As Chen Shui-bian (陳水扁) takes the presidential oath of office today pundits and local business people alike are bullish on the impact the new government will have on the economy, but they also see tough ingrained problems that will require a determined effort by the incoming administration to overcome.
Throughout the election campaign, Chen sung the virtues of a "revolution of power" at this point in Taiwan's history and pledged to clean out the deeply infused remnants of the KMT's 55-year rule.
But starting from today, all eyes will be on Chen and his assembled team to see if they can deliver.
The general feeling among the business community is optimism.
According to a survey conducted by Commonwealth Magazine, around 75 percent of businesspeople are positive about the transition of power from the KMT to the DPP.
Tempering this optimism, however, is the fact that 81 percent expressed concern that uncertainty over cross-strait ties will affect economic performance.
Paul Cassingham, chief of the American Chamber of Commerce in Taipei told the Taipei Times that if Chen can deliver on his campaign pledge to break the links between government and big business, Taiwan's economic growth would be bolstered and foreign companies could look forward to greater equality.
"We would like to see the new administration move toward a more level playing field where foreign companies can compete across the board in the economy on the same basis as local companies," Cassingham said.
"We believe that this will help with Taiwan's growth."
According to Lin Tzu-chia (林祖嘉), an economist at National Chengchi University, the end of the KMT's rule will immediately reduce the incidents of "black gold" politics.
Considering incoming Justice Minister Chen Ting-nan's (陳定南) famously hard line on corruption and Chen's general willingness to combat the problem, Lin is confident that "Chen will have a very good chance to reduce the link between government and business."
One area where the new government might have more difficulty, however, is in defining the areas of responsibility between the various levels of government.
"Many of our members have had difficulties over the years dealing successfully and efficiently with local governments because the relationship as to who decided what between central and local was not clearly defined," Cassingham said.
Much of the problem has stemmed from the political division between the central government -- controlled by the KMT -- and the local governments, many of which are held by the DPP.
But with the DPP at the helm, Lin believes that such a problem might solve itself.
"Because now both the central government and many of the local governments are controlled by the DPP, there will be much less conflict than before," Lin said.
Local governments will likely follow the lead of Chen's administration simply because they wear the same stripes and because of the popularity of the president, Lin said.
"But I think in the long run, the DPP still has to work very hard to work out the systematic relationship between the central and local government," Lin said. "I'm not sure how long it will take."
Of course, the overall effectiveness of the new government in handling political and economic problems at home will be influenced by how well Chen can handle ties with China.
Ironically, while Chen's potential to stir trouble throughout the election was his Achilles heel, it appears that it will be under his administration that the long-held restrictions on direct investment and trade with China could be eased.
Since his electoral victory, Chen and his key economic ministers have proposed relaxing restrictions on investment and trade in China. Indeed, Chen has said that a solution to the old problem of opening the direct "three links" (三通) would be "quick in coming."
But according Lin Tzu-chia, any talk by Chen of an early solution to the problem is merely an effort to show some solid goodwill in his first few months in office and not a realistic proposition.
Because of the precarious nature of cross-strait ties, Chen "will make some friendly gestures ... to talk about the `three links' is a good strategy," Lin said
Realistically, the problem will take at least one to two years to resolve, Lin said.
In the interim, however, cross-strait ties will likely be bolstered by the lifting of restrictions on certain categories of high-tech investments in China, as proposed by incoming Minister of Economics, Lin Hsin-yi.
While acknowledging the need for Taiwan businesspeople not to be left out of the race for Chinese investment opportunities, Lin warned firms not to move their core technologies from Taiwan to protect their international competitiveness.
Despite fears of a mass exodus of Taiwan high-tech firms under such loosened conditions, Lin Tzu-chia says that "those companies that wanted to go to China have already gone, so if it is opened now, I don't think there would suddenly be a huge amount going there."
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