The agreements reached between Taiwan and China last week could boost cross-strait tourism and cut down operational costs for Taiwanese firms with business in China. analysts said on Friday, but the benefits may not be strong enough to offset the impact of the global recession next year.
Last Tuesday the Straits Exchange Foundation and the Association for Relations Across the Taiwan Strait inked agreements on direct, regular air and sea links for cargo and passenger services.
Cross-strait flights are currently limited to the weekend and to five locations and planes must pass over the airspace of a third country or region before continuing to their destination. No direct cargo services by sea or air are available.
The accords, which are scheduled to take effect within 40 days of their signing, will make passenger flights available throughout the week, increase the number of flights from 36 to 108, allow 16 more airports to handle the flights and eliminate the requirement of flying through the airspace of a third country or region.
Cheng Chen-mount (鄭貞茂), chief economist at Citigroup Inc Taiwan, said the pacts would increase corporate efficiency and reduce operation outlays for companies with cross-strait business.
Direct flights between Taipei and Shanghai will take only 82 minutes, saving at least one hour of travel time, which could coax more Chinese tourists to visit Taiwan.
“The number of Chinese tourists will increase after the air pact is implemented,” Cheng said by telephone.
Taiwan and China also agreed to lower restrictions for Taiwan-bound trips, and the economist said faster and less expensive cross-strait travel would attract Chinese tourists despite the global slowdown. Travel agencies said trips to Taiwan could cost up to 30 percent less.
More convenient travel could increase the incentive for foreign corporations to set up regional operational offices in Taiwan, with the Ministry of Economic Affairs expecting the number of such offices to hit 800 next year, from 615.
“That means more high-paid, white-collar job opportunities,” Cheng said.
Norman Yin (殷乃平), a money and banking professor at National Chengchi University, said the shipping sector would be the biggest beneficiary of the introduction of cross-strait cargo services.
Yin said the direct sea link would cut cross-strait voyages by 16 hours to 27 hours.
At present, ships from Taiwan and China must navigate via a third place, usually Japan’s Ishigaki Island, which adds up to US$20,000 in costs per voyage.
Yin said shippers expected the cross-strait cargo services to generate US$120 billion in business a year.
These and other potential benefits will not, however, neutralize the damage caused by the international financial crisis, the economists said.
Liang Kuo-yuan (梁國源), president of Polaris Research Institute, said the slump in market volume would overshadow the drop in operational costs throughout the economic downturn.
“Market volume is a more critical factor than price competitiveness when judging overall economic performance,” Liang said by telephone.
“Growing cross-strait trade is favorable for Taiwan, but can do little to halt sliding exports, the mainstay of the country’s GDP growth,” Liang said.
Cheng agreed, saying that while direct cross-strait links would lower corporate overhead, they would not boost export orders, which were bound to shrink sizably next year.
“Consumers abroad will cut down spending amid the slowdown,” Cheng said.
“Exporters worldwide will suffer before the recovery,” Cheng said.
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