Wed, May 21, 2003 - Page 1 News List

AmCham faults government for failing economy

THUMBS DOWN The business organization said in its annual White Paper that the government had rectified only three out of 50 problems cited in last year's paper

By Bill Heaney  /  STAFF REPORTER

Taiwan's economic health has suffered over the past 12 months due the government's inability to push through reforms, the American Chamber of Commerce in Taipei's (AmCham) annual report on the local business environment revealed yesterday.

"Taiwan's economic health could use some good doctoring," AmCham president Gus Sorenson said yesterday.

In its annual Taiwan White Paper, AmCham said the government has little to show for last year. With only three of 50 recommendations on last year's White Paper resolved in the last 12 months, the chamber complained yesterday of "an intensified sense of frustration and disappointment."

Sorenson emphasized that the goal of the report is to halt the nation's "slide into economic self-marginalization."

The numbers speak for themselves. Foreign direct investment in Taiwan plummeted by 36 percent to US$3.27 billion last year, a six-year low.

The government should instead stop interfering in business and focus on growth.

"That effort will be helped if the government would spend less time on economic micromanaging and more time on facilitating business development," Sorenson said.

A change of mind-set is needed in the government, the report said.

"Facilitating development of an international business environment ? will entail replacing the residual regulatory mindset of `illegal unless approved' with `legal unless prohibited.'"

When the chamber began compiling the Taiwan White Paper in 1996, the report was considered a shopping list of what American businesses needed to be more profitable, Sorenson said, but the focus of the paper has shifted.

"These days our focus and concern is on Taiwan's overall attractiveness and competitiveness," he said.

The six areas AmCham highlighted in this year's Taiwan White Paper yesterday virtually mirror last year's report. Restrictive work-permit regulations continue to obstruct firms' freedom to hire the staff they require; a lack of transparency in the health-care system is scaring off international research-based pharmaceutical firms; essential financial reforms are still incomplete; enforcement and punishment of intellectual property violators remains ineffective; the government turns a blind eye to under-the-table payments to community leaders in districts near chemical plants; and an unfair bidding procedure for infrastructure projects prevents international companies from bringing their expertise to the nation.

Even the basics appear to be in question.

"The island still does not have reliable, high-quality power and water," the report said.

"Waste and sewage treatment is far from international standards."

The protection of intellectual property rights (IPR) has also been a major sticking point for foreign businesses working here for many years. Now the problem has been brought much closer to home for Taiwan's leaders.

"Taiwan wants to become a world-class knowledge-based society, but one of the building blocks for that achievement is world-class IPR protection," Sorenson said.

"Unfortunately, Taiwan's IPR environment is getting worse, in large part because of its insufficient enforcement and inadequate punishment for IPR violators," he said.

"A poor IPR record has a direct impact on investment. How can Taiwan attract foreign investment in biotechnology, pharmaceuticals, nanotechnology, new materials and other high-tech fields if its IPR environment is weak?" he said.

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