Industrial Cooperation Program - Relevant Regulations

:::

:::
	Introduction

	Program Objectives

	Organization

	Processing Procedure

	Transaction Categories

	Relevant Regulations

	Requirements of Note

	Preferred ICP Items

	Online Application

	Contacts

:::

	HomeRelevant Regulations

In order to enhance the effectiveness of ICPs, to fairly utilize relevant ICP resources, and to ensure the technical competitiveness of local industries, Taiwan’s ICP has implemented seven sets of Directions as follows:

(1) Objective
	These Directions are prescribed by the Ministry of Economic Affairs (hereinafter referred to as the "MOEA"), Republic of China (the "R.O.C.") for the effective implementation of industrial cooperation programs (hereinafter referred to as the "ICPs") in the R.O.C. by stipulating penalty provisions against any contractor (hereinafter referred to as the "Contractor") who fails to implement an ICP in accordance with the relevant Industrial Cooperation Agreement (hereinafter referred to as the "ICA") so as to prompt the Contractor to duly fulfill its ICP obligations.

(2) Definition
	The following terms as used in these Directions are defined as follows:
	a.	"Contractor" shall mean a contractor who has entered into an ICA with the Industrial Development Bureau of the MOEA (hereinafter referred to as the "IDB").
	b.	"Executive Committee" shall mean the Executive Committee of Industrial Cooperation Program under the MOEA.
	c.	"Default by Delay" shall mean the case where the Contractor has failed to complete the implementation of an ICP and to achieve the total amount of credits required under the ICA (hereinafter referred to as the "Required Credits") by the deadline as specified under the ICA.
	d.	"Penalty for Delay" shall mean the punitive damages payable by the Contractor in case of a Default by Delay.
	e.	"Maximum Penalty" shall mean the upper limit of the amount of Penalty for Delay as determined by the Executive Committee.
	f.	"ICP Performance Bond" shall mean the performance bond provided by the Contractor to secure the performance of its ICP obligations under the ICA.
	g.	"Letter of Guarantee" shall mean the letter of guarantee provided by the Contractor to secure the performance of its ICP obligations under the ICA (in the same form as Attachment hereto).

(3) Operation Procedures
	a.	The Executive Committee shall, pursuant to these Directions, set forth relevant penalty provisions in the Contractor’s Undertaking for Industrial Cooperation, as attached hereto as Annex I, the Specifications for Industrial Cooperation Program (hereinafter referred to as the "Specifications") and the ICAs, unless an exemption from the application of these Directions is granted by a special approval of the Executive Committee.
	b.	The Maximum Penalty shall be decided by the Executive Committee, on a case-by-case basis, in an amount within the range from 3% to 5% of the total price of the procurement contract.
	c.	Each of the Specifications and the ICAs shall indicate the amount of the Maximum Penalty, and shall provide that in case of failure of the relevant Contractor to fulfill its ICP obligations by the deadlines in accordance with the ICA, the Contractor shall be subject to the punitive damages set forth in the ICA; and the Contractor's Default by Delay will further be reported to all relevant government agencies and state-owned enterprises in the ROC for their reference in conducting contractor credit investigations for future procurement projects.
	d.	In the event the Contractor becomes incapable of completing its ICP obligations under the ICA by the deadline owing to any event of force majeure during the program duration, and an extension of the performance period of the ICA is granted by the Executive Committee, these Directions shall remain applicable to the performance of the ICA during the extended period.
	e.	Terms and conditions set forth in the Standard ICA, as attached hereto as Annex II, are a total of twenty-four (24) articles.

(4) Calculation of Penalty for Delay
	The amount of Penalty for Delay payable by the Contractor shall be calculated as follows:
	a.	If the credits granted to the Contractor for its performance of the ICP are less than 10% of the Required Credits, the amount of the Penalty for Delay shall be equal to the Maximum Penalty.
	b.	If the credits granted to the Contractor for its performance of the ICP reach 10% or more of the Required Credits, the amount of the Penalty for Delay shall be the Maximum Penalty multiplied by the percentage of the outstanding credits over the Required Credits.

