Forum calls for cross-strait relaxation

Although the Taiwanese economy is expected to steadily improve next year, the key to catching up with other Asian competitors -- which are growing at a much faster pace -- is to ease cross-strait business restrictions, market watchers said in a forum yesterday.

"Many analysts and even the president have said that Taiwan's stock market will surge past 10,000 points [from the current 7,500], but it will not happen without a relaxation of cross-strait rules," said Hsieh Chin-ho (謝金河), chief executive officer of Wealth Group, a publisher of Chinsese-language business magazines, during a forum held by the Taiwan Economy and Industry Association (台灣產經建研社).

Hsieh made the remark one day after the Investment Commission announced revision of rules that further restricted major China-bound investments.

On Thursday, President Chen Shui-bian (陳水扁) also voiced his opposition to lifting the 40 percent cap on China-bound investment by Taiwanese companies.

Faced with China's growing economic power, many Asian countries have chosen to grow with China or loosen related regulations to sustain their economies, Hsieh said, citing the three other four little dragons, i.e., Singapore, Hong Kong and South Korea, as an example.

Singapore is trying to lure Chinese visitors and boost regional tourism by approving the opening of two casinos in the city state, Hsieh said.

Singapore's Temasek Holdings Pte has also become one of the most active investors in the initial public offerings of Chinese companies, he said.

Hong Kong's real estate, retail, banking and other sectors have benefited from its Closer Economic Partnership Arrangement with China, and its capital market has largely benefited from the listing of major Chinese companies, Hsieh said.

South Korea is trying to grab a share of China's lucrative market, and now is China's second largest source of imports, he said.

While Taiwan's GDP is forecast to hover around 4 percent this year, Singapore's economy is expected to grow by 8 percent, Hong Kong's by more than 6 percent and South Korea by about 5 percent, he said.

Meanwhile, a survey of the members of the banking and securities association showed that they believed improving cross-strait relations should top the government's agenda, said Wu Chung-shu (吳中書), a research fellow at the Academia Sinica who conducted the poll.

"The result shows that cross-strait relations are considered the most important factor that could influence the nation's economy," Wu said at the forum yesterday.

However, Citigroup Taiwan's country officer Morris Li (利明獻) cautioned that the the government needed to take the decreasing net exports into account before lifting the investment cap on China.

Net exports are expected to account for 3.2 percent of the nation's GDP growth, but the percentage will go down to 1.6 percent as local industries' migration to China continues, he said.

Rising production overseas will inevitably cut into Taiwan's exports, he added.

Aside from cross-strait issues, Sophia Cheng (程淑芬), president of Merrill Lynch Taiwan Ltd, said that more reforms in the financial and service sectors were needed to bolster Taiwan's economy, which has been affected by the political instability.