Liberty Times (LT): How should the government implement its innovative national defense and Industry 4.0 policies?
Premier Lin Chuan (林全): The national defense industry might not be a large tree, but it is a very important one. National defense industries and the industrial sector are complementary in nature, and Taiwan has a solid foundation in both.
With increased globalization efforts on Taiwan’s part, the government is also considering how to sell the products of these industries to other nations. The current obstacle to this is the lack of some key techniques or technology, and to obtain such technology or techniques would require investment into research and development and considerable manpower. This is not something small companies are capable of.
Taiwan has many excellent companies, but they are all rather small-scale, which draws out the time taken to achieve breakthroughs in certain technologies and techniques. Sometimes the size of the company outright prohibits the possibility of obtaining such breakthroughs.
If the government can usher in a closer synchronization of production and research, our companies would have a greater chance of achieving breakthroughs in technology. This is the basis for the advancement of the industrial sector and the national defense industry.
Taiwan has not been able to bring production and research close enough, which is evident in the disconnect between corporations and the research conducted at Academia Sinica, the National Chung-shan Institute of Science and Technology, the Industrial Technology Research Institute and various other schools.
Regardless of whether it conducted at public or private institutions, most research is scattered and self-contained; they are not given a clear direction. Most research even ends up being purely academic, while other researchers have even started conducting research for other countries.
We hope to find more commercial value for our research, and in order to do so we must invest more resources.
While I agree with the importance of academic research, it is the government’s hope that some resources should be shifted to commercial research. We are hoping to combine the two by making available public funds earmarked for technology.
Should the government feel that there are some fields, or some key technologies, that need a breakthrough, or that a particular field is important; the government will be able to allot the necessary fund from the technology budget for a fiscal year toward research into that field or technology. At the same time, the government will mandate that the research proposal make clear its commercial value.
With regards to manufacturing locally developed aircraft and ships, Taiwan is already able to manufacture the Indigenous Defense Fighter (IDF).
While we have to collaborate with other nations to manufacture some components of the IDF, recent reports show that we are 90 percent sure that we could, for the most part, domestically manufacture high-end trainer aircraft.
These plans to domestically manufacture aircraft will create commercial values for mechanical engineering and production of basic materials, which would become known globally, boosting the sale of Taiwanese products in global markets, and allowing Taiwan a foothold in the international market.
In addition, if Taiwan proves that it can manufacture aircraft, and such a capability is recognized by other nations, it would provide Taiwan with a competitive edge when collaborating with other nations.
Prior to the manufacture of the Tuo Jiang-class corvette, the Lung Teh Shipbuilding Co, the shipyard building the ship, was not known for producing combat surface ships. The success of the corvette has drawn the attention and interest of other nations, proving that the shipyard — and in extension the Taiwanese shipbuilding industry as a whole — is capable of competing with other nations.
However, the government must take the lead in fostering such progress, or invest and help individuals to achieve breakthroughs in certain technologies, before it can claim to be competitive on the international stage.
Investment in such industries is never a waste, as the added value is usually quite high. When breakthroughs are achieved in certain technologies, industry can make of use such technologies in either mechanical engineering or basic industry, thus creating more commercial value.
LT: What is the government’s policy for extant industries of a certain scale and size?
Lin: The government’s core focus is the five innovative industries, along with a new agricultural paradigm and the circular economy. Policies are intended to bolster existing industries.
There is much that can be done to improve agriculture, and farmers could add more value to their products. To achieve this, we must change the fundamental structure of the agricultural system, including making the Water Resource Agency a private entity and changing farmers’ subsidies to land subsidies.
Apart from agriculture, there are other traditional industries, such as the petrochemical industry, that are constantly criticized.
The petrochemical industry is at a loss following the cancelation of the Kuokuang PetroChemical Plant project and the retirement of the fifth naphtha cracker.
However, the government has indicated which direction the nation’s petrochemical policies are headed.
Therefore, the government must map out the industry’s future, but before it can do that, the government must consider whether the industry can survive in Taiwan due to the severity of the pollution it produces. Without a solution to such pollution, the petrochemical industry will be resisted everywhere.
However, if we look at Japan or Europe, we can see that not only has the industry remained, but its added value is quite high, and through our observations, we understand that it has managed to do this by finding ways to coexist with local communities and limits the pollution it emits to the lowest possible levels. This is our goal for the future.
The government did not try to stem pollution in the past because of the difficulty involved, but now we are serious about trying to limit pollution from any industry to its absolute lowest, and to recycle waste to redeem partial commercial value.
Once other industries have transitioned to the point where they do not produce pollution, we can start changing the petrochemical industry as well. Although such changes might mean that Taiwan could no longer mass-produce, it would mean that we would still survive.
The nation’s economic stagnation over the past 20 years is because we have not arrived at the aforementioned levels of industrial evolution. Once we have made such changes, new investments would flow in and provide the basis for growth in our economy.
In the end, whether Taiwan is able to achieve such results, or attract investment — foreign or domestic — is dependent on whether highly educated people are willing to stay in Taiwan.
Owing to the difficulties that successive governments have not attempted to surmount, we have been losing investors little by little over the years. This is the fundamental problem that needs to be addressed, and no amount of government expenditure or quantitative easing policies can solve the issue.
Translated by staff writers Jake Chung and William Hetherington
This is part II of a two-part interview. Part 1 was published yesterday.
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