Tue, Nov 06, 2007 - Page 12 News List

ECCT warns over Taiwan's economy

COMPETITIVENESS The European Chamber has listed 10 ways the next government could improve the economy. Topping the list is normalizing cross-strait economic ties


The government must act to bring Taiwan back on track in economic development or it will only fall further behind other regional competitors, the European Chamber of Commerce in Taipei (ECCT) said yesterday.

In the global race for economic prosperity, Taiwan has dropped out of the group of leading economies in the region, including South Korea, Hong Kong and Singapore, while others like China, India and Vietnam are catching up fast, the ECCT said in its annual position papers.

Citing the 2007 Global Competitiveness Report released by the World Economic Forum (WEF) last Thursday, ECCT chairman Ralf Scheller said Taiwan was the worst performer of the four Asian tigers.

Taiwan was ranked by the WEF as the 14th competitive economy in the world, behind Singapore (No. 7), South Korea (No. 11) and Hong Kong (No. 12).

"We are not surprised by the result as no progress was made on priority issues we've raised in the past," Scheller said.

Taiwan also has the lowest GDP growth, the lowest GNP per capita, but the heaviest tax burden for its companies and citizens, the position papers said, citing official statistics.

After meeting with the presidential candidates from the two major parties, "they failed to convince us that they have the ability to address some fundamental problems of Taiwan," Scheller said.

Under the theme "Time to Act! Roadmap for the New President," the chamber proposed 10 suggestions that serve as a roadmap for the next government to deal with fundamental economic development issues. Immediately normalizing cross-strait economic relations topped the agenda.

Lifting bans on Chinese investment and imports is essential for Taiwan to attract foreign investors, said Guy Wittich, ECCT's chief executive officer.

Sweden-based clothes manufacturer and retail chain H&M, for example, decided to give the Taiwanese market a miss because it cannot ship apparel from China where 80 percent of its products are manufactured, Wittich said.

European firms that have avoided or withdrawn from the market, or which have been unable to source cheaper goods because of the ban have caused at least a US$1 billion loss for the retail industry, Wittich said.

"The sentiment among our service providers is low as business is bad," he said.

The Ministry of Economic Affairs was to approve 54 categories of Chinese textile imports at the end of last month, but decided to maintain the ban after protests from legislators and the local textiles industry.

Scheller said the ECCT was not surprised at the move because Taiwan's policies always change after interest groups intervene.

Other remedies proposed by the ECCT include deregulating the financial service sector, developing a competitive taxation and tax incentive climate, opening the public procurement market and upgrading infrastructure, accelerating the development of the service industry and strengthening intellectual property rights protection.

After next year's elections, the new government should put more focus on economic development, especially cross-strait issues, Scheller said.

More free-trade agreements inked by major neighbors, as well as ASEAN members' closer ties, will increase pressure to liberalize cross-strait relations, he said.

"We didn't see any other remedy for this [reviving Taiwan's economy]," Scheller said.

In response to the ECCT complaints, Council for Economic Planning and Development Chairwoman Ho Mei-yueh (何美玥) said the council would hold a high-level roundtable meeting in the near future to address the concerns of European investors.

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