Taiwan basked in reflected glory Monday after film-maker Ang Lee won the best director Oscar for fantasy epic "Life of Pi", shot on the diplomatically isolated island where he was born.

President Ma Ying-jeou sent his congratulations to Lee, probably the island's most famous living son, saying Taiwan was "proud" and urging others to follow his example and boost the island's international image.

"I thank Ang Lee and all film industry people who have made an effort for Taiwan. I'd like to encourage everyone to work hard at promoting Taiwan to the world and to keep an international outlook," Ma said.

The Oscar came as a rare chance for Taiwan, living in the shadow of giant neighbour China, to savour the global limelight after the small island found its way into Lee's acceptance speech.

"I (could) not make this movie without the help of Taiwan. We shot there," the 58-year-old said.

The speech in Los Angeles was played over and over on Taiwan's news channels, and sparked an enthusiastic response from social media users.

"Just watching Ang Lee walk up to the stage had me shed a few tears, and when he mentioned the word 'Taiwan' I totally turned on the waterworks," one person wrote on micro-blogging service Plurk.

Lee also sent special thanks to Taiwan's third-largest city Taichung, where the majority of "Life of Pi" was filmed.

Taichung mayor Jason Hu said in a statement that Lee's Oscar win showed Taiwan's ability "to do many things well", adding: "Taiwan deserves this!"

It is a widespread feeling in Taiwan that the island's accomplishments are under-appreciated, and many blame China.

China considers Taiwan part of its territory, demanding that all its diplomatic allies cut off official ties with the island.

Taiwan is currently recognised by only 23 countries, mostly small and poor, but the island's government has tried in recent years to make up for some of the missing diplomatic clout by banking on soft power.

Sports icons such as golf superstar Tseng Yani and basketball player Jeremy Lin -- American but with Taiwanese-born parents -- have been held up as models of the cool, modern image Taiwan wants to project.

In a post-acceptance press conference, Lee played up the film's cosmopolitan crew.

"Ninety percent of the movie was shot in Taiwan. They gave us financial and physical help. But this was really an international film. I feel this film belonged to the world," he said.

Lee, who has spent almost his entire professional career abroad, won a best director Oscar in 2005 for the gay cowboy drama "Brokeback Mountain".

In 2000, he won the Oscar for best foreign language film with the kung fu epic "Crouching Tiger, Hidden Dragon".