Liberty Times (LT): Will the government’s foreign trade policy, especially the “new southbound policy,” to be affected by developments in the US?
Tsai Ing-wen (蔡英文): A [US president-elect Donald] Trump administration brings great uncertainty to the liberalization of global trade and to the development of multilateral economic integration.
We plan to pay close attention to those developments and to respond effectively.
However, those developments will not affect the government’s policy to expand trade with other nations. Asia’s overall economy is highly reliant on global trade and it is a vast and common interest for all Asian nations.
As an “insular economy,” Taiwan is fundamentally dependent on trade; therefore we need to improve our economic links with neighboring Asian states and other nations in the region, put all our effort into developing bilateral ties and aggressively pursue national participation in regional economic cooperative relationships.
Of course, we wish to continue bolstering bilateral economic ties between Taiwan and the US through negotiations, and to build an enduring and mutually beneficial relationship.
Some say Trump’s isolationism will cause Asian nations to move closer into China’s orbit and lead to heavier resistance to the “new southbound policy.”
I reiterate: The “new southbound policy” was not intended to replace or check the cross-strait economic relationship, but as an adjustment to emerging economic developments in the Asia-Pacific region, to reconfigure Taiwan’s overall regional role and to gather momentum for growth.
With reference to the new political situation in the US, it reinforces the importance and necessity of my administration’s push for the “new southbound policy.”
We must reaffirm our dedication to building close economic links and developing a sense of common purpose with ASEAN, South Asian nations, New Zealand, Australia and other nations to mitigate economic uncertainties with collective action.
LT: Your administration has been in office for nearly six months now. As the president, how do you evaluate its performance?
Tsai: We are trying to address basic economic and societal issues, and this expends political capital, which is risky for politicians.
For example, a commercial entity that invests in research and development needs to keep investing capital into the effort and cannot expect to see benefits arriving any earlier than the successful conclusion of the process. Ultimately, someone has to do the work in order for anything to change.
At the conclusion of a successful presidential campaign, voters of course have high expectations of the elected candidate, but as the task of governance begins, there is a period of lower approval ratings.
Dealing with problems inherited from the previous administration is the hardest task for this government and confronting them might involve changing things at a basic level, such as making structural adjustments to the economy, which is a time-consuming task and it is difficult to see short-term results.
When building a house, laying the foundations is bound to be messy and noisy. However, to have a sturdy and comfortable house, the foundation must be laid with patience and care. This is where we are now.
Since 2012, we have engaged in a dialogue with society in search of solutions for national problems. We are confident in our choices; glitches and bumps down the road do not affect our confidence.
Our task in the past few months has not been limited to persuading the public; we must also familiarize the civil service with this administration’s guiding principles so that they can assume the role of the main instrument for policy implementation.
Over the past eight years, civil servants have become accustomed to the former administration’s thinking and habits, and it takes time to readjust.
However, we have also seen that the Department of Commerce director-general was speaking to the public about the need for far-reaching reforms of the Company Act (公司法), and other department heads have began promoting major policies. Those are signs that this administration has entered the implementation phase of its platform, and this is happening on the ground.
LT: In the past six months, the suitability of several political appointees has come under public scrutiny. Will there be a Cabinet reshuffle at some point to improve its performance?
Tsai: The administrative team works under a common set of guiding principles and a common plan. Each member is expected to march in formation, and so individuals are not of the highest importance.
One of the top jobs of a Cabinet appointee is to be the link between the administrative team and the civil service. Through them, we need to change the perception of our policy direction, hence cooperation is very important so the ideals of the administrative team can be implemented.
There is no fixed timetable for a Cabinet reshuffle. We [at the Presidential Office] interact with the Cabinet on a daily basis, and through the interactions, we know their abilities and work ethic better than the general public.
However, as a leader, it is a matter of course [for me] to constantly re-examine the team for gaps that should be filled and adjustments that should be made. In short, the team has many interim tasks. Our considerations are not based on individuals — we assess the team as a whole and make adjustments for specific tasks under specific circumstances.
LT: Most people hope the nation’s economy can be revived, but there has been no significant sign of that in the past six months. What are your thoughts?
Tsai: In recent years, the economy has fallen to anemic growth rates [as evidenced by government targets of] improving GDP growth by one or two percentage points.
Real wages have fallen to levels not seen since the turn of this century. This is the result of long-term and structural issues, especially the over-reliance on the export model of efficiency and low-cost original equipment manufacturing.
With a global slump in the volume of trade, and the rapid reorganization of supply chains, the economy’s international competitiveness and domestic dynamism fell far short of past levels, and a vicious circle of low-growth and low-wages emerged.
In these challenging conditions, we believe the effects of short-term stimuli would be limited in impact and duration.
Therefore, the core of the government’s response is to generate momentum for growth by crafting a new model of economic growth and facilitating the upgrade of the nation’s industries through innovation.
Addressing chronically stagnant growth on a fundamental level could lead to a simultaneous increase in employment and wages, as well as contribute to improved income distribution.
The government is pursuing the “five plus two” industrial innovation plan, the “expansion of investment” plan and the fund for transitioning enterprises; those measures are intended to concentrate finite [public] resources to spark innovation for businesses throughout Taiwan.
At the same time, we are implementing supplementary policies, such as amending the Company Act and the Fundamental Science and Technology Act (科學技術基本法), as well as improving cooperation between the academic and the private sectors, improving campus career opportunities and professional training, as well as dropping some restrictions on the residency requirements for skilled foreign workers.
Because of this, in past months the government has been busy assessing the economy to address its long-term structural and basic issues, as the legal foundations need to be laid at the Legislative Yuan before relevant policies can move forward.
Those are the prerequisites; it is through lawmaking that reform can be introduced to industries, and growth can be revitalized.
LT: Aside from long-term economic restructuring, does the government have any other clear revitalization plans?
Tsai: [My administration’s] project to promote innovation involves both long and short-term plans. The government has also been working to bolster industries dependent on domestic demand and the service industry.
We hope that through the development of those industries we can increase economic growth momentum and create more and better-quality job opportunities and alleviate the downturn caused by a drop in exports.
Especially worth noting is that the budget we have now was compiled by the previous administration, but the budget we formulated takes effