formosa plastics group 2017 annual report2｜2017 annual report formosa plastics group’s annual...

2 0 1 7 Annual Report

Chang Gung Golf Club: Promotion of sport and leisure of the society as well as development of sound physical & mental balance

2017 Annual ReportFORMOSA PLASTICS GROUP

Chang Gung Golf Club： Promotion of sport and leisure of the society as well as development of sound physical & mental balance

2017 Financial Highlights

Preface

Formosa Plastics Corporation

Nan Ya Plastics Corporation

Formosa Chemicals & Fibre Corporation

Formosa Petrochemical Corporation

Formosa Plastics Group-US. Operations

Other Investments

Non-Pro�t Organization—Medical Care

Chang Gung Memorial Hospital

Non-Pro�t Organization—Education

Chang Gung University

Chang Gung University of Science and Technology

Ming Chi University of Technology

1

2

10

20

26

32

36

39

40

44

48

52

CONTENTS

Chang Gung Golf Club: Promotion of sport and leisure of the society as well as development of sound physical & mental balance"What is taken from the society is used in the interest of the society" is always our objective of operating business. In addition to the development of industry, we set up Chang Gung Golf Club to provide a safe, health and good sport place for playing golf, taking a break from everyday life, and enjoying delicacy in order to take care of physical and mental health for the general public in Taiwan.

1

Formosa Plastics Group∣2017 Financial Highlights

(In Thousands of US Dollars, persons)

• NOTE:The financial data shown above is extracted from the individual financial statements of each company.

Formosa Plastics Corp. 2,132,719 15,259,702 11,558,904 5,704,702 1,838,291 6,135

Nan Ya Plastics Corp. 2,657,070 16,708,190 11,914,361 5,809,515 1,971,639 12,248

Formosa Chemicals & Fibre Corp. 1,963,678 15,206,178 11,983,043 7,898,667 1,971,617 4,921

Formosa Petrochemical Corp. 3,191,490 14,285,050 11,434,153 20,846,848 3,216,830 5,179

Nan Ya Technology Corp. 993,011 5,042,763 4,422,402 1,812,056 1,400,197 2,923

Nan Ya PCB Corp. 216,485 1,223,460 1,030,437 721,222 -65,518 5,331

Formosa Sumco Technology Corp. 259,882 812,628 726,079 425,926 87,042 1,328

Formosa Taffeta Co., Ltd. 564,415 2,864,653 2,324,424 861,493 150,208 4,741

Formosa Advanced Technologies Corp. 148,158 407,906 371,264 264,289 53,121 2,379

Mai-Liao Power Corp. 734,790 1,744,347 1,456,975 682,859 34,386 416

Subtotal of Public Companies 12,861,698 73,554,877 57,222,042 45,027,577 10,657,813 45,601

Other Domestic Companies 1,464,795 18,748,446 16,362,006 5,257,405 960,626 29,850

Subtotal of Domestic Companies 14,326,493 92,303,323 73,584,048 50,284,982 11,618,439 75,451

Companies in U.S.A 1,142,906 11,579,696 10,043,563 5,677,651 1,096,248 4,080

Companies in China 4,961,018 11,121,521 6,026,197 9,379,936 608,691 19,235

Other Foreign Companies 6,133,916 16,710,406 6,922,887 1,812,015 -206,665 14,230

Subtotal of Foreign Companies 12,237,840 39,411,623 22,992,647 16,869,602 1,498,274 37,545

Total of Formosa Plastics Group 26,564,333 131,714,946 96,576,695 67,154,584 13,116,713 112,996

Company Capital Assets Equity SalesIncome Before

Income TaxNumber of Employees

2｜2017年報

Perface

2｜2017 Annual Report

Formosa Plastics Group’s annual revenue for 2017 was US$ 67.2 billion, with a growth of 12.4% as compared to 2016. The pretax profit of US$ 13.1 billion is 17.3% higher than the previous year. It sets a historic record since Formosa Plastics Group was established six decades ago. Our plants will gradually be transformed into Industry 4.0 smart factories, where artificial intelligence (AI) technology will be applied to improve the production process, efficiency and product quality.

3

the Four Asian Tigers. The figure is also lower than the global average economic growth rate; the trend has persisted over the years, thus it is imperative that the ruling party and oppositions collaborate to devise a counter strategy as soon as possible.

Outline of business operationFormosa Plastics Group’s annual revenue for 2017 was US$ 67.2 billion, with a growth of 12.4% as compared to 2016. Although the Brent crude oil price dropped from US$ 55 a barrel in early 2017 to the bottom of US$ 45 a barrel in June, it bounced back to US$ 67 towards the end of the year. Since the oil price is still in the average of the historical price range, plus the global economy is in continued recovery, it helps push the price of petrochemicals, plastics and chemicals rising steadily. The increase of the price results in an increase of overall profit. In 2017, the pretax profit of US$ 13.1 billion is 17.3% higher than the previous year. It sets a historic record since Formosa Plastics Group was established six decades ago.

1. Taiwan regionIn 2017, combined revenue for various Formosa Plastics Group subsidiaries in Taiwan was US$ 50.3 billion, an increase of 11% compared to 2016, and the pretax profit of US$ 11.6 billion was 21.1% higher than the previous year.

Particularly, benefitting from the Chinese policy of limiting petrochemical industry operations coupled with the inability of USA to export ethylene products to Asia due to hurricanes during the second half of last year, the price of petrochemical materials was driven up by unbalanced market supply and demand. With advantageous conditions such as progressively widening interest rate differences, together with our developments in high unit price, niche and differentiated products, as well as the strengthening of emerging markets in ASEAN, New Zealand, Australia

Preface

Since signs of steady recovery were s h o w n f o r a g l o b a l e co n o my

during Q4 of 2016, the recovery trend has continued into 2017. The global economy ’s per formance not only exceeded original expectations, it is also the first time that various economies w o r l d w i d e h a v e d e m o n s t r a t e d concurrent growth. In particular, the crucial element is that the developed co u nt r i e s h a d n ot e x p a n d e d o r accelerated their tight monetary policies, allowing economic performance to be maintained at a respectable pace. Furthermore, economies in developed countries including USA, Europe and Japan have surpassed expectations. It coupled with the higher stability of policies in developing and emerging countries, the global economy in 2017 continued its recovery.

In Taiwan, benefitting from the global economic recovery, increased demand, a rise in international crude oil and raw material prices, as well as the launch of new mobile devices worldwide in 2017, monthly industrial production exhibited pos i t ive growth , and the annual industrial production also set a record high over the past 3 years. Trade and economic performances also exceeded expectations. Another noteworthy aspect is that despite a GDP growth rate of 2.9% in 2017 – the highest in 3 recent years – Taiwan still came in last among

Chairman WenYuan Wong

4｜2017年報

Perface


and Africa, we were able to further expand our export domain and disperse market risks. In addition, we have also proactively promoted circular economy to ensure the reuti l ization of raw materials and energy. Various aggressive approaches have been implemented to achieve the desired outcome; therefore Formosa Plastics Group has been able to deliver outstanding profitability performance over the years.

On July 20, 2018, Vietnam’s Prime Minister Nguyen Xuan Phuc, accompanied by WenYuan Wong, Chairman of FPG, visited the Formosa Ha Tinh Steel Corp and inspected the operation of Furnace No. 2.

2. US regionFormosa Plastics Group owns numerous fully integrated petrochemical materials and plastics processing plants in the US. In 2017, the combined revenue for various subsidiaries in the US amounted to US$ 5.68 billion, a 1.1% increase compared to 2016. The pretax profit of US$ 1.10 billion was 25.9% less than the previous year. This is mainly attributed to the Olefins II plant’s major turnaround, which is required every six years and the shutdown of the Texas plant in Q3 due to hurricanes.

Massive reserves of shale oil and gas in the US, advances in exploitation technology and long-term low cost are beneficial for developments in the petrochemical industry, therefore Formosa Plastics Group has invested in new ethylene cracking plant, PE and ethylene glycol plants in the US, all are slated for completion and production in 2019. On top of that, US government manufacturing industry renaissance policy is expected to provide businesses with a better development environment, which will also facilitate our long-term developments in the US.

5

3. China regionThe combined turnover of various subsidiar ies in China in 2017 was approximately US$ 9.38 billion, with massive growth of 31.2% over 2016. The pretax gain of US$ 608 million was 4.5 times that of 2016.

This is mainly attributed to China’s supply-side reform in cutting excess c a p a c i t y i n 2 0 1 7 w h i l e l i m i t i n g petrochemical plant operations through more rigorous governance, in turn stimulating economic recovery and enabling enterprises to restock more quickly, as well as boosting the price and sales of the Group’s petrochemical products. In the meantime, af ter the Phase 2 expansion project of N ingbo petrochemical plant was completed, new production of various petrochemical mater ials was also commenced in 2017, signif icantly improving operating performance.

4. Vietnam regionFor Formosa Plastics Group’s integrated steel plant in Hatinh Province and Shanyang deep water port, test run for the first blast furnace was completed in late May 2017, producing the first steel slab in Vietnamese history. Within a year, the second blast furnace also completed on May 18, 2018, officially announcing the completion of Phase 1 of the Hatinh steel plant project and starting a new chapter in full capacity production.

In response to the production of the first blast furnace at Formosa Ha Tinh Steel Corporation in 2017, the Group’s revenue data was incorporated into the Vietnam region for the first time. Combined revenue for various plants in Vietnam amounted to roughly US$ 1.22 billion in 2017, showing a growth of 24% compared to 2016. However, after Formosa Ha Tinh Steel Corporation commenced test run, the amortization of various expenses was also carried; moreover, cost per unit is relatively high due to the fact that the plant is

still in its test run, coupled with the decreased profitability caused by fuel cost hikes, therefore the overall pretax loss amounted to US$ 195 million, declining considerably from the previous year.

Nonetheless, in light of favorable conditions in Vietnam – including tariff exemption and rapid growth in the emerging market – the Group’s investments will reap rewards over the years to come as the demand in the Southeast Asian markets expand.

Materializing Circular Economy Fo r a l o n g t i m e, we h ave f i r m l y b e l i e ve d t h a t environmental protection and industry development can go hand-in-hand; therefore, we continue to advocate the philosophy of “circular economy”, hoping to strike the ideal balance between the two. Besides resource integration throughout the production process, emissions reduction, resource recycling/reutilization and waste minimization are also key factors. In light of this, Formosa Plastics Group’s circular economy involves incorporating four major aspects (raw materials, water resources, energy and wastes) into consideration while implementing measures in energy conservation, carbon reduction, as well as company-wide and plant area energy and resource integration.

1. Water conservationTo utilize limited water resources effectively, measures including water usage reduction, water management and evaporation loss reduction are applied to the production process. Furthermore, in an effort to achieve sustainable use of water resources, besides wastewater recycling and reuse, rainwater harvesting operations in various plants have been intensified to effectively store rainwater for later use.

According to calculations conducted using the water consumption index from the MOEA’s “Directions for Application Review on Proposal of Water Usage”, the water recycling rate (R1) at the Mailiao Eco-Industrial Park was over 98% and every drop of water can be used 7.3 times. This is significantly superior to the water recycling rate of other petrochemical industries in Taiwan (R1=71-90%).

2. Energy conservationIn the init ial stages, var ious plants implemented improvement measures, such as production process energy utilization, waste heat recovery, equipment efficiency enhancement and energy management independently. To increase efficiency further, the Group has tirelessly reviewed how energy and resources in different plants and companies can be integrated, thereby

6｜2017年報

Perface


3. Overal l investment and performanceAs of 2017, Formosa Plastics Group has invested US$ 1.08 billion in implementing water and energy conservation projects. In particular, 2,690 improvement projects were carried out, saving 123.08 million tons of water every year, equivalent to 23 Baoshan Reservoirs, or an entire year's worth of water consumption by 1.349 million people. Additionally, 9,430 energy conservation and improvement projects were completed, decreasing CO2

emissions by 11.61 million tons annually, equivalent to the carbon sequestration capacity of 31,294 Daan Forest Parks or 1.5 billion trees, truly remarkable accomplishments. In the future, we will continue to implement various energy conservation and emissions reduction efforts.

Social care and giving back to societyWhile developing the company business, Formosa Plastics Group also upholds the spirit of “giving back what you took from society”. Apart from establishing three colleges and the Chang Gung Memorial Hospital, we have also set up multiple foundations and charitable trusts. Over the years, the Group has engaged in the following public welfare activities:

1. Rebuilding schools: 76 dilapidated and dangerous school buildings have been adopted and rebuilt, and over 1,000 classrooms were constructed since the 921 Earthquake.

2. Senior citizens’ welfare: We have purchased 1.12 million doses of pneumococcal conjugate vaccines valued at US$ 32.2 million for seniors older than 75 years old, saving the government nearly US$ 429 million in terms of medical expenses for pneumonia. At the same time, we also implanted numerous aid projects, including senior citizen housing improvement projects, home appliance subsidies and senior citizen health activity centers etc.

considerably improving overall energy efficiency and attaining the goal of waste heat recycling/reuse and carbon reduction.

Taking the Mailiao Eco-Industrial Park as example, although daily production volume increased by 12% over the last decade, per product unit power and steam consumption have dropped by 23% and 21% respectively.

FPG has long promoted the Rainbow Project and the Sunshine Project to help inmates’ reintegration to society. Chairman WenYuan Wong was awarded the 11th “Charity Award” by HK & Macau Taiwanese Charity Fund Ltd.

7

The Rainbow Project and the Sunshine Project arrange various types of job training for inmates.

