The government’s plan to develop “free economic pilot zones” might begin in July, Council for Economic Planning and Development (CEPD) Minister Kuan Chung-ming (管中閔) said yesterday.
Officials are currently gathering opinions from various government agencies, a process that may come to an end later this month, Kuan told business leaders at a luncheon.
The council plans to submit the reform plan to the Cabinet next month so it may go into practice in July, at the earliest, he said.
“The schedule shows the government is serious about revitalizing the economy,” which may not recover to the state it was in prior to the global financial crisis of 2008 due to structural changes in the economic landscape at home and abroad, Kuan said.
The nation should have embarked on bold economic reform long ago, but these have stalled due to worries over a negative impact on some sectors and job losses to foreigners, Kuan said.
However, opening up is inevitable under greater globalization and will pay off in the long run, he said.
Under the draft plan, companies do not need to set up offices in the economic pilot zones to enjoy favorable tax terms and other incentives. The reform effort would target high value-added services providers such as firms engaged in legal consulting, accounting or financial services that pay higher salaries.
The nation’s lagging pace of liberalization underpinned the financial sector’s shrinking contribution to GDP to 6.59 percent in 2011, from 8.67 percent in 1999, Kuan said.
The financial sector has also lagged behind other sectors in job creation, with the personnel numbers growing 1.11 percent from 2000 to last year, weaker than the overall job market’s 1.14 percent growth during the same period, he said.
Between 1981 and 1999, job growth in the financial sector reached 8.52 percent, outpacing the nation’s 1.92 percent pickup, thanks to a series of deregulation measures, he said.
Meanwhile, he voiced confidence the nation could achieve a GDP growth rate of 3 percent this year despite a sluggish recovery of 1.54 percent in the first quarter.
The Directorate-General of Budget, Accounting and Statistics is scheduled to update its growth forecast later this month and some economists have projected a significant downward revision, from the 3.59 percent it last projected.
Kuan also defended the central bank’s position in stabilizing the New Taiwan dollar, saying the bank knows how to cope with a falling yen, but cannot blatantly interfere in the foreign exchange market.
“Some things can be done, but not discussed in public,” Kuan said after a machinery exporter urged a depreciation of 10 percent in the NT dollar.
The NT dollar yesterday fell 0.41 percent to close at the day’s low of NT$30.028 versus the US dollar, marking the first time since April 9 that the local unit ended below the NT$30 mark.