Mon, Apr 25, 2011 - Page 12 News List

Analysts mull Kuokuang impact

OPPORTUNITY BECKONS:Economists have said that if the Kuokuang plant is scrapped from Taiwan, it could be a chance to focus on new and innovative investments

By Amy Su  /  Staff Reporter

If the plan to build Kuokuang Petrochemical Technology Co’s (國光石化) naphtha cracker plant in Taiwan is scrapped, it would have a positive influence on the nation’s economy in the long term, economists said yesterday.

Premier Wu Den-yih (吳敦義) said on Saturday that Kuokuang Petrochemical might seek an alternative location overseas for its proposed plant, after President Ma Ying-jeou (馬英九) said on Friday that the government would not support the construction of the company’s project in Changhua County.

GDP growth could fall by 2 percentage points if the plant’s construction in Taiwan is halted because domestic investment momentum could drop without the NT$900 billion (US$31.11 billion) two-phase project, not to mention the economic spin-off effects, the Ministry of Economic Affairs said last week.

However, Gordon Sun (孫明德), deputy director of the macroeconomic forecasting center at the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院), said any negative impact on GDP growth could be compensated for with the government’s other -investment projects.

“If Kuokuang Petrochemical’s project is out, the government could come up with projects or construction in other industries and transfer the NT$900 billion investment to them, keeping up the momentum in domestic investment,” Sun said by telephone yesterday.

Furthermore, the ministry’s forecast that 2 percentage points could be shaved off GDP growth would be a long-term effect spread over five to eight years, not just one year, Sun said.

Liang Kuo-yuan (梁國源), president of the Polaris Research Institute (寶華綜合經濟研究院), said that any potential withdrawal of Kuokuang Petrochemical’s investment from Taiwan would only have a limited impact on GDP growth.

“External demand could be -impacted if the project is halted, but the benefits for the local natural environment and water quality could offset this negative impact, as the macroeconomics not only include GDP growth, but also the potential negative consequences brought about by the execution of the project,” Liang told the Taipei Times.

Diagee Shaw (蕭代基), president of the Chung-Hua Institution for Economic Research (中華經濟研究院), said the potential withdrawal of the project could inspire the government into thinking that the development of the petrochemical industry should focus on quality, not just quantity.

The government is now seeking to develop a value-added petrochemical industry, such as the production of optical coatings and upstream materials for solar energy and LED industries, Minister of Economic Affairs Shih Yen-shiang (施顏祥) told a media briefing on Saturday.

Sun agreed that Taiwan could develop a high-end petrochemical industry by applying its successful development experience in the development of its semiconductor foundry industry.

“We should let investments in low-value and high-contamination sectors be made overseas, while retaining the value-added sectors here,” Sun said.

The government should also consider transferring the budgeted funds for the Kuokuang project to bio-technology, tourism and other manufacturing industries with value-added components, compensating for any potential dip in GDP growth, should the project be withdrawn, Sun said.

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