3 . R a i n b o w P r o j e c t ( i n m a t e s w i t h d r u g addiction and AIDS), Sunshine Project (drug offenders): Assisted the sk i l l t ra in ing, psychological counseling and health education of inmates with drug addiction and AIDS, as we l l a s regu la r fo l low-u p c o u n s e l i n g a f t e r t h e y are released from prison in order to help them return to society. The programs reduced the rate of recidivism from 70~80% to below 10%. For this reason, Formosa Plastics Group Chairman received the 11th “Charity Award” from HK & Macau Ta iwanese Char i ty Fund; bes ides donating all of the prize money, an equal amount of money was donated by the Chan-yang Wang Trust to expand the scale of the project and spread the warmth of love.

4. Women and chi ldren’s welfare:The Group has promoted rare disorder patient medical treatment and financial aid program, educational assistance program for child and youth care institutions, enhancement of child d e ve l o p m e n t e a r l y i n te r ve n t i o n projects and facilities for disabled care institutions, helping 18,000 children and 70 institutions.

5 . O t h e r s o c i a l w e l f a r e activities: The Group has sponsored the expenses for training many outstanding tennis and table tennis athletes, as well as per formances by local ar t and performance art groups to provide Taiwanese c i t izens with ar ts and cultural feasts that appeal to refined

and popular tastes. At the same time, the programs also nurture local performance art groups by assisting them to grow and prosper.

In particular, of Formosa Plastics Group’s public welfare events, many were new under tak ings in Taiwan. By attaining the objective of total service quality enhancement and sustainable management for social welfare institutions, the events have fulfilled the ideals of the two founders in giving back to society.

Concerns in the domest ic bus iness environmentBenefitting from the global economic recovery in 2017, the economy in Taiwan also exhibited signs of growth. However, the rate of growth is significantly lower than most countries in Asia. For many years, Taiwan’s growth rate has fallen below the global average, mainly because Taiwan’s development has been at a standstill due to internal frictions, such as the rise of populism, where right and wrong is not determined scientifically, and heightened environmental protection awareness. Together with amendments to the laws and regulations, as well as problems including hastily launched power structure policies and the five shortcomings of industry development, the investment and business conditions are becoming increasingly challenging. Even if businesses are willing to remain in Taiwan, they feel powerless to change the status quo and hence are unable or dare not invest in the country.

8｜2017年報

Perface


On the contrary, China’s “31 beneficial m e a s u r e s f o r Ta i w a n”, U S ’s t a x incentives for the manufactur ing industries and investments as well as investment promotion by ASEAN c o u n t r i e s u s i n g t h e i r i n h e r e n t advantage are a l l ver y att ract ive policies for Taiwanese businesses. In particular, as the second largest economy in the world, China is the most important link for Taiwanese i n d u s t r i e s i n t e r m s o f g l o b a l deployment and trade. In 2017, China accounted for 42% of Taiwan’s exports; therefore, cross-strait relations play a decisive role in the rise or fall of Taiwanese businesses. There is an urgent need for the government to pay more attention and implement proactive strategies to remedy the s i t u a t i o n i n o rd e r to i m b u e t h e economy in Taiwan with immediate and positive influences.

O n a m o re i m p o r t a n t n o t e , t h e government needs to join regional economy integration effor ts such a s t h e R e gi o n a l Co m p re h e n s i ve Economic Par tnership (RCEP) and the Comprehensive and Progressive A g r e e m e n t f o r T r a n s - P a c i f i c Partnership (CPTPP), or it should sign trade agreements with individual ASEAN countries in order to strive for comparable impor t taxes and m a i n t a i n Ta i w a n e s e b u s i n e s s e s ’ competitiveness in the international market. This is far more meaningful than the New Southward Policy, and it is also the most pressing agenda that everyone is hoping to resolve.

Future outlookLooking ahead to 2018, the global economy looks optimistic, although the recovery trend from last year is expected to continue, uncertainties such as the escalading trade war between China and the US, geopolitical risks, turmoil of the UK leaving the EU, interest rate hike and reduced balance sheet in the US are variables that determine the oil price and overall economy situation, therefore they must be monitored closely.

In Taiwan, Formosa Plast ics Group wil l continue our developments in the direction of “high added value”, “differentiation” and “internationalization” to materialize a circular economy. At the same time, our plants will gradually be transformed into Industry 4.0 smart factories, where artificial intelligence (AI) technology will be applied to improve the production process, efficiency and product quality. In the future, operating model can be quickly replicated across different plants to implement total AI operation and reinforce long-term competitiveness of the Group.

For overseas operation, we plan to invest US $ 500 million to build a new plant capable of producing 300 ,000 tons o f co ld ro l led s ta in less s tee l per annum, and we also plan to invest US$ 1.78 billion in expanding the production capacity of petrochemical products in Ningbo Plant, China. Another US$ 308 million will be invested to expand the production capacity of CCI and fiberglass cloth in Huizhou plant in order to solidify our leadership position in the global electronic materials market. All projects are slated for completion in 2020.

In the US, we currently have 2 major investment projects in progress, including the third ethylene crack ing plant in Texas and related downstream petrochemical plants, which is under construction and will be completed by 2019. Meanwhile, a new petrochemical park in Louisiana with an estimated investment value of US $ 9.4 billion will commence construction in 2020.

9

A l l i n a l l , t h e o u t l o o k f o r 2 0 1 8 r e m a i n s a n o p t i m i s t i c o n e , b u t there exist numerous var iables in the global economy, and for this r e a s o n Fo r m o s a P l a s t i c s G r o u p will remain vigilant in conducting various internal management affairs with a dil igent, steadfast attitude. M o re ove r, we w i l l k e e p t r a c k o f cutting edge technologies and new oppor tunit ies in order to elevate our competit iveness, because we are confident that we can ultimately achieve perpetual sustainability.

Pipe plant in Chiayi

2017 Buisness Overview

10｜2017年報 10｜2017 Annual ReportECH Plant in Mailio

The Company will continue to maintain Formosa Plastics Group’s core value, fully develop circular economy, and to ensure the fulfillment of social responsibility. Moreover, the Company will continue to develop Industrial 4.0 and automatic selling system, as well as to boost up product quality, production efficiency and to lower costs by carrying on the improvement on AI production process and the implementation of AI technique and expects the Company’s business to challenge another new record in 2018.

11

FORMOSA PLASTICS CORPORATION

ECH Plant in Mailio

The Company (Formosa Plast ics Corporation) generated consolidated

sales of TWD206.71bn in 2017, reaching 106% of its target of TWD194.59bn and was up 15% from TWD180.17bn generated in 2016 . Consol idated pretax profit came in at TWD54.90bn in 2017, reaching 122% of its target of TWD45.01bn and was up 25% from TWD43.81bn generated in 2016.

In 2017, the stronger-than-expected global economic recovery has led to growing demand for petrochemical produc ts . D espi te the feedstock ethylene and propylene prices were higher due to the rising crude oil prices and delayed production start-up of new ethylene plants in the US, products such as caustic soda, AN, MMA, ECH and AE saw higher prices and spreads given the imbalanced supply and demand situation driven by the deepening i m p l e m e n t a t i o n o f s u p p l y s i d e reform and tightening environmental protection in China, which limited the run rate of petrochemical companies in China, frequent production outages and supply reduction of other companies, as well as hurricane in the US at end of August in 2017.

In addition, the Company enhanced its operation safety management to maintain stable operation, which has resulted in a 90% capacity utilization rate in 2017, higher than 87% in 2016. Meanwhile, the Company developed overseas markets aggressively and

increased the sales contribution from high-value differentiated products. As a result, the Company’s consolidated operating profit of TWD21.93bn in 2017 significantly increased 68.5% from 2016, which is a record high level for the Company in the past 6 years. Moreover, equity investment income from Formosa Petrochemical and FPC USA were TWD29.90bn in 2017, which supported the Company’s consolidated pretax profit to break the record high level of TWD51.6bn in 2010 and achieve the highest level in the past 63 years since the Company established.

In 2017, the major economies such as the US, Eurozone, Japan, and China showed solid recovery, which resulted in stable growth of global trade and the recovery of investments, as well as the stronger growth in emerging markets, making the way out of the shadow of slow global economic growth. According to the forecast made by IMF, global economic growth accelerated by 0.5% points to 3.7% in 2017. Thanks to the global economic recovery, the growth of Taiwan’s economy also showed positive momentum. However, the growth was mainly driven by stronger export. Domestic investments decreased on the contrary, which as a result created a polarization of “warm on the outside, but cool in the inside”.

In addition, the long-term weakness of Taiwan domestic investments environment has made investment rate drop from an average of 27% in the 1990s to an average of 21% in the past 5 years, which was the lowest level in the past 50 years. As a result, Taiwan’s economic growth was slower than the global average for 6 out of the past 7 years. It is obvious that the lagging economic growth in Taiwan has already become a normal situation that leads to stagnant salary growth. The economic issues that Taiwan is facing are getting more and more serious.

The long-term weakness of investment environment in Taiwan was largely due to the environmental assessment system, which allows the ideology of environmental

Formosa Plastics Corporation

Chairman Jason Lin


12｜2017年報 12｜2017 Annual Report

protect ion over r ide the industr y development. As a result, many business opportunities were lost as large scale investment projects were stuck in the long reviewing process. Moreover, the local counties where the factories are located cannot benefit from the contribution of corporate income tax due to the inappropriate financial and tax planning. In addition, the society is br imming with the ideology of populism, which makes all policies that are positive for industry development be considered as “ l in ing moguls’ pockets”. While business would like to stay in Taiwan and to help improve Taiwan’s economic situation, under this circumstance, business dares not to and cannot invest. Take the Company as an example, the amount of depreciation reached to TWD10.3bn in 2009, but due to the investment obstacles, the amount was only TWD5.2bn in 2017, which was a reflection of the Company’s decreasing investment in Taiwan. The Company can only invest in overseas markets in order to seek for a sustainable development. On the contrary, markets that the Company exported to are seeking investments aggressively and expanding new petrochemical capacities. In the long run, the situation will continue to limit the space for industry and economic developments in Taiwan.

Furthermore, while export accounts for more than 60 percent of Taiwan GDP, Taiwan’s par ticipation in the international Free Trade Agreement (FTA) coverage is poor at less than 10%, which is much lower than other export-oriented countries such as Japan, South Korea and Singapore. While the trade protectionism atmosphere has gradually increased, and the upcoming formation of "Regional Comprehensive Economic Partnership Agreement (RCEP)" in Asia and the “Comprehensive and Progressive Agreement for Trans-Pacific Partnership Agreement (CPTPP)”, Taiwan has been excluded in the discussion. Taiwan will be marginalized, and our industries will find it very difficult to survive or further develop, if Taiwan government is not

actively seeking a solution of the breakthrough for the trade tariff obstacle.

We hope that the government can accelerate the revision of “Environmental Impact Assessment Act”, give back the competency of environmental assessment to the government authority that in charge of the relevant end-enterprise, and to simplify the environmental assessment process. In addition, the government should set up a fiscal tax system with investment incentives and create a favorable investment environment for the industry to dissolve the populist atmosphere and enhance businesses’ confidence in investing in Taiwan. In order to make a breakthrough of the above difficulties and to keep businesses in Taiwan and develop sustainably, the government should understand the market mechanism and the problem of the unequal trade tariff towards the globalization roadmap, as well as make effort to join RCEP, CPTPP and sign FTA with main trading partners.

In view of the difficulty in domestic investment and global trade barrier, the Company continued to develop high-value differentiated products in 2017, which saw sales volume up 11% from 2016, and meanwhile to diversify market concentration risks by lowering the export to China from 42.6% of total sales in 2016 to 42.1% in 2017. The Company has also aggressively developed its business and customer service in Southeast Asia, Europe, Middle East, Africa, India and other emerging markets by expanding its onsite technical service offices in Vietnam, Germany, United Arab Emirates, and India. Separately, margins of nitrogen tri-fluoride (NF3) and electronic-grade ammonia (EG NH3) business were impacted by oversupply and small production scale. The Company had worked hard to improve this business but still cannot turn it around.

FPC's Prouduct TAIRYFIL

13


Therefore, the Company shut down the production of HCFC plant after receiving the approval from board of directors in March 2017.

In an effort to develop circular economy, promote the improvement projects, reduce the consumption of water, energy, and the liquid usage volume per unit, the Company accomplished 434 projects in 2017 and resulted in a total benefit of TWD460mn. Aside from this, by promoting Industrial 4.0 and the automatic selling system, production and sales efficiency has come into effect on PVC automatic selling system, and the Company has expanded the application towards PE and PP. Meanwhile, in order to increase the product quality, optimize the operation and formulation and dispatch the power units, the Company has improved the production process and launched 42 improvement projects through instant and historical production data analysis,

and expects to complete all the implementation by end of 2018. Apart from this, the Company has introduced AI technique into the production process, and cooperated with Academia Sinica on the AI production procedure improvement to increase product quality and production efficiency. The Company also established an innovation platform to hold seminars semi-annually and boost up the innovation atmosphere. There have been more than 50 ideas proposed on an accumulated basis so far. By the means mentioned above, the Company is able to gradually pursue the rationalization, strengthen the business essence, overcome the operating difficulties and continue to grow the business.

