Taiwan elected its first female president — Tsai Ing-wen (蔡英文) — in a landmark election on Jan. 16, with her Democratic Progressive Party also securing a majority in the legislature for the first time. The new legislature takes office on Monday, which offers the new Cabinet opportunities to reconsider the long-awaited Free Economic Pilot Zone project and many other significant domestic bills.
The draft special act for Free Economic Pilot Zones mainly focuses on economic liberalization and regulatory loosening, which has faced hurdles as political parties and the public hold different perspectives. The draft also claims its mid-term goal is to create favorable conditions for Taiwan’s entry to the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership, so the act’s period of effectiveness has been set at only 10 years.
Special economic zones have been a powerful instrument for attracting foreign investments and boosting economic growth, as evidence in the growth of such the zones in East Asia, Africa and Latin America since the 1970s. However, there are also many examples of failures, where firms have taken advantage of tax breaks and natural resources. Some zones have even been criticized as “pollution havens” for failing to meet international environmental standards.
A World Bank study said that zones that are the most successful in contributing to long-term development go beyond the traditional models of attracting investment and generating employment. This means that successful projects will ultimately deliver structural transformation of the economy. Critical to this process is the degree of integration of economic efficiency with other social and environmental considerations in the domestic economy.
Established in 2012, Enterprise Zones are at the center of the UK government’s long-term economic plan, which adopts a “local enterprise partnerships” approach to create entrepreneurial cultures in local communities and deliver sustainable growth.
As climate change becomes a development challenge, exploring a new paradigm that decouples economic growth from further increases in greenhouse gas emissions is a main task.
The role of special economic zones in promoting climate-friendly development has become critical in policy discussions. The zones can provide an ideal platform for both social and environmental policy innovations, not only because of their enclave nature, but also because they own built-in compliance and implementation mechanisms.
The concept of developing low-carbon “green” economic zones is already being adopted worldwide. Northern European nations have successfully developed eco-industrial parks since the 1960s, such as the Kalundborg Symbiosis in Denmark.
It is expected that greenhouse gas emissions from developing nations will surpass those from developed countries. China, India and South Korea have realized that special economic zones will play a catalytic role in pursuing “green” growth. For instance, South Korea’s Incheon Free Economic Zone sets a clear low-carbon master plan and harnesses foreign investment to fund climate mitigation strategies.
Taiwan published its Intended Nationally Determined Contributions report before the Paris climate negotiations last year. Now it is necessary to consider incorporating this reduction commitment into the next wave of development. Synergising low-carbon and investment policies, the new generation of “green” Free Economic Pilot Zones would provide an ambitious path for long-term sustainable economic development.
Yang Chung-han is a doctoral candidate researching international environmental law at the University of Cambridge and a member of the Taipei Bar Association.
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