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Manufacturing fixed capital investment grows for 6th straight quarter

2017/04/03 18:25:06

(CNA file photo)

Taipei, April 3 (CNA) The local manufacturing sector posted a year-on-year increase in fixed capital investment for the sixth consecutive quarter in the fourth quarter, with rising global demand encouraging Taiwanese manufacturers to spend more on capacity expansion, according to the Ministry of Economic Affairs (MOEA).

Citing data, the MOEA said that NT$319.2 billion (US$10.53 billion) in fixed capital investment was made in the local manufacturing sector from October-December, an increase of 6.3 percent from a year earlier, after a 16.4 percent year-on-year increase in the third quarter of last year.

The Directorate General of Budget, Accounting and Statistics raised its economic growth forecast from 1.87 percent in mid-February to 1.92 percent, citing improved export performance.

In February, Taiwan's exports rose 27.7 percent year-on-year to US$22.66 billion, marking the fifth consecutive month the country's outbound sales grew. Such solid global demand encouraged many exporters in Taiwan to pour more funds into expanding output.

Of the NT$319.2 billion in fixed capital investment, about NT$277 billion or 86.8 percent was assigned to buy machinery, ahead of an 11.9 percent share spent on new plant construction.

The strong growth in fixed capital investment for the local manufacturing sector came after the bellwether electronics industry aggressively assigned funds to raise production in response to rising global demand, the MOEA said.

According to the MOEA, Taiwanese electronics component suppliers invested NT$204.8 billion in fixed capital in the fourth quarter, accounting for 64.2 percent of the manufacturing sector total.

Investment by electronics component makers rose 14.9 percent from a year earlier, marking the third consecutive quarter such investment has grown at a double digit pace with semiconductor suppliers in Taiwan keen to expand capacity and develop high-end technology processes for a wide range of applications such as handheld devices and the Internet of Things, the MOEA said.

In contrast, fixed capital investment in the chemical materials segment fell 3.8 percent from a year earlier to NT$14.7 billion, reflecting a higher comparison base seen over the same period in the previous year, the MOEA said.

Investment by the local oil and coal segment fell 6.3 percent from a year earlier to NT$9.6 billion and funds assigned by the local base metal sector also dropped 4.7 percent to NT$9 billion on the back of a higher comparison base, the MOEA added.

In 2016, the local manufacturing sector made fixed capital investments totaling NT$1.09 trillion, up 11.8 percent from a year earlier, the MOEA said.

The ministry said that with the global economy expected to grow further, local semiconductor firms will continue to invest in more sophisticated processes to maintain their lead over foreign counterparts, with the manufacturing sector expected to report another year-on-year increase in fixed capital investment for the first quarter of this year.

(By Huang Ya-chuan and Frances Huang)