Wed, Mar 14, 2018 - Page 8 News List

The Liberty Times Editorial: Taiwan’s economy needs relaunch

The American Chamber of Commerce in Taipei (AmCham) on Wednesday last week published its 2018 AmCham Taipei Business Climate Survey. Although more than half of the AmCham members who responded to the survey said they were confident about Taiwan’s economic growth for this year and the next three years, they were critical, as they have been in the past, about Taiwan’s investment environment.

Nearly 50 percent of the respondents said that the Labor Standards Act (勞基法) is still not flexible enough, and about 90 percent agreed that the terms of the act should be relaxed to allow managers and professionals to work under a responsibility system instead of being restricted by rigid clauses regarding working hours.

Nearly 85 percent said they are worried that there might not be enough electricity generation in the future.

Nearly 60 percent said that the government does not pay sufficient attention to the needs of business when setting relevant policies. Asked about taxation issues, 56 percent of respondents said that the individual income tax rate is too high, which they say is not favorable to doing business in Taiwan and more than 70 percent said that tax deductions are more important than government subsidies.

AmCham’s annual reports nearly always raise questions about Taiwan’s investment environment. Last year’s report drew much attention for its strong criticism of the Labor Standards Act. This year’s report is still critical of the act, but the criticisms are a little milder.

The survey results are good and bad news. It is encouraging that the government has been paying attention to improving Taiwan’s investment environment and promoting businesses to make long-term commitments and has been actively seeking solutions.

Of concern are the main reasons for Taiwan’s economic stagnation in recent years: insufficient investment and a lack of confidence, along with a pervasive sentiment that is not supportive of businesses.

Other problems include excessively strict environmental protection laws and overcautious tax reforms, while a lot of legal regulations do not meet the needs of start-ups.

Instead of taking big steps forward, reforms tend to get bogged down in arguments that waste a lot of time and energy. There is so much dithering that those concerned feel complacent about even the smallest of achievements. While all this is going on, real incomes keep falling and Taiwan’s economic development falls further behind.

To grasp the true state of Taiwan’s economy and understand its development and difficulties, it is not enough to compare Taiwan today with what it once was. It should be compared with other countries in the region.

Taiwan created an economic miracle and became a model for developing countries, but now, sad to say, its economic conditions are gradually deteriorating.

There was a time when Taiwan enjoyed double-digit annual growth rates and was No. 1 among the “four Asian Tigers,” but in recent years maintaining just 2 percent growth has become a cause for celebration and a political achievement worth boasting about.

Taiwan’s growth rate lags behind a mature economy like the US. Sometimes receding and sometimes stagnating, the economy shows signs of early or even premature aging. Compared with the flourishing economies of other countries in the region, Taiwan’s economy, regrettably, is declining with each passing day.

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