In his recent visit to Taiwan's Latin American allies, Premier Yu Shyi-kun proposed linking diplomacy with investment. He said he hoped that Taiwan could mobilize 20 or 30 enterprises to invest in Central and South American countries that are diplomatic allies. These enterprises would receive full government support and would aim to consolidate the relationship between Taiwan and its allies. This is an excellent idea, but if we are to avoid the problems associated with Taiwan's policy of encouraging investment in Southeast Asia and achieve our goals, the implementation of the policy must be rethought.
China's economy is developing rapidly and its international ambitions are expanding. If Taiwan relies on traditional economic aid, questions of blackmail and bribery may arise as countries try to make the most of offers coming simultaneously from China and Taiwan. For example, when the Honduran president met Yu, he presented him with a list of aid requests. This list was simply a compilation of everything China has offered Honduras in its bid to draw the country away from Taiwan. In bidding for the allegiance of these countries, we will have fewer and fewer cards in our hand, and ultimately we may not only lose our allies, but find that we have spent huge amounts of money without gaining any benefit.
Yu pointed to the example of Chentex (
So how can more companies be encouraged to invest in these allied countries? When investing overseas, Taiwanese companies are faced with a lack of international management expertise, problems with dispute resolution, language and cultural barriers, inadequate infrastructure and political savvy and cashflow problems. The lesson of Taiwan's failed push to invest in Southeast Asia is clear to all, and better incentives are needed to encourage Taiwanese businesses to invest in Central and South America.
At its most basic, Taiwan can help its allies resolve these problems. But these countries should be required to set aside a portion of their foreign affairs budget to assist incoming Taiwanese investors by constructing industrial parks geared toward the needs of the investors, providing subsidies to train Taiwanese and local management personnel and offering legal and diplomatic assistance, low-interest loans and more information about operating in a local context.
In the face of China's economic expansion, Taiwan should gradually put aside conventional economic aid and replace it with a foreign policy with economic development at its core. This should be based on long-term investment and economic construction. A diplomatic relationship based on this will be far more stable than one based on short-term economic aid. It will also benefit the people, rather than individual politicians. If the benefits are there, Taiwanese businesses will be more willing to invest overseas, helping to build up the economies of both Taiwan and its allies. Moreover, Taiwan will not be squandering its resources and the government and opposition will be able to build a greater consensus about how to maintain our diplomatic ties.
Tung Chen-yuan is an associate research fellow at the Institute of International Relations at National Chengchi University.
TRANSLATED BY Ian Bartholomew
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