(5) Receipt and Management of ICP Performance Bond and Letter of Guarantee
	The Specifications shall set forth, inter alia, the following particulars:
	a.	The Contractor shall, prior to the execution of the ICA, post an ICP Performance Bond with the IDB, in an amount equal to the Maximum Penalty.
	b.	Operations regarding the receipt, custody, withholding and refund of the ICP Performance Bond may be effected by the IDB itself, or by the Bank of Taiwan on behalf of the IDB.
	c.	Relevant service fees arising from the ICP Performance Bond shall be borne by the Contractor. However, the Contractor will be granted credits for the relevant service fees paid as ICP management efforts.
	d.	The Penalty for Delay payable by Contractor may be drawn from the ICP Performance Bond by the IDB. Upon termination of the ICA, the ICP Performance Bond (less any forfeiture or withdrawal) shall be returned to the Contractor without interest.
	e.	The ICP Performance Bond shall be paid in the form of an irrevocable standby letter of credit to be issued and confirmed by a bank acceptable to the IDB, with the contents thereof conforming to those as shown in the form standby letter of credit annexed to the bidding documents, and shall be valid for a period at least equal to the program duration under the ICA plus an additional period of six (6) months, except where the Contractor may deliver a Letter of Guarantee pursuant to the provisions of Sub-Paragraph (6) as set out below.
	f.	Except for any of the following circumstances, the Contractor may deliver a Letter of Guarantee duly notarized by a public notary in lieu of an ICP Performance Bond:
		Where it is the first time for the Contractor to implement an ICP in the R.O.C.; Where the Contractor has breached the provision of an ICA in the implementation of a previous ICP in the R.O.C.; Where the Contractor has withdrawn from an ICP without prior consent of the Executive Committee, or has delayed the completion of a previous ICP in the R.O.C.; Where the Contractor has forged or, without authorization, altered any relevant documents in the implementation of a previous ICP in the R.O.C.; and Where the bidding requirements of a procurement project which is conducted with open tendering procedures stipulate that an ICP performance bond shall be provided by the Contractor.
	g.	Where a Letter of Guarantee is provided in lieu of an ICP Performance Bond in accordance with the provisions set out in the preceding Sub-Paragraph (6), the Letter of Guarantee shall be submitted to the IDB prior to the execution of the ICA. In the event that the Contractor fails to fulfill its obligations under the ICA, the IDB may claim directly against the Contractor for Penalty for Delay in accordance with the Letter of Guarantee.

(1)	These Directions are prescribed by the Ministry of Economic Affairs, Republic of China (hereinafter referred to as the "MOEA") to ensure that a local entity which, under the framework of an Industrial Cooperation Program (hereinafter referred to as the "ICP"), participates in an eligible ICP transaction (hereinafter referred to as the "ICP Participant"), shall pay an appropriate contribution (hereinafter referred to as the "Contribution") as feedback.
(2) Definition
	The Executive Committee shall mean the Executive Committee of Industrial Cooperation Program, MOEA.

(3) Scope of Application
	a.	These Directions shall apply to any ICP Participant registered as a profit-seeking enterprise (including a private enterprise or state-owned enterprise).
	b.	These Directions shall not apply to the following ICP Participants:
		Government agencies and non-profit-seeking organizations (including foundations and public/private universities); and Any individual who has participated in a relevant training program.

(4) Calculation of Contribution Payable by ICP Participants
	The amount of the Contribution payable by an ICP Participant shall, depending upon the category of the eligible ICP transaction (hereinafter referred to as the "Eligible ICP Transaction") in which the ICP Participant participates, be calculated in accordance with the following:
	a.	Where the Eligible ICP Transaction falls in the category of local procurement, the amount of Contribution payable shall be equal to 0.3% of the amount of credits granted for such Eligible ICP Transaction.
	b.	Where the Eligible ICP Transaction falls in the category of international marketing assistance, the amount of Contribution payable shall be equal to 0.6% of the amount of credits granted for such Eligible ICP Transaction.
	c.	Where the Eligible ICP Transaction falls in the category of technology transfer, joint research and development, local investment, or personnel training, the amount of Contribution payable shall be equal to 0.7% of the amount of credits granted for such Eligible ICP Transaction.
	d.	Where the Eligible ICP Transaction falls in any other category as approved by the Executive Committee, the amount of Contribution payable shall be determined by the Executive Committee within the range from 0.3% to 0.7% of the amount of credits granted for such Eligible ICP Transaction.

