CNFI paper urges government boldness

SEEKING INCENTIVES::Rock Hsu said the government could help by providing tax breaks to innovative firms, while the report urged an easing of regulatory roadblocks

By Crystal Hsu  /  Staff reporter

Fri, Jul 12, 2013 - Page 13

The Chinese National Federation of Industries (CNFI, 全國工業總會) yesterday urged the government to be bolder and show more prowess in guiding the economy out of the doldrums and making the business environment more friendly for manufacturers.

The trade group, which consists of 155 member associations and represents a majority of local manufacturing businesses, made the plea during a news conference on its annual white paper.

CNFI chairman Rock Hsu (許勝雄) urged the government to notice that corporate earnings in Taiwan have declined for five consecutive years amid increasingly difficult global conditions, while tax burdens have increased.

“The predicament has driven Taiwan’s economy into a vicious cycle of stagnating export growth and firms’ conservative capital spending,” said Hsu, who is chairman of notebook computer maker Compal Electronics Co (仁寶).

The government must take bold steps to revive the anemic economy and regain the public’s confidence in the next three years as the past year has seen a growing public mistrust of the administration, Hsu said.

Meanwhile, the US sequestration limits its GDP growth, China’s recovery is slowing and Europe remains in recession, all of which are challenges for Taiwan’s export-oriented manufacturers, Hsu said.

CNFI urged the government to provide greater incentives to encourage private investment and innovations, noting that South Korea spent 16.6 percent of its GDP on research and development for the past 20 years.

As a result, South Koreans have beaten their rivals in the Asia-Pacific region and on the global stage in the production of flat panels, smartphones, surveillance gadgets and consumer electronics, Hsu said.

The government could lend a helping hand by providing tax breaks for share investment in companies engaged in innovations, Hsu said.

CNFI also urged the government to facilitate regulatory easing and remove roadblocks to private investment, which it said was critical to the establishment of free economic pilot zones.

“The benefits linked to the pilot zones should be applied to businesses that play an important role in driving the nation’s economy and in which foreign countries have voiced interest,” Hsu said.

Major economies like the US have sought to attract return of US manufacturers from abroad and Taiwan’s government must not buck the trend with unfavorable policies such as the capital gains tax on securities transactions and special sales levy, Hsu said.

The government should help companies acquire land to expand production and simplify investment review procedures, the white paper said.

CNFI made 262 suggestions in this year’s white paper, the highest number in its group’s history.

The report said 76 proposals made in previous years have yet to be acted upon.