Taipei Times (TT): The eurozone’s debt crisis is continuing to influence the global economy this year. How can Taiwan minimize the negative impact of this and create new economic opportunities?
Yiin Chii-ming (尹啟銘): Deepening regional integration with Asia would be an important direction for Taiwan in strengthening our economic capabilities, so we have to accelerate the pace of economic liberalization and the track of signing more free-trade agreements with other countries.
On Monday, the premier [Sean Chen (陳冲)] asked the Council for Economic Planning and Development to do more research on the creation of a free economic demonstration zone. This is an important process in the nation’s economic liberalization, which could help us gain the essential conditions for participating in the Trans-Pacific Partnership (TPP), one of President Ma Ying-jeou’s (馬英九) ultimate goals.
In addition, the Economic Cooperation Framework Agreement (ECFA) with China signed on June. 29, 2010, has proved to be a driver for Taiwan’s investment sector.
TT: Officials in both Taiwan and China once said China “offered favors” to Taiwan in the signing of the ECFA. Has the ECFA really helped Taiwan that much?
Yiin: I never said that China “offered favors” to us in the ECFA, because we always hoped to take more advantages from them during the negotiations, like adding automobiles, LCD panels and some key items in the machine tool and petrochemical industries to the “early harvest” list.
Therefore, in the next round of negotiations with China, I hope representatives from Taiwan will secure more favors for us, even signing a “trade in goods” agreement. Overall, I think the signing of the ECFA was still a major breakthrough that will do more good than harm for Taiwan.
TT: The latest data released by the Bureau of Foreign Trade showed the ECFA only helped reduce US$114 million in tariffs for Taiwan in the first 11 months of last year, with the utilization rate standing at just 21.1 percent. Does this mean the ECFA’s benefits were lower than the government’s expectations?
Yiin: Although the government had forecast the ECFA would reduce tariffs by US$9 billion per year at most, it counted the total 8,000 items exported to China as zero-tariff items, with the utilization rate reaching 100 percent. So it is too early to say the ECFA’s benefits were lower than expected, as it needs more time to wait for benefits fully emerge.
Meanwhile, other than direct benefits, another main positive effect brought by the ECFA was increasing investments. According to the bureau’s data, approved Chinese and foreign investment totaled NT$4.96 billion last year, up 30.01 percent from a year earlier. This could definitely be referred as the ECFA’s spillover effect.
Nevertheless, the government has to focus more on pursuing higher utilization rate for the ECFA by promoting it more to domestic exporters, as well as discussing with China about simplifying the procedures.
TT: What are your thoughts about Taiwan’s industrial transformation and industrial innovation, especially the ailing DRAM, LCD, LED and solar energy sectors?
Yiin: For the LCD panel sector, I think local manufacturers should form stronger alliances with downstream suppliers to consolidate the market and develop a new business model. Other than Chinese TV manufacturers, domestic LCD companies should also focus on cooperating with downstream suppliers in Japan, who own high-level video technology.
As for the DRAM sector, Taiwanese companies must be determined to carry out industrial rebuilding. How to consolidate the industry by transforming the capacity-oriented business mode to a technology-oriented one would be a key factor to get the industry back on track.
Basically, we hope local companies will hang on until the global economy rebounds. And at an appropriate time, I will also discuss my thoughts with the Ministry of Economic Affairs to see if the government could help these industries properly.