(5) Reduction or Exemption of Contribution
	Where an Eligible ICP Transaction meets either of the following conditions, the Executive Committee may, upon receipt of an application filed by the ICP Participant concerned, halve the amount of the Contribution payable by the ICP Participant:
	a.	Where the Eligible ICP Transaction is related to the performance of the procurement project which gives rise to the ICP performance and the Eligible ICP Transaction; or
	b.	Where the Eligible ICP Transaction is related to an industry, the development of which is highly encouraged and promoted by the Government and the entry barrier to which is comparatively higher (presently referring to the aero-space industries and the bio-tech industries).
	For any Eligible ICP Transaction which is special in nature or which has any other special reasons for exemption from payment of the Contribution, the ICP Participant may apply to the Executive Committee for an exemption.

(6) Management and Utilization of Contribution
	The Contribution paid by an ICP Participant shall be submitted to R.O.C. National Treasury, processed in pursuance of the budgetary procedures with the assistance of the IDB in accordance with the relevant provisions set forth in National Property Act.

(7) Operation Procedures
	An ICP Participant shall submit to the Executive Committee a duly notarized Letter of Undertaking for Payment of Contribution (hereinafter referred to as the "Letter of Undertaking") in the form as shown in the Attachment attached hereto, together with the corresponding proposal for the Eligible ICP Transaction to be submitted by the foreign contractor which undertakes the Eligible ICP Transaction (hereinafter referred to as the "Contractor") for review and preliminary approval. The Letter of Undertaking shall indicate an estimated amount of the Contribution payable.
	In case an ICP Participant fails to submit the Letter of Undertaking as required under the preceding Paragraph, the Executive Committee may refuse to grant its preliminary approval of the ICP proposal submitted by the Contractor.
	After completion of the Eligible ICP Transaction by the Contractor, the ICP Participant shall, at the time when the Contractor applies to the Executive Committee for final approval of the Eligible ICP Transaction, submit a report and relevant supporting information regarding the performance and results of such Eligible ICP Transaction for review and determination by the Executive Committee concerning the amount of Contribution payable, and shall subsequently make the payment of the Contribution within the period specified by the Executive Committee.
	An ICP Participant which has failed to pay the Contribution in compliance with the preceding Paragraph shall not be allowed to take part in any other Eligible ICP Transaction, unless otherwise permitted by the Executive Committee.

(1)	These Directions are prescribed by the Industrial Development Bureau of Ministry of Economic Affairs (hereinafter referred to as the "IDB") for the purpose of effective control of export from Taiwan of the technologies acquired through an industrial cooperation program (hereinafter referred to as the "ICP").

(2)	The IDB will specify in both the Specification for Industrial Cooperation Program (hereinafter referred to as the "Specification") and the Industrial Cooperation Agreement (hereinafter referred to as the "ICA") that a foreign contractor shall submit to the Executive Committee of Industrial Cooperation Program, MOEA (hereinafter referred to as the "Executive Committee"), a "Letter of Undertaking for Compliance with Export Control of Technologies Acquired through Industrial Cooperation Programs" (hereinafter referred to as the "Letter of Undertaking," in the form as shown in Attachment I hereof) signed by an local entity participating an Eligible ICP Transaction (hereinafter referred to as the "ICP Participant") together with the corresponding proposal for the Eligible ICP Transaction for the review and preliminary approval by the Executive Committee. Otherwise, no preliminary approval will be granted by the Executive Committee. The Letter of Undertaking shall contain a clause prohibiting the ICP Participant from transferring the technology acquired to any other place outside the territory of Taiwan for use in the production of relevant products within two (2) years from the date on which all technical information has been transferred to the ICP Participant by the foreign contractor, unless otherwise approved by the Executive Committee or by the appropriate competent authority due to special circumstances. In case of a violation of the Letter of Undertaking, the ICP Participant's legal liabilities shall be pursued, and the ICP Participant shall be banned from participating in any future Eligible ICP Transactions.

(3)	In order to control the export to Mainland China of any technologies acquired through the ICP, the IDB shall, in junction with the Investment Commission of the Ministry of Economic Affairs and by making reference to the regulations governing "New Leading Product Development Project" and the "Traditional Industrial Technology Advancement and Guidance Project," examine the contents of the simple/special "Check List for Examination of Investment Project to be Made in Mainland China" (refer to the standard form of the Check List as shown in Attachment II hereof) to determine whether the products or the technologies involved in such investment projects include any technologies acquired through the ICP and are still subject to export control.

(1)	These Directions are promulgated for the purpose of effective promotion of the use of reserved credit under the Industrial Cooperation Program (the “ICP”).

(2) Terminology:
	The following terms used in these Directions shall have the following definition:
	a.	Reserved Credit: refers to the ICP credit approved by the Executive Committee upon an application with the Industrial Development Bureau filed by an applicant company which, while not under any obligation to do so, is willing to carry out the ICP in advance and reserve the right to use such credit in the ICP required under a future government procurement project to be undertaken by it.
	b.	Affiliate: refers, with regard to an applicant company, to its parent or subsidiary company which holds the majority of its voting shares or the majority of whose voting shares are held by the company, respectively.
	c.	Weighted Factor: refers to the multiplier as approved by the Executive Committee based on the relative significance of the contents of the ICP proposed by a company to the benefits of domestic industry as a whole; and
	d.	Executive Committee: refers to the Executive Committee of Industrial Cooperation Program, Ministry of Economic Affairs.

(3)	The applicant referred to in these Directions shall be confined to such foreign contractor which is not under any obligation to carry out the ICP. The contractor referred to in the preceding paragraph shall have the capacity to conduct research and development, and to produce professional products.

(4)	Upon filing an application for the Reserved Credit, the applicant company shall submit the application form together with other related documents to the Executive Committee for its review

(5)	The applicant company and its affiliate shall have the right to use and transfer the Reserved Credit. The use and transfer of the Reserved Credit as referred to in the preceding paragraph shall be specifically approved by the Executive Committee on a case-by-case basis. The Reserved Credit shall be valid for five (5) years commencing from the date immediately following the approval of the Reserved Credit by the Executive Committee.

(6)	Upon applying the Reserved Credit to offset the ICP credit requirement under other government procurement project, the amount of the Reserved Credit to be used shall not be greater than one half of the total credit required to be performed for the other government procurement project unless otherwise specifically approved by the Executive Committee on a case-by-case basis.

(7)	These Directions shall become effective upon the approval by the Industrial Cooperation Steering Committee. Revision and/or amendment may be made to cover matters not specifically provided herein if and when necessary.

(1)	These Directions have been promulgated for the purpose of effective management of the use of surplus credit generated from the Industrial Cooperation Program (the “ICP”).

(2) Terminology:
	The following terms used in these Directions shall have the following definition:
	a.	Surplus Credit: Where the total credit completed by a company as audited and recognized by the Executive Committee exceeds the amount of credit required to be performed by the company, such excessive credit shall be referred to as the Surplus Credit.
	b.	Affiliate: refers, with regard to a company, to its parent or subsidiary company which holds the majority of its voting shares or the majority of whose voting shares are held by the company, respectively.
	c.	Executive Committee: refers to the Executive Committee of Industrial Cooperation Program, Ministry of Economic Affairs.

(3)	The applicant referred to in these Directions shall be confined to such company which is obligated to carry out the ICP. The applicant and its Affiliate thereof shall have the right to use and transfer the Surplus Credit. The use and transfer of the Surplus Credit as referred to in the preceding paragraph shall be specifically approved by the Executive Committee on a case-by-case basis. The Surplus Credit shall be valid for five (5) years commencing from the date immediately following the approval of the Surplus Credit by the Executive Committee.

