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Deregulation of service sector is vital, forum says

The service sector, which contributes more than 70 percent to the nation's gross domestic product, should be the next target of market liberalization and deregulation, industry leaders said in a forum yesterday.

"Why should we exclude ourselves from the rapid growth of China and strangle our highly competitive service sector?" asked Lin Hsin-i (林信義), chairman of the Industrial and Technology Research Institute (工研院).

"The proliferation of banks, like convenience stores, underlines the problem of overbanking [in Taiwan]," said Lin, also a former vice premier.

At the forum organized by the Chinese-language CommonWealth Magazine, Lin said the government needed to change its mindset and give industries such as healthcare/medical services, tourism, banking, insurance and transportation more room and freedom to thrive.

"We fear risks to a point that we give up opportunities, but don't opportunities come with a certain risk?" Lin asked. "We cannot avoid risk by burying our heads in the sand, but by coming up with sound measures to reduce risks while reaping the benefits."

Hospitals, banks, insurance companies and transportation service providers are banned from investing in China. The number of Chinese tourist arrivals are also capped at 1,000 people per day.

SinoPac Holdings Corp (永豐金控) chairman Ho Show-chung (何壽川) said that Taiwan lacked a clear policy for the service sector.

"Well-protected industries such as banking did not have enough competition in the past. But now, faced with stiff competition from foreign operators, the industry is stifling and needs a drastic change," he said.

Industry heavyweight Stan Shih (施振榮) voiced his concern about the manufacturing sector, especially the information technology industries, asking where Taiwan's strengths lie.

Shih, founder of the world's third largest computer maker Acer Inc, said branding was the key to adding value and carving a niche in the world's hyper competitive markets.

"We have strengths in cost control, flexible logistics and cutting-edge manufacturing, but remain weak in branding and global marketing," Shih said.

"Branding is a cultural thing and takes years to make things happen," Shih said. "But without devoting efforts to this endeavor, we are destined to be slaves to other people's success, chasing after the limited profits that original equipment manufacturing offers."

Shih said Taiwan either has to strive to be the world's best provider of products or services to be selected as part of a global supply chain, or be a good service integrator capable of gathering the best products or services to feed global market demand.

"Value-added is key," Shih said. "Whether you are in the service sector or traditional industries, without creativity, innovation and quality, you will never have an advantage over competitors that offer cheaper labor."
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