National Taiwan University economics professor Kenneth Lin (林向愷), who once worked for the Democratic Progressive Party (DPP), recently criticized the “free economic pilot zones” project launched by President Ma Ying-jeou’s (馬英九) government, calling it “the wrong prescription” and saying it not only catered to business, but would hurt workers and would lead to salaries in Taiwan being the lowest in Asia in five years’ time.
Council for Economic Planning and Development Minister Kuan Chung-ming (管中閔) rebutted Lin’s criticism on April 12, and I agree with his arguments.
In an increasingly competitive, globalized world led by knowledge-based economies, capital, commodities, labor, technology and human capital flow across national borders at an unprecedented pace in search of the most beneficial markets.
Human capital is a crucial resource in the survival of corporations and a key component for consolidating and enhancing a nation’s competitive edge. Developed nations see human capital as a strategic resource for further development and invest heavily on training human resources and attracting international talent.
In Singapore, China, South Korea and Hong Kong, importing human capital is viewed as an important part of national economic strategy, and their flexible and pragmatic approach and its beneficial effects on the economy is something Taiwan should take note of.
The free economic pilot zones plan would ease regulations on foreign and Chinese blue-collar labor and agricultural products. From this, Lin surmised that it would also mean importing more foreign white-collar workers, which in turn would have a negative effect on employment opportunities outside the zones.
Taiwan has a low birth rate, an aging population, low economic growth, stagnant salaries, as well as a deficit of human capital, or the imbalance created by an unequal outflow and inflow of people. Those leaving the country include highly skilled white-collar workers, while those moving to Taiwan consist mostly of foreign spouses and family caretakers.
Faced with this dilemma, Taiwan needs to learn how to attract, keep, nurture and utilize top personnel. Bureaucracy has made it difficult to attract foreign white-collar workers, so breakthroughs are needed, such as liberalizing regulations to facilitate foreign workers’ entry and exit and providing tax exemptions. Aside from abolishing the two-year work experience requirement, the revenue restrictions on companies that want to hire foreign personnel should also be relaxed. In addition, for foreign white-collar workers, income earned outside of Taiwan should not have to be declared, while individual income tax should only be calculated for half of a person’s wages earned in a three-year period.
Attracting global resources through liberalization would prove that the government is determined to get back on track internationally. Although it means competing with the rest of the world, it is possible to use the pilot zones to attract international talent, bring in important technologies, enhance corporate technology standards and lead industrial transformation to improve competitiveness.
Over the past decade, more than 200 regional trade pacts have been inked throughout the world. This rapid regional economic integration should serve as a wakeup call for Taiwan.
With appropriate planning and execution, the free economic pilot zones could relieve a human capital deficit, resuscitate the economy, improve the domestic economic environment, consolidate Taiwan’s core competitive advantages and help promote regional economic cooperation — all of which would help the nation’s competitiveness.
Lee Wo-chiang is a professor in Tamkang University’s department of banking and finance.
Translated by Kyle Jeffcoat
Two sets of economic data released last week by the Directorate-General of Budget, Accounting and Statistics (DGBAS) have drawn mixed reactions from the public: One on the nation’s economic performance in the first quarter of the year and the other on Taiwan’s household wealth distribution in 2021. GDP growth for the first quarter was faster than expected, at 6.51 percent year-on-year, an acceleration from the previous quarter’s 4.93 percent and higher than the agency’s February estimate of 5.92 percent. It was also the highest growth since the second quarter of 2021, when the economy expanded 8.07 percent, DGBAS data showed. The growth
In the intricate ballet of geopolitics, names signify more than mere identification: They embody history, culture and sovereignty. The recent decision by China to refer to Arunachal Pradesh as “Tsang Nan” or South Tibet, and to rename Tibet as “Xizang,” is a strategic move that extends beyond cartography into the realm of diplomatic signaling. This op-ed explores the implications of these actions and India’s potential response. Names are potent symbols in international relations, encapsulating the essence of a nation’s stance on territorial disputes. China’s choice to rename regions within Indian territory is not merely a linguistic exercise, but a symbolic assertion
More than seven months into the armed conflict in Gaza, the International Court of Justice ordered Israel to take “immediate and effective measures” to protect Palestinians in Gaza from the risk of genocide following a case brought by South Africa regarding Israel’s breaches of the 1948 Genocide Convention. The international community, including Amnesty International, called for an immediate ceasefire by all parties to prevent further loss of civilian lives and to ensure access to life-saving aid. Several protests have been organized around the world, including at the University of California Los Angeles (UCLA) and many other universities in the US.
Every day since Oct. 7 last year, the world has watched an unprecedented wave of violence rain down on Israel and the occupied Palestinian Territories — more than 200 days of constant suffering and death in Gaza with just a seven-day pause. Many of us in the American expatriate community in Taiwan have been watching this tragedy unfold in horror. We know we are implicated with every US-made “dumb” bomb dropped on a civilian target and by the diplomatic cover our government gives to the Israeli government, which has only gotten more extreme with such impunity. Meantime, multicultural coalitions of US