Tue, Sep 18, 2012 page8

• Taiwan’s squandered 12 years

  • By J. Michael Cole 寇謐將
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  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.

  This is not only the insurance sector, to name one area that sorely needs an overhaul, but also education, where university professors continue to enjoy an unfair advantage over foreign talent. For example, only Republic of China (ROC) citizens can have tenure at public universities, which means that top foreign academics, or those with dual nationality, will have little incentive to come to Taiwan, a problem that is exacerbated by uncompetitive wages. The same applies to other sectors, where pay packages or opportunities for career progression are generally sub-optimal for Taiwanese and expatriates alike.

  Think tanks, which serve as laboratories for ideas and influence on government, have little if any foreign input, which signals an inwardness that simply does not jibe with Taiwan’s perception of itself as strategically relevant. Firms involved with due diligence or financial investigation, wire news agencies, major newspapers, all are in China, Hong Kong, Singapore, Tokyo or Seoul, and will only parachute someone into Taiwan when something big happens, like major elections or natural catastrophes.

  Taiwan remains a wonderfully attractive place to live, with an unbeatable quality of life. Unfortunately, its leaders — political and from the corporate world — still think in the short-term and seem incapable of imagining that top researchers, academics, journalists and scientists would want to develop a permanent presence here. They still think of Taiwan as a destination for, say, short-term English teachers who will eventually move on to better things. This is unfortunate as a sizeable number of highly skilled individuals currently working in China would much rather work in Taiwan — if the conditions were right. Sadly for them and for Taiwan, such conditions do not, for the most part, prevail here.

  As a result, the top minds, domestic and foreign, that could help Taiwan modernize itself have little interest in coming here or staying for the long term. Major firms that could consider Taiwan’s safe environment and location to establish a regional office often end up going somewhere else because of the lack of a level playing field and unfair treatment vis-a-vis local firms. Some gave it a shot, especially in the wave of optimism that accompanied Ma’s election in 2008, but many more are on the brink of pulling the plug.

  More often than not, an unfair business environment is the principal reason, along with growing fears in the high-tech sector — Taiwan’s lifeline — of tech transfer to China. While the Ma administration is aware of this (Tsai’s think tank acknowledged as much recently), there is little cause for optimism when Ma says that Taiwan will not be ready to join the Trans-Pacific Partnership for another eight years, a clear sign that he is unwilling to do what’s necessary to address the structural problems that undermine Taiwan’s economy.

  Tackling interest groups will not be easy and will have political costs domestically. However, this needs to be done, lest Taiwan fall behind in a region that cannot, and will not, stand still. Chen, and now Ma, have failed to display the kind of leadership that is needed to ensure Taiwan’s economic survival and prosperity. What is needed now, more than ever, is a leader who has the vision and gumption to take the bold steps that the situation calls for.

  J. Michael Cole is deputy news editor at the Taipei Times.
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