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.
PHOTO:SEAN CHAO, TAIPEI TIMES
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.
PHOTO: CHIANG YING-YING, TAIPEI TIMES
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.
Because of the SARS outbreak in China, it has prompted investors to re-evaluate their plans of operating their businesses there.
What I meant when I mentioned encouraging the return of Taiwanese businesspeople in China in view of the SARS outbreak, is that the government should come up with measures to attract Taiwanese investors who are in the process of moving to China but have not yet done so due to the SARS outbreak.
The point here therefore is not calling for the return of Taiwanese investors from China, but how the government should seize the chance to improve the nation's investment environment to attract investors.
TT: Chiang has suggested that the government should seize this opportunity to encourage the return of Taiwanese businesspeople in China. What's your opinion of this?
Siew: I think Chiang's idea, in principle, is correct for in recent years, especially in these past three years, there have been excessive business exchanges with China with tens of thousands of Taiwanese investors flocking there.
I think the SARS situation provides an opportunity for people to cool down a little and reflect on their business strategy in China.
However, I personally believe that businesspeople always think in a business-like manner, meaning, businesspeople will always make their investment where they see they can make the most profit and earn the most revenue. That attitude is an unchanging rule of economics.
China came in for fierce criticism for its sluggish initial response to the illness.
If China can't learn from its SARS experience the importance of transparent information to investors and continues to underscore the importance of such things as government transparency, then I think Taiwanese businesspeople will be smart enough to re-assess their across-the-board investment risk from a global perspective and make the necessary changes in terms of the where and how.
If Taiwan works to upgrade and improve its investment environment, then I believe Taiwanese investors would naturally be drawn back to the country if they see that the investment environment affords them good profit and gain prospects.
TT: What are the measures the government should consider to upgrade the investment environment?
Chiang: In the interest of improving the investment environment, the government can consider relaxing its measures governing land, labor, investment and the like.
The government can consider setting up more one-stop services like that of a technology industrial park, where all the manufacturing procedures can be completed under one roof with the necessary authorities.
This would negate lengthy administrative procedures one would otherwise have to go through with local governments.
Siew: Land prices is one thing the government can consider when thinking of improving the nation's investment environment. The government can readjust land prices to make it more attractive to investors.
Labor issues is another thing the government can work on. As we've learned from experience, when enhancing the standard of labor production, it in return can help lowering the prime cost and therefore become attractive to investors.
Our investment policy should also enhance skills in the system.
And most important is that the government should offer some incentives, such as tax exemption and rent reduction.
TT: President Chen Shui-bian (
Siew: I think the service is going to helpful. Why? Because it would be very convenient for Taiwanese businesspeople who can then ship their finished goods from China to the US via Taiwan, which is more time-efficient.
The service will also assist Taiwan in achieving its goal of becoming an "Asian Pacific Logistic Center".
Chiang: I think the service is feasible. An exchange of people might be a more complex issue, however, as this service pertains only to cargo, it will pose less of a national security concern than some people might have thought.
Now we already have cargo transportation to China from Kaohsiung via Xiamen. To offer a direct cross-strait cargo transportation service would act as an attractive element in luring Taiwanese as well as foreign investors.
TT: Do you think the SARS crisis could serve as a stepping stone in ameliorating cross-strait relations?
Siew: The SARS outbreak highlights the importance of regional cooperation.
I think the outbreak of SARS therefore can be an opportunity for both sides to come together in the fight against the disease. Of course, cross-strait cooperation can't be just our own wishful thinking. It needs cooperation from the other party as well.
So if both sides of the Strait can come to the same understanding in working together combating the spread of the disease, I think the SARS crisis can very well be like a stepping stone to improving cross-strait relations.
But again, it depends on both sides' sincerity to cooperate.
Chiang: I don't think so, because long before the outbreak of SARS, there were no cross-strait contacts due to political constraints.
Now with the outbreak of SARS, contacts across the Strait will be further limited because people fear the disease.
The core issue to resolve the cross-strait deadlock does not depend on the SARS epidemic but on political policies.
As long as political issues are not resolved, there won't be a channel for both sides to sit down and negotiate.
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