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What advantages does the park have that make it appealing to so many companies?
Hydean Biotechnology Company held its grand opening at Pingtung Agricultural Biotechnology Park (PABP) in mid-March. The company’s 2.38-hectare site is home to Taiwan’s first marine ecological greenhouse.
Hydean Biotech, built by Tai-I Group chairman Hsu Shou-hsin and technological R&D expert Lai Jea-gwan, employs fish–algae and fish–plant cultivation to raise high-priced fish such as eel, giant grouper and coral trout, produce healthful seaweeds including sea wood-ear (Sarcodia spp.) and sea grapes (Caulerpa spp.), and grow vegetables like iceberg lettuce, all of top quality.
According to Kevin Sun, a section manager in Hydean’s General Affairs Department, the company expects to attain an annual output of 750 metric tons of fish and 4 million metric tons of seaweed and vegetables within five years, for a total value of NT$1.3 billion per year.
Hydean Biotech isn’t the only newcomer here. Construction can be seen everywhere in the park as companies build their new factories.
With an area of 233 hectares, PABP currently boasts 84 companies, and there’s still room for ten to 20 more. The second stage of the Free Economic Pilot Zone (FEPZ) plan will expand the park by a further 167 hectares. The feasibility assessment was completed last year, and this year the environmental impact assessment will be carried out.
“A lot of applications have been submitted recently,” says Huang Chin-cheng, director of the PABP preparatory office. The reason why the park has been able to entice so many companies is that new possibilities and advantages have sprung up since the regulations were relaxed.
Advantage 1: Regulated raw materials
PABP is Taiwan’s only agricultural biotech park. Once a duty-free zone in which companies could avoid tariffs and commodity taxes, it has now been made into an FEPZ. Since then, its biggest advantage is that regulated raw materials can be processed here for export.
For instance, the 830 agricultural products from mainland China whose importation into Taiwan is banned, and the agricultural products from other countries whose importation is restricted to limit their impact on the local market, can all be processed within the park, with the caveat that everything must be exported.
Huang Chin-cheng says that the chief goal of the relaxation of regulations, besides raising the technological level of the processing of Taiwan’s agricultural produce, is to internationalize Taiwan’s agriculture. PABP differs from the other seven pilot zones in that the entire park is landlocked. The lack of a harbor or airstrip makes regulation more difficult.
For this reason, the PABP is setting up customs, trade and quarantine stations, for a fully equipped regulatory system. Huang notes that if a company makes use of regulated raw materials, it must have a bonded zone within the factory building so that the quantities of materials brought in and used can be overseen. On top of this, there’s a manufacturing process control system in the park, keeping tabs on how much regulated raw material is used and what quantities of products are produced, and ensuring that it’s all exported.
Advantage 2: Industry–academia partnership
Thanks to its strategic location, Pingtung Agricultural Biotechnology Park is well positioned for partnership with academia.
Says Huang, Taiwan’s agriculture is at the head of the class internationally. Moreover, central and southern Taiwan boast over 30 institutes of higher learning, including National Pingtung University of Science and Technology, National Cheng Kung University and National Chung Hsing University, which are all members of the park’s Academia–Industry Consortium and as such can provide ample assistance.
Lohmann, the animal health research organization whose factory is currently under construction in the park, will able to push Taiwan’s animal vaccine industry into the international market in one go, while also hiring and training over 100 vaccine R&D technicians. These Taiwanese seed technicians will be set to become animal vaccine researchers and sales personnel able to work in the international arena.
Sun Toward Tech Company, whose application has been approved and who is building its factory, has taken a liking to the park’s easy availability of land and preferential tariff regime for export-related activities, as well as its capacity for industry–academia partnerships.
Within the Sun Toward group are restaurants as well as plastics firms that manufacture packaging for electronic materials and food. Zhong Chaoqin, assistant manager of the biotech department, tells us that Sun Toward Tech has replicated Japanese technology with the aim of growing frigid-zone plants, such as ice plant, a leafy vegetable from South Africa, which currently sells at NT$12,000 per kilogram, in order to supply the company’s four Italian restaurants.
In addition, one of the company’s chief exports is its improved shimeji mushrooms.
Mainstay 1: Animal vaccines
Generally speaking, PABP’s companies can be divided into three main types: animal vaccines, ornamental fish, and value-added processing of agricultural produce.
