Despite the challenges posed by the COVID-19 pandemic and geopolitical tensions in the Taiwan Strait, Taiwan’s construction industry continues to demonstrate robust growth. This resilience may be attributed to several key factors:

• the government’s sustained policy support for the energy sector and railway infrastructure;
• the repatriation of substantial Taiwanese capital previously invested in Mainland China; and
• the rise of the semiconductor and AI industries, which have contributed to increased national income and stimulated the expansion of consumer-oriented real estate. This report provides an overview of the key trends and developments shaping Taiwan’s construction sector in 2025, including the primary construction project categories, the construction project regulatory landscape, the types of construction disputes and the dispute resolution mechanisms.

Primary Construction Project Categories

Recent notable construction projects in Taiwan include the following:

• Terminal 3 of Taiwan Taoyuan International Airport – the construction cost was estimated at TWD128.37 billion (USD3.97 billion) as of 2024;
• the offshore wind power sector since 2018 – the total new plant investment was estimated at TWD80.26 billion (USD2.48 billion) as of 2024; and
• the Danjiang bridge project – the construction cost was estimated at TWD15.4 billion (USD522.5 million) as of 2015.

Energy

In response to Taiwan’s energy transition, the central government has prioritised the development of offshore wind farms, LNG receiving terminals and natural gas power plants. To offset the energy deficiency during the transition, upgrades and expansions of clean coal-fired power plants are also underway. As available land for large-scale solar installations becomes increasingly limited, the focus has shifted towards energy efficiency and storage solutions, with private entities encouraged to install solar panels on buildings.

Transportation

The central government plans to extend the high-speed rail system to eastern Taiwan and the island’s southernmost region, aiming to complete a fully connected island-wide network. Meanwhile, local governments – including Taipei, New Taipei, Taoyuan, Taichung, Tainan and Kaohsiung – are actively tendering mass rapid transit (MRT) and light rail projects, using either separate civil and electrical and mechanical (E&M) contracts or integrated engineering, procurement and construction (EPC) models. At selected stations, transit-oriented development is being adopted to align rail infrastructure with consumer-driven real estate demand.

To accommodate the continued growth in commercial air travel and air cargo, the Taiwan government is actively advancing the construction of Terminal 3, runways and related public infrastructure at Taiwan Taoyuan International Airport.

Major public buildings

Although the Taipei Dome took years to complete and officially open, it has proven its economic value by successfully hosting large-scale baseball games and concerts. The venue has also contributed to elevating the profile of baseball in Taiwan, culminating in the national team’s victory at the 2024 WBSC Premier12 championship. Inspired by this success, local governments – including the New Taipei City government – have begun planning large-scale indoor sports and performance venues. Many of these projects are being launched through international tenders, inviting renowned architects from around the world to deliver designs that blend aesthetics with functionality. In the coming years, Taiwan is expected to see the emergence of more iconic major public buildings, following the examples set by the National Taichung Theater, the Southern Branch of the National Palace Museum, and the National Kaohsiung Center for the Arts (Weiwuying), helping to shape a new generation of architectural landmarks across the island.

Private investment

Led by TSMC, the semiconductor and AI industries are building R&D centres and factories across Taiwan, constituting a significant portion of construction output. Government-led urban renewal and “dangerous and old building” redevelopment programmes, designed to address potential earthquake risks, have also delivered tangible results, driving significant commercial and residential redevelopment.

To address the aging population, the government is promoting elderly and long-term care facility construction across Taiwan through PPP. To encourage private investment, recent amendments to the Act for Promotion of Private Participation in Infrastructure Projects now allow for the “paid PPP” model – namely, private finance initiative (PFI) – under which the government may purchase services directly from private providers. Eligible projects include waste water and water supply systems, pollution control, transportation infrastructure, utility tunnels, labour welfare and healthcare facilities.

Construction Project Regulatory Landscape

Government Procurement Act

Under the leadership of its new chairperson, the Public Construction Commission of the Executive Yuan (PCC) has initiated the following key reforms to Taiwan’s procurement environment:

• enhancing feasibility studies for major public construction projects, review mechanisms for construction planning and preliminary design phases, and the soundness of project budgeting;
• drafting amendments to the Government Procurement Act to promote fair competition between domestic and foreign contractors, improve procurement efficiency and increase penalties for non-compliant contractors, including disqualification from government procurement contracts;
• updating standard procurement contract templates to enhance fairness and encourage broader participation; and
• promoting the use of a so-called working and evaluation group of procurement to support agencies in contract management and dispute resolution, helping to reduce conflicts.

Act for Promotion of Private Participation in Infrastructure Projects

Taiwan has promoted PPP through the enactment of the Act for Promotion of Private Participation in Infrastructure Projects. The following major amendments to the Act were made at the end of 2022, and implementation will gradually take effect through 2025, accompanied by the promulgation of relevant regulations.

• Expanding the scope of eligible PPP projects to green energy, digital infrastructure (eg, AI) and resource recycling facilities.
• Introducing new PPP models in addition to the commonly used build-operate-transfer (BOT), operate-transfer (OT), rehabilitate-operate-transfer (ROT) and build-own-operate (BOO) models, including (paid or unpaid) rehabilitate-transfer-operate (RTO), rehabilitate-own-operate (ROO) and government-paid public service procurement (ie, paid PPP). With respect to the paid PPP model, the law specifically provides that where a public infrastructure project is determined through policy evaluation to be necessary, of priority and urgent, and where it is confirmed to be more efficient than government-led construction and operation, the competent authority may, during the operation phase of the project, purchase all or part of the public services provided by the private entity. This significantly enhances the incentive for private investment in public infrastructure.
• The Ministry of Finance has established a contract performance mediation mechanism by creating a mediation committee. This committee provides neutral recommendations for resolving investment contract disputes between private entities and procuring authorities based on the perspective of the competent authority, aiming to expedite dispute resolution.

