Traditional industries in Taiwan, namely the construction, steel, petrochemical, textile, electrical machinery, chemicals, building materials and foodstuffs industries are now bearing the brunt of harsh competition. Their revenues are sliding yearly.
The government pushed hard to promote technological industries in the 1970s, and these industries soon achieved a great deal of importance in the market and became the lifeblood of Taiwan's economy.
In the 1980s, Taiwan's economy had soared at a staggering pace, and overall manufacturing output and competitiveness had been elevated, bringing about the rise of service industries that had turned into 65 percent of Taiwan's overall output.
After 1990, manufacturing industries as a percentage of the GDP became lower and lower, which might lead one believe that the economy as a whole is doing badly.
Currently, the hi-tech industry as a whole is booming and has been a leader in investment markets, so much so that 75 percent of all investments find their way into this sector.
Traditional industries on the other hand make up 75 percent of the stock market in terms of the number of listed companies, and the majority of these shares are ignored. As a result, share prices of some traditional industries occasionaly hit rock bottom, and furthermore, given the severity of the competition in selling traditional industry products locally, profit margins decrease on a yearly basis.
Therefore, with the problems these traditional industries face in raising capital, conditions are bound to worsen and they will have no way of extricating themselves from this vicious cycle.
Since it is very difficult to solve the difficulties facing traditional industries, the three main industrial and commercial organizations and the Taiwan Research Institute (TRI, 臺灣綜合研究院) have consequently made efforts to provide umbrellas for traditional industries in a depression. The organizations have appealed to President Chen Shui-bian (
Such purchases will help traditional industries acquire the assets they need and add some impetus to their share prices.
The depression and financial difficulties they find themselves in are not causes but effects; in fact, the purchase of NT$300 billion may not be enough to bring about a rise in competitiveness and productivity for these troubled industries. Furthermore, the proposal made by the TRI to adjust the current market and management regulations is likely to be a powerful alternative in the long-term.
After three months in office, the finance and economic ministers in the new government have come under harsh criticism from all corners of the manufacturing industries circle due to their clumsy rejuvenating measures. On Aug. 25, Premier Tang Fei (唐飛) announced the establishment of a special taskforce to grapple with finanical and economic problems, but nothing constructive has resulted, including the latest two-day seminar held by the task force.
In the past three months, there has not yet been a face-to-face meeting between our four financial and economic chiefs and traditional industry leaders, with a view to working out resolutions for the various problems facing the manufacturing industries. Given the negligence and delays in attempting to save them from further malais, we are likely to pay a dear price in the future.
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