The Company and its China Ningbo subsidiary mainly produce plastics and chemical fiber raw materials. In 2017, sales volume of PVC increased 5% to 1,608K tons driven by market diversification with higher sales in New Zealand, Australia, Middle East and Turkey. The Company’s caustic soda sales volume was 1,430K tons in 2017, up 9% from 2016 given, (1) rising demand for metallic aluminum and aluminum oxide due to global recovery in automobile and industrial industry, (2) increasing demand for caustic soda due to severe environmental inspection in China. China has been monitored stringently on the exhaust emissions

FPC Plant in Ningbo



and waste water treatment, which should comply with the standards. The Company’s HDPE products have expanded to differentiated products like pipe grade, blow molding grade and fiber grade HDPE, and aggressively diversified the market to Southeast Asia and Middle East, however, as the severe competitions in China, sales of general blown film grade HDPE decreased. As a result, HDPE sales volume was 491K tons in 2017, down 1% from 2016. The Company’s EVA sales volume was 247K tons in 2017, up 9% from 2016 due to (1) production increased significantly in 2017 due to Ningbo EVA plant started mass production in May 2016, even though EVA plant in Mailiao complex conducted maintenance shutdown, (2) sales expansion in differentiated products, VA forming grade product. The Company’s LLDPE sales volume was 207K tons in 2017, up 4% from 2016 due to the success in the promotion of the Company’s injection grade LLDPE differentiated products in spite of the decreasing sales in general blown f i lm grade HDPE due to the t ight competition in China and the US market as there were new supplies coming on stream. The Company’s AE sales volume was 508K tons in 2017, up 5% from 2016 due to (1) lower run rate of other AE suppliers following the severer environmental inspection in China, (2) stronger demand driven by hurricane in Texas in August 2017, which caused the supply shortage in the market. The Company’s carbon fiber sales volume was 4.7K tons in 2017, up 32% from 2016 due to the rising demand for wind power. The Company’s sales volume of NBA, which is mainly for captive use by AE plants, decreased 1% to 220K tons in 2017 due to oversupply in Asia market and the maintenance shutdown in 4Q17. Sales volume of SAP increased 13% from 2016 to 132K tons in 2017 mainly due to (1) Ningbo SAP phase 2 capacity started production, (2) aggressive promotion on differentiated products, (3) development of customized products for China, Turkey, and Southeast Asia clients. Sales volume of PP decreased 14% from 2016

to 936K tons in 2017 due to (1) capacity upgrade of PP plant in Linyuan after maintenance shutdown, (2) strong demand from automobile and home appliance, (3) sales expansion in South and Southeast Asia market. Sales volume of AN and MMA both dropped 5% from 2016 in 2017 to 269K tons and 79K tons, respectively, mainly due to the shipment control on the secure of inventory level. Sales volume of ECH increased 12% from 2016 to 94K tons in 2017 due to a better-than-expected downstream product epoxy. Others such as MTBE also saw higher sales volume from last year in 2017.

In terms of capacity expansion, in order to strengthen its competitiveness, the Company has been aggressively expanding its capacities and conducting debottleneck projects, including the debottleneck project of PP plant in Ningbo, which will increase its PP capacity from 450K tons to 522K tons after the project is completed in 1Q19, as well as the project of the new PDH plant, which will have 600K tons propylene capacity and is expected to complete and start production in 2Q21. In addition, the Company continues on its capacity expansion project in Texas, USA, including (1) a new 400K tons HDPE plant invested by subsidiary company in the US called Formosa Industries Corporation, (2) a new 1.2 million tons ethane cracker under Formosa Olefins, LLC (Formosa USA owns 33%). The two plants are scheduled to start production by the end of 2018 and 1Q19, respectively.

In terms of equity investments, FPC USA (22.61% owned by the Company) generated pretax profit of USD960mn in 2017, down 25% from 2016, mainly due to (1) maintenance shutdown once every 6 years of Olefin No.2 plant (OL-2) in 1Q17, (2) 12-day production halt of plant in Taxes due to hurricane in 3Q17, (3) incident of Olefin No.1 plant (OL-1) in 4Q17. Because of the relatively cheap natural gas and ethane, propane, and butane feedstocks, companies that use natural gas as feedstock are still very competitive. Besides, there is no olefin plant scheduled for maintenance shutdown in 2018, along with Trumps

HDPE3 Plant in Texas

15


policies on tax reduction, energy, and the expansion on infrastructure, these will lead to the increase in the demand for petrochemical products. Therefore, business should be able to grow in 2018 from 2017. In order to expand production scale and continue to leverage on shale gas’ low cost advantage, aside from the ethane cracker expansion project, the Company is conducting the construction of a 400K tpa LDPE plant and a 250K tpa PP plant in Taxes, which are both scheduled to start production by end of 2019.

In addition, profit loss of Fujian Fuxin Special Steel Corporation (29.17% owned by the Company) in 2017 decreased significantly from 2016 given (1) improving stainless steel market condition due to deepening supply side reform in China and the enhancement of the elimination of excess capacity, (2) LME nickel price hiked by 10% from 2016 and pushed product prices higher,

(3) record high production and sales volume. Fujian Fuxin is expected to turn profitable in 2018 as (1) according to ISSF forecast, global demand for stainless steel should increase 5.4%, and China to increase 7% in 2018 driven by strong growth of global automobile, home appliance, solar energy industry and strong demand for industrial pipe materials, (2) improvement in steel production process of Fujian Fuxin. Capacity will further increase to 864K tpa from 720K tpa, (3) Fujian Fuxin will develop the super ferritic stainless steel differentiated products, and expects the sales contribution of high added-value on 400 series pure ferritic stainless steel will increase by 20% in 2018 from 2017. In order to enlarge the completeness of the product line and enhance the competitiveness, Fujian Fuxin will conduct the new cold rolling mill plant project with 300K tpa capacity, and expects the plant to start production by 1Q20. Furthermore, Formosa Ha Tinh Steel Corporation, which the Company owns 11.43% equity stake, is constructing an integrated steel plant in Ha Tinh Province, Vietnam, with 7.1mn tpa steel billet capacity. The first blast furnace has started production at the end of May 2017, and its production and selling condition has been smooth so far and has continued to increase the capacity utilization rate. The second blast furnace is expected to conduct pilot

Formosa Ha Tinh Steel Corporation Hot Rolled Steel Mill



run in first half of 2018. In addition, the Company and Mitsui Chemicals (Japan) have formed a 50:50 joint venture “Formosa Mitsui Advanced Chemicals Co., Ltd.” in Ningbo. The second phase construction of a 3,500 tpa lithium-ion battery solution plant had finished in Q3 2017 and started production, and total capacity increased to 5,000 tpa from 1,500 tpa. Main customers for Formosa Mitsui Advanced Chemicals Co are electric vehicle and electric bus companies. Formosa Mitsui Advanced Chemicals Co will keep developing new clients and plan to construct the third phase of capacity expansion of 1,500 tpa, and expects to complete the construction by end of 2018.

In terms of research and development, t h e Co m p a ny s p e n t T W D 1 . 6 4 b n on R&D in 2017, accounted for 1% of the Company ’s revenues. These R&D expenses were mainly spent on developing new formulation, improving production process, increasing product quality, conserving energy consumption, and developing human resources, in order to increase production capacity and lower cost, and to increase technical skills through cooperating with industry peers. Meanwhile, in order to conduct R&D on industrial production technique and to commercialize specialty products, the Company launched 92 R&D projects, including high pseudoplastic and low fogging values PVC homopolymer resin, low-sagging pipe grade HDPE, injection blow molding grade HDPE, high strength wire and cable grade EVA, weather resistant rotational molding grade LLDPE, SAP for pre-making core ultra-thin baby diapers, eco friendly SAP, thermoplastic carbon fiber UD sheet, long carbon fiber reinforced thermoplastic composite, high fluidity melt-blown PP, and high transparent PP. The development in differentiated products and the enhancement in value-added products for downstream have accomplished good results.

M o re ove r, t h e Co m p a ny f u r t h e r enhanced the development of key technology and appl ied for both

domestic and international patent. In 2017, the Company has received approval on 17 patents, and as of the end of 2017, the Company has a total of 138 effective patents. Meanwhile, the Company will continue to work with both domestic and international industry experts, government, and academic area to accelerate the interaction and resources integration of research development and production, as well as to speed up the process of commercialization. Also, in order to further strengthen the competitiveness, the Company will incorporate new technologies such as Internet of Things, Automation, and Green Technology to upgrade and expand its R&D capabilities in the area of compounds, circular economy, aerospace and medical materials.

In terms of operational safety and environmental protection, the Company has always been putting equal emphasis on industry developments and environmental protection. As of the end of 2017, the accumulated investments on operational safety, environmental protection, and firefighting has reached TWD19.5bn, which was mainly spent on controlling pollution, saving energy, reducing waste and greenhouse gases, and improving operational safety and firefighting. The Company’s pollution treatment and emissions are better than national regulatory standards.

In 2017, there were 8 business units and 3 employees praised by competent authority. Among them, Mailiao Caustic Soda plant, HDPE plant, and PVC plant received the “Occupational Safety 5-Star Award” from Ministry of Labor and were all praised by Yunlin County for strong performance on occupational safety and health. Mailiao HDPE plant was praised by Water Resources Agency, Ministry of Economic Affairs, for strong performance on water conservation. Also, Mailiao, Renwu and Linyuan

FPC HDPE blow grade can be applied to produce bottles for medicine, cosmetics and food.

17


plant were praised by Ministry of Health and Welfare for strong performance o n c r e a t i n g a h e a l t h y w o r k i n g environment. The Company also praised by Depar tment of Environmental Protection of Taipei City Government on strong performance on green purchase.

The Company accompl ished 287 improvement projects in 2017 in an effort to save water and energy c o n s u m e d a s w e l l a s t o re d u c e greenhouse gas emiss ions. Tota l water saved amounted to 3,811 tons/day while greenhouse gas emissions reduction reached 101,985 tons/year. Another 235 improvement projects will be accomplished in 2018, which would further conserve water by 3,657 tons/day and reduce greenhouse gas emissions by 117,762 tons/year. Besides, the Company established GPS system for employee safety in order to know well of employees’ movement, enhance operational safety, and continue to promote the “Execution Implementation SOP – Full Participation”, “Advanced

Simulation” and “Production Safety Management (PSM)” operations, as a result to reduce abnormal operation and to secure the operation. Moreover, in view of increasing environmental regulations, the Company strengthened the control on equipment component leakage, set up FTIR to monitor air quality instantly, changed Renwu utility plant from coal-based to gas-based, conducted the improvement project on the elimination of while smoke for a total of 6 boiler units in Mailiao, Renwu and Linyuan plant, and promoted water conservation, “processed water not touching ground”, emission and waste reduction, to lower the impact to the environment.

Looking into 2018, global agency is positive on global economic growth momentum and expects GDP to grow by 3.9%. Aside from stable growth in the major economies such as the US, China, Europe Zone and Japan, this will also lead to the continuous growth in emerging markets. IHS forecasts global ethylene capacity will increase around 7.8 million tons in 2018, mainly concentrated in North America, and China. In terms of demand, based on the global ethylene demand growth of 1.2x of GDP growth, incremental demand should be 6.7 million tons in 2018, although supply additions are higher than demand additions, with an 87% forecasted run rate, global ethylene supply demand is rather balanced. Among the new supply additions, there are 7 new ethane crackers with

Mailiao HDPE Plant was awarded for outstanding performance of water conservation by Water Resources Agency, Ministry of Economic Affairs.



a combined annul ethylene capacity of 10 mil l ion tpa in the US. Aside from DowDuPont’s 1.5 million tons ethylene capacity, which has started production in 3Q17, the production start of ExxonMobil and Chevron Phillips Chemical’s ethylene plants were delayed to 1Q18 and 2Q18 due to the lack of technical specialists and the impact from hurricane in August 2017, respectively. The ethylene capacity are 1.5 million tons for each plant, which were originally scheduled to start production at the end of 2017. The other 4 ethylene capacities will start production after 2019. As a result, US ethylene suppliers cannot fully supply downstream clients in first half of 2018, and the impact of the new supply additions will only come into effect in second half of 2018. In addition, China is the most aggressive country in the development of coal-to-chemical industry. According to the “13th Five-Year Plan for the Demonstration of the Coal Deep Processing Industry” published by China’s National Energy Administration,

China will enhance the technique of methanol-to-aromatics (MTA), and to construct million tons of coal-to-chemical capacities. IHS forecasts new coal-to-olefin (CTO) and methanol-to-olefin (MTO) capacities in China will be 4.2 million tons during 2018-2022. However, coal-based chemical production has many environmental issues such as large amount of water and power consumption, high carbon emissions, and environmental pollutions. In addition, under the low oil prices situation, the coal-based chemical production is not economical with high capacity expenditure on water treatment equipment and the high operating costs. Once more downstream derivatives are made from gas-based capacities, product prices might go down and the coal-based chemical production will be no longer competitive.

Furthermore, demand for petrochemical products should increase to support the prices of ethylene, propylene and their downstream derivatives given (1) US President’s, Mr. Trump, tax cut policy and the USD1.5 tr i l l ion infrastructure investments, (2) continuous quantitative easing in Eurozone and Japan, (3) China’s investments on infrastructure expansion, promotion on urbanization, and the “One-belt-one-road” project will help maintain a stable economic growth, (4) economic reform released by Indian government, (5) stable global economic growth in 2018, (6) stable oil prices, and, (7) balanced

FPC participated in "PLASCOM Taiwan 2017" Exhibition.

19


ethylene supply and demand. In terms of China market, which accounts for around 40% of the Company’s total exports, because of the continuous enforcement of supply side reform and de-leveraging, as well as the stricter environmental examination, plants with high-pollution and high-energy-consumption were forced to shut down or reduce production volume. These regulations have increased the capacity expenditure for companies in order to meet the environmental requirements, and this may hopefully improve the problem of oversupply and price cutting competition in the past. In addition, China continues to implement the transition of coal-to-gas program, the mid to long-term oil and gas pipeline project, and to ban on plastics waste starting from 2018, which has led to a significant increase in the demand and import of plastics, which will raise the product spreads and is good for Asian petrochemical industry. As a result , the Company expects petrochemical industry to continue to maintain the industry upcycle into 2018 for 4 consecutive years. However, there are still many variables that might affect global economic growth and petrochemical industry, which includes (1) the impact to financial industry on Fed’s reduction on balance sheet and interest rate hike, (2) the uncertainty on the implementation of energy policy easing in US, (3) the rise of global trade protectionism, (4) debt problem in China and the potential bubble in real estate, (5) the impact on oil price from the rising political problem in Middle East and Korea. The Company will still need to respond prudently when it comes to the potential problems mentioned above.

In the new year, as the global climate change and the environmental issue have become widespread publ ic concerns, to pursue the sustainable deve lopment , the Company wi l l start from the conduct of corporate governance and the implementation of social responsibility rather than staying out of the global mega trend.

In view of the rising of technology innovation and an operating environment that is full of uncertainties, the Company will continue to maintain Formosa Plastics Group’s core value, fully develop circular economy, and to ensure the fulfillment of social responsibility. Aside from this, the Company will raise the run rate as there will be more ethylene and propylene supply provided following the fewer days of maintenance shutdown of ethylene capacity in Taiwan in 2018 from 2017. At the same time, the Company will accelerate the development of new differentiated products and technology, increase the sales contribution of products with high price and high margins, lower export volume to China and diversify to South, Southeast Asia, New Zealand, Australia, Africa and other emerging markets, and in addition, to expand the business by setting up technical service offices to provide onsite services.

Moreover, the Company will continue to develop Industrial 4.0 and automatic selling system, as well as to boost up product quality, production efficiency and to lower costs by carrying on the improvement on AI production process and the implementation of AI technique. Furthermore, the Company will create an eco-friendly park and be the role model for the transformation of Taiwan petrochemical industry by promoting the transformation programme of Renwu plant, including the setup of compounds research center, dye-sensitized solar cell plant, chemical & environmental protection experience hall, general showroom in research building, and a research center for AI and Industrial 4.0. Meanwhile, the Company will continue to conduct (1) the debottleneck project of Ningbo PP plant, (2) the investment project of HDPE plant in the US and PDH capacity in Ningbo, and accordingly, to save the growth momentum and expects the Company’s business to challenge another new record in 2018.

The beauty of Yunlin, Wan Chan-yung Memorial Park in Mailiao



EG Plant in Mailiao

In response to the vertical integration of the sixth naphtha cracker plant in Mailiao District, our plants in Mailiao maintain highly competitive advantages in terms of production scale, product range, and shortened delivery times. Looking to 2018, it is expected that the global economy will continue to grow steadily. We will apply rich experience in diversification and vertical integration, arrange the best configuration of production and sales, increase our overall competitiveness, and create maximum benefits for our shareholders.

21

NAN YA PLASTICS CORPORATION

EG Plant in Mailiao

The company’s consolidated operating revenue in 2017 was US$ 10,257

million, which represents an increase of 11.2% from US$ 9,223 million in 2016. The consolidated profit before tax was US$2,103 million, which represents an increase of 16.6% from US$1,804 million in the previous year.

In 2017, the global economic momentum was strengthened. Advanced, emerging and developing countries recovered simultaneously, and global trade activities also increased. The International Monetary Fund (IMF) repeatedly revised estimates for the global economy and global trade volume growth rate. It was the best year for economic growth since the financial crisis of 2009. The United States has driven economic growth due to the growth of non-governmental investment, the expansion of manufacturing PMI, and the promotion of tax reform. Although mainland China was restrained by supply-side reforms and strong reinforcement of environmental protection inspections, its economic growth rate reached 6.9% due to strong personal consumption, strong import and export, and stable expansion of the service industry. In other major countries such as Euro countries and Japan, the effectiveness of the expansionary fiscal policy has averted the impact of deflation, and economic growth is generally better than expected.

Under steady global economy growth, Nan Ya has been striving to expand domestic and international markets with full production and sales, and actively increasing the proportion of differentiated and high-value product sales, with remarkable results, including the rapid expansion of electronics material applications, resulting in production and sale is booming, and price is rising. Adding to petrochemical products rising prices follow crude oil prices, the increasing demand has led to widening interest, and as a result, profits have increased significantly. In addition to the increased return recognized by the investment in Nanya Technology and Formosa Petrochemical, the company’s annual pretax profit rose 16.6% compared to last year.

The four main categories of products of Nan Ya are plastic processing products, petrochemicals, polyesters and electronic materials.

On plastic processing products, most three-stage plastic processing companies in Taiwan have relocated to mainland China and Southeast Asia where raw materials are locally available at cheaper prices, hence the decreasing demand on domestic two-stage processing products. To adapt to changing markets and external environmental factors, Nan Ya continues to transform and accelerate research and development of new applications, new materials, environmental trends and unique specifications to develop new niche markets, and actively strive to collaborate with international manufacturers in production, marketing and strategic alliances, combined with e-commerce and online marketing to vigorously expand high-end markets such as the U.S. and Japan and potential emerging markets. Through the development of manufacturing services to provide customer satisfaction and other efforts, plastic processing products can still maintain stable profits.

Chairman Chia-Chau Wu

Nan Ya Plastics Corporation



In terms of petrochemicals, in response to the vertical integration of the sixth naphtha cracker plant in Mai l iao District, our petrochemical products, including EG, BPA, 1,4BG, DEHP, PA, 2EH, and EPOXY, are all integrated vertically w i th upst ream and downst ream industries to form a complete supply chain, respectively, to support the development of downstream industries s u c h a s t h e p l a s t i c p r o c e s s i n g , electronics, and polyester industries. Due to the rapid economic growth i n m a i n l a n d C h i n a a n d A S E A N countries, the petrochemical industry is developing rapidly in Asia. The Mailiao plant maintains its highly competitive advantages in terms of production scale, product range, and shortened delivery times, which has made it the Company’s key profit contributor for numerous years.

I n 2 0 1 7 , p e t ro c h e m i c a l p ro d u c t prices were affected by the rise in international oil prices, and the prices gradually increased. The EG demand was better than expected due to mainland China’s economic growth, a n d t h e d o w n s t r e a m p o l y e s t e r industry ’s operating rate gradually increased. Demand for EG increased, resulting in higher profits. For DEHP, the operating performance has been improved due to process optimization, production capacity improvement and product structure adjustment. BPA is affected by unfavorable factors such as overcapacity, high raw material prices and costs, which creates challenges for the operat ion. However, af ter enhanced promotional efforts by the sales department, the situation has improved. Although petrochemical products have been heavily affected by upstream raw material price fluctuations, the company continues to promote optimization of various processes, cost down improvements and monitoring of raw material and product pricing, as well as timely adjustment of production,

sales and inventory, and strengthening the sales outside mainland China and actively diversifying market risks, and through the adjustment of production and marketing strategies, increased profitability has been achieved.

As for polyester products, since major international brands haven’t recovered its sales fully in the first half of 2017, orders to manufacturers remained low but gradually increased by the second half of the year. The startup rate of mainland China manufacturers has increased, accompanied by strong market competition. Polyester fiber and yarn continued to perform with good profits from good differentiation and high-valued products. While the PET chip and industrial film product market faces challenges due to oversupply. In the face of difficult external environmental factors, Nan Ya responded to the international requests for eco-products and focused on recycling and green products, collaborated with world renowned brands for better business opportunities, leading to further increased sales that maintained stable profitability.

With regard to electronic materials, in 2017, China, the U.S. and European countries continued to promote new energy vehicles and electrical vehicles. The demand for Lithium battery, copper foil, and related products in the upstream market has grown rapidly. In addition, the demand for PCBs for automobiles and smart home appliances continue to grow, which drove up the supply of upstream electronic materials and as a result, the sales of various products and revenues have increased. In the future, we will integrate the advantages of upstream and downstream vertical integration, accelerate adjustment of production and marketing strategies, and respond to market development trends. We actively promote main products including differentiated products such as high density Interconnection CCL (HDI), high layer count CCL (HLC), automotive electronics CCL, low Dk epoxy, ultrathin glass fiber cloth, high frequency copper foil, and thick copper foil. Increased proportion of niche product sales with high added value and high functionality drives profits and growth.

Our investment in the Nan Ya Printed Circuit Board Corporation, which has long focused on the development and production of PCBs and IC substrate products was devoted to product transformation in 2017 in order to reduce the proportion of PC related products and increase auto electronics, internet communication, and other niche market products. However the transformation rate was behind expectation and operating performance failed to achieve the goal. To catch up with future trends such as AI and machine learning, Nan Ya PCB has actively strengthened its R&D capabilities and developed new products, and continued to improve the rationalization of process configuration and

23


automation of production equipment. In the future, Nan Ya PCB shall continue to expand new customers, strive for more niche-type product orders, and continue to improve production technology, increase yields, and reduce costs to improve operating performance.

Our investment in Nanya Technology relies on DRAM (Dynamic Random-Access Memory) product development, manufacturing and sales. The company c o m p l e t e d t h e 2 0 n m p r o c e s s technology upgrade plan in 2017, which not only increased productivity but also significantly reduced production costs. In addition, to lower the operation risk as well as respond to market changes, the company has already developed and produced high-density products such as 8Gb DDR4, and will introduce a series of high margin products such as consumer and low-power products in the future,

which will further diversify the application of products and enhance competitiveness. As the overall DRAM industry was in short supply in 2017, the operating profit of the company increased significantly, and the recognition of the sale of Micron Technology stock interests brought substantial return on investment to the company this year.

In the future, it is expected that 5G, AI, auto-drive and Big Data will lead the industry, bringing along DRAM products as indispensable key components. Nanya Technology will continue to improve its production technology, product design and customer service capabilities in response to market demand, and provide customers with the best memory solutions.

Looking to 2018, it is expected that the global economy will continue to grow steadily. Advanced, emerging and developing countries are expected to be driven by manufacturing. Meanwhile, the global economic situation has changed rapidly, and it is greatly influenced by international political and economic conditions as well as oil prices in various countries. In particular, the economic and trade conflicts brought about by international trade frictions, tariff

NAN YA Plastics Nantong



barriers formed under regional alliances, and the sudden deterioration of the global financial environment, geopolitical situations and so on may all hinder economic development.

A f te r U. S . Pre s i d e n t Tr u m p’s t a x re fo r m a t i o n p o l i c y w a s p a s s e d , investment in U.S . domest ic and foreign capital companies will bring a positive boost to economic growth, better employment rates, and boost consumption and capital expenditure as the U.S. is the world’s largest consumer market. Th e reduction in taxes will increase the disposable income of U.S. citizens, thus Effectively increasing U. S . d e m a n d . T h e t r a n s n a t i o n a l supply chain that supplies the U.S. will continue to expand and operate, thus stimulating international trade and prosperity. However, President Trump promotes the “America First” policy and adopts protectionist measures

one after another, causing international economic and trade conflicts and creating barriers to trade, which may adversely impact economy recovery and global trade.

Mainland China will continue its industrial restructuring in the future. The Central Economic Work Conference has clearly stated that China’s economy should transform from ‘high speed’ to ‘high quality’. With China continuing on restructuring the industry and the ‘Made in China 2025’ strategy, its overall industry chain localization will weigh in and bring high threats to Taiwan outbound performance due to great dependence on Chinese market, plus Taiwan being isolated from regional trade organizations where the most favorable trade terms apply, exportation is becoming increasingly unfavorable. In the long run, we fear that the economic development shall stagnate. It depends on the government and all industries to work together to make breakthroughs, and attach importance to and mobilize cross-strait economic and trade relations.

Th e c o m p l e x a n d e ve r - c h a n gi n g i n te r n a t i o n a l environment and uncertainties in the future may interfere with economic development. In short term the global economic recovery momentum should continue. However,

NAN YA Cling Film/ Decoration LISO Film

25


in the long term, the global economy will still be unable to shake off the low productivity growth and uneven income distribution. Faced with the multiple uncertainties of the global economy, Nan Ya upholds the philosophy of always explor ing the bottom l ine and finishing with per fection, and continuous improvement and pursuit of rationalization. The production department fully promotes process o p t i m i z a t i o n w i t h p r o d u c t i o n data collection, analysis and trend management to achieve the best production conditions to improve production performance.. Furthermore, promotion of circular economy through reduction, reuse and so on, improves resource recycling efficiency to reduce production costs and create maximum economic benefits.

With the joint efforts of the production, sales, and technical departments, we continue to strengthen R&D and expand potential markets, and increase the proportion of differentiated and high-value product sales. By making Taiwan the center of our business operations,

we have applied rich experience in diversification and vertical integration, adjusted resources from domestic and foreign companies in which we have invested in order to arrange the best configuration of production and sales, increase our overall competitiveness, and create maximum benefits for our shareholders.

Nan Ya current investment include the addition of production equipment for high-end PEPA synthetic paper, PET film, release film, and a new copper foil plant in Taiwan. In China, production equipment expansion projects include high value-added plastic leather and aluminum-plastic film in Nantong, CCL, prepreg and glass fiber cloth expansion in Huizhou; and the expansion of a new EG plant in Texas. Among them, the new copper foil plant and aluminum-plastic film equipment are developing power and energy storage applications mainly for diversified applications such as differentiated copper foil and battery housing materials for lithium batteries. In Huizhou, the electronic material expansion focuses on local South China market exploration; the new EG plant in Texas utilizes the benefit of cheap local natural gas and is expected to have an annual capacity of 828 thousand tons, and is scheduled for completion in two years, which will be able to expand the production and marketing scale and increase operating income to ensure that the company’s performance continues to increase.

