While seeking to bolster the economy, the government should take steps to encourage competition between companies rather than designate a winner by providing various incentives, pundits at a two-day forum on economic competitiveness said yesterday.
Morris Chang (張忠謀), chairman of Taiwan Semiconductor Manufacturing Company (TSMC, 台積電), said a nation’s competitiveness hinges on its government and people, and the administration should set clear directions for the nation’s economic development in the same way that a company spells out its corporate goal.
Chang, who has urged the government to impose heavier taxes on the rich, said it was no longer feasible for the government to help an industry grow and thrive the way it did for the past three decades.
“In a world marked by increasing globalization, there are things a democratic government should do and shouldn’t do to foster economic growth,” Chang said in his opening address to the forum co-sponsored by the Council for Economic Planning and Development, the American Institute in Taiwan, the American Chamber of Commerce and other organizations.
“Since the new government has made boosting the economy its top priority, it should strive to create a favorable environment to realize this policy,” Chang said.
However, the government should not engage in activities that would favor a particular winner, he said.
The advice fell in line with Chang’s recent remark that the government should not renew the Statute for Upgrading Industries (促進產業升級條例) that is scheduled to expire in December next year. The statute spares qualified companies from paying taxes despite their huge profits.
Chang said his company, the world’s largest semiconductor foundry, has been able to maintain its competitive edge because it only hires high caliber talent.
While the government cannot choose the staff, it can help train and nurture talent, he said.
Paul London, formerly a deputy undersecretary at the US Department of Commerce, said key sectors of the US economy were dominated by powerful companies with powerful unions between 1945 and 1970. Those companies had the power to raise prices and wages but had little incentive to innovate and modernize, London said.
But because US political leaders were willing to support economic reform and raise competition, the scenario has substantially altered, London said.
“We have 10 or 12 car companies producing in the United States, quality is better and prices are falling,” London said. “Finance has been opened up to competition and all the changes — junk bonds, the NASDAQ, stronger regional banks, the growth of non-bank lenders—have made money available to companies that had difficulty raising money when competition was weak.”
Charles Kao (高希均), founder and CEO of the Commonwealth Publishing Group, said Taiwan should develop a knowledge-based economy to enhance its competitiveness.
Kao also urged companies to abide by their corporate social responsibility and ethics, adding that doing so helps keep a society prosperous and healthy.
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