After the chaos created by the events of last month, it now seems President Ma Ying-jeou’s (馬英九) mother is the only person with confidence left in his government. Ma has recently been talking about “principles.” He is, of course, playing politics, but none of this can cover up his incompetence. What it has done is to make people overseas see Taiwan in a much bleaker light.
The Asian Development Bank recently slashed its original projections for economic growth in Taiwan for this year. Given the tough economic challenges Taiwan faces both domestically and externally, we should really think long and hard about time squandered on political battles.
According to the bank’s Asian Development Outlook 2013 Update, Taiwan came last of the four Asian tiger economies in economic growth, with the Update cutting economic growth forecast from 3.5 percent to 2.3 percent, even more pessimistic than the 2.31 percent projected by the Directorate-General of Budget, Accounting and Statistics (DGBAS) in August. Nor did the bank expect good things for Taiwan’s economy next year, forecasting that economic growth would only be 3.3 percent.
Some of this pessimism is linked to a poor external economic environment, as the growth of Taiwan’s export-
oriented economy depends greatly on the pace and strength of the world’s largest economies. If the Chinese and Indian economies slow down, and if the US pulls back on quantitative easing, causing an outflow of foreign capital, things will get even worse.
However, the ADB’s report also clearly stated the main reason Taiwan’s economy is unable to recover is poor governance, so the Ma administration’s incompetence has now once again gained international recognition, for less than admirable reasons. The Cabinet in May rolled out a package of 13 measures with the hope of increasing consumer spending and bolstering domestic investment. However, judging from data on private consumption and investment, the effects will be limited.
This harsh external economic environment, coupled with a lack of personal consumption and a lack of willingness to invest have directly impacted Taiwan’s industries and the livelihoods of more than 8 million workers. As a result, consumers are not as willing to consume as before and these factors have seen the economy suffer.
People have been unwilling to invest in businesses, preferring to put their money into real-estate speculation, increasing housing prices. People struggle with salaries at a 16-year low and increasing costs of living.
China is already promoting a pilot for economic and political reforms in Qianhai, a development zone in Shenzhen. The China (Shanghai) Pilot Free Trade Zone also opened at the end of last month. China is adjusting its domestic political, economic and industrial infrastructure to increase its overall national strength.
Now, even Hong Kong is concerned that it will lose the advantages it has in its financial industry and skills-intensive service industries.
Taiwan not only lacks clear industrial economic development policies, but the “free economic pilot zones” the government has been talking about for years is stalled. The Ma administration’s crafty dealings over the cross-strait service trade agreement has meant that regardless of the merits of the agreement, it has become mired in the legislature.
Taiwan’s dreams of becoming a major logistics and financial hub in the Asia-Pacific region will be doomed with Ma’s plans to boost economic growth. It is pretty safe to say that by the time Ma leaves office, Taiwan will be in a rut.
Hong Chi-chang is a former Democratic Progressive Party legislator and a former chairman of the Straits Exchange Foundation.
Translated by Drew Cameron