Taipei, Jan. 8 (CNA) Taiwan has maintained its status as the world's third best investment destination in the latest U.S. Business Environment Risk Intelligence (BERI) report, the Ministry of Economic Affairs (MOEA) said in a statement Wednesday.
Taiwan kept its place behind only Singapore and Switzerland despite a one-point decline to 72 in its profit opportunities recommendation (POR) score from the previous rating released in September 2013, the MOEA's Department of Investment Services (DIS) said.
POR is the overall indicator used by BERI to evaluate each country's investment climate and business risk.
DIS Director-General Chiu Yi-cheh attributed the drop in the POR score mainly to the controversy over a cross-Taiwan Strait agreement on trade in services that led to a 3-point decline in Taiwan's political risk rating.
The organization uses three main indicators to assess investment risk -- operating conditions (operations risk), political risk, and the foreign exchange/external accounts position (remittance & repatriation factor risk).
Taiwan emerged in the December report as the world's safest place to invest in terms of foreign exchange/external accounts risk, replacing the Netherlands in the top spot mainly because the Dutch trade surplus for 2013 fell short of expectations.
BERI estimated that Taiwan would have a current account surplus of US$55.78 billion in 2013, exceeding the 2012 surplus of US$48.88.
Chiu said Taiwan ranked second only to Singapore in terms of operating conditions, but it dropped two notches to become the world's 10th safest place in terms of political risk.
In BERI's August report, Taiwan was ranked the eighth-safest place worldwide in terms of political risk.
Taiwan saw its score in political risk drop to 59 points because the cross-strait agreement on liberalization of trade in services signed in June 2013 is still stalled in the Legislative Yuan, Chiu said.
BERI also forecast in its latest report that Taiwan will rank ninth in the world in political risk in 2014 and eighth in 2018.
Overall, BERI gave Taiwan's general investment climate a 1B rating, which means investors can continue to invest in Taiwan.
The United States-based business analysis and rating service provider also forecast that Taiwan will remain as the third-best investment destination worldwide between 2014 and 2018, with its overall POR score expected to rise to 73 points.
The group was optimistic on relations between Taiwan and China, forecasting that cross-Taiwan Strait ties will remain friendly over the next five years as Taiwan strengthens its external trade and economic relations and promotes the signing of free trade agreements with its major trade partners.
BERI releases its survey on the investment climates and competitiveness of the world's 50 major economies in April, August and December every year.
Although Taiwan has ranked consistently high in the BERI evaluation, foreign investment in Taiwan has only grown modestly in recent years.
Chiu said the phenomenon could partly be attributed to the fact that Taiwan's industrial development has been excessively concentrated in a few sectors, primarily electronics and information technology.
He also noted that foreign investors have mostly invested in the service sector, which tends to require smaller amounts of capital. Services account for 70 percent of Taiwan's gross domestic product (GDP).
In recent years, Taiwan has encouraged multinational conglomerates to set up their global operational hubs or research and development hubs in Taiwan, knowledge-intensive investments that also require only limited capital infusions, Chiu said.
(By Huang Chiao-wen and Sofia Wu)