The government must pull back from micromanaging the economy or risk marginalizing Taiwan, as strong competition and changing market conditions threaten to outpace local businesses, according to the American Chamber of Commerce (AmCham) in Taipei.
"There's too much micromanaging in market forces. We've seen three decades of rather intense central planning by the government ... but in a mature economy that is counterproductive," Richard Vuylsteke, executive director of AmCham, told the Taipei Times yesterday.
"If that continues, if that kind of micromanagement continues, then it has a contradictory effect of marginalization," he added.
These themes of restructuring and deregulation form the basis of the general message in Amcham's 2002 White Paper which was published yesterday and details current business conditions in Taiwan.
Service sector growth
In this year's issue, the paper highlights the importance of quickly restructuring industry to focus more on the service sector.
Other issues include resolving problems regarding compliance with WTO commitments, stronger enforcement of intellectual property rights and loosening regulatory controls over the hiring of employees by private companies.
"In 2002, Taiwan finds itself on the cusp of the greatest change in its economic structure since the early 1970s, when it shifted from a predominantly agricultural society to manufacturing," says the paper.
"Taiwan's economic strength will increasingly depend upon cultivating world-class service industries, including transportation, telecommunications, accounting and legal services, software development, health and senior citizen care, and a full range of financial services," it says.
However, at this juncture setting a course that will expedite the realization of these goals is vital, according to the chamber, as in a matter of years Taiwan's boat will have missed a tide ridden by other countries around the region.
"It's very important for the government to demonstrate that it's chosen the right path, not another 5- or 6-year plan -- they don't have that kind of time anymore," said Vuylsteke, who added that there's a lot of really tough restructuring to do to deal with regulatory issues.
The theme is echoed by the paper. "Government needs to embrace change, not fight it."
"In this respect, the plan to re-engineer and downsize the government is a step in the right direction. The qualitative principle guiding this downsizing should be to facilitate business, not micro-manage it," the report says.
Hiring practices
Of particular concern to AmCham members who were surveyed for the white paper, was the hand of the government in hiring personnel and the importance of comprehensively broadening cross-strait economic ties.
"Accept economic reality. Cross-strait business will continue to expand," said the paper.
"Let businesses decide where to go; the government should make it easier for the businesses to operate. Those benefits will continue to flow back into the Taiwanese economy and Taiwan will continue climbing the economic scale," said Richard Henson, president of AmCham.
In permitting greater autonomy for business, AmCham urges the easing of hiring restrictions on foreign workers and professionals from across the Strait.
"The knowledge-based economy ... requires the free flow of people and that is the one thing where we encourage the government to be more welcoming and accepting to the ideas of others," said Henson.
"You've got to recognize that in a knowledge-based economy and software-based environment in the digital world ideas are carried around in people's heads. There is a big difference in the value that an individual can bring here versus the value that you produce in a factory somewhere," said Henson.
"Probably the biggest message we would like to push is that every single one of these issues on this priority list can be accomplished, should be accomplished this year and we can check every one of these things off," he said.
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