Last week, the Cabinet unveiled a package of 13 short-term stimulus measures to ensure that the nation’s GDP growth can reach the government’s 3 percent target for the year. The government plans to spend NT$3.24 billion (US$108.2 million) to boost domestic consumption and investment, as the nation’s export-reliant economy faces challenging headwinds.
The 13 measures include revising the capital gains tax on securities investments, easing restrictions on domestic insurers investing in infrastructure projects, setting up a NT$1 billion angel fund to invest in business start-ups, introducing a cash-for-clunker scheme for old taxis and buses and offering NT$400 million in cash subsidies on energy-saving home appliances.
Premier Jiang Yi-huah (江宜樺) last week said that the plan would boost the nation’s GDP growth, but it is questionable how many percentage points the five-year plan — during which the state is to spend NT$648 million each year — would add. In comparison, South Korea’s latest stimulus plan is far more aggressive, with the South Korean parliament last month approving 17.3 trillion won (US$15.4 billion) of stimulus spending.
It is not surprising that the public response to Taiwan’s latest stimulus plan has not been positive. Most people think there is little innovation in the plan, with the proposed measures simply mirroring existing policies. Instead, the plan appears to be a continuation of the NT$389.4 billion “Economic Power-up Plan” that the government launched in September last year, which included mostly long-term measures.
Economists, too, say the government’s solutions for weak consumption have nothing to do with creating jobs or raising wages, which are key to boosting domestic consumption. Moreover, they believe the government is too focused on kick-starting the economy in the short term and has lost its vision to transform the nation’s industrial structure in the long run.
For instance, the latest stimulus plan aims to continue a short-term subsidy scheme to encourage consumers to purchase energy-saving electric appliances, rather than pushing forward a more ambitious program to collaborate with the solar power and electric car sectors to boost consumption of rooftop solar panels or electric vehicles. The government needs to understand that one of the key factors in promoting “green” energy-related industries in Taiwan is the provision of firm policy support. Without this, the goals of achieving a low-carbon-emission society and transforming the nation’s industrial structure will remain ideas for the foreseeable future.
A global competitiveness ranking report issued by the Switzerland-based International Institute for Management Development last week showed exactly why Taiwan should be concerned about its development outlook. The report showed that Taiwan’s place among the world’s 60 major economies plunged four places to the 11th spot this year, the lowest since 2009, with across-the-board declines in all four sub-indices: economic performance, government efficiency, business efficiency and infrastructure.
No matter how difficult times are, Taiwanese are able to face challenges with their hard-working attitudes and unfaltering courage. However, they often get frustrated with their situation if the government does nothing to fix problems or indeed makes things worse. If the government maintains the same approach with the nation’s development and continues leaving investment uncertainties to the private sector, while ineffectively executing stimulus measures, it is little wonder the public has no confidence in its latest plan to revitalize the economy.