Sat, Mar 23, 2013 - Page 14 News List

INTERVIEW: Former CEPD chairman skeptical on new pilot zones

The Council for Economic Planning and Development (CEPD) says the government’s proposed free economic pilot zones aim to further deregulate to allow firms, especially in the service sector, to operate more freely. On Thursday, former CEPD chairman Chen Po-chih (2000-2002) shared his views on the new zones with ‘Taipei Times’ staff reporter Camaron Kao

Taipei Times: The concept of the free economic pilot zones is somewhat elusive and abstract to the general public. Can you explain what they are?

Chen Po-chih (陳博志): I think the government is itself unclear about the project. First, who will be the customers of the service sector firms in the pilot zones? Are they just those in the zones or the whole of Taiwan? What is the reason to base a company within the zones? Why not just gradually open up the service industry in this country? Overall, I do not see a reason to set up special zones for the services sector.

TT: You played a major role in proposing the Act for the Establishment and Management of Free Trade Zones (自由貿易港區設置管理條例) a few years ago. What is the reason the act sets out zones in five places?

Chen: By setting up free-trade zones, we wanted to allow some shipments to enter without passing through customs and entering the domestic market. The special zones would also allow us to clearly monitor trade flows. However, this can hardly be applied to the service sector.

TT: Is it not correct that the government wants to give special treatment to companies in the zones to help improve the nation’s economy, such as opening up the labor market in the zones and allowing foreigners to work in them?

Chen: To me, it would make more sense to gradually liberalize regulations that apply to all companies throughout the nation, rather than just companies in the zones. The logic of setting up the zones was to confine workers and companies within the zones. The only precedent I can think of for service sector zones are red light districts or areas that allow gambling.

It is true that opening up hiring of foreign workers in the pilot zones would have less of an impact on the domestic labor market. However, I would still suggest the government gradually ease the regulations by setting up certain requirements, such as having high capability in research and development, for companies nationwide to hire more foreigners.

TT: What will the pilot zones become eventually?

Chen: I do not think the government will come up with any new ideas. Since the CEPD minister [Kuan Chung-ming (管中閔)] said the pilot zones would be based on the free-trade zones we previously designed, I guess in the end we could only see a similar version of the free-trade zones with minor adjustments. In this case, it is tempting for me to think that it is because President Ma Ying-jeou (馬英九) made a public statement last year saying that he is determined to complete the plan that the council and the Cabinet have stuck with it.

The government needs to evaluate the pros and cons of further liberalization before it makes any further decisions.

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