Project financing through securitisation

Taiwan’s Financial Supervisory Commission is exploring asset securitisation as a means of financing both public and private construction projects.

On 24 July 2002 and 23 July 2003, the Financial Asset Securitization Act and the Clauses of the Real Estate Securitization Act were enacted, respectively, establishing the two foundational pillars of Taiwan’s asset securitisation framework. Through securitisation, future cash flows are packaged into investment products that appeal to investors. This not only offers alternative financing channels for both the public and private sectors, easing their financial burdens, but also generates long-term economic benefits. A notable example of successful securitisation in practice is the Taipei City government’s initiative to securitise rental income derived from superficies on its non-public-use lands in 2007.

To strengthen the REITs market in Taiwan, the Executive Yuan proposed an amendment to the Securities Investment Trust and Consulting Act on 12 October 2023, drawing from the regulatory frameworks of Japan, Singapore, and Hong Kong. The amendment has been submitted to the Legislative Yuan and is currently under review. It introduces a fund-structured REIT model, which not only mandates that real estate investment trust enterprises act as management companies but also enhances flexibility by streamlining additional fundraising processes, allowing offshore real estate investments through SPVs and permitting affiliated transactions to improve asset allocation flexibility.

The newly introduced fund-structured REIT is expected to broaden investment targets beyond traditional commercial real estate to include renewable energy infrastructure, such as offshore wind farms and solar power plants, urban renewal developments and self-liquidating PPP projects. This expansion offers a new and diversified funding channel for future construction initiatives.

Types of Construction Disputes

Due to the impact of the COVID-19 pandemic, the Russia–Ukraine war, the Israel–Hamas conflict, and escalating US–China trade tensions and tariff wars following the inauguration of President Trump, Taiwan – being highly reliant on imported construction materials and foreign labour – has faced significant construction cost inflation. Public resistance to construction site locations and labour shortages driven by major factory construction projects (eg, TSMC) have also led to frequent project delays.

As a result, beyond traditional disputes (eg, design change pricing, omissions in the bill of quantities), disputes concerning price escalation and adjustments, force majeure, extension of time (EOT) and EOT-related cost (“prolongation cost”) claims have become increasingly prevalent.

Under Taiwan’s Civil Code, the doctrine of “change of circumstances” allows for reasonable adjustments to contract prices and schedules in the types of construction disputes mentioned above, where the contract terms are unclear. However, in cases involving concurrent delay by the contractor, there are differing views on how EOT and EOT-related management costs should be addressed, leaving room for legal argument.

Moreover, while standard contracts issued by the PCC are widely used, many construction contracts also incorporate International Federation of Consulting Engineers (Fédération Internationale Des Ingénieurs-Conseils; FIDIC) principles or clauses. The PCC guidance letters and precedents, as well as the established FIDIC practices, serve as tools in dispute resolution. Hence, engaging legal counsel with experience in construction-related disputes can help ensure proper resolution and support reasonable investment returns.

Dispute Resolution Mechanisms

In Taiwan, construction disputes are generally resolved through the following three mechanisms: PCC mediation, arbitration and litigation.

PCC mediation

For public procurement projects, contractors may apply for mediation before the PCC’s Complaint Review Board for Government Procurement.

Recently, the PCC has engaged a group of young and neutral legal scholars and lawyers to serve as mediators. Mediation procedures have also been simplified, and efficiency has improved. Therefore, despite being an administrative mediation process directed by the government authority, the outcomes are not biased in favour of the government and can be trusted by foreign contractors.

In addition, the PCC encourages government agencies to establish a working and evaluation group of procurement comprising external experts to provide recommendations on construction disputes. This mechanism is similar to the internationally recognised dispute review board (DRB) system. Government agencies are generally more willing to accept fair solutions when guided by the recommendations of external experts. Taiwan’s airport MRT E&M EPC contract is a successful example of this approach, having resolved dozens of contract performance disputes.

Arbitration

The Taiwanese government is currently reviewing the Arbitration Law of the Republic of China (ROC) with a view to adopting the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”). Even prior to formal legislative amendments, the Chinese Arbitration Association, Taipei (CAA) – Taiwan’s leading arbitration institution – has taken proactive steps by establishing an arbitration court, implementing case management rules consistent with the Model Law and ICC procedures, and offering proceedings in English or bilingual format. These efforts are designed to align Taiwan’s arbitration practices with internationally recognised standards.

The CAA also maintains a roster of presiding arbitrators with expertise in construction disputes, offering parties access to highly experienced arbitrators to enhance the quality of arbitral proceedings.

Under Taiwanese law, arbitral awards must be rendered within six months of the tribunal’s formation, with a possible extension of up to three additional months. This statutory time limit makes Taiwan’s arbitration process faster than in many other Asian jurisdictions.

Litigation

Construction litigation in Taiwan is generally time-consuming and often requires input from technical experts serving as third-party examiners. To address this, the Taipei District Court has established a specialised construction division staffed by judges experienced in construction disputes and judicial officers with engineering backgrounds. Over more than a decade, this division has significantly improved both the professionalism and efficiency of dispute resolution.

Nevertheless, due to the inherent complexity of construction cases, the Judicial Yuan continues to promote the use of ADR mechanisms – such as mediation, arbitration and DRB – whenever possible.

Conclusion

Overall, Taiwan’s construction industry continues to thrive despite global economic volatility, and the Taiwanese government has been promoting a fair and efficient construction environment.