Efficiency is the key
Your editorial (“Help needed to combat strong NT”, Feb. 13, page 8) is totally off the mark. Why is it that so many people claim to support an open market economy, but start to complain as soon as it is no longer to their advantage?
A strong New Taiwan dollar should not be a reason for concern. In fact, it should be a wake-up call for the local economy to adapt itself to a new era in which energy, resources and commodities will get more expensive. Begging the government to keep prices artificially low only exacerbates the situation in the long run.
It is high time that local small and medium-sized enterprises (SME) become more efficient and flexible. That will hurt in the short term, but in the end it will make the Taiwanese economy a lot stronger. The current policies are a recipe for disaster. Pinning all their hopes on closer ties between Taipei and Beijing will only lead to a rude awakening down the road.
You only need to look at the number of people sitting around in some companies, the enormous waste of energy and water to know that there is huge room for improvement. Instead of ducking its responsibility, the government (and here, the previous Democratic Progressive Party administration also lacked guts) should allow prices of water and electricity to rise to reflect their true market value.
The argument that it will be the poorest that will be hit hardest by such moves I find hard to substantiate. Say someone uses NT$200 of water per month. He may see his bill increase to say maybe NT$250. Since that person already does not waste, the impact on his overall expense will be minimal. However, the big businesses that open their doors and set the air conditioners on deep freeze might think twice if they saw their energy bill soar by 50 percent to 100 percent. The same goes for offices and factories where lights and air conditioners are left on day and night. Once they start on the path of change, they will find all kinds of ways to work more efficiently.
Just take a look at Germany. Despite a strong euro over the past few years, high wages and strong unions, its economy has kept growing. A highly trained workforce and attention to research and development have kept that country at the top of many fields. Now that the euro is coming down in value, Germans can reap even bigger rewards from the hard work they have put into improving their economy during hard times. Why is it that Chinese firms buy German machines even if they are much more expensive than ones they can buy locally? Attention to detail, reliability, excellent after-sales service.
For the past eight years, my cousin has been selling second-hand European-built machines that are 50 percent more expensive than locally built new ones and still demand outpaces supply. Simply put, they work and when there is a problem they get fixed almost immediately.
The US economy was stronger when the US dollar was at it highest under former US president Bill Clinton’s administration because they worked hard to get the budget back on track. Waste, bad policies and a ballooning deficit under former US president George W. Bush have eroded all those advantages. The US dollar languishes and the economy is in tatters. I know it is a bit simplistic, but you get the general idea.
So, a 6 percent rise in the value of the NT dollar should be no reason to worry or panic, but rather, to roll up the sleeves and make some hard decisions. It is time for the SMEs to clean up their act. The less the government and the central bank intervene, the better. The government should assist with training, but not with handouts.