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Taiwanese businesses should look to Vietnam

Thursday, Aug 08, 2002, Page 8

President Chen Shui-bian's (陳水扁) major policy speech on investment in Southeast Asia is yet another resuscitation of the "go south" policy that followed the announcement in 1994 of guidelines for the strengthening of economic and trade activities in the Southeast Asia region.

For years, the "no haste, be patient" policy was unable to match the tempestuous trend to "go west," which has gradually built up to a national security crisis. If it can't now be balanced by the "go south" policy, this inappropriate bias will create intensifying difficulties for Taiwan.

At one stage, the "go south" policy was in the ascendant, which resulted in the signing of agreements with many Southeast Asian nations guaranteeing investment and the banning of dual taxation, as well as agreements on temporarily allowing goods into countries for acceptance tests. It can't be denied that the authorities worked hard to make the policy work. It met with difficulties, however, and in the end, many investments in Malaysia, the Philippines and Indonesia failed.

Now that this policy is being brought back to life, we suggest that the government give serious thought to targeting Vietnam for its first major breakthrough.

First, Vietnam's coastline is 3,200km long. It's geographic position makes it extremely strategic for military activities in the South China Sea and is a vital terminus for trade. Its economic and strategic value, therefore, is obvious.

For landlocked countries in the peninsula's hinterland, Vietnam is as precious as the land along China's southeast coast. To achieve a breakthrough in Vietnam, we should first of all put to good use the benefits accrued from the complementary economic and trade activities between Taiwan and Vietnam.

Second, the zero tariff agreement for industrial raw materials and semi-finished products between Vietnam and all other ASEAN member countries will come into effect by the end of the year. Distribution costs can be cut, which would be good for the prospects of Taiwanese trade with Southeast Asia.

Third, to date, most exports from Southeast Asian nations, including Vietnam, have not been met with European or American import quotas. This makes it advantageous for Taiwanese enterprises to use Vietnam as an intermediary for further developing exports to the US and Europe.

Fourth, labor costs in Vietnam are far lower than in the coastal areas of southeastern China.

The monthly salary for a graduate of the National University of Hanoi stands at NT$1,200 and monthly salaries in Ho Chi Minh are the equivalent of NT$1,800. Land prices are also low.

Further, the law is not given to arbitrary changes, nor do interpretations of laws and regulations vary from one area or one person to another, as is the case in China.

If we add to this the friendliness of the Vietnamese people and the fact that university graduates have a good understanding of modernity and a good, basic knowledge of business matters, while we at the same time are tolerant of inexperience and a lack of expertise, development should be easy once some direction has been given.

On the surface, the Vietnamese government continues to pursue communism, but General Secretary of the Vietnamese Communist Party Nong Duc Manh is keen on reform. China and Vietnam are communist countries, and the two nations will finalize their 1,462km shared border within three years, even though the Vietnamese leadership fully understands that China is a neighbor that must be treated carefully.

While the 1979 Sino-Vietnamese war has passed into history, jurisdiction over the Spratly and Paracel islands and their estimated US$500 billion worth of oil remains a bone of contention between the two nations.

The Vietnamese government is currently considering signing an agreement to lease Cam Ranh Bay to the US for military use, in a move that would involve using the US military to stabilize the national political situation, but it still has reservations because of behind-the-scenes Chinese pressure.

This situation highlights the psychological distance between Vietnam and China, which leaves room for stable development between Taiwan and Vietnam. More concretely, apart from economic and trade developments, there is much scope for political and military contact between Taiwan and Vietnam over the next 10 to 20 years.

Consider, in particular, the 1,650km long border between Vietnam and Laos, where the people of both countries interact without any problems using the Vietnamese language. When Laotian government officials advance to a certain level, they are all sent to Vietnam for training. If we can establish a good relationship with Vietnam, we also have good prospects in Laos.

From 1988 to March this year, accumulated Taiwanese investments in Vietnam amounted to US$5.7 billion. If we add investments through third countries, the total amount would probably exceed US$10 billion, making Taiwan the largest foreign investor in Vietnam.

Vietnam has shown that it places great importance on economic and trade relations with Taiwan. Though not publicly announced, there have recently been high-level Vietnamese visits to Taiwan as well as high-level Taiwanese visits to Vietnam,which shows the importance Hanoi attaches to such relations.

Unfortunately, the government and people of Taiwan have little understanding of and attach little importance to education in the field of Vietnam studies. As a result, developments between Taiwan and Vietnam are somewhat superficial and exchanges cannot deepen the relationship. We therefore propose the following concrete suggestions.

One, the number of scholarships for Vietnamese students to study in Taiwan should be increased from the current 15 per year to 45 per year.

Two, universities in Taiwan should set up lectureships in Vietnam studies and invite Vietnamese scholars to Taiwan for short-term lectureships of three or six months.

Three, a department of Vietnamese language studies should be established within two years, and Taiwan should invest in the training of skilled Vietnamese workers for the benefit of the 30,000 Tai-wanese businesspeople currently in Vietnam, a number that will increase sharply in the future.

Four, to address the immediate problem of the lack of Vietnamese officials having the language skills to handle communications be-tween Taiwanese businesspeople and Vietnamese authorities, the government should allocate NT$1 million each year for grants to Vietnamese students doing research on Taiwan. We estimate that this will provide for about 200 young Vietnamese intellectuals each year who could assist with the development of trade between Taiwan and Vietnam.

We sincerely hope that the government will demonstrate that it has the vision to replan and reshape the "go south" policy and open up a new opportunity for Taiwan's economy.

Translated by Perry Svensson
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