Wed, Sep 29, 2004 - Page 2 News List

`Go south' strategy threatened

PROMOTION NEEDED With more than 65 percent of investment going to China in the first quarter, the strategy to diversify to Southeast Asia doesn't seem to be working

By Melody Chen  /  STAFF REPORTER

The outstanding work performance of Vietnamese women such as those above has been highly praised by Taiwanese businesspeople currently operating in the country. Taiwanese investment to Southeast Asian countries such as Vietnam has not increased as much as was hoped with the ``go south'' strategy, with the lion's share of the nation's investment still headed to China.


Two years after President Chen Shui-bian (陳水扁) reintroduced the government's "go south" policy, many think the strategy lies in tatters.

The policy, first announced in 1994, aims to lessen Taiwan's economic dependence on China by encouraging the country's businessmen to invest in Southeast Asian countries.

In July 2002, Chen urged people not to "hold any illusions about China" and said Taiwan's "go south" policy would be further highlighted.

"With the government's backing, Taiwanese enterprises should look to Southeast Asia's potential instead of seeing China as the only market in the world," he said at the time.

But last year, Taiwan's overall investment in seven ASEAN countries -- Thailand, Malaysia, the Philippines, Indonesia, Singapore, Vietnam and Cambodia -- reached only US$937 million, according to Ministry of Economic Affairs (MOEA) statistics.

During the same period, the nation's investment in China amounted to US$7.7 billion, or 53.66 percent of total foreign investment.

Moreover, for the first quarter of this year, Taiwan's investment in China climbed to 67.43 percent of its total foreign investment, the ministry's Industrial Development and Investment Center's numbers show.

According to the center's statistics, investment in the seven ASEAN economies peaked between 1994 and 1997. Taiwan poured more than US$4 billion each year into the region during the period.

From 1998 to 2001, investment dropped and fluctuated between US$1 billion and US$2 billion per year.

Two year struggle

When Chen reiterated the government's determination to continue the "go south" policy in 2002, Taiwan's investment in the region had plummeted to US$692 million -- the lowest point since 1994.

Still, in the APEC summit in Mexico in October 2002, the Sultan of Brunei and Philippine President Gloria Macapagal Arroyo welcomed Taiwan's "go south" policy.

They expressed their appreciation for Taiwan's initiative to Lee Yuan-tseh (李遠哲), the nation's representative at the meeting.

At the end of that year, former foreign minister Eugene Chien (簡又新) was confronted in the legislature with a report by the Council for Economic Planning and Development, which said Taiwan's investment in Southeast Asia had fallen dramatically.

Chien, however, insisted the policy had to go on.

"Southeast Asian countries are our best neighbors. We'll suffer a great loss if we fail to conduct close economic exchanges with them," he said in defense of the policy.

Now businessmen are not so sure the policy is viable.

"During my recent trip to Malaysia, a Taiwanese businessman working there asked me whether the government is still seriously pursuing the `go south' policy," Tsai Horng-ming (蔡宏明), deputy general secretary of the Chinese National Federation of Industries, said earlier this week.

Limited impact

The policy is not a complete failure, but its impact has been limited, according to Tsai.

According to the MOEA's Bureau of Foreign Trade, bilateral trade volume between Taiwan and ASEAN reached US$34.88 billion last year, a 112.2 percent growth compared with trade volume in 1993.

Tsai, however, said few businessmen personally felt they had benefited from the policy.

"Businesspeople do not benefit much from the policy. We don't have enough information about Southeast Asia and are unaware of market opportunities there," he said.

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