(4)	The principal contractor of a procurement project in connection with which the ICP is required shall enter into the Industrial Cooperation Agreement ("Agreement") in its own name, and be responsible for carrying out the ICP. The principal contractor may assign its Surplus Credit pro-rata to its subcontractors depending on the extent each subcontractor contributes in the performance of the Agreement; provided, that the subcontractor, though not a signing party to the Agreement, is willing to jointly undertake to perform the ICP and such willingness is expressly included in the Agreement. The subcontractor shall have the right to use any Surplus Credit so assigned to it. In the event that two or more companies in the form of a consortium have jointly undertaken a procurement project in connection with which the ICP is required, they shall jointly sign the Agreement in which the amount or percentage of the ICP credit undertaken by each individual contractor shall be expressly provided.

(5)	When applying its Surplus Credit to fulfill its obligation under other procurement project in connection with which the ICP is required, the amount of Surplus Credit to be used shall not be greater than one half of the total credit required to be performed for the other procurement project unless otherwise specifically approved by the Executive Committee on a case-by-case basis.

(6)	These Directions shall become effective upon the approval by the Industrial Cooperation Steering Committee. Revision and/or amendment may be made to cover matters not specifically provided herein if and when necessary.

(1)	These Directions are prescribed for the effective implementation of ICP Transactions by way of supervising the ROC participant and Contractor to fulfill their respective obligations under the ICP Plan, and to ensure the quality and effectiveness of said ICP Transaction.

(2)	Within one month after the Executive Committee grants a preliminary approval for a proposed ICP Transaction, the ROC participant shall, based on the relevant proposal and materials as reviewed and approved by the Executive Committee, cooperate with the Contractor in preparing and providing the ICP Office with an action plan detailing major milestones and their respective timeline to facilitate the ICP Office conducting regular inspection on the status of the implementation of said ICP Transaction.

(3)	The ROC participant shall provide a quarterly status report regarding the implementation, coordination with the Contractor and other matters relating to the ICP Transaction to the ICP Office for its review and evaluation.

(4)	Based on the review of the quarterly status report submitted by the ROC participant as described in Paragraph (3) above, the case officer of the ICP Office may raise relevant inquiries by phone, conduct on-site inspection(s), or hold meeting(s) to review the submitted materials as the ICP Office may deem appropriate.

(5)	In the event that the implementation of the ICP Transaction is affected due to force majeure events (e.g. nature disaster, restriction/prohibition on exportation permits without notice, or suspension of operation), the ROC participant and/or Contractor shall file an application with the ICP Office along with supporting documents for amendment to ICP Transaction, extension of timeline, or withdrawal of ICP Transaction and said application would be forwarded by the ICP Office to the Executive Committee for its review.

These Directions are prescribed to effectively supervise the implementation of each industrial cooperation project ("Eligible ICP Transaction") based on the credits preliminarily approved by the Executive Committee ("Executive Committee").

(1) For any on-going Eligible ICP Transactions:
	The Executive Committee shall instruct the Contractor to perform the Eligible ICP Transaction in accordance with the credits being preliminarily approved. In the event of any proposed changes to the category, any of the items, or estimated credits to be generated from such Eligible ICP Transaction, the Contractor shall submit a plan for adjustment to the Executive Committee for its review and approval before submitting an application for final credit claim.

(2) For any Eligible ICP Transactions that are in process of review by the Executive Committee:
	After the Executive Committee grants a preliminary approval for a proposed Eligible ICP Transaction, the Executive Committee shall state in its notice to the Contractor that the Eligible ICP Transaction should be performed in accordance with the credits being preliminarily approved. In the event of any proposed changes to the category, any of the items, or estimated credits to be generated from such Eligible ICP Transaction, the Contractor shall submit a plan for adjustment to the Executive Committee for its review and approval before submitting an application for final credit claim.

(3)	In the event of any changes to the credit amount generated from an Eligible ICP Transaction, the requirement for submitting a plan for adjustment to the Executive Committee as described above shall apply under the circumstances where the estimated total credit to be generated from said Eligible ICP Transaction would exceed the pre-approved credit by an amount ("Excessive Credits") equivalent to One Million U.S. Dollars (US$1,000,000) or more. Where the amount of Excessive Credits in question is below One Million US Dollars, the Executive Committee will only grant final credit amount as preliminary approved.