The Japanese Chamber of Commerce and Industry in Taipei yesterday called on the government to draft measures to boost domestic demand in the medium term, as the nation’s aging population constrains private consumption.
The trend could deepen and become a problem by 2025 when the population starts to show negative growth, the chamber said in its annual report released yesterday.
“Taiwan’s private consumption runs the risk of contraction over the medium to long term. Authorities should work out measures to reverse it,” the report said.
Private consumption, which accounts for 60 percent of GDP, has played an important part in driving economic growth in the past decade, the report said.
About 70 percent of the trade group, which consists of 460 registered firms, are selling goods and services to the local market and 47 percent cited the sluggish domestic market as their top concern.
Sharp price competition and difficulty attracting new customers ranked second and third, the report said.
However, 75 percent of Japanese firms based in Taiwan reported profits last year, second only to South Korea in the Asian and Oceania regions, the report said.
“The government could take measures to make Taiwan more business friendly and a better investment destination,” the report said.
The chamber welcomed the government’s plans to promote new industries and offered to share its know-how and experience in “renewable” energy, biotechnology, “smart” technologies and the Internet of Things.
NUCLEAR POWER
However, the report also said that Taiwan could run into power shortages in an attempt to phase out nuclear power plants, which currently supply 14 percent of the nation’s electricity.
The government should also accelerate urban renewal projects, as it could help address housing affordability for young people and ensure building safety with many of Taiwan’s buildings are more 30 years old, the report said.
Japanese firms have years of experience dealing with an aging population and alternative energy development, the report said, calling on the Taiwanese government to remove legal barriers so related technology and services can be imported.
Taiwan can address low wages for young people by promoting business-to-business and business-to-consumer commerce, the report said, adding that business-to-business transactions account for a small share of GDP in Taiwan, suggesting ample room for growth.
Compared with other sectors, it is relatively easy to export business-to-business commerce in financial, creative and biotechnology industries and they generate greater added value, the report said.
The government can provide tax credits and other incentives to encourage business-to-business ventures at home and abroad, the report said, adding that the chamber would serve as a key reference for bilateral trade talks in Taipei next month.
Taiwan’s National Development Council yesterday said it would respond to the Japanese trade group’s requests after reading through the report in detail.
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