Taiwan is underperforming as a destination for foreign investment, lagging behind traditional and emerging competitors in the region chiefly due to difficult access, the American Chamber of Commerce (AmCham) in Taipei said yesterday.
The trade group made the statement and a string of policy recommendations at a press conference to announce its annual white paper titled “Taiwan at a Crossroads.”
AmCham said the coming year will be crucial in determining Taiwan’s economic future and warned that the nation risks losing out to its regional competitors if economic reform and liberalization are not enacted swiftly.
Approved foreign direct investment in Taiwan was US$5.56 billion last year, higher than the US$3.81 billion in 2010 and US$4.96 billion in 2011, but much lower than that of Thailand, Vietnam, Indonesia, Hong Kong and Singapore, AmCham chairman Alan Eusden said.
South Korea, with which Taiwan is most often compared, drew US$16.3 billion in foreign direct investment last year, Eusden said.
“The Ministry of Economic Affairs (MOEA) should thoroughly re-evaluate the foreign investment application approval process,” Eusden said, adding that government agencies should publish clear and comprehensive criteria for assessing investment proposals with specific timetables for regulatory decisions.
Taiwan scared away US$20 billion of foreign investment in June 2011 when it rejected private equity fund Orion Investment Co’s (遨睿投資) buyout of Yageo Corp (國巨), Taiwan’s biggest maker of passive components used in electronics, said William Bryson, head of AmCham’s private equity committee.
The Investment Commission withheld approval due to concerns over the financial soundness and transparency of the deal, ending hopes of 10 to 11 other investment deals valued at US$2 million each, Bryson said.
Attractiveness and ease of investment sit atop the list of concerns of prospective investors and the latter appears the biggest obstacle, Bryson said.
“Although Taiwan scores well on international competitiveness surveys, those rankings do not translate into high levels of inbound investment,” he said.
Taiwan embarrassingly ranks second to last among 17 Asian countries in attracting private equity fund investment, behind Sri Lanka and ahead only of Pakistan, AmCham’s white paper says.
AmCham urged President Ma Ying-jeou (馬英九), now well into his second term, to make a greater effort to revitalize the economy as time is running out to establish his legacy, the paper says.
“Actions taken in the next 12 months before the ‘lame duck’ status begins to hamper progress will be decisive in shaping the Ma administration’s future place in history,” it says.
Eusden pressed Ma to mobilize a national campaign, with trade liberalization and joining the Trans-Pacific Partnership as overriding objectives, adding that only urgent action can propel Taiwan’s economy out of the doldrums.
Taiwan’s wages have stagnated, consumer confidence is weak and young people increasingly go to China to find better, higher-paying jobs, the AmCham report says.
The trade group does not have an opinion on the planned nuclear referendum, but suggests policymakers make sure there is sufficient energy to meet the demands of all sectors of the economy.
RSS