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SANJIH, Taiwan, Aug 6: Staring out across the dunes in front of his seafront factory, Taiwan luxury yacht builder Jack Chen sees an ocean of opportunity.

Chen has just bought a new strip of land in Sanjih town along Taiwan's north coast adjacent to his existing yard and, along with a growing number of other yacht builders, is planning to expand his production as global demand for high-end boats rises.

Chen's company, Bluewater Yacht Builders, like most builders in Taiwan, make made-to-order, mostly fiber-glass hulls contain every kind of luxury, including large teak-lined staterooms complete with flat-screen televisions and hot tubs on deck.

Walking atop an almost-finished yacht sitting in one of his workshops, Chen says Taiwan's export-reliant industry is enjoying a boom since a slump in the mid-1990s and is now the world's seventh largest, according to ShowBoats International magazine.

Taiwan and China are the only Asian makers on ShowBoats' top 10 list, ranking behind top builders makers, such as Italy, the United States and the Netherlands.

''Most people have received a lot of good orders for mega-yacht, which are over 80 feet and sell for over $3 million each,'' said Chen, who is also the chairman of the Taiwan Yacht Industry Association.

''We are talking about 18-20 month delivery time if you ordered a boat now, that's all we can do. We have 6-7 boats under construction right now at the same time,'' said Chen.

MEGA-YACHT BUILDER

The value of Taiwan's yacht exports grew almost 26 percent in 2005 to $217.7 million, according to the United Ship Design Centre, which is a government-funded organisation that offers design and technical consultant services. From simple beginnings maintaining small sailboats used by American military personnel stationed on the island during the 1960s and 1970s, Taiwan's yachting industry has grown into a global producer of mega-yachts.

''In mega-yachts, more and more people are interested in and can accept Taiwan-made yachts. Ten or 15 years ago even if you offered a good price they didn't think you can really do it,'' said Chen.

Demand for luxury yachts globally is fuelling aggressive expansion among builders in Taiwan, with UK industry journal, The Yacht Report, reporting that global orders for superyachts in 2006 have grown by over 20 per cent.

The island's largest yard, Horizon, is also aggressively expanding and plans to more than double the size of its production facilities in southern Taiwan by the end of 2006, according to The Yacht Report.

Taiwan's strength in exports isn't simply due to quality workmanship and hard work.

That is because they have been forced to focus on the overseas market as citizens are prevented from owning private luxury yachts due to tough licensing restrictions.

LACK OF DOMESTIC MARKET

The conditions are due to security concerns about China, just 200 km to the west across the Taiwan Strait. Taiwan and China have been ruled separately since 1949, when the Nationalists retreated to the island at the end of a civil war.

Eddie Yeh, founder of President Marine Ltd, bemoans the lack of a domestic market, pointing out that even though Taiwan is an island, its people have yet to fully embrace the ocean as an outlet for leisure.

''Our government won't allow us to have our own pleasure boats, we can build the boats but we cannot use them, we've been fighting with them for 10 years, but still we haven't been able to work out something,'' he said in Tainan county in the south.

Yeh estimates that Taiwan's sales could rise sharply if the restrictions were eased, as the island has enough people able to afford such luxury to generate strong demand.

Others like Bluewater's Chen says domestic sales in the first year could 100 boats, although in the initial stages it would be mostly smaller boats in the 30-40-foot range, which are no longer made in Taiwan. Demand for larger boats will come later, he said.

As with other industries, cheaper labour and incentives are also fuelling the luxury yacht building industry in China, which according to ShowBoats magazine, edged passed Taiwan in terms of production to world number six in 2006 rankings.

Taiwan slipped to number seven in 2006 from number five in 2005, according to ShowBoats. To ensure the local industry stays competitive, the government is building a 46 hectare yacht industrial zone in Tainan, which will be fully completed by 2010.

REUTERS