Mon, May 12, 2003 - Page 2 News List

KMT officials say SARS can enhance local investment

Vincent Siew (蕭萬長) and Chiang Ping-kun (江丙坤) are both vice chairmen of the KMT, with expertise in finance and economic matters. Siew is director of the Chung-Hua Institute for Economic Research and chairman of the Taiwan Cross-Strait Common Market Foundation, while Chiang is deputy speaker of the Legislative Yuan. Siew and Chiang recently sat down in separate interviews with `Taipei Times' staff reporter Sandy Huang to share their assessments of the impact of SARS on cross-strait economics. While both men stressed the importance of the government upgrading and improving Taiwan's investment environment if it wishes to lure Taiwanese investors back from China, they disagreed on whether the SARS crisis would deliver the impetus to resolve the deadlock between the two sides of the Taiwan Strait.

By Sandy Huang  /  STAFF REPORTER

Chiang Ping-kun is confident that a cross-strait cargo transportation service is feasible.

PHOTO:SEAN CHAO, TAIPEI TIMES

Taipei Times: In view of the SARS outbreak in China, how would you assess its impact on cross-strait relations in terms of trade and economics?

Siew: To speak from a short-term perspective, the economy would of course be affected by the outbreak of the disease. But how it would affect the economy in a long-run would depend on how the SARS situation develops.

Health experts had said that SARS is mainly spread through droplets of saliva, so the best prevention tactic is to reduce contact with people.

In other words, since players in the service sector such as hotels, airlines, travel agencies, retailers, entertainment centers and the like are the ones that have the most contact with people, these are the sectors that have been most affected by the SARS epidemic.

For instance the number of travelers on the Taiwan-Hong Kong route in the past has been in the region of 5,000 per day, but the number of passengers has fallen dramatically since the SARS outbreak. And the hotels, airlines and retailers already face slumping sales.

Even though most of the business operated by Taiwanese investors in China are in the production sector, they have also been affected to a certain degree since personal contact is necessary in all forms of business.

As a result, we see that business trips are being postponed and that trade shows are being canceled to avoid frequent personal contact as much as possible.

The Economic Planning and Development Council noted that, in the short-term, SARS' impact on Taiwan's economy has yet to take clear shape although we've heard from some companies that less orders were placed for goods this month than last month, and so on.

We've here seen a trend of slowly declining orders for goods, due to the SARS outbreak.

If SARS situation continues to escalate, its effect on the economy would not be merely on the service sector, but our business trade sector would also feel the punch, and that is something we need to take strong precautions against.

However, if the SARS situation can be brought under control soon, I think it will have only a limited effect on Taiwan's foreign trade and economic growth.

Chiang: The most direct impact on our economy would be on our domestic consumption market.

On cross-strait economy, SARS has severely cut down on people traveling both locally and abroad, as they don't dare to travel for fear of SARS.

SARS affects China's production and consumer market as well. As a result, it prompts China to reduce its export activities, which in return affects Taiwan as well, as there will be a decline in its exports to China.

Another issue that arises is that people in the past often thought that the opening-up of direct links and allowing people from China to visit Taiwan for tourist purposes would help stimulate Taiwan's sluggish economy.

However, in view of the SARS outbreak in China, it would make it harder to lobby for these two measures as people now are more concerned about the spread of the disease.

TT: You've recently suggested that the government should seize this opportunity to encourage the return of Taiwanese businesspeople in China. Could you elaborate on this?

Chiang: The main reason that Taiwanese investors go abroad or to China is because this country offers no competition for them if they stay. For industries such as shoe and fabric manufactures, they see that they must move their plant abroad in order to stay competitive.

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