It is hardly unusual to see news reporters working overtime. But one rarely sees the owner of a newspaper staying until the early hours of the morning. The owner of The Liberty Times (自由時報) and The Taipei Times (
At the Lunar New Year, The Liberty Times gave out bonuses of four months' salary to employees. For the Dragon Boat Festival, it distributed bonuses of a quarter of a month's salary. Such generosity inspires curiosity about the financial prowess of Lin's Union Group (聯邦集團), and says much about Lin's management style.
During this interview with Andy Liang and Vicky Tien, Lin said that the keys to his management style are conservatism and stability. With most of his businesses targeting Taiwanese markets, Lin is voluble in his warnings about the downside to the industrial exodus to China at a time when Taiwan faces financial crisis.
The following is a summary of the interview with Lin as it relates to his management of the Union Group, The Liberty Times, and the Taiwan economy.
Question: Many say there are the similarities between Taiwan's current financial crisis and the oil crisis of 30 years ago. You experienced both. What is your view?
Lin Rong-san: The nature of these two crises are different. The oil crisis occurred simply because of problems with oil [supplies] and the time was short. The economy rebounded in a year or so. But the current financial crisis is global. The problem is complicated by a sophisticated mixture of factors within Taiwan. Plus, 30 years ago, capital in Taiwan was not allowed to leave the island. Now, huge amounts of capital are flowing to China, making the extent of the crisis far deeper than the oil crisis.
Question: What do you think are the major causes of Taiwan's current financial crisis?
Lin: There are many factors. Some have international roots and others domestic origins. The former are beyond our control. We have no excuse for the latter, however. Industry-wise, the disorderly conduct of some workers, in the name of environmental protection, has worsened the business environment.
Next, members of the Taiwan media overly glorify China. China's problems cannot be seen through the media. In contrast, most coverage about Taiwan is negative. Taiwan's industries therefore hold illusions about China, which causes a massive emigration to China. The emigration in turn causes serious capital outflows and aggravates the crisis. Of course, perhaps the media's negative coverage is intended to compel action by the government. But the opposite is often achieved. If the media continues to blacken our own country and society, Taiwan can only become worthless. Such conduct not only endangers the country and society at large, but also indirectly harms ourselves.
Question: In this economic recession, the real estate sector is suffering extreme pressure. You are also in the real estate business. What is your view about the sector's future?
Lin: [In this business ...], if a firm had NT$10 billion in capital and another NT$10 billion secured from loans five years ago, it would be unable to stay in business now. If it had NT$10 billion in capital and NT$2 billion secured from loans, and it was now able to convert the capital into cash, then it would be able to survive now. In addition, those who have a proportion of real estate holdings leased out, and therefore have steady incomes, may also survive.
The main cause of the current real estate crisis has nothing to do with the nature of the industry. The keys are the outflow of domestic capital and management personnel, and the large increase in unemployment. These factors, in combination with the drastic reductions in revenues in other industries and the service sector, made everyone sell their houses in the hope of getting rich in China. This has created strong pressure to sell in the real estate market. If industries could keep their roots in Taiwan for sustainable development and operation, then demand in the real estate market would naturally rise. The market would inevitably be revamped.
Question: Many people feel that the opening up of the "Three Links" (三通), and the purchase of real estate in Taiwan by Chinese capital would do the Taiwan economy a great deal of good. What do you think?
Lin: The "Three Links" may help Taiwanese businesses' investments in China, but will also increase the outflow of industries from Taiwan and speed up the hollowing out of Taiwanese capital. If Chinese capital is allowed to purchase real estate and stock in Taiwan, the influence on Taiwan will be negative. This is because China has no private capital. Capital invested in Taiwan would necessarily come from the Chinese government. The purchase of real estate and stock in Taiwan by Chinese capital serves only one purpose, that is, to tie Taiwan to a string. Once the string is pulled, not only will Taiwan become chaotic, but the end of the Taiwan people's democracy and freedoms will also be near. A lot of people say one day that if they didn't invest in China, they could not survive, and then, the next day, urge the government to open the door to Chinese capital. What kind of logic is that?
Question: Currently, even the new administration has apparently agreed that the opening up of the "Three Links" is the inevitable trend of the future. Under the circumstances, what do you think the Taiwan economy should do?
Lin: I think the government is unlikely to open up the "Three Links." Under pressure from the pro-China media, the government has to adopt some of their views. But the government must consider the issue of national security and respect the popular will.
Question: What do you think is the solution to Taiwan's economic problems? What directions should be proposed by the Economic Development Advisory Conference (經發會)?
Lin: A key to the problem of Taiwan's economy are the industries. If industry leaves Taiwan, then all business sectors will suffer. If the industries are prosperous, then all business sectors will recover. I often say that the government should not try to save the stock market, the real estate sector, and the banking sectors. All it needs to save are the industries. The media is always saying that we must simply invest in China quickly. I don't agree. The media should encourage the government to improve the investment environment immediately, and give the investors faith in Taiwan. These are the responsibilities of media that truly care about Taiwan.
