Tue, Sep 18, 2012 - Page 8 News List

Taiwan’s squandered 12 years

By J. Michael Cole 寇謐將

For 12 long years, every administration that has occupied the Presidential Office has failed to do what was necessary to ensure the nation could keep pace with a rapidly changing world. The cost of such inaction is becoming increasingly salient and will become heavier still, with the risk that Taiwan will become obsolete not as a result of political isolation, but from an irreversible exodus of brainpower and capital.

Former president Chen Shui-bian’s (陳水扁) Democratic Progressive Party (DPP), which came to power on May 20, 2000, after 53 years of uninterrupted Chinese Nationalist Party (KMT) rule, came in as a left-of-center party, proposing a more socialist alternative to the conservatism of the KMT.

However, neither the unfavorable context that arose from the Sept. 11, 2001, terrorist attacks, nor Chinese obstructionism or the party’s lack of ruling experience can fully account for the little that the Chen administration, over the two four-year terms it was given, had to show when it comes to modernizing Taiwan.

Chen’s failures stemmed instead from an inability to see how quickly economies around Taiwan were changing. Progress was undoubtedly made, as with the small, initial steps that were taken to normalize trade relations with China, the signing of free-trade agreements (FTA) with allied nations like Nicaragua and Taiwan’s accession to the WTO in 2001.

However, much more could and should have been done to bring Taiwan into the 21st century by creating a business environment that would attract — and equally importantly, retain — human capital. Instead, Chen remained fixated on socialism and protectionist measures that, though they may have made sense 20 years earlier, no longer did so. Tsai Ing-wen (蔡英文), the party’s candidate in the presidential election this year, ran on similar ideology, which failed to unseat President Ma Ying-jeou (馬英九) of the KMT.

That is not to say that more equitable wealth distribution or protecting certain sectors of the economy are intrinsically wrong policies. The problem is that Taiwan does not exist in a vacuum, and such measures cannot work in a region whose economies are rapidly evolving toward integration.

The KMT, which unseated the DPP in 2008 on promises it would “revitalize” Taiwan’s economy after eight “wasted years,” has not fared any better. Ma, who was given a second term in January, has done far more to liberalize relations with China, with 16 agreements and the Economic Cooperation Framework Agreement (ECFA) of June 2010, but none of those were visionary. In many respects, they simply built upon the foundations set by his predecessors, and all were long overdue, irrespective of the political dispute that exists between the two sides of the Taiwan Strait.

The Ma administration has been obsessed with China, often at the detriment of trade relations with other important economies. More fundamentally, even under his supposedly pro-business administration, his government has completely failed to address the numerous problems that continue to hurt Taiwan’s economy, deficiencies that go well beyond cutting GDP forecasts or sagging exports. Ma’s failures, like Chen’s before him, are the result of his inability to normalize the business sector and to confront interest groups that hold the nation hostage for the sake of maintaining their advantage over external competitors.

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