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.
The report also highlights the practice of "community payments" to settle disputes between chemical plants and residents living close to them as "an insidious form of `black gold.'"
The government should collect pollution taxes and use the revenues to pay for community projects as is the case in the US, Europe and Japan, it said.
The practice of community payments is "a third-world practice in this country aspiring to developed country status, and amounts to little more than indirect vote-buying on the part of government officials who engage in or condone it," the report said.
Delivery services are hindered by the lack of parking spaces in Taipei, which has the lowest ratio of designated parking spaces to vehicles among major cities of the world.
Last year this resulted in parking fines of NT$10 million for express delivery companies, and failed deliveries as trucks were towed.
"FedEx has around 250 vehicles operating in Taiwan, most of them in Taipei, and we have a financial impact from these fines," said Jimmy Chen (
"There are designated spaces reserved for deliveries in commercial buildings, but there is a problem with enforcement," he said.
Chen said that, following the chamber's recommendations, the city government had converted over 500 yellow lines to blue line commercial loading areas.
"The city government needs to do more. Five hundred parking spaces in a city the size of Taipei is a drop in the ocean," he said.
Sorenson acknowledged that the nation is currently focused on the battle against SARS, but he hoped to press forward with discussions with the government soon.
"We believe AmCham's agenda is not much different from Taiwan's economic plan," Sorenson said.
"Once SARS has been conquered, we hope we can spend more time looking at the economic health of Taiwan," he said.
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