Taiwan's direct overseas investments hit new high in 2024

Taipei, Feb. 22 (CNA) Taiwan's direct overseas investments hit a new high in 2024 due to investments made by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and other major manufacturers to boost global expansion, according to the central bank.

Central bank data showed the country's net increase in direct overseas investments in 2024 hit a record US$21.05 billion. The net increase in overseas investments by Taiwanese residents also hit a record US$31.98 billion.

Chen Fei-wen (陳斐纹), deputy director of the central bank's Department of Economic Research, said the increase was largely due to TSMC's efforts to expand production in the U.S. and Japan, citing statistics from the Ministry of Economic Affairs.

In addition, Chen said, investments by Vanguard International Semiconductor Corp., a smaller contract chipmaker, semiconductor distributor WT Microelectronics Co. and iPhone assembler Hon Hai Precision Industry Co. also contributed to the growth.

The central bank said the portfolio investment account posted a net asset increase of US$66.33 billion in 2024, down US$5.59 billion from a year earlier.

As a result, Taiwan's net fund outflow, which measures the flow of direct and portfolio investments, reached US$94.39 billion in 2024, an increase of US$9.02 billion from the previous year.

In the fourth quarter, the country's net fund outflow totaled US$30.70 billion, an increase of US$2.53 billion from the previous year, marking the 58th consecutive quarter of net fund outflows-the longest streak in Taiwan's history.

As Taiwan continues to report net fund outflows in its financial account, concerns over sustained massive fund drainage have deepened.

In response to concerns that investors may continue moving funds out of the country, the central bank stated that net financial account outflows are not unusual in a country like Taiwan, which has a long-term current account surplus.

The central bank said countries with long-term current account surpluses, including Japan, Singapore, South Korea and Germany, have also tended to record net financial account outflows.

The current account primarily measures a country's exports and imports of goods and services.

In 2024, Taiwan recorded a current account surplus of US$113.83 billion, an increase of US$7.99 billion from the previous year, following a record-high surplus of US$100.7 billion in goods, driven by strong global demand for emerging technologies.

In the fourth quarter alone, Taiwan recorded a current account surplus of US$34.40 billion, down US$240 million from a year earlier.

Chen said if Taiwanese companies generate profits from overseas direct investments, including dividend income, the gains will be logged as primary income in the current account.