Taiwan's Government Information Office (GIO) has overhauled its film funding policy in an attempt to reinvigorate local production and encourage co-productions with international partners.

The Taiwanese film industry is renowned for its arthouse films - from auteurs such as Hou Hsiao-Hsien and Tsai Ming-Liang - that win awards at festivals around the world.

But the Taiwanese government is concerned that domestic films don't perform at the local box office. Taiwanese films had an estimated 3% share of overall box office in 2002 - most of which was accounted for by Chen Kuo-Fu's mainstream thriller Double Vision.

Keen to replicate Double Vision's success, the GIO plans to start backing mainstream projects, in addition to arthouse films, with a special emphasis on digital production and animation. It is also opening its Domestic Film Guidance Fund to co-productions between Taiwan and international partners for the first time.

'It can't be denied that for the past couple of years, Taiwanese movies have been unable to compete with big-budget commercial films from abroad,' said Peggy Chou, director of the GIO's Motion Picture Affairs department. 'Local audiences have not been very receptive to Taiwan's overly artistic movies.'

One of the first international co-productions which plans to apply for GIO assistance is $20m drama Seeing Red. Taiwanese producer-distributor Pandasia is setting the film up as a co-production with a British company. Set against the background of the Cultural Revolution, it is currently being scripted by Ana Chi.

Financed by Columbia Pictures Film Production Asia, Double Vision scored a record $1m opening for a thriller when it was released last October in Taiwan. It also helped to lift the market share of local films in Taiwan to an estimated 3% in 2002, compared to a paltry 0.1% in 2001.