As for the Economic Development Advisory Conference, it will certainly benefit the Taiwan economy, if it reaches a consensus. For example, the labor costs in Taiwan cannot be lowered to the point of satisfying the demands of management. But we can try to encourage the building up of a sense of unity between the workers and the management. This is an issue the Economic Development Advisory Conference could actively look into.
Moreover, I have also been thinking about how to save Taiwan, and I thought of a possible life-saving wonder drug, but the government needs to have the aggressiveness to adopt it. That is, a total business income tax immunity for the manufacturing industry. This measure would bring enormous investment incentives for the enterprises.
I've read some statistics indicating that the amount of annual business income taxes levied is approximately between NT$180 and NT190 billion. Tax dollars levied from manufacturing industry amount to about NT$40 billion. If these NT$40 billion are given immunity, missing tax income could be made up from the annual stock exchange taxes. This is because once the manufacturing sector receives business tax immunity, profits from stockholding in the sector will increase, resulting in an increase in the price of the stock. In the past, stock exchange taxes levied each year amount to about NT$100 billion. But during the upper half of this year, only NT$30 billion were levied. Stock exchange taxes levied for this entire year will be NT$30 to NT$60 billion less.
Next, even if the increase in stock exchange taxes is incapable of making up for the loss in business income taxes, the general income taxes levied will increase. The increase in these two types of income taxes levied will far surpass the loss in tax revenues caused by the manufacturing sector's immunity from business tax.
Under the circumstances, naturally the economy will be boosted, and all other sectors will also recover. If the loss in business income taxes levied from the manufacturing sector can bring about a higher employment rate, then it is worth it in any event. Measures such as these will help keep businesses in Taiwan, and the management and technology elites will also stay.
In addition, the business tax immunity will also attract foreign investors. It wouldn't matter, even if the companies were registered abroad. As long as ample employment opportunities are furnished in Taiwan, there are still many sources of taxation. Furthermore, Taiwan should also become more competitive in terms of tax rates, because companies will gravitate toward places with lower tax rates. Therefore, the higher the tax rates, the lesser the amount of taxes levied. In particular, foreign capital or companies with foreign investments will report revenues in places with lower rates and make Taiwan lose its tax resources. Now a lot of businesses in Taiwan are doing precisely this.
In this past year, the confidence of the Taiwan people has suffered a continuous decline. If we are able to keep the businesses by offering them business tax immunity, then that should be considered a most effective solution. In comparison, all other tax deduction measures are too piecemeal, and too minimal, in effect.
Question: The Liberty Times was widely noted for being one of a few media groups capable of giving out bonuses on the Dragon Boat Festival holiday. Why is it that the Union Group is able to do that despite the economic recession? How is The Liberty Timesdoing this year?
Lin: I have been in the construction business since the end of 1966. I have kept a consistent belief, that is, never draw capital from the public (ie, become a publicly traded company) to further my self-interest. In managing my businesses, I neither "daydream" nor become so blinded by the apparent gains that I overlook the hidden downfalls. I do not expand business blindly. This is why my base hasn't been affected and shaken in today's economic crisis.
Frankly, The Liberty Times' advertisement revenues have been slightly affected. The impact is limited, however. This year, we are still grossing. This is because we have put a lot of effort into management, and done a good job in controlling costs.
People have asked me, since there are so many personnel advertisements on my newspapers, why not put them on the Internet? Other newspapers have developed employment Web sites on the Internet. The Liberty Times has remained the newspaper with the highest readership in Taiwan for the past five years, with readers in all walks of life. There is therefore really no need to supplement it with an Internet newspaper. The development of Internet newspapers by the print media is the equivalent of committing suicide.
Question: Will The Liberty Times give out bonuses on the Mid-Autumn Festival holiday?
Lin: Yes.
Question: Taiwanese media are suffering as a result of the economic recession as well. In fact, there have been many reports of businesses collapsing. How do you see the future of Taiwan's media market?
Lin: If the greater environment continues to deteriorate, it is only a matter of time before media groups close down. If the economic recession continues, better-managed media groups may be able to drag on longer. But that excludes circumstances in which outside factors intervene.
I speak frankly. For that reason, I am open to criticism by others. But, it is becoming impossible to watch TV these days. A lot of members of the media are speaking nonsense. I can only try my best to ensure that The Liberty Times is a newspaper that knows the difference between right and wrong and speaks nothing but the truth to satisfy the demands of the readers.
Question: After the passage of the Financial Holdings Company Law (金融控股公司法), has the Union Bank taken any measures in response? What instructions have you given to the management of the Union Bank and Union Construction?
Lin: I don't deal too much with the affairs of the bank. I only keep on reminding them to be cautious and steady. The same is true with Union Construction. The economy is not so good this year, so the company hasn't launched any new projects. I am not too troubled. We'll just keep what we have for now. Plus, the overhead personnel costs for a construction company are limited. It is not too heavy a burden.
Andy Liang (
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