From European colonizers to adventurous settlers from China and Japanese imperialists, Taiwan as long been a magnet for an array of people attracted by its strategic location along vital East Asian shipping routes. But while Taiwan has long been closely tied to the global market – and is widely considered to be among the most diverse and multicultural environments in Northeast Asia – this openness hasn’t previously been reflected in immigration policy.

As the composition of the Taiwan population rapidly ages, the size of the labor force will soon start shrinking substantially each year. Given that demographic challenge, the government is looking at promoting immigration as a means of maintaining economic growth and vitality. A Talent Recruitment Policy Committee has been established under the Executive Yuan to explore ways to attract both white-collar professionals and specialized blue-color skilled workers from other countries.

“Though Taiwan has always had a high amount of imports and exports, that hasn’t always been translated into government policy in terms of immigration,” says Peter J. Dernbach, a U.S. citizen and partner at Winkler Partners Attorneys at Law who closely follows immigration issues. “We have huge numbers of people who go abroad to study and stay abroad to live and work, but government policy hasn’t been open to the same extent to the import of people, the import of talent.”

“Though Taiwan has always had a high amount of imports and exports, that hasn’t always been translated into government policy in terms of immigration. We have huge numbers of people who go abroad to study and stay abroad to live and work, but government policy hasn’t been open to the same extent to the import of people, the import of talent.”

Recent developments in Taiwan’s economy, and more importantly its population structure, have led to a rethinking of the national position on immigration. The Taiwan government has begun adopting a far more open approach to immigration, looking for ways to recruit highly skilled people from around the world to boost its plateauing economy and its soon-to-be declining population.

Despite Taiwan’s overcrowded residential areas and the often overwhelming busy-ness of the place, the island is actually facing a demographic crisis. Like many rich developed countries, Taiwan is facing the prospect of an aged population. Currently 12% of the population is over the age of 65, which as it stands is not a very serious situation. In the European Union, roughly 17-18% of the population is in that age bracket, and in Japan it’s a quarter of the population.

An exacerbating factor, however, is Taiwan’s extremely low fertility rate (the average number of children born to women over their lifetime). In fact, it is one of the lowest rates in the world. The United Nations regards 1.3 as the threshold for “ultra-low” fertility rates, but in Taiwan the figure hovers around 1.1, and in 2010 even dropped to 0.9, among the lowest rates ever recorded. As a consequence of fewer births and greater longevity, demographers forecast that within a period of 25 years – from 1993 to 2018 – Taiwan will have gone from an aging society, with 7% of the population over 65 years old, to an aged society with more than 14%. The only nation to have made this transition faster is Japan.

“The trend is the same in all advanced countries, as they all experience declining birth rates,” says National Taiwan University sociologist James Hsueh, a former minister without portfolio. “But the challenge for Taiwan is the steep rate of change.”

The impact on Taiwan’s economy and civic society could be profound. Starting next year, the number of people in the workforce will begin declining by 140,000 annually. In 2021, the overall size of the population will also begin to shrink, according to National Development Council (NDC) forecasts.

The United Nations regards 1.3 as the threshold for “ultra-low” fertility rates, but in Taiwan the figure hovers around 1.1, and in 2010 even dropped to 0.9, among the lowest rates ever recorded.

The result will be massive stress on the social welfare system. As the elderly account for the vast majority of healthcare dollars, Taiwan’s vaunted National Health Insurance system will face a huge struggle maintaining quality standards as it seeks to care for the rising wave of senior citizens. Labor pension schemes will be similarly burdened by the sheer number of recipients. And there will be fewer workers contributing tax dollars to support the whole system.

Taiwan is working on a number of policy initiatives aimed at mitigating the situation. According to the “ROC Population Policy Guidelines” issued by the Executive Yuan, these include such efforts to increase the fertility rate as “improving the environment for spouse selection” and providing “assistance in creating happy marriages.” NDC representatives say the government is also devising plans to encourage people to retire later and to implement better controls to reduce cheating in the labor pension system.

Fostering immigration is another of the strategies designed to mitigate the impact of an aging society.

“Immigration is a logical and potentially powerful step to remedy these demographic changes,” says Dernbach. Citing the very low fertility rate and the “number of young people who go overseas to pursue their higher education and remain overseas to pursue their careers,” he says “we need to counterbalance that outflow with an inflow of equally talented, motivated young people coming into Taiwan.”

Seeking talent

The need for greater immigration seems apparent to both the ruling Kuomintang and the opposition Democratic Progressive Party (DPP). But not all types of immigration are valued equally. While at least 600,000 foreign spouses are living in Taiwan, these immigrants by marriage tend to be from Southeast Asia and mainland China, with many of them unskilled and less-well-educated. (There are also some 550,000 foreign laborers in Taiwan, also from Southeast Asia, but their status as guest workers is subject to a time limit and they are not eligible for citizenship or permanent residence.)

Both the government and the DPP take pains to say they do not want to discriminate against different social or ethnic groups. They also agree, however, that priority for immigration should be given to “talent,” by which they mean those who will take high-paying jobs or start their own businesses.

The vision is to attract dynamic highly skilled immigrants who will make positive contributions to Taiwan’s economy and society, regardless of their country of origin, as taxpayers and consumers.

“There’s a lot of data from the United States to show how many of the game-changing entrepreneurs are second-generation Americans,” says Dernbach. According to Bloomberg, in 2010 Asian-Americans became the majority of the tech workforce in Silicon Valley, and fully one-third of tech startups are founded by Indian-Americans.

“If Taiwan were to open itself to immigration, it absolutely could become the Silicon Valley of Asia,” asserts Dernbach. “Why? Because we’re an open, democratic country with freedom of speech, lots of diversity, lots of collaboration. There are more opportunities to collaborate in Taiwan than in any other place in Northeast Asia.”

A 16-year resident of Taiwan, Dernbach says that he knows a lot of people who are currently working in China but would prefer to be in Taiwan. But the obstacle is that “the job isn’t here, or it is here but at a fraction of the salary.” That observation gets at the challenge Taiwan currently faces. The high-talent immigrants that Taiwan wants to attract are likewise in strong demand around the world. Can Taiwan compete with other prominent destinations in East Asia, including Tokyo, Hong Kong, Singapore, and Shanghai?

“We face a challenge from the globalization of human resources,” says Chang Herng-yuh, director-general of the NDC’s department of human resources development. “Other countries are also competing for talent in the region.”

Taiwan’s appeal is unlikely to be based on salaries. Its pay levels lag behind the other East Asian powerhouses by a large measure, and Taipei can hardly match Hong Kong as a financial center, nor is it a commercial center for international business on the scale of Shanghai or Singapore. Even Taiwan’s pride, its technology sector, continues to walk in Japan’s shadow.

The vision is to attract dynamic highly skilled immigrants who will make positive contributions to Taiwan’s economy and society, regardless of their country of origin, as taxpayers and consumers.

So what does Taiwan bring to the table in attracting foreign talent? Many cite the friendly people, the tolerant attitude, and low crime rates. The cost of living is low as well. Housing prices may be far beyond the reach of most except the wealthiest, but rents are reasonable. Air quality is much better than in many other locations in the region, and with Taiwan’s compact size, a range of natural environments are easily within reach, from nearly 4,000-meter-tall mountains to lovely beaches.

But will these be enough to attract sufficient numbers of talented immigrants for there to be an appreciable impact on Taiwan’s economy and population trends?

Demographic background

The main reason for the large number of elderly people in Taiwan is the huge fertility boom of the 1950s and 1960s. At one point Taiwan had one of the highest fertility rates in the world, at 6.9. Those post-war babies have resulted in the current surge of people approaching or exceeding 65 years of age. In addition, a very successful healthcare system has extended lifespans to an average of 80 years for both genders.

Why do young Taiwanese seem so reluctant to marry and have children? Exorbitant housing prices are considered to be a major reason, along with stagnant salaries and growing income inequality.

A partial explanation for the current low fertility rate, James Hsueh notes, is that as development ramped up in the 1960s and 1970s, transforming the society from an agrarian to an industrial base, the government made a strenuous effort to promote birth control under the slogan “Two Kids, Just Right.” Taiwan’s reproduction rate has experienced a gradual decline ever since, as is typical everywhere that has gone through a similar development curve. Less clear is why fertility rates continued to fall over the past decade and remain among the lowest in the world.

Why do young Taiwanese seem so reluctant to marry and have children? Exorbitant housing prices are considered to be a major reason, along with stagnant salaries and growing income inequality. Gordon Sun, a senior economist at the Taiwan Institute for Economic Research, notes that these factors engender a sense of frustration and hopelessness among young people concerned about their future. James Hsueh concurs, saying “when I was young, we all experienced a lot of hardship, but we could feel the economic growth and the opportunity it was creating, so we had hope that with some effort we could make our dreams come true. But nowadays things have changed.”

Whether to better prepare for reality, or as many older Taiwanese suspect, to avoid reality, many students stay in school well into their twenties, earning one degree after another. Taiwan has 160 universities, virtually guaranteeing a place for every high school graduate. According to economists, the over-availability of higher education has led to an excess of people with advanced degrees, giving Taiwan one of the highest rates in the world of Master’s and Ph.D. holders per capita. The result has been to devalue such degrees on the labor market. Further, the longer the period of education, the shorter the working careers, leading to less tax money paid in to support the social system.

In the past, Taiwan only reluctantly opened its doors to immigrants. Now, the promotion of immigration is left as the most feasible option to ensure continued economic vitality.

Scant relief is likely to come soon for any of these circumstances. Most nations are confronted with growing income gaps, and even acclaimed economist Thomas Pikkety, author of the tome Capital in the Twenty-first Century, has little to offer in the way of a solution except for a global tax, which politically would seem to be a non-starter.

Although housing costs in Taiwan are slowly stabilizing, the reality is that even a slight drop in prices could have huge ramifications, considering the amount of wealth tied up in the property market. So without a huge hike in incomes, housing prices are unlikely to come down into an affordable range.

And with fertility rates unlikely to rise anytime soon, the promotion of immigration is left as the most feasible option to ensure continued economic vitality. That certainly seems to be the conclusion the government has drawn. In the past, Taiwan only reluctantly opened its doors to immigrants, and permanent-residence status was created only in the late 1990s and at the time was very difficult to obtain. More recently, the Ma Ying-jeou administration has made a concerted effort to ease certain restrictions for people interested in living in Taiwan.

Governmental changes

In line with that endeavor, the National Immigration Agency under the Ministry of Interior this year revised its name in Chinese to remove the words “entry” and “exit” from the title, highlighting the “immigration” nature of its portfolio. According to Director-General Mo Tien-hu, “we feel it is simpler and also more in line with international trends.” The NIA also underwent some restructuring, including the addition of more service centers. “The purpose is to enhance our work efficiency and be able to offer more services,” says Mo.

Overall policy on immigration is being directed by a high-level Talent Recruitment Policy Committee established under the Executive Yuan and including representatives from various ministries, including Economic Affairs, Labor, Education, and Health and Welfare, in addition to the NIA. “The goal we are working toward is to make it possible for people from all over the world to come to Taiwan to live and work,” says Mo.

He points to a number of recent changes to liberalize rules governing foreigners’ residence and employment in Taiwan. For example, last year the government amended regulations affecting foreigners who have completed their work assignments or are no longer employed by their original company. “Now we give them more time – up to six months – to find another job before they are required to leave the country,” he explains. Until the change, the time allowed was 90 days, already an improvement over the original 15 days.

Another revision allows foreign students graduating from Taiwan universities to qualify for employment here without needing to meet the general requirement of having two years of work experience. Besides such professional, white-collar talent, Mo says the Talent Recruitment Policy Committee is also looking at “how to recruit blue-collar specialists to take up residence here” to help meet domestic industry’s manpower needs.

He also notes the government’s efforts to provide a more comfortable environment for foreigners already staying in Taiwan. The NIA, for example, operates a hotline (0800-088-885), with multilingual specialists manning the phone 24 hours a day. If the NIA personnel lack the information being sought, they will find the appropriate government agency to contact. In another initiative, the NIA in recent years has simplified the application process for obtaining an Alien Permanent Resident Certificate (APRC). Applicants no longer have to undergo an interview, and the number of documents they need to produce has been reduced. Last year the government also made it easier for the offspring of foreign permanent residents to qualify for APRC status by allowing them to count the years of residence in which they were listed under their parents’ APRC.

“The goal we are working toward is to make it possible for people from all over the world to come to Taiwan to live and work,”

At the same time, some overly restrictive regulations remain on the books. The Forward Taiwan Task Force, a civic organization describing itself as “dedicated to strengthening Taiwan’s global economic position through efforts to improve national immigration policies,” notes that foreigners living here are banned from engaging in musical, theatrical, or other artistic performances outside the scope of their work permit. The group considers this regulation to be an unwarranted limitation on creative expression that is also not in this society’s best interest.

Another issue is that under current law, foreigners seeking to take Taiwanese nationality must renounce their original citizenship instead of being able to hold dual nationality. Many would-be immigrants from less prosperous countries would be happy to do so, but relatively few expatriates from the United States or other Western nations are willing to take that step (see the accompanying story on American citizens who have given up their passports to take ROC citizenship). The rule against dual citizenship, however, does not apply to Chinese-Americans or other overseas Chinese.

Forward Taiwan, of which Dernbach is a member, is urging the government to remove the restrictions on foreigners’ obtaining ROC citizenship. In fact, the government is considering just this sort of rule change, allowing those with exceptional skills, talents, or resources to obtain ROC citizenship without renouncing their own. This rule change specifically references Quincy Davis, the American-born basketball player who now plays on the Chinese Taipei national team but had to give up his U.S. citizenship to do so. The proposed rule change, which is awaiting deliberation by the Legislative Yuan, is aimed at drawing such exceptional talent to Taiwan, but it must be noted that the prospective revision is extremely limited in scope and will not apply to most foreigners. Forward Taiwan is asking for the scope to be broadened to include all foreigners willing to take ROC citizenship.

The official DPP policy on immigration is still being formulated, but a representative said by email that the party favors a “nondiscriminatory and immigrant-friendly policy position under the precondition of border security and safety.” The email also stressed that “the DPP values the culture new immigrants bring to Taiwan.” In addition, the opposition party appears well aware of the looming demographic threats to Taiwan, and considers a partial solution to be urging women to participate in greater numbers in the workforce.

In terms of government policy, the NDC says that while it is trying hard to increase Taiwan’s attractiveness for highly skilled immigrants, immigration can only do so much to bolster the country’s economy and population. Therefore, the NDC is promoting a number of policy initiatives aimed at mitigating the consequences of an aging population. One is to encourage people to retire later – especially women, who often cite their reason for retirement as the need to take care of aging parents or other family members. Keeping them in the labor force longer may require improvement in Taiwan’s social infrastructure for care of dependents.

Currently about 28,000 white-collar foreign professionals are working in Taiwan, according to the NDC, which says it hopes to increase that figure substantially over the next few years. But with stagnant incomes and high real estate prices, does Taiwan have what it takes to attract the kind of talented professionals that it seeks?