Park director Huang Chin-cheng, who was formerly a vaccine researcher at the Council of Agriculture’s Livestock Research Institute, understands Taiwan’s animal vaccine industry well, and has spared no effort to push Taiwan’s animal vaccine products into the international market.
“Only when the market end is opened up and products have an outlet will people be prepared to invest in research and funding,” says Huang, noting that Taiwan currently has seven animal vaccine firms, but most are only able to sell raw materials to other countries for processing. Their inability to get their own vaccine products onto the international market means they lack motivation for research and development.
Taiwan’s market is small, but Taiwan has a great advantage in terms of R&D, says Huang. Nearly 3.5 billion ducks and geese are farmed around the world, but there are no vaccines available for them internationally; only those in Taiwan are well developed.
Lohmann, which has received special licenses to produce eight of Taiwan’s vaccine products, decided to set up a factory at PABP. Says Huang, the opening of Lohmann’s factory means that animal vaccines developed in Taiwan are a step away from the international market. In the future, whether they’re developed independently or jointly, it will drive the park’s other three vaccine firms toward internationalization.
Mainstay 2: Ornamental fish
Another mainstay of PABP is ornamental fish and associated products. At present there are 12 such firms in the park.
In PABP’s newly constructed Asia–Pacific Operation Center for Aquaculture, a standard factory building can be leased for NT$1 million a year. The center has room for a total of 18 companies.
The chief items produced by Taiwan Fu Shrimp Industries, the first company to enter the center, are aquarium shrimp and fish, as well as associated products such as fish food and water conditioner.
Seven years ago, Taiwan Fu Shrimp chairman Frank Liao ran an aquarium shrimp cultivation facility in Xiamen, China, but pulled out later because of fierce price competition and other factors. He returned to Taiwan last year, setting up a shrimp cultivation facility in Kaohsiung’s Dashu District, and then applied to the Council of Agriculture to set up a base for research, breeding, imports and exports at PABP.
Taiwan Fu Shrimp’s chief business involves high-priced crystal shrimp (Caridina) breeds that the company developed itself. There are over 30 breeds in all, including Cardinal, Tangerine Tiger, Blue Black Panda, Black King Kong and Blood Red Wine, and they are exported to South Korea, the United Kingdom, Germany, France and Singapore.
Liao remarks that it’s necessary to import more high-quality shrimp species for breeding in order to maintain a technical advantage. With the relaxed regulations of this FEPZ, they can apply to import more than 2,000 species of regulated fish and shrimp, carry out breeding and improvement on site, and then sell the resulting breeds to the global market. It’s a “blue ocean” for the ornamental fish industry.
Says Huang Chin-cheng, conditions for breeding aquarium fish are much better in Taiwan than in Singapore or Hong Kong, because those places only do transshipments, while Taiwan enjoys excellent capacity for R&D.
In the past, Taiwan was only able to produce around 300 to 400 species of aquarium fish, and was unable to claim even 1% of the international market because the government prohibited imports of overseas species. Now that the FEPZ has been established and the Asia–Pacific Operation Center for Aquaculture has been set up, companies can source species from other countries to match clients’ orders. Thanks to this system, the number of species produced can be expanded to 3,000–4,000.
Mainstay 3: Agricultural upgrading
T-Ham, which has been in Kaohsiung’s Dashu District for five decades, applied to enter the park given its “processing on order” advantage. The company plans to invest NT$350 million, and is scheduled to begin construction of its new factory at the end of 2014.
T-Ham production manager Huang Cunhou remarks that given insufficient factory space, the company had already made plans to build a new facility. By setting it up in PABP, it can carry out processing on order and expand its exports.
One Power Biotechnology Company has been in PABP since 2000. After the regulations were relaxed, it was able to bring in valuable Chinese medicines for processing; moreover, the company recently transformed its Enzyme Brand Culture Museum into a tourist factory, drawing in visitors to learn about enzyme production and to sample enzymes and enzyme ice cream.
One Power chairperson Stephanie Lin says that the enzyme industry not only promotes health; it can also boost local agriculture and help protect the natural environment. Such a diversified operating model also adds luster to the growing park.
“Both agriculture and industry are changing,” says Huang Chin-cheng. Taiwan cannot rely on primary agricultural production to maintain its entire agricultural sector. With investment focused on primary production, we have been weak in terms of processing and internationalization, says Huang. But with the Free Economic Pilot Zone model, Taiwan will be able to thrive by transforming its agricultural products into international goods.
(photos by Chuang Kung-ju/tr. by Chris Nelson)