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September 27, 2017

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NSC to set up 'seed fund' to encourage innovation: chairman

The National Science Council (NSC) plans to set up a "seed fund" of about NT$200 million to NT$300 million to encourage innovation, which is key to raising the nation's competitiveness, said council Chairman Chu Ching-yi in an interview with the Central News Agency.

"The seed fund is currently in its preparatory stage and will be available once the related rules and regulations come up," he said.

According to Chu, Taiwan used to be an "efficiency-oriented" economy, taking a firm foothold in different parts in the world with its ability to raise productivity and lower cost. Yet with the trend of globalization and competition from China and Southeast Asia where cost is lower, the need for Taiwan to transform its economy has gained urgency, he said.

The NSC is now working to help Taiwan transform into an innovation-oriented economy, where "good intellectual property (IP) can translate into good initial public offering," he said.

He said during the initial stage of IP development, however, things can look murky and uncertain, causing venture capitals to be hesitant to provide assistance.

This is where the government comes in, he said.

"Suppose you have some 100 IP projects, each of which carries certain risk," he said. "The government will diversify that risk by putting a few million dollars into each project. This way the investment yield will still be positive."

On concerns specific groups or individuals will profiteer from the fund, Chu said he will devise a mechanism in which winners of the money will be selected through an evaluation process.

He also dismissed the presumption that whenever a fund is set up, it is thought to be a way to benefit specific groups or individuals.

"Let me use Morris Chang, CEO and chairman of Taiwan Semiconductor Manufacturing Co. as an example. Suppose Chang works in a foreign country, and the government asks him to come back to pick an investment project from 100 candidates. Since we can't afford to pay him, we put him as a nominal shareholder in each of the firms. Suppose the project he picks is a cash cow, then Chang gets tons of money. If the project fails, then Chang doesn't lose, since he didn't put any money up front."

"If you call this 'profiteering,' I can't agree with that line of thinking," Chu said. "The salary that Chang gave up when he came back to Taiwan was his loss. If you continue to have the mentality that someone needs to pay first to qualify for not being a profiteer, then you won't find anyone in the world to help you do what you do."

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