Taiwan is not expensive, and in fact is now very good value for the money. Overall you’ll spend the same in China for a far rougher experience. Same with Malaysia (go budget in Malaysia and you have to contend with bed bugs). Singapore, HK, Japan and Korea are all more expensive.
It’s also not true Taiwan has nothing to compare with others in the region. Of course there is the Palace Museum with its world class collection. There is Taiwan’s folk religious culture, able to hold its own with the best in the region. It’s temples (which trace their heritage back to the Song Dynasty in China) are filled with unique forms of folk art from wood carving to jiannian. There is a fascinating Buddhist culture engaged in public works. Taiwan has a fantastic array of hot springs. It’s one of the most complex geologies in the world and a number of places to see the results of this: from marble Taroko Gorge, to the Qingshui Cliffs, to the bizarre scultped shapes at Yehliu.
It has a unique aboriginal culture and easy ways to explore that with homestays and other activities. Unique flora and fauna including the second largest overwintering of butterflies in the world. Things like flying squirrels are really easy to see as are fireflies, gorgeous blue magpies, and a host of other pretty birds (yeah, no hornbills like in Malaysia but again, travel is not a zero-sum game). There are well-developed hiking trails, river tracing is first rate, and Penghu has Asia’s best windsurfing. There’s outrageously good fruit, and a host of first rate performers: from Cloud Gate dance company to the zen inspired U-Theatre drummers, to Taiwanese opera. Kaohsiung now holds yearly international lion dance competitions as well as competitions for temple performance troupes. Hard to beat the boat burning, Matsu pilgrimage or even Qingshan Temple night patrol for great cultural festivals.
For shopping Taiwan has come into its own in recent years: high quality teas and tea sets, ceramics, jade, glassworks, local snacks galore (just go to the train station first floor and see), whiskeys, essential oils and soaps, wood products, aboriginal crafts, etc etc.
So hans, the question is not why don’t people come here, but why don’t people know what Taiwan has to offer?