Lee Yuan-tseh says political stability vital

The government must maintain domestic political stability and craft sound financial and economic policies if it wants to revitalize the sagging Taiwan economy, Academia Sinica President Lee Yuan-tseh (李遠哲) warned yesterday.

Quoting a report released by Academia Sinica's Institute of Economics (IOE), Lee said Taiwan's economy will apparently take a turn for the worse next year.

"At this crucial moment, the government should do its utmost to maintain domestic political stability and work out the right economic and financial policies to regain public confidence in its competence," Lee said, adding: "If the public loses confidence, it will be very difficult for us to resume our previous economic boom."

The IOE report forecasted that Taiwan's economic growth rate would decline from this year's estimated 6.23 percent to a mere 5.21 percent in 2001 and that the private consumption growth rate would also drop to 4.63 percent from this year's estimated 5.76 percent.

Despite the IOE's pessimistic forecast, Lee said he remains confident in Taiwan's information-technology industry, citing that 15 new 12-inch wafer production facilities are being constructed in the Tainan Science-based Industrial Park in southern Taiwan, which would jointly increase Taiwan's integrated circuit production capacity by more than 10 percent.

Lee further said that as the Taiwan economy has shown apparent signs of a slowdown in recent months, now is not the right time to push for a drastic cut in working hours.

He was commenting on the opposition parties' insistence on implementing an 84 hours per fortnight workweek scheme from the beginning of next year.

Noting that shortening work hours will affect productivity, Lee said the opposition-proposed new workweek system would aggravate Taiwan's economic woes as local labor productivity cannot quickly upgrade to offset the decrease in work hours. In his view, Lee said it is more reasonable to implement a 44-hour workweek system proposed by the DPP-led government.

Lee further said he thinks that Taiwan need not worry too much about China-bound investments by its companies. "So long as our government and individual local companies work out effective management systems, China-bound investments will not necessarily lead to Taiwan's industrial hollowing out," he said.

With economic globalization becoming the prevailing trend, Lee said, Taiwanese companies should catch up and stay competitive in the global market.

Since President Chen Shui-bian (陳水扁), a DPP stalwart, assumed office in May, Taiwan's stock market has plunged drastically while the unemployment rate has skyrocketed. Chen's approval rating has also dropped to a new low in recent weeks.

Commenting on this phenomenon, Lee said Chen's minority administration has not operated smoothly partly because of continued inter-party political wrangling.

In fact, Lee said, the new DPP government has endeavored over the past seven months to shed the bad practices left by the previous government.

Nevertheless, Lee said, there is still ample room for the Chen administration to improve, particularly its inexperience in handling many politically sensitive issues. "And it takes time for the new government to reform systems and improve its operational efficiency," he said, adding that the public and private sectors should make concerted efforts to create a better living and business climate.