The global economy has not been doing well in recent years, and this has had a major impact on Taiwan’s economy. President Ma Ying-jeou’s (馬英九) administration seems to have pinned all its hopes of an economic recovery on the signing of a service trade agreement with China. However, the agreement is only one possible solution; there are many other industries, such as biotechnology, pharmaceuticals and cloud technology, that offer Taiwan a good opportunity for future economic development.
The government has been initiating a series of policies to develop the biotech industry since 1982. In addition to providing long-term funding for fundamental research at Academia Sinica, the National Institute of Health and several universities, the government has in recent years also looked at the Bayh-Dole Act, or the Patent and Trademark Law Amendments Act, and amended relevant legislation in order to improve innovation and research and development (R&D) capabilities, and Taiwan’s drug R&D environment is taking shape. In September, the head of the US$800 million Novartis Venture Funds came to Taiwan looking for investment targets. JHL Biotech has set up headquarters in Hsinchu, and other companies are also in the process of setting up business operations and factories in Taiwan.
In addition, Taiwan recently signed a pharmaceutical cooperation agreement with Japan. As personnel and capital are flowing to Taiwan, it is clear that the country is becoming the most attractive biotech market in Asia. The Chinese government has clearly taken note of this business opportunity and its potential, and it is eager to use the service trade agreement to attract Taiwanese biotech and healthcare personnel. The government would be well advised not to discard this asset by handing over something that we have worked on for so long to someone else.
China also wants to use the agreement to attract Taiwanese software engineers, which could affect the development of Taiwan’s cloud technology industry. If Taiwan’s many small and medium-sized enterprises could take advantage of the information services provided by cloud technology, they will not have to invest heavily in information-technology maintenance, allowing them to focus their limited manpower and funds on innovation and research and development. The government should take advantage of the new opportunity offered by cloud computing to promote the development of the software services and digital content industries and end the nation’s overreliance on electronics hardware exports.
The development of cloud computing has not only brought major changes to information and communications technology, other sectors can also use this to bring about industrial transformation and upgrading. If appropriate regional development policies are further integrated, it would be possible to improve the constantly deteriorating imbalance between northern and southern Taiwan, and doing so would have a far-reaching and positive impact on national economic development.
To sum up, the current version of the cross-strait service trade agreement is fraught with problems, such as the inability to guarantee national security and protect disadvantaged industries. The government should restart talks to protect Taiwanese interests, as well as step up efforts to develop the biotech, pharmaceuticals and software industries. In doing so, it should use systemic and legal innovation and set up a platform for exchanges between industry and academia, in addition to seeking cooperation with developed countries to promote diverse economic development, create more job opportunities and increase tax revenue.
Jang Show-ling is chairwoman of National Taiwan University’s economics department.
Translated by Perry Svensson