The US' top representative to Taiwan warned yesterday the nation risks losing its economic prowess if it does not start viewing China as an economic opportunity, rather than a threat.
"If Taiwan continues to view the mainland through the prism of economic threat, it is in danger of isolating itself and getting cut out of tomorrow's deals," Douglas Paal, director of American Institute in Taiwan (AIT) told the American Chamber of Commerce yesterday.
Facing this new economic reality -- a bitter pill for many Taiwanese to swallow -- cannot be ignored, Paal said.
The pressures of the marketplace are forcing international companies to seek opportunities in China, Hong Kong and Taiwan, according to each place's particular talents, he said.
"This is a new reality that Taiwan, with its maturing economy, must accept ... to ignore this fact of life or adopt policies to try to counter it will inevitably lead to self-marginalization."
Building barriers to doing business in China will only scare off much needed foreign cash, he said.
"Playing defense against the mainland's rapidly emerging capitalist economy may well lessen the appeal of Taiwan as an investment destination," he said.
"The challenge ahead is to create the most attractive environment possible to lure foreign investment."
Bureaucrats should therefore adopt a more liberalized approach to the activities of foreign inves-tors, Paal stressed, saying that such a plan would "go far in encouraging more American companies to invest here and bring with them their best talents and latest products and services to Taiwan."
To stay ahead of increasingly competitive Asian neighbors like Singapore and South Korea, Paal also suggested Taiwan further unleash its entrepreneurial forces.
"The secret of Taiwan's economic transition in the past [and the future will be to] ... harness the talents of its people and propel them forward, in part by adopting new economic policies and approaches that keep the island one step ahead of change."
He also pressed the government to steer clear of past mistakes and formulate "economic policies that will ultimately unshackle entrepreneurial energy and strengthen all business sectors, from energy to high-tech to financial services."
But according to Paal, it is not enough to "merely pass laws and create new institutions. The decisions on implementation and the operation of these new independent bodies should be informed by the spirit of the WTO."
Citing intellectual property rights (IPR) as an example, Paal said the issue is the "most important trade agenda item" between the US and Taiwan.
"Taiwan should enact effective legislation, enforce its laws fully, and investigate and prosecute pirates," Paal said. Left unchecked, the IPR problems will "certainly hobble Taiwan's future economic development," he said.
Backing down on its IPR commitment would ultimately come back to haunt Taiwan's stars -- semiconductors, flat screens and the nanotech and biotech industries -- all of which require comprehensive IPR protection, he said.
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