Kong in 2019, a trend that has continued this year. The number of Hong Kongers settling in Taiwan between January and May rose 96 per cent versus the same period last year, while the number of investments - mostly small-dollar amounts by individuals - climbed 25 per cent.
Taiwan grants residency to Hong Kongers for an investment of as little as NT$6 million (S$284,000), less than half the NT$15 million needed for nationals from other countries.
The influx has been welcome news for Taiwan employers. More than 75 per cent of local businesses encountered difficulties finding staff with the requisite skills in 2019, up from 45 per cent in 2014, according to a survey conducted by Manpower Group that placed Taiwan alongside Japan as one of the economies with the most severe talent shortages.
One of Taiwan's biggest economic challenges is its rapidly declining birthrate, according to Chen Chih-jou, a sociology professor at Academia Sinica. He said the government should amend its laws to allow Hong Kong students studying in Taiwan to stay on after graduation and find work.
In addition to its sometimes restrictive immigration rules, Taiwan's comparatively low salaries and high tax rates are potential barriers to attracting Hong Kong talent. The highest bracket of individual income tax in Taiwan is 40 per cent, though certain expats are allowed to pay a 20 per cent flat rate. That compares with a top rate of 17 per cent in Hong Kong. Rates on corporate tax are also slightly higher in Taiwan.
Some Hong Kongers may also be turned off by Taiwan's own contentions relationship with China. Beijing views the island as an inalienable part of its territory and regularly threatens to impose unification with the mainland through military force. Taiwan's government rejects China's claims of sovereignty over the island.
"Like Hong Kong, there is a political risk in Taiwan that emanates from China," said Dr Wu Jieh-min, a sociologist at Academia Sinica. "It's not the safest haven."
One risk for the Tsai administration is that a flood of new immigrants from Hong Kong will push up property prices and make it harder for local college graduates to find well-paying jobs, according to Dr Malte Kaeding, a lecturer at the University of Surrey who specialises in Hong Kong and Taiwanese political identities.
"The arrival of young Hong Kongers fleeing from prosecution through the national security law and a deteriorating political situation in Hong Kong, without a well-thought plan, would add pressure on the Taiwanese job market," Dr Kaeding said.
Despite the hurdles, all signs point towards more Hong Kong-to-Taiwan migration. Mr George Lee, director of Ark International Consultancy, said the number of Hong Kong residents requesting his company's help to move overseas has doubled since the national security law was first proposed in May.
Having outperformed many other countries in keeping the coronavirus under control, Taiwan has become one of the most requested destinations, ahead of traditional favourites such as the UK, the US, Canada and Australia, Dr Lee said. A familiar language and culture, a slower pace of living and a highly regarded health-care system have added to Taiwan's allure.
"Before the security law, a lot of people would seek our advice but wouldn't necessarily take action," he said. "But since the law was proposed, a lot of people say they want to get their hands on an open-ended ticket out of Hong Kong as quickly as possible."