NAN YA attended 18th TPCA exhibition


26｜2017年報 26｜2017 Annual ReportAROMA Plant in Mailiao

To date, investments totaling USD 335 million has been made on energy saving and waste reduction, wi th 3,784 ind iv idua l improvement cases accomplished, representing a total saving of 89 thousand tons/ day water, 872 tons/hour steam, and 102 kWh/hour electricity. The implementation has saved USD 310 million and 3.38 million tons CO2, which is equivalent to 282 thousand hectares of forest.

27

FORMOSA CHEMICALS & FIBRE CORPORATION

AROMA Plant in Mailiao

In 2017, the global economy grew despite US fed rate hikes and the

geopolitical conflicts in North Korea and Middle East. Brent oil priced USD 55 per barrel in the beginning of the year, dropped to the low of USD 45 in June, then climbed back up to USD 67 by year end; the USDX was down by the notion of a positive ef fect of the weak US dollar while the currency rates of most other countries have risen. Higher raw material costs and exchange losses from the above factors were out-balanced by the rising international economy, reformation of Chinese suppliers, strict environmental protection acts, and waste plastic import ban. The annual revenue reached a record high due to benefits from internal control such as best product combinations, top product quality, and the recycle and reuse of raw materials and energy.

The 2017 consolidated revenue was USD 12,008 million, contributing USD 1,314 million, representing an increase of 12.3%, which was derived from average sales price rose contributing USD 1,055 million, and increased sales volume contributing USD 259 million although it was covered partially by the large units regular inspections of ARO-3 and SM-3,

more compared to the 2016 consolidated revenue of USD 10,694 million. With reference to the annual profit, the 2017 consolidated income before tax of USD 2,235 million represents an increase of USD 403 million or 22% growth compared to the 2016 consolidated income before tax of USD 1,832 million.

The 2017 consolidated income consists of 53.2% from the parent company net income of USD 6,385 million, and 46.8% respectively from China, Vietnam and Formosa Taffeta combined net income of USD 5,623 million.

T h e m a i n o u t p u t o f t h e p a r e n t c o m p a n y w a s petrochemical and plastic products, which contributed 9 1 . 8 % o f t h e 2 0 1 7 c o n s o l i d a t e d i n c o m e, w i t h petrochemical contributing USD 3,980 million, plastic products USD 1,880 million, representing 62.3% and 29.5%, respectively.

The respective product operation statuses are as follows:With regard to the petrochemical division, the key is to reduce process costs through process improvements, increase major product productivity with less raw material and energy consumption.

In 2017, the Aromatic plant III completed process optimization and de-bottlenecking during regular inspection. All three Aromatic plants had completed a new round of process optimization, contributing enhanced reforming processes and transalkylation feed-in and cost effectiveness from the reduction of high-cost raw material consumption. Each plant will continue on with

Formosa Chemicals & Fibre Corporation

Chairman WenYuan Wong



the water and energy saving strategy for better energy efficiency. In 2018, the priority is to upgrade the Aromatic plant II reforming reheating furnace convection area and all three Aromatic plants energy saving program activation to save steam, reduce production costs and enhance competitiveness.

As for SM plants, the SM plant I I I processes have been enhanced after several water usage improvements during 2017, leading to a significantly reduced SM-III production cost. Though there was little new production output on the market, plastic material demand shall increase and hence benefit the SM market. In 2018, the priority work is to maintain consistent production. Due to

face imposing anti-dumping tax for SM importation from china, we will put more energy in domestic market and focus on India and Southeast markets instead of China to ensure profitability.

The excess capacity of synthetic phenol in 2017 is a major challenge. In addition to promotion products to maintain full production, cost down initiatives is another key to ensuring profitability. Looking into 2018, the excess capacity of phenol production in China will be consumed by the government industry structure adjustments, strict environmental protection inspections, improved activation, and stronger demand from downstream buyers. The ongoing de-bottlenecking in the Ningbo plant is expected to bring productivity increases from 30 million tons to 40 million tons, adding another profitable aspect to the operation.

Regarding PTA, high activation in the downstream polyester industry and low in stocks resulted in climbing

FCFC' plant in Ningbo

29


pr ices. In 2017, both Taiwan and China plants increased in revenue and profit compared to 2016. In 2018, the Taiwan plant shall continue on with consistent supply to faithful domestic customers. For export, in addition to Formosa Industries Corporation, market exploration including Southeast Asian countries, Middle Eastern countries and China, material-based clients will be focused to ensure two full production lines. As for the China plant, though it takes only about 3% market share, the sustainable quality and shipping have maintained smooth operation. The process reformation project has started and will be complete by mid-2018. Process costs are expected to reduce USD 25 per ton, contributing great competency. A new expansion project with an additional 1.5 million tons capacity per year is in schedule as well.

As for PIA, with four plus years of effort, it has now established its brand in the market. Year 2017 was a better profit year with higher prices in an environment whereby the overall market source was tight and with continuously high demand of bottle chips and coating materials from downstream markets. In the coming year, in preparation for sales after the China plant completion by the end of 2019, developing out of China markets will be enhanced with priorities set in the Middle East, Russia, and other potential customers with the same market competition conditions on import duties.

As for plastic products, with the oil price, China’s strict eco-inspection and restrictions on waste plastic material imports have caused supply reductions, leaving sales supported only by the local market. The rising economy caused increasingly r igid demand, which benefited the plastic pellets price. In 2017, we contributed to high-value sales and customer-service based operations, which not only stabilized customers

but also raised product prices. While short on material, at the same time we expanded the sales in other regions and have gained positive profits. Looking into 2018, other China markets development and product promotions, new specification developments, product differentiation, technical service and made-to-order capabilities shall continue to enhance product competitiveness.

In respect of PS resins, Taiwan plants experienced good profit levels and consistent demand for LCD TV diffusers and OPS; as for the China plant, the revenue came mainly from A/C panels, high gloss, high impact, LED lighting and LGP. In 2018, for Taiwan plants, in addition to stable growth in the Middle East and other regional sales targets, Latin America, South Africa, Southeast Asian major OA company orders must be enhanced by focusing on LCD diffusers, home appliances and electronic packing material with specification differentiation for market diversification. For the China plant, continue focusing on increasing sales of special grade products such as high LGP, refrigerator liners, super high impact and high flow products.

As for ABS resins, the Taiwan plant’s special grade ABS reached 25.4% of total sales, with China plant reached 14.0%. In 2018, high threshold, high value-added special grade products are to be developed for increased sales, with 30% and 21% as the goal for the Taiwan plant and China plant, respectively. For the Taiwan plant, sales will be focused on regions other than China to contribute to market diversification with better regional sales figures. Meanwhile, optimized production and sales specification adjustments will be based on niche products, with positive development of combined PC and ABS resins and other combined specification products. Carry out detailed inspection tours to downstream factories for better knowledge of needs and demands. Co-development of materials with customers for long-term stable collaboration while enhancing special grade product sales.

On the subject of PP resins, in order to maintain good profit levels, ECFA and vertical integration with stable production quality, as well as being the continuous supplier to JPP of Japan, will be carried out in the near future. In the coming year, PP resins demand from the China auto-parts and home-appliance industries is expected to rise steadily. Our priority is to maintain consistent production while moving onto high flow and light weight featured quality. Our quality strength in medical materials and featured modules in contact lens looks promising for market share expansion. Meanwhile, to increase profit, the work will focus on flexible production specification adjustments, made-to-order and high-value products with the advantages of



high-impact copolymer, high rigidity, and low ECFA duty.

Regarding PC resins, high demand in 2017 plus consistent production and high product quality have brought customer satisfaction. Mid-high-end customer exploration also increased special needs sales volume. Once again, the 2017 profit had outperformed 2016, reaching a new record. In 2018, in order to set foot in the high-end market, the main focus will be consistent production and supply of special products with high flow, high transparent grades, Silicide Copolymer, high flow with solar-radiation-proof ability; enhanced market exploration in Israel, Turkey, Germany, Vietnam and Philippines for better brand awareness; positive customer relationships to maintain high profitability.

For the fiber and textile products, low price competition from China continued to affect the annual revenue and profit, but operation results has been improved in 2017. In 2018, the focus will be on new market development for High-Value Viscose Staple Fiber. For the Nylon Division and Textile Division, certain achievement in production stabilization and new market exploration in 2017 must combine with branding and sales in the future. Consistent production quality, down-stream-customer-based vertical sales channel integration will be the effort focus in 2018.

In addition, the revenue growth of 2017 Formosa Industries Corp, Vietnam, was counterbalanced by utility department high fuel costs, with overall profit not being achieved. However, considering that Vietnam is a developing market with Southeast Asian countries joining RCEP and the “One Belt One Road” policy promoted by China at the same time, the production schedule will be in line with market trends, and the 2018 Formosa Industries Corp profit forecast is on the rise.

On work safety and environmental protection, FCFC continues to fulfill corporate social responsibilities with the attitude of finding the root causes and striving for perfection.

Regarding work safety, the Long-de plant site was recognized with the “2017 MOL Excellent Occupational health and Safety Units” award, while the Mai Liao plant site won the excellence award of the “2017 MOEA Industrial Zone Regional Security Organization Classification Group Type I”. “Safe Production” is the primary goal this year. The only way to effectively cost down is through equipment safety, personnel safety and zero occupational hazards. Each plant will learn from one another through the competition over PHA, JSA/SOP, MOC, and false alarm case sharing to locate blind spots of work safety management and potential risks.

As for environmental protection, BACT and energy optimization processes, pollution prevention facilities, and waste reduction efforts continued. Up until the end of 2017, the accumulated pollution prevention investment reached USD 597million. In addition, based on the concept of “circular economy”, the company sees corporate responsibility to implement “energy saving, waste reduction” for carbon reduction and water resource sustainability and GHG reductions. Our goal is sustainable development. The ARO-1 plant won the golden award of the “2017 Energy Saving Standard Award Group B of Bureau of Energy”, “2017 Greenhouse Gas Reduction Ratio Model”; the PC plant won the “2017 Water Resources

FCFC's product-nylon filament

31


FCFC won the golden award of the “2017 Energy Saving Standard Award Group B of Bureau of Energy”

Agency Industrial Water Saving Award” for performance excellence. To date, investments totaling USD 335 million has been made on energy saving and waste reduction, with 3,784 individual improvement cases accomplished, representing a total saving of 89 thousand tons/ day water, 872 tons/hour steam, and 102 kWh/hour electricity. The implementation has saved USD 310 million and 3.38 million tons CO2, which is equivalent to 282 thousand hectares of forest.

Looking into 2018, with the global economy turning up, China’s industrial structure adjustments and quality products enhancement, the overall market exploration is positive. However, in order to the adjust operational direction in time, changing factors that impact the economy must not be overlooked, such as the continuous rise of the US Fed rate, tax reformation and the rise of protectionism in US, the rebound of price of international

fuel, and the variety of exchange rate. Regarding the Taiwan economic growth rate being lower than the global average, government sectors is yet to come up with breakthrough policies that will lead the industry forward, while the dilemma between Taiwan and China has continued to drag down our chances of survival.

The investment environment in Taiwan is very limited, and therefore, the company will continue to focus on de-bottlenecking and circular economy improvement. Moving on to the goal of sustainable operations, it is necessary to ensure continuous investment. The ongoing investment projects in Louisiana, US and Ningbo, China will be focused as the main driving force to ensure the future development of the Company.



FPCC prioritized the expansion in domestic market, seeking to achieve more sales volume and market share. Besides, under the principle of fostering industrial safety and environmental protection, we had been operating with full capacity all year around, and had secured profitability via rigorous cost control protocols. This contributed to the annual performance of FPCC, whose profit accordingly leaped to a new record high. Looking ahead to 2018, FPCC will hold a proactive attitude of “advance with the times, and adapt to changes”, and to become the most competitive oil company in Asia.

Refinery Plant#1 in Mailiao

33

FORMOSA PETROCHEMICAL CORPORATION

Refinery Plant#1 in Mailiao

Foreword

2017 is the year of global economic r e v i v a l , a cc o m p a n i e d b y t h e

amplification of momentum derived from investment, trading, and industrial manufacturing. During the second half year, the demand of petroleum products had been expanding, and the oil cut policy were implied by OPEC, leading to the oil price upswing, which was then followed by the price hike of petrochemicals. Under the principle of fostering industrial safety and environmental protection, Formosa Petrochemical Corporation (FPCC) had been operating with full capacity all year around, and had secured profitability via rigorous cost control protocols; meanwhile, the enlargement in crack spreads also contributed to the annual performance of FPCC, whose profit accordingly leaped to a new record high.Financial performanceFPCC’s consolidated revenue in 2017 came to US$ 20.9 billion, a 14% increase compared to US$ 18.3 billion in 2016; consolidated earnings before tax was US$ 3.2 billion, a 6% increase compared to US$ 3 billion in 2016; lastly, pre-tax income margin was 15.4%.

Business OperationPetroleum Refining – Flexible logistics, aiming for optimized effectivenessFPCC’s Refining Business coordinates with integrated logistic planning, adjusting refining units’ production patterns dexterously in react to crack spreads alternation, to achieve the best production performance. However, due to more scheduled maintenances, refining throughput averaged 471,000 barrels per day in 2017, a 2.7 % decline compared to that in 2016.

In the aspect of foreign sales, FPCC proactively expanded new markets; aside from executing sales contracts, FPCC inspected market situations and supplies and demands to reactively sale goods in stock with spot price. Because of lower throughput, in 2017 the exports of gasoline and of diesel were 3,583 thousand KL and 8,707 thousand KL, or declined 6.6% and 9.6% respectively compared to 2016.

For domestic sales, FPCC prioritized the expansion in domestic market, seeking to achieve more sales volume and market share. The active utilization of various advertising channels, including new media and outdoor commercials, to promote the product features of the 95+unleaded gasoline and of diesel was aimed to building brand image and bolstering positive reputation regarding oil products, with an eye on increasing consumers’ adoption and confidence. In addition, regular marketing campaigns were held in cooperation with Cathay Bank, taxi fleets, and gas station franchisees, and continuous efforts were put on popularizing self-serve gas booths to draw new customers.

Formosa Petrochemical Corporation

Chairman Bao-Lang Chen



Petrochemical Feedstock B u s i n e s s – S t a b i l i z e d p r o d u c t i o n w i t h c o m p r e h e n s i v e v e r t i c a l integrationSituated in the ver y upstream of petrochemical industry as a feedstock supplier, the Feedstock Business of FPCC has been consistently supporting downstream units within FPG, and has optimized product combination with strengths in economies of scale, cost advantages, and flexible raw material selection, al l of which have made decent demonstration of the synergy of upstream-downstream collaboration. In 2017, the annual ethylene production was 3,039 KT, a 0.2% decline compared to that in 2016. The decline was due to regular maintenance of the naphtha cracker with annual ethylene capacity of 1.2 million ton.

From a mark et aspec t , genera l ly speaking, the increase in oil price was synchronized by price increments on

petrochemical products; along with the disturbance in the US market derived from hurricane incidents in the second half year, there were limited ethylene products exported to Asia, and prices were thus held. Following global economic revival, downstream demands gradually picked up as well. Under full-cap operation and crack spreads widened, FPCC’s profits were higher than the previous year.

Utility Business – reliable operation powered by co-gen units A total of 2,750 MW capacity were installed for FPCC’s qualified cogeneration units, whose primary goal is to supply the steam and electrical power throughout the Mailiao complex sufficiently and stably to the extent of self-sufficiency. In recent years, for the sake of air-pollution reduction, FPCC, aside from enhancing cogeneration efficiency, proactively has adopt various kind of advanced technology regarding improvement in contamination control, in pursuit of the balance between economic development and environmental protection.

In the year of 2017, the utility business generated 21,080 KT of steam and 13.8 billion KWH of electricity; overall production and sales were less than the previous year due to longer maintenance.

FPCC active utilization of various advertising channels, including new media and outdoor commercials, to promote the product features of the 95+ unleaded gasoline.

35

FORMOSA PETROCHEMICAL CORPORATION

H i g h - v a l u e A d d e d a n d GlobalizedThe domestic investment environment has become more challenging in recent years for the petrochemical industry; FPCC’s Mailiao Industrial Complex, however, has been improving current production processes under the premise that the total emission amount of air pollutants shall not increase, and has been seeking for high-value added production model.

For the dedication to developing appl icat ions of crackers’ C4 & C5 downstream products, cooperation with renowned foreign enterprises, among which Kraton is a joint venture project with an annual production capacity of 40KT of HSBC(Hydrogenated Styrenic Block Copolymers); the project has been testing and producing products of new specs since February, 2017. Another joint venture project, establishing a 43.8 KT annual HHCR (Hydrogenated Hydrocarbon Resin) production capacity, with Japan-based Idemitsu Kosan Co. Ltd is now under construction, and is expected to accomplish its trial run in 2019. Additionally, under the harsh circumstances of domestic investment, to secure FPCC’s future development and sustainable operation, the Louisiana Investment Project is now in active progress.

Environmental ly Fr iendly Co-existence FPCC aims for the win-win situation for industrial safety, environmental protection, and economic growth, by paying extraordinary attention on environmental protection when pursuing revenue growths. These efforts were made not only for fulfilling enterprise’s social responsibility, but also for realizing our commitment to sustainable development.

Beside continuously dedicating to various management and improvement measures to ensure industrial safety and to reduce environment impact, FPCC also has been striving hard for energy

saving and water saving. In 2017 FPCC was honored the “Annual Greenhouse Gas Reduction Awards” by the Energy Bureau, R.O.C. and the “Corporate Sustainability Awards” by the Taiwan Institute for Sustainable Energy.

In 2017, FPCC finished a total of 223 improvement cases regarding water-saving, energy-saving, and greenhouse gas emission reduction. The results are 2,124 tons per day for water-saving, 7,828 KW for energy saving, and 232.3 KT per year for greenhouse gas emission reduction. Additionally, multiple environmental protection projects were scheduled. For water usage, a desalination plant with a capacity of 100 thousand tons per day is now under preparation with an eye on increasing water sources; for air pollution prevention, beginning 2018, vessels owned by FPCC porting at Mailiao has turned for low-sulfur fuel to decrease air pollution emission. Meanwhile, to let the society have better understandings of Mailiao Port’s environment, efforts are made to pursue the EcoPorts Certification and to prove the environment quality around the Complex. Furthermore, the investment on the improvement project regarding white smoke elimination of co-gen units, for which the synergy of visual beautification and energy saving is achieved by heat recycling, has already been planned.

Sales TargetThe global economy of 2018 is expected to keep on growing, and hopefully will motivate global investment, as well as the demand on petroleum and petrochemical products. Except regular maintenance, our refinery and petrochemical units will be in full operation all year. The expected sales in 2018 for gasoline is 5,973 thousand KL, 10,522 thousand KL for diesel, 3,128 KT for ethylene, and 2,509 KT for propylene, all of which are greater than in 2017. The Utility Business, on the other hand, will mainly focus on stably providing electricity and steam to the Complex in accordance with production plans.

ProspectsLooking ahead to 2018, the projected economical growths of each region, including China, the US, and Europe, are still strong. The overall economy seems to be positive, nevertheless, there are still some unstable factors, such as the US protectionism policies, and the intensified regional political risks, all of which are variables that could impact prices of oil and petrochemical products, and thus have influence on FPCC’s performance. Despite the ever changing external conditions, FPCC will hold a proactive attitude of “advance with the times, and adapt to changes”, and continuously absorb the latest information regarding industry trends, market contexts, and sustainable issues, to get ready for the next decade, and to become the most competitive oil company in Asia.



Formosa Plastics Group-US. Operations

For the Phase 4 Expansion, FPC USA has obtained all required permits from the US Environmental Protection Agency (EPA) and Texas Commission on Environmental Quality (TCEQ) to build the Olefins III Plant, Propane Dehydrogenation (PDH) Plant, Low Density Polyethylene (LDPE) Plant, High Density Polyethylene III (HDPE-3) Plant, EG-2 Plant and PP-2 Train-3 Unit. It is expected that by the end of 2018, Olefin III plants and LDPE plants will be put into operation one after another.

37

FORMOSA PLASTICS GROUP-US.OPERATIONS

In 2017, the revenues of Formosa Plastics Corporation, U.S.A. (FPC USA),

Nan Ya Plastics Corporation USA (NPC USA) and Nan Ya Plastics Corporation, America (NPCA) totaled $US 5.7 billion, about 9.6% increase compared to $US 5.2 billion achieved in 2016. Crude oil prices were related stable at about US$55 per barrel in first three quarters of 2017. Starting from the last quarter of 2017, crude oil demand increased constantly and crude oil prices saw a steady uptrend. Therefore, our petrochemical products’ prices remained high.

The 2017 US economy continued s t e a d y gro w t h , b e n e f i t i n g f ro m reduced unemployment and gradual improvement in various economic indicators. With US natural gas prices remaining low, resulting in relatively low prices for ethane, propane, and electricity, our competitive advantage increased and petrochemical profits grew steadily. Thanks to our vertical integration and stable PE/PP market d e m a n d i n N o r t h A m e r i c a , w e maintained profitability during the year through excellent production and successful sales of different products.

All three major product segments, Olefins and Polyolefins, Chlor-Vinyl and PET/Fiber, continued efforts to improve product quality, optimize operational processes and improve production efficiency. These efforts contributed to i m p rove d c o s t p o s i t i o n s a n d competitiveness in the North American marketplace.

In the Olefins and Polyolefins segment, both our oil & gas operations and the spot market supplied natural gas, ethane, and propane to our olefins c rack ers . The c rack ers produced 1,670,000 tonnes of ethylene and 670,000 tonnes of propylene per year. The polyolefins operations converted these intermediates into 1,220,000 tonnes of polyethylene (PE) and 910,000 tonnes of polypropylene (PP).

In Chlor-Vinyl segment, the Utility Venture generated electricity for FPC USA to produce 1,060,000 tonnes of caustic soda and chlorine. These materials were used by our ethylene dichloride (EDC), vinyl chloride monomer (VCM) and polyvinyl chloride (PVC) operations to produce 1,490,000 tonnes of PVC resin. Using a portion of the resin, NPC USA produced 70,000 tonnes of rigid PVC film and NPCA produced 48,000 tonnes of flexible PVC film.

In PET/Fiber segment, FPC USA produced the ethylene used by NPCA to produce 360,000 tonnes of ethylene glycol and 880,000 tonnes of polyester and derivatives.

Our marketing strategy balanced production and sales among our North American customers, as our key focus, as well as our export customers. In building customer relationships, we established broad customer bases and selected specific product grades to develop new customers strategically. We also formed partnerships for new products through research and development. In North America, we focused on high-growth, high-profit margin segments across customers of different sizes. Our exports focused on the growth in Mexico, Central and South America to take advantage of low freight costs.

Looking forward, in 2018 we expect the US economy to maintain steady growth. The economic growth in advanced countries will also drive the economic recovery in developing countries. The demand for petrochemical products is expected to accelerate. Crude oil prices will rise slowly and the oil and gas production in shale will rebound, which will help stabilize the price of petrochemical raw materials and provide adequate supplies. Olefins plants should achieve high production rates and our products should keep current market shares.

LDPE Plant Civil Construction



But as expansions in petrochemical i n d u s t r y g r a d u a l l y i n c r e a s e i t s production, profit margins in olefins and polyolefins products will likely reduce. Overall, we expect to see the continuing cost advantage in US petrochemical industry. We remain cautious, however, as we face the uncertainty of US trade policy, US dollar appreciation, and US interest rate hikes.

For our Phase 4 Expansion, FPC USA has obtained al l required permits from the US Environmental Protection Agency (EPA) and Texas Commission on Environmental Quality (TCEQ) to build the Olefins III Plant, Propane Dehydrogenation (PDH) Plant, Low Density Polyethylene (LDPE) Plant, High Density Polyethylene III (HDPE-3) Plant, EG-2 Plant and PP-2 Train-3 Unit. It is expected that by the end of

2018, Olefin III plants and LDPE plants will be put into operation one after another. Genuine efforts will be made to complete these projects as scheduled. We have always had a core management goal of ensuring sustainable operation and growth. Achieving this goal depends on our ongoing efforts to emphasize environmental and safety management, human resources management, employee skills enhancement, new products development, and increasing our sales and service capabilities – with a focus on high profit margin, long-term customers who demand excellent product quality and services.

We fully expect that these marketing and operational efforts will strengthen our presence in our markets, grow our market share and further increase profitability.

OL-3 Plant Furnace Erection

39

FORMOSA PLASTICS GROUP-US.OPERATIONS

Other Investments

I n a d d i t i o n t o t h e s e fo u r m a j o r corporations, the Formosa Plastics Group has many other affiliates. Our domestic aff i l iates include NanYa Technology Corp., Nan Ya Printed Circuit Board Corporation, Formosa Sumco Technology Corp., Formosa Taffeta Co., Formosa Advanced Technologies Co., Formosa Heavy Industries Corp., Mailiao Power Corp., Formosa Daikin Advanced Chemicals Co., Ltd., Formosa Asahi Spandex Co. , Hwa Ya Power Corp., PFG Fiber Glass Corp., Formosa Environmental Technology Corp. , Formosa Idemitsu Petrochemical Corp., Formosa BP Chemicals Corp., Formosa FCFC Carpet Corp., Formosa Oil (Asia Pacific) Corp., Formosa Plastics Transport Corp., Formosa Plastics Marine Corp., Nan Ya Photonics Inc., Formosa Biomedical Technology Corp., Formosa Technology Corp., Formosa Lithium Iron Oxide Corp.,

Our overseas affiliates include Formosa Plastics Corporation, U.S.A., Nan Ya Plastics Corporation, USA, Nan Ya Plastics Corporation, America, Formosa Ha Tinh Steel Corporation and P. T. Indonesia Nan Ya Indah Plastics Corporation. FPG’s investments in Mainland China include Formosa Plastics Corporation, Nan Ya Plastics and Formosa Chemicals & Fibre Corporation.

Formosa Ha Tinh Steel Corporation

Formosa Biomedical Technology Corp.

Non-Profit Organization—Medical Care


Chang Gung Memorial Hospital

In order to achieve the goals of“Raising the quality of service and controlling the reasonable medical cost”, Chang Gung Medical Foundation has kept evaluating the circumstance and demand in Taiwan, and get to the bottom of every question to rationalize the patient –centered care, innovate the environment, provision the best quality of medical care, maximize the benefit of limited resource, and steadily improve the qualities of medical service of Taiwan for the past forty years.

41

CHANG GUNG MEMORIAL HOSPITAL

Established in 1976,Chang Gung Memorial Hospital(CGMH)is now

in its 42rd year of operation.Adhering to the belief of “What is Taken from the society is to be used in advancing the interests of the Society”,we have o v e r c o m e n u m e r o u s o b s t a c l e s during that timeframe.By integrating teaching,research,services and sound management,we have created an institution that serves the public as we strive toward upgrading the level of medical care and enhancing the well-being of the society.

1.TeachingA s a t e a c h i n g h o s p i t a l , w e h a v e launched cooperative programs with Major medical schools in the country to provide their interns with clinical training.We have also developed a highly respected resident training system designed to nurture highly competent attending physicians in different specialties.In 2017,99 residents finished their training program at CGMH for promotion to Attending Physician.Over the years CGMH has graduated over 3,749 students to achieve excellent Performance in their respective careers in the medical profession.

2.ResearchTo encourage R&D,we provide funding for cl inical research,basic Medical research and international studies for our medical ,nurs ing,technical and administrative staffs.In 2017 we conducted more then 3,052 medical research projects under the commission of the National Science Council and the Department of Health.In addition,we p r o v i d e d Fu n d i n g o f U S $ 1 2 1 . 7 million,published nearly 2,717 papers in domestic and International journals and supported international studies for 47 esearch staff personnel.

3.servicesAs one of the biggest general hospitals in Taiwan,both our facilities and our level of health care are on par with first-rate hospitals around the world.By the end of 2017,we offered 9,000 beds with health care services provided by over 23,000 employees.In 2017 we served over 9.1 million outpatients and admitted almost 298,000 patients for inpatient services.

4.ManagementTo achieve the goal of enhancing service quality and controlling Medical costs within reasonable limits,for over 41 years we have Constantly evaluated local conditions and needs,inquiring into the root Of every problem.With patients at the center of our mission,we have embraced innovations allowing us to provide the best possible medical care,to make the most of limited resources and to enhance the quality health service in the country.

In terms of management,we follow the belief of Founder Wang and the spirit of ‘inquire into the root of the matter and aim at the sovereign good’.In terms of service,one out of every three people in Taiwan has been a patient of CGMH.In terms of teaching,one out of every four doctors in Taiwan has been trained by CGMH.In terms of research,we publish over 2,500 papers a year in world leading medical journals.We search for excellence in every aspect,establishing CGMH in the world arena.

In recent years,rapid changes in Taiwan’s society and economic environment have increased the public’s need for quality medical care.The change in the country’s national health insurance policy presented

Significant challenges to medical institutions.Chang Gung Memorial Hospital’s spirit of social responsibility drives us to adopt every countermeasure possible to reduce the impacts and burdens of these changes as much as possible.As a result,2017 operational income

growth remained stable.Further,patients and the community haverecognized the hospital’s devotion to providing service and quality medical care.

To fur ther enhance the quality of our medical service,we have Embarked on a wide range of service improvement projects.For example,we introduced

Non-Profit Organization—Medical Care


a 24-hour Internet and computer voice appointment booking service t h a t a l l o w s p a t i e n t s t o m a k e appointments over the Internet or phone instead of showing up in person to make an appointment.The computerization of doctor orders has substantially shortened the time necessary for outpatient patients to make payment and pick up their prescriptions,95% of patients have been able to leave the hospital within 15 minutes after their consultation.

T h e i m p l e m e n t a t i o n o f t h e CGMH webs i te now a l lows the public to Learn more about our ser v ices.The Electronic Medical Record(EMR) And Picture Archiving and Communication System(PACS)a l l o w d o c t o r s f r o m d i f f e r e n t branch hospitals(including outside institutions in the coalition)to access and exchange medical information and patient ’s images.To give our pat ients the best medica l care possible,we are also promoting the Clinical Path Way and Protocol Project.This project provides computer-based tools to help doctors make accurate diagnoses and provide effective treatments.

In the area of organ management,we continue to promote the Concept of organ donation and per form organ transplants.In 2017 CGMH received organ donat ions form 108 people and performed organ transplants that included 122 cornea cases,12 heart cases,6 lung case 88 kidney cases(include 32 case of vivo transplant),186 liver cases(include 148 case of vivo transplant).The hospitals also handled 4 anatomical pathology cases,and 7 body donations.

CG M H h a s a l s o b e e n a c t i ve i n providing advanced social services.In 2017,CGMH provided relief to over

4.48 million patients,representing An outlay over US$ 18.07 million from our social service fund.

Our facilities have expanded our service area and fulfilled the aspiration of Founder Wang to care for both the young and the elderly.For example,recognizing the specialty services for children in Taiwan were inadequate compared with those offered in other advanced nations,CGMH established children’s hospitals in Linkou and Kaohsiung in1993 and 1995,respectively.These hospitals have trained pediatriciansof various sub-specialties and treated numerous acutely or critically ill children in these regions.

In addition,in 2003 we established a hospital for patients with Chronic illnesses and a nursing home in response to the aging population in Taiwan,where over 12.5% of the population is over the age of 65 and face a lack of long-term care facilities.Other efforts to address this issue included the establishment of a health culture village to provide the elderly with proper and comforting care.Given that medical resources in Taiwan were relatively scarce in the Chiayi and Yunlin district,in that community we built Chiayi and Yunlin branch that opened in December 2001 and December 2009.

For the proper care of cancer patients and to protect people health, we invest billions of dollars to set up the Asian first and largest Proton radiation therapy center at Linkou Y.C.WANG Center for Advanced Medicine. Had

Chang Gung Medical Fundation has awarded the Golden Tower Award of 30th Taiwan Continuous Improvement Awafd

43

CHANG GUNG MEMORIAL HOSPITAL

started service since Nov 2015,and Set up second Proton radiation therapy center at Kaohsiung branch, Opening service is scheduled in Augst 2018 . In the view of Founder Wang,after five thousand years of development Chinese medicine is an invaluable asset that reflects the amalgamation of wisdom and experience of our ancestors and warrants being carried forward.thus,in 1996 we became the first among large medical centers to set up a Chinese medicine department at our Linkou medical center and s t a r t e d a t o u r o t h e r c e n t e r s . I n practice,we will unite the concepts of Chinese medicine with modern scientific techniques and methods of Western medicine to care for the health of the public.

Promote “Sports medicine care plan”

Doctor of CGMH went to an aboriginal tribe and offered volunteer medical service

Non-Profit Organization—Education


Chang Gung University

Chang Gung University places emphasis on the equal development of morale and literacy, integration between the individual and groups, and harmony between body and mind. Students are expected to develop into well-balanced individuals by following the “Learning by doing” philosophy. Besides, indicators including caring and giving, teamwork, humanity and art, self reflection, self discipline, and innovation and progress, etc. are used to measure the effect of holistic education.

45

CHANG GUNG UNIVERSITY

Ch a n g G u n g U n i v e r s i t y w a s established in April 1987 under the

name of Chang Gung Medical College, with the aim of prepar ing future outstanding medical professionals. In order to support the economic development of the nation, Chang Gung Medical College later introduced the engineering and management programs to prepare young talents in these fields, and was renamed to Chang Gung College of Medicine and Technology. In August 1997, the Ministry of Education formally approved the name change to Chang Gung University. At present, Chang Gung University has three colleges: Colleges of Medicine, Engineering and Management and includes 18 undergraduate, 30 master’s and 11 doctoral degree programs.

From the ver y beginn ing o f the establishment, Chang Gung University has been planning long-term curricula and academic research programs under the educat iona l motto o f “Diligence, Perseverance, Frugality, and Trustworthiness”. These endeavors have helped us achieve our goal of “combining theory and practice in our education programs”. In addition, our efforts have been made in pursuit of excellence in instructions and academic research and long-term promotion for holistic education of our students.

There are 596 fu l l - t ime facul t ies and 584 par t - t ime facu l t ies and preceptors. 7,187 students, including 5,304 undergraduate students and 1,883 graduate students, are currently enrolled at Chang Gung University. In addition to classroom learning, students are required to participate in various internships and cooperation programs with Formosa Plastics Group, Chang Gung Memorial Hospitals and other institutions in order to achieve the goal of “combining theory and practice”. There are plenty of opportunities for various practical training or work-study programs available to students during semester breaks. These programs are

designed to allow them to gain working experience and to develop proper working ethics before they graduate. The university has also introduced over 22 academic programs, including the Biotechnology Management Program, the Gerontological Health Care Program, the Program of Information Security with Medical Applications, the Steel Production and Management Program, the Reliability Science and Technologies Program, the Interdisciplinary Innovation and Entrepreneurship Program, and the Medical Design Program, just to name a few. These programs are also available to the students who desire to develop additional expertise or secondary specialty in addition to their major programs. Graduates of Chang Gung University have proved their abilities and competence at work or during their advanced studies; they also are well liked by their employers because of their devotion and ethics displayed in the workplace.

In line with the development of science and technology and the needs of society, Chang Gung University integrates its expertise in engineering and management with the core research fields in medicine and biotechnology, and leverages on the abundance of practical experience and manpower of Chang Gung Medical System and Formosa Plastics Group. By incorporating the uniqueness of surrounding areas as well as promoting the liaison of industry and academic research, Chang Gung University has become an excellent university in research, teaching and industrial innovation.

To reach its goal, the university used the Shengen Research Center model to coordinate research teams and resources and cooperate with top research institutions abroad, in order to establish an international research network. The university is the only private university in Taiwan that has received the Aiming-for-Top-University funding from the Ministry of Education consecutively since 2005 to 2017. The university also set up the Molecular Medicine Research Center, whose interdisciplinary platform in cancer biomarkers research has reached world-class standards and was invited to join the U.S.-led “Cancer Moonshot Program”. In response to the aging society, the university also set up the Healthy Aging Research Center to focus on neurodegenerative diseases and to develop innovative metabolic-body-sensing technologies for diseases such as cardiovascular diseases and diabetes. The results have prompted Waters, a US company, to engage our university as the training center for metabolomics analysis. The Institute for Radiological Research worked closely with the Chang Gung Memorial Hospital to set up the first proton therapy center in Taiwan. Meanwhile, the Center for Reliability Sciences and Technologies analyzes the reliability of products such as electronics, integrated circuits,



machinery and optoelectronic devices in order to increase the output value of equipment. The results have enabled us to be in cooperation with a number of international research institutions, such as National University of Singapore. In addition, by applying the integrated t e a m m o d e l , t h e u n i v e r s i t y h a s established a number of research or service centers, including the Research Center for Emerging Viral Infections, the Green Technology Research Center, the Center for Biomedical Engineering, the Clinical Informatics and Medical Statistics Research Center, the M icrobiota Research Center, the Research Center of Industry Innovation for Senior Citizens, and the Research Services Center for Health Information.

Chang Gung University has also placed great emphasis on the liaison with industries. Over the past three years, our cooperation with the Formosa Plastics Group has been worth on average NTD$17 million per year (USD$576,200). A long-term cooperation has established

the limestone specification through systematic analysis. Prof. Kuo and his research team successfully transformed millions of tons of ashes into high-purity calcium sulfate dehydrate (a.k.a. gypsum), which was worth over a billion dollars. In the same year, Professor Wei-Nan Chang was also appointed by the Formosa Plastics Co. Ltd. to conduct the power system stability analysis, amounting to NTD$4.54 million (USD$150,000). Another successful example is Prof. Kuang-Hua Hou and his research team. They have long been helping the Formosa Plastics Group with issues such as welding, materials, corrosion, failure analysis, and nondestructive testing, etc. They designed a series of educational training programs to help the Formosa Plastics Group cultivate professional technicians and talents. So far, he and his research team have helped the Formosa Plastics Group with the piping maintenance for over 20 kilometers.

In recent years, overall academic performance of Chang Gung University has been outstanding, ranking within the top 5% of all universities in Taiwan. From 2008 to 2017, our university was ranked within the top 400 universities according to the Academic Ranking of World Universities released by the Shanghai Jiaotong University.

Chang Gung University places emphasis on the equal development of morale and literacy, integration between the individual and groups, and harmony between body and mind. Students are expected to develop into well-

The Windmill Festival of Chang Gung University

47

CHANG GUNG UNIVERSITY

balanced individuals by following the “Learning by doing” philosophy. Besides, indicators including caring and giving, teamwork , humanity and ar t , sel f reflection, self discipline, and innovation and progress, etc. are used to measure the effect of holistic education. These endeavors are made to ensure our students to transform into individuals who have balanced development in all aspects, have moral integrity, and maintain their principles.

Chang Gung University aims to develop into a top -notch univers i t y with distinctive global vision. The University will keep enhancing teaching and research in various fields, continue working on industrial innovation, and facilitate academic exchanges with international institutions in response to social demands and trends. In addition, we will persist on edification of our students by encouraging them to care for humanity and to devote themselves to serve. Our mission is to educate good

young generation to develop sound personality, to acquire specialized knowledge and skills, to possess excellent learning capabilities, and to believe in lifelong learning.

Impressive on-campus exhibition presented by students of the Department of Industrial Design

The exhibition of the Health Care Research Center



Chang Gung University of Science and Technology

To meet society’s need for talents, we are committed to improving all education-related affairs on campus to construct a quality learning environment centered on humanism and health, so as to contribute to society with people who are at once professional, exceptional, obliging, and with specialized skills. We will persist in our pursuit of “perfection” in school affairs and administration, education and research, as well as school-business partnerships, and most importantly, we will continue to do our best in cultivating integrity in our students. By so doing, we seek to keep up our efforts to bring up first-class skilled workers who are professional, expert, and high-quality, and who place great emphasis on the quality of service.

49

CHUNG GUNG UNIVERSITY OF SCIENCE AND TECHNOLOGY

The Chang Gung University of Science and Technology began in 1988 as a

two-year nursing junior college. It was founded by Mr. Yung-Ching Wang and named after his father. The University, with the aims of elevating the quality of medical and nursing practices and fostering nursing professionals in Taiwan, commits itself to nurturing in its students such qualities as endurance, reliability, diligence and sincerity. Indeed, these four words are the motto of the University.

In 1989, an evening nursing degree program was launched, followed by a five-year junior nursing program in 1991. In 1996, the two-year Child Care and Education Program was established. In 2000, the Department of Information Management was created. Two years later, in 2002, the school was upgraded by the Ministry of Education from a Junior College to an Institute of Technology. In order to respond to a growing demand for medical and nursing services in the Chiayi and Yunlin areas, the additional Chiayi Campus was established in January 2003. In 2006, two new departments were established: the Department of Cosmetic Science on the original Linkou campus, and the Department of Respiratory Care on the Chiayi Campus. To cope with a rapidly growing elderly population and to meet the changing needs of senior citizens, the Department of Geriatric Care and Management was founded in September 2008. In the same year, the Graduate School of Nursing (Chiayi Campus) was a lso launched. The Department of Nutrition and Health was founded a year later, in 2009. In August 2011, Chang Gung Institute of technology CGIT was transitioned to Chang Gung University of Science and Technology (CGUST ). Graduate Institute of Health Care was founded in

2012, Graduate Institute of Health Industry Technology was founded in 2013, and the following year, Graduate Institute of Nursing (Linkou Campus) was inaugurated in 2014. In June 2017, the Ministry of Education approved to merge the Gerontological Care and Management and Graduate Institute of Health Care to form the Department of Gerontology and Health Care Management since August, 2018.

The University educational scope has been broadened gradually, and its growth clearly reflects the soundness of the University central tenet. Currently, the University employs 340 full-time teachers, and 6,712 students are enrolled. With additional expansion of excellent academic programs over the years, the University seek to nurture best professionals in the field of health care industry.

The University has been a model college in the technical and vocational education system. Founded to support commitment to humanity and integrity, its vision is to be, in every aspect of health care, the highest-quality school and the source of the highest-quality nurses entering the field. In order to develop in its students the spirit of diligence and endurance, and to enable them, in both theory and practice, to apply that spirit for the benefit of society, the University has cooperated with Chang Gung Memorial Hospital, the Formosa Plastics Group, and 183 other organizations to provide students with a wealth of

Appreciation and Application of Picture Books is the English-taught course.



internship opportunities. The students are thus offered chances to accumulate work experience and hone their skills. This strategy is designed to help students achieve the educational goal of combining work experience with classroom knowledge in a solid way, thus placing them in an advantageous position in today’s competitive job market.

M o r e o v e r , t h e U n i v e r s i t y h a s implemented a mandatory boarding school pol ic y in order to pursue integrate school educat ion with guidance and discipline. Based upon the belief that ethical and moral education is developed in daily life, the policy aims to promote all-rounded development of students, cultivate students to become good-tempered and modest, respect for life, and concern for society. The students are envisioned as professionals

endowed with love and patience.

Within the aspect of academic research, the University encourages teachers to participate in research projects in cooperation with the government, Chang Gung Memorial Hospital, and the Formosa Plastics Group. Efforts in cooperative research projects with other industries are strongly encouraged as well. In the academic year of 2017 alone, the University received a grant of $1,494,621.42from the Ministry of Science and Technology for 47 research projects, and a grant of $778,835.77from governmental offices for 40 research projects. In addition, grants totaling $1,405,332.25 were accumulated by 94 cooperative projects between the University and the private sector. Finally, 20 projects, with grants totaling $61,310.64, were funded by the University.I

n response to the rapid changes in society, the University is dedicated to improving its administration, with personnel as its central consideration. Moreover, the learning environment is being improved to support the ideal of providing quality health care for the general public. In the future, the aim of “being the best” will continue to

Department of Nutrition and Health Sciences Students attending healthy diet Implementation course

51

CHUNG GUNG UNIVERSITY OF SCIENCE AND TECHNOLOGY

guide the development of the University administration, teaching, research, industry cooperation, and student development. The Chang Gung University of Science and Technology will continuously strive to foster top-quality professionals who adhere to the principle of providing the best professional services.

The teachers and students of Research Center for Chinese Herbal Medicine used a multiple chemiluminescence imaging system to analyze the specific protein.

The teachers and students of the Research Center for Chinese Herbal Medicine used a microscopy to analyze staining images of the cell or animal tissue sections.



Ming Chi University of Technology

Education is the foundation of a nation and its importance is hardly surmountable. Ming Chi looks for “perfection” in every aspect including school administration, research, industry cooperation, and the development of personal integrity of the students. We seek the best for everything we do, and pursue self-improvement at all the times. We hope to contribute to help the entire economic development of the industry through the cultivation of professionals with sound personality, and set our goal for a new model for the vocational education in Taiwan.

53

MING CHI UNIVERSITY OF TECHNOLOGY

In the 1960’s while both the industrial and economic developments were

taking off in Taiwan, there was a lack of mid-level professionals in the industries. In response to the developmental needs, Mr. Y. C. Wang, the founder of Formosa Plastics Group, donated the funds for the establishment of the University in December 1963 in order to strengthen the cultivation of talents.

The University is located on the hillside of Kueizi Village in Taishan District, New Taipei City and was originally named “Ming Chi Institute of Technology.” The campus occupies an area of 62 hectares with vast green areas and beautiful yet tranquil sceneries. More than 200 years ago, during the reign of Emperor Chienlong in the Ching Dynasty, the “Ming Chi Academy,” founded by a Tributary Scholar, Mr. Hu Cho-yu in Southern Fukien, was located in the vicinity of the University. At that time the Academy was a center of intellectual and cultural hub and was also the cultural origin of northern Taiwan. This university was named “Ming Chi” with an aim to encourage the faculty and the students to learn from the virtuous elders and to embrace heritage and vision as their own mission.

With the exceptional operat ional performances and in response to the need for talents due to the economic d e ve l o p m e n t a n d t h e i n d u s t r i a l advancement in Taiwan, the School was approved in 1999 for its transformation into “Ming Chi Institute of Technology.” After being awarded Excellence by the annual evaluation conducted by the Ministry of Education (MOE) for six consecutive years, the Institute was approved again in 2004 for its further transformation into “Ming Chi University of Technology.” The University currently hosts 4,500 students (4,000 students in the day division and 500 students in the continuing education division), 192 faculty members, and 108 staff members. The University includes the College of Engineering, College of Environmental Resources, and College of Management

and Design, offering 11 Masters’ programs, one Ph.D. program and 10 departments. All the departments and graduate institutes have passed the certifications of IEET (Institute of Engineering Education Taiwan) and ACCSB (Accreditation of Chinese Collegiate School of Business), showing that the University’s educational system is on the international track.

Due to the fact that all the units of MCUT (including university affairs, administrative offices, three colleges, ten departments, and eleven graduate institutes) received top rankings and the school was ranked number one nationwide in the 2011 MOE Evaluation of Technological Universities, MCUT was approved to self-evaluate in 2016 instead of being evaluated by the MOE. In that year, MCUT passed the MOE evaluation on technological university affairs and self-evaluation on colleges, departments and graduate institutes. According to the data collected from Web of Science, MCUT ranked the second among all the technological universities and colleges in the year of 2018 in producing SCI/ SSCI papers per author, including assistant professors and above. MCUT’s Corporate Social Responsibility Report (CSR) not only has passed AA1000 certification by British Standards Institution (BSI) in 2015 but was awarded the silver medal, which was the top honor among non-profit organizations for the Taiwan Corporate Social Award (TSCA). In 2016, MCUT was accredited by the New Taipei City Government with a “Silver Goose Mark” for its efforts in creating a low-carbon campus. The average amount of subsidies per student at MCUT received from the MOE has led other funded technological universities for years. MCUT, which has been awarded certificates of information security management system (ISMS) ISO-27001, and environmental management system (EMS) ISO-14001 every year, is an outstanding technological university with excellent traditions and achievements.

The motto of the University is “Diligence, Perseverance, Frugality and Trustworthiness.” In terms of “Diligence and Perseverance,” we expect the students not only to work hard but also to do the right and useful things. Students are encouraged to build their wisdom and enhance self-confidence through the accumulation of such useful experiences. When students live simple and honest lives, they can concentrate on the pursuit of their life goals. Based on this foundation and equipped with the professional knowledge and skills, all our students are expected to become useful members of the society. Since its founding, faculty members and students have lived continuously on campus. Through this shared on-campus living, we can encourage students to maintain a regular life, strong body and mind, while fostering grounded characteristics and good moral character. The Mindfulness Center was established in 2016. A selective course of Mindfulness for



general education was offered to help students boost their concentration and observation. MCUT has been honored by the MOE for its excellent performances in health promotion, waste reduction and recycling, as well as managing food materials of school cafeteria in 2016. Moreover, since teachers also live on campus, they can better guide students and live up to the standards of propagating the doctrines of the ancient sages, who would not only teach but also clarify any doubts.

In order to take both theory and practice into account, and to help students develop the spirits of self-supporting, hard work ing, and endurance, the University practices the teaching model integrating regular classes, internship and regular classes. Students are arranged to take turns participating in the full time practical internship program for one year in the Formosa Plastics Group as well as other companies taking part in the co-op practical training program. This allows the students to receive wages from the practical work so that they could reduce the financial burden of their families and complete their studies. Through

the internship and practical work, students are able to learn the techniques relevant to their professions as well as the practical management skills, and from the physical works students are also able to experience the meaning of diligence, perseverance, frugality and trustworthiness and develop the attitude of being down-to-earth and always getting to the bottom of everything. The overseas internship since 2006 is unprecedented among universities in Taiwan. Presently the practical training program has expanded to various industries and companies in the U.S., Switzerland, Mainland China, Indonesia and Vietnam. The amount of students working overseas has accumulated to 452 till 2017. Moreover, for eight consecutive years since 2010, Ming Chi has been selected to facilitate nationwide vocational schools in offering co-op practical training programs. The practical training program has expanded to various types of industries with over 100 companies participating in the program. Students’ performances are highly accredited in the industry. The University has also received lots of recognition of “Excellent Performances in Industry-Education Cooperation” evaluated and selected by the Chinese Institute of Engineers. The discrepancies between education and the employment in the business field are effectively eliminated, realizing the educational goals in connecting industries and education. According to the 2017 university ranking (excluding medical schools) released by Global Views Magazine, Ming Chi ranked number one among all other private technology universities. The Ming Chi alumni of the past years have

MCUT integrates resources from each college to establish research institutes with characteristics. The picture shows Center for Plasma and Thin Film Technologies.

55

MING CHI UNIVERSITY OF TECHNOLOGY

received positive affirmation from the academic, industrial, and business fields.

Beginning from the academic year 2004, the University started to recruit aboriginal students in the four-year college in order to extend our concerns for the aboriginal students. The University has funded the aboriginal students up to NT$ 430 million. This program has gained much appreciation from the aborigines and acclamation from the public in the society. Moreover, in coordination with the needs in lifetime learning and returning education for technical training, the University provides assistance for the enterprises in employee training as well as career guidance for young adults of the society. Meanwhile, in order to satisfy the needs of the alumni and members of the society in continuing education, the Division of Continuing Education was established. This Division has offered continuing education credit courses, in-service courses, and community university courses for the residents of Taishan District. The University also offers on-the-job master programs and four-year college programs in the Division of Continuing Education. In 2017 the “Steel Industry Program” was offered by MCUT, Formosa Ha Tinh Steel, and Da Nang University. Ming Chi will be contributing its practical teaching experiences to the society and to provide efforts for the technical education.

After the institute was upgraded to the university level, in addition to the usual devotion in the maintenance of the existing educational beliefs and practice, the University also focuses on “Industry-University Collaboration.” The University has frequently been honored by the Chinese Institute of Engineers for its excellent practices in industry-university collaboration. In 2014, the Small and Medium Enterprise Administration has honored the University as one of the best incubation centers. According to the statistics released by the Ministry of Science and Technology (MOST) in 2017, MCUT ranked number one among the private technology universities in the category of the average amount of

funding per project director. Those honors demonstrate the fruitful results of developing collaborative relationships with industry partners. In recent years, by means of continually integrating the resources of various colleges, seven research centers have been established: the Biochemical Engineering R&D Center, the Center for Plasma and Thin Film Technologies, the Chinese Herbal Medicine Center, the Battery Research Center of Green Energy, Organic Electronics Research Center and Center for Reliability Engineering, Research Center for Intelligent Medical.

The faculty and students are always encouraged to participate in practical researches and to provide industry-education services for the enterprises. With the development of internship opportunities, the industry-university collaboration relations are actively being built. Via the diverse channels of intern students, guidance teachers, specific research centers, the Industry-University Collaboration Center, and the Innovation and Incubation Center, we are able to achieve close cooperation with the industries and improve the quality and quantity of the research, and further contribute the research results to the industries. While the educational functions as well as the advancement of technological power in the industries are achieved, a win-win situation is also created.

Education is the foundation of a nation and its importance is hardly surmountable. Ming Chi looks for “perfection” in every aspect including school administration, research, industry cooperation, and the development of personal integrity of the students. We seek the best for everything we do, and pursue self-improvement at all the times. We hope to contribute to help the entire economic development of the industry through the cultivation of professionals with sound personality, and set our goal for a new model for the vocational education in Taiwan.

Department of Industrial Design equips students with complete abilities of product analysis, product marketing, product development, as well as solid design & implementation capabilities.

HEADQUARTERS

…………………………………………………

No.201, Dunhua N. Rd.,

Songshan Dist.,

Taipei City 10508,

Taiwan (R.O.C.)

Tel : 886-2-27122211

Fax : 886-2-27178412

http: //www.fpg.com.tw

FORMOSA PLASTICS CORPORATION, U.S.A.

…………………………………………………

9 Peach Tree Hill Road,

Livingston. NJ 07039, USA

Tel : 1-973-992-2090

http : //www.fpcusa.com

2018.9.4550.47

formosa plastics group 2017 annual report2｜2017 annual report formosa plastics group’s annual...

Documents