Reduced labor protection, fewer restrictions for companies and lower taxes for businesses boosted Taiwan’s overall score on economic freedom for a fourth straight year, according to the 2013 Index of Economic Freedom.
The 2013 index, released by the Heritage Foundation and the Wall Street Journal on Thursday, showed that Taiwan’s overall score rose 0.8 points to 75.2 points from the previous year.
Graded on a scale from 0 to 100, the overall score is computed by averaging scores of 10 sub-indices.
Despite its rising score, Taiwan saw its ranking among the 177 countries reviewed fall to 20th place from 18th place last year. It placed fifth among 41 Asia-Pacific nations.
The average score of all countries surveyed increased to 59.6 from 59.5 last year, with Hong Kong remaining the freest economy in the world, followed by Singapore, Australia and New Zealand.
South Korea was ranked 34th in the world, while China was ranked 136th and described as “unfree.”
According to the index, higher economic freedom can bring higher income growth, more entrepreneurial activities and greater job creation.
The index is compiled from several indicators, including freedom from corruption, business freedom, labor freedom, monetary freedom, investment freedom, financial freedom and government spending.
This year’s report showed that Taiwan’s labor freedom score rose from 46.6 points to 53.3 points. However, this increase means Taiwan has a relatively lower minimum wage and lower severance pay, and business owners can adjust employees’ working hours or fire them more freely.
Taiwan’s business freedom score, which rises as restrictions for starting, operating and closing businesses ease, rose 5.8 points to 94.3 points from a year ago because of ongoing simplification of registration procedures, the report said.
“Bankruptcy proceedings in Taiwan are fairly easy and straightforward,” the index said, adding that to start a company is also convenient and requires only a small amount of capital.
Taiwan’s score for freedom from corruption increased 3 points to 61 points this year.
“[However,] despite some progress, corruption continues to be a cause for concern,” the report said.
The score for fiscal freedom, which rises as the average tax rate drops, was up 0.1 points to 80.5 points for Taiwan this year. Taiwan’s average tax rate was reduced to 7.9 percent of total domestic income after the corporate tax rate was cut from 20 percent to 17 percent in 2010, according to the index.
Increased government spending played the most significant role in dragging down the overall score by dropping 7.4 points to 84.9 points, while the amount of government spending increased to 22.4 percent of GDP this year, the report said.
“The budget balance has fallen into deficit, and public debt is about 40 percent of GDP,” the report said.
Taiwan’s score for monetary freedom, which rises when inflation is lower and government price controls are rarer, decreased 0.2 points to 82.9 points, a reflection of rising inflation and increasing government intervention on prices.
NOT ALL GOOD: Analysts warned that other data for last month might be less rosy due to the virus and analysts expect the PMI to contract again next month Chinese factory activity saw surprise growth last month as businesses went back to work following a lengthy shutdown, but analysts said that the economy faces a challenging recovery as external demand has been devastated by the COVID-19 pandemic, while the World Bank said that growth could screech to a halt. China is slowly returning to life after months of tough restrictions aimed at containing the virus, which put millions of people into virtual house arrest and brought economic activity to a near standstill. The strict measures saw a closely watched gauge of manufacturing plunge to its lowest level on record in February,
ALL ABOUT STRATEGY: The company is optimistic, saying that its gross margin should increase year-on-year, but it is scaling back on its plans to expand capacity Quang Viet Enterprise Co (QVE, 廣越), which makes down jackets and garments for sportswear and outdoor brands including Adidas AG, yesterday said that revenue might drop 5 to 10 percent annually this year as some customers trimmed orders in response to the COVID-19 pandemic. That would mark its first revenue decline since 2016. Quang Viet posted record-high revenue of NT$16.26 billion (US$537.45 million) last year, up 22 percent from 2018. Down jackets made up 40 percent of it revenue last year. North Face Inc and Patagonia Inc are this year likely to reduce orders by 20 to 30 percent from a
The output of the global smartphone industry this year is to contract by 7.8 percent on an annual basis as the COVID-19 pandemic ushers in a global recession, Taipei-based market researcher TrendForce Corp (集邦科技) said in a report on Monday. The global production of smartphones is expected to fall to 1.29 billion units, as the pandemic dampens demand for consumer electronics, leading to a decline in shipments across Europe and North America, TrendForce said. With consumers delaying smartphone purchases and thereby lengthening the device replacement cycle, overall prices would suffer a setback that is expected to negatively affect the profitability of smartphone
ELECTRONICS Lite-On delays sale of unit Lite-On Technology Corp (光寶科技) yesterday said it would postpone the sale of its solid-state drives (SSD) business to Kioxia Holdings Corp, formerly known as Toshiba Memory Holdings Corp, due to disruptions amid the COVID-19 pandemic. Last year, the Taiwan-based electronics components supplier struck the deal with the Japanese firm, agreeing to sell the unit for US$165 million. Citing unfinished integration work due to the pandemic, Lite-On has deferred today’s closing date until further notice, adding that the delay would not have a negative effect on the unit’s operations. AUTO PARTS Hiroca approves dividend Automotive interior parts supplier Hiroca