German engineering conglomerate Siemens is planning to establish a high-end machine tool control technology application center in Taiwan, an economic official said Friday. Meanwhile, leading German machine and turret producer Sauter will also expand its production line in Taiwan, according to the official.

The announcement came after Duh Tyzz-jiun, director-general of the Industrial Development Bureau (IDB), visited the companies in Germany to seek business investment, hoping to increase the output of self-produced machinery controllers in Taiwan.

According to Duh, Siemens has agreed to launch the machine tool control technology application center and sign an Investment Letter of Intent with the Committee for Precision Machinery Industry Development to provide service and assistance for the company's future investment in Taiwan.

Sauter meanwhile has committed to expand its Taiwan operations and further localize its production of turrets, a key component in the machine tool industry, which will create advantages such as cutting down the time and cost for supply and transportation, the official said.

In addition to adding 15 local managerial positions, Sauter is expected to pour in additional funding of NT$200 million (US$6.9 million), the official added.

The machine tool sector is one of the industries that has benefitted the most from the signing of the economic cooperation framework agreement (ECFA) between the two sides of the Taiwan Strait last year, Duh said. With 17 machine tool items on the ECFA early harvest list, machine tool companies will from next year be able to enjoy zero tariffs on exports to China.

The technology application center Siemens is set to create is expected to boost Taiwan's competitiveness and help the country outpace Italy to become one of the world's top three in terms of machine tool exports, the official said. Taiwan was the world's fourth-biggest machine tool exporter in 2010, behind Germany, Japan and Italy.