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Developing industries should be the priority

Minister of Economic Affairs Morgan Hwang (黃營杉) recently said that further careful review was required before establishing a government-funded research institute to enhance the nation's business development.

Following the rapid growth in the number of universities and colleges in Taiwan, there has been a mushrooming of master of business administration programs with solid enrollments. There is no longer a lack of people who have specialized in commercial or business management. Establishing a commercial development research institute would therefore be superfluous.

Quite a few of the nation's leading enterprises have suggested the government establish such an institute. Their pleas won the backing of former premier Frank Hsieh (謝長廷). Although such an institute would emulate the Industrial Technology Research Institute (ITRI) by helping develop the nation's service and business sectors, it would be difficult to avoid the impression that various government agencies only care about their turf and that business is running the country.

Commercial and industrial development are two different issues. The theory behind the ITRI, which aims to develop the nation's manufacturing sector, is not applicable to business development. That is why advanced nations around the world have industrial technology research institutes similar to those of Taiwan, but they do not have government-funded institutes for business development.

Some think that it is strange that while Taiwan's business services sector accounts for nearly 70 percent of the nation's GDP, there is no center dedicated to the study of business development patterns or the application of new technologies.

However, looking at the present scale of Taiwan's economy -- with per capita GDP at a bit more than one-third of that in the US and Japan -- the service sector accounting for 70 percent of the nation's GDP is very close to the level of highly developed nations such as the US, Japan and the UK. Compared with Japan's 68 percent and the UK's 69 percent in 2003, the percentage reported by Taiwan is probably too high for this stage in the country's development.

Whether or not the government should continue to stress the importance of business services and invest a sizeable amount of capital to increase the percentage of the service sector in the nation's GDP is an issue the government has to seriously consider.

Major conferences that were held to improve the economy were designed to benefit certain groups or achieve certain government goals. The 2001 Economic Development Advisory Conference, the 2004 National Service Industry Development Conference and last year's National Commercial Development Conference were intended to launch and then protect the "active opening, effective management" policy in dealing with China. The idea of establishing a commercial development research institute was also a product of this policy.

Although I am not completely opposed to the Service Industry Development Guidelines and Action Plan's goal that the service sector should account for 71 percent of GDP within four years, I am opposed to making this goal part of the national development plan in order to fill the industrial void left by the relocation of some industries to China.

At US$15,000, Taiwan's per capita income is still relatively low. At this stage of economic development, there are still a lot of industries in Taiwan that can be further developed and upgraded. How to assist these industries and making them stay in Taiwan should be the government's top priority.

Huang Tien-lin is a national policy adviser.

Translated by Daniel Cheng
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