The political strife resulting from the rivalry between President Ma Ying-jeou (馬英九) and Legislative Speaker Wang Jin-pyng (王金平) may negatively affect private investment this year and government spending next year, an analyst said yesterday.
“As political uncertainties rise, private companies will delay or even reduce their investment, which may drag down economic growth this year,” Gordon Sun (孫明德), director of the Taiwan Institute of Economic Research’s (TIER, 台灣經濟研究院) economic forecasting center, said by telephone yesterday.
The institute forecast on July 25 that the nation’s economic growth this year would be 2.52 percent, provided that private investment, the main driving force for economic growth, increased by 5.83 percent.
“Because growth in exports and private consumption has dwindled this year, private investment is of vital importance for the economy,” Sun said.
On Wednesday, Wang’s membership of the Chinese Nationalist Party (KMT) was revoked, as requested by Ma, which is likely to lead to Wang being replaced as legislative speaker.
As the legislature is set to review the government’s budget for next year in the next session, and if Ma cannot immediately retain control of the legislature, government spending next year may be cut significantly, affecting GDP growth next year, Sun said.
However, the political turmoil will have less of an impact on exports, which are mostly determined by orders from abroad, and private consumption, he added.
Commenting on other bills under review in the legislature, Sun said a possible delay in the ratification of the cross-strait service trade agreement with China, which grants more rights to Taiwanese companies investing in China, would postpone companies’ investment plans and possibly give their competitors a chance to catch up.
Sun said the TAIEX would likely decline to 7,800 points as money flows to Japan, Taiwan and China from Southeast Asia after the tapering of the US’ quantitative easing policy.
In addition to the government’s budget and the service trade pact, the legislature is also set to review a bill on the planned “free economic pilot zones,” a referendum on the Fourth Nuclear Power Plant in Gongliao District (貢寮), New Taipei City (新北市), and whether to give tax cuts to manufacturers of high-risk medical devices.
Council for Economic Planning and Development Minister Kuan Chung-ming (管中閔) said on Wednesday that he is not 100 percent sure the pilot zones bill will be passed by the end of this month as planned and that the implementation of tax reductions in the zones may be delayed.
Concord Securities Corp (康和證券) said yesterday that the future subsidies for local medical device makers granted by the bill are not as significant as most investors think.
“As shares in these companies declined because of the political uncertainty, it created a chance for investors to enter the market,” Concord Securities said in a report.
The Cabinet has said construction of the Fourth Nuclear Power Plant cannot continue until the referendum is held, but KMT Legislator Lee Ching-hua (李慶華), who initiated the draft version of the referendum, withdrew the draft from the legislature on Tuesday, citing “political chaos.”
“The president’s action shows that the nation’s policies can be altered at his will without any reasoning, making companies wary about the investment environment,” former Council of Economic Planning and Development (CEPD) minister Chen Po-chih (陳博志) said yesterday.
Chen said Wang is someone who can mediate the different interests of all the parties in the legislature and that many laws had been passed because of his efforts.
“In the future, with the KMT in the majority, the government may force many inappropriate bills through the legislature,” Chen said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts