20130715 EDITORIAL: Government failing high-tech firms

EDITORIAL: Government failing high-tech firms

At a recent meeting with Minister of Economic Affairs Chang Chia-juch (張家祝), Taiwan’s technology companies — semiconductor firms particularly — urged the government to help stanch the drain of talent to South Korean and Chinese competitors.

It was the latest in a slew of requests from local companies desperate for the government to address the growing brain drain. The government, however, continues to fail to provide effective assistance to companies withstand harsh and unrelenting industry cycles.

As competition intensifies amid globalization and an accelerating pace of development, technological capability is becoming increasingly crucial to profitmaking and is considered the most significant weapon to survive the industry elimination game. Because skilled engineers are core to developing cutting-edge technologies and patents, the ruthless game of snatching talent is heating up.

High-technology companies feel the pinch the most and, as a result, have stepped up recruiting efforts. Taiwan Semiconductor Manufacturing Co (TSMC) provides a good example of how these firms are getting in early and targeting the nation’s best universities. Three years ago, the semiconductor heavyweight launched a program enabling students to help develop advanced technologies at TSMC during their summer vacation. The program is a door to the world’s biggest chipmaker, while giving TSMC an opportunity to pick out the best students as future employees.

Yet companies like TSMC find employee retention tough because overseas competitors have more resources. This is why government forces must be activated.

Representatives from Taiwan’s biggest chipmaking companies, including TSMC, United Microelectronics Corp, Realtek Semiconductor Corp and MediaTek, want the rules on recruiting high-end specialists from abroad, primarily from China, relaxed.

Currently, Chinese high-end workers are not permitted to work in Taiwan and executives are only allowed to come on a four-month business trip.

The firms have also asked the government to revise a rule that requires companies to book employee stock bonuses as an expense. They say these accounting rules have rendered their efforts to retain skilled professionals hopeless. According to the rule, companies have to deduct bonuses from their net profits, which dilutes corporate profits. As a result, some companies like TSMC have totally scrapped the issuance of stock bonuses and shifted to issuing cash bonuses. Yet most employees pay income tax on the market price of stock, rather than by the book value of NT$10 per share. As such, Taiwan is losing skilled technology professionals to China, South Korea and even Singapore.

The ministry’s lukewarm response appears to portend more disappointment. It said it will be unlikely to revise the accounting rule only for semiconductor companies and the electronics industry as this has been in place for the past five years.

As for the request to hire more foreign professionals to fill the talent gap, the ministry said the Council of Labor Affairs would need to be consulted about allowing in more high-end workers from China and other countries.

Clearly the government is going to fail local firms again, leaving Taiwan’s businesses to count on themselves to solve the growing brain drain problem.