The “New Southbound Policy” is important to the government in terms of political, economic and foreign affairs issues. It is not the first time the government has pushed such a policy: In 1993, it announced a list of “Southbound Policy talking points,” which was followed by the first Guideline on Enhancing Economic and Trade Relations with Southeast Asia — which was in place between 1994 and 1996.
In 1997, an expanded Guideline on Enhancing Economic and Trade Relations with Southeast Asia, Australia and New Zealand was introduced, which remained in place until late 2002. That year, then-president Chen Shui-bian (陳水扁) announced that former president Lee Teng-hui’s (李登輝) “go south” policy would be reinstated to improve support and assistance for investments in Southeast Asia, and a proactive effort would be made to sign free-trade agreements with countries in the region.
President Tsai Ing-wen (蔡英文) is again pushing a southbound policy, this time “centered on people,” to bolster relations with ASEAN and India.
The new policy is designed to avoid Taiwan becoming overly dependent on a single market, and to find new external markets that can offer business opportunities for economic and trade cooperation. However, strategy formulation must take place within the context of Taiwan’s future overall economic transformation.
A broader strategy covering the transformation of the nation’s overall economic development model must take a different approach from previous policies, which focused on sourcing lower-cost equipment manufacturers.
India and the Southeast Asian countries are faring well economically, and they now provide a huge and growing market. One area the New Southbound Policy must consider is how it can be deployed strategically to bring overall momentum to Taiwan’s economic growth.
When trying to gain a deeper understanding of the markets targeted by this policy, the past approach of Taiwanese businesspeople going it alone is no longer appropriate; a collective approach is now required.
This means solving major problems, such as government mechanisms and policies that were aimed at assisting businesses, but were neither as wide-ranging nor as in-depth as those formulated by China, Japan or South Korea.
In addition, understanding market needs requires close attention to local markets and maintaining sincere relationships with local groups, rather than just seeing the end user as a business target. It is thus imperative that Taiwanese abandon their prejudices against “cheap foreign labor,” a product of the past original-equipment manufacturer development model.
To succeed, the government is using concrete policy tools. One example of this is the Taipei Railway Station and its surroundings, such as the 228 Peace Memorial Park, which have become a well-known gathering place for Muslims during Eid al-Fitr, the festival that marks the end of Ramadan.
Taiwan is home to a maturing second generation of immigrants, and these people are a social resource that could assist in the consolidation of relations with Southeast Asia.
The government could take advantage of the diversity provided by immigrants and the nation’s various ethnic groups, combined with studies of overseas markets’ needs, to encourage businesses to invest in the development of new services and products aimed at Southeast Asian markets.
By doing so, it could initiate an industrial renewal based on demand and at the same time nurture diverse talent required to support the New Southbound Policy.
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