The government’s “Free Economic Pilot Zones” project will do little to help the economy because it only covers service industries and the controversy that will occur when the government tries to amend certain laws, economists said.
The Cabinet passed a plan to set up the pilot zones on Wednesday, encompassing several tax reductions and the liberalization of the employment of foreign white-collar workers at companies within the zones.
“The plan for the free economic pilot zones cover only a small proportion of [the economy],” Gordon Sun (孫明德), director of the Taiwan Institute of Economic Research’s macroeconomic forecasting center, said yesterday.
The plan focuses on the medical and logistics industries, leaving wholesalers, retailers and restaurants — the major constituents of the sector — untouched, Sun said.
Furthermore, the plan does not liberate the financial and telecommunications industries, over which the government still has heavy control, he said.
The service sector accounts for 70 percent of Taiwan’s GDP, compared with 25 percent for the manufacturing sector, but local manufacturers contributed as much as service industries to the economy last year because of the restraints imposed upon the service sector, he added.
Former Council for Economic Planning and Development chairman Chen Po-chih (陳博志) was also skeptical, saying the government might not be able to carry out the major reforms.
“The plan creates unfavorable conditions for companies outside the zones, making them unable to compete with firms in the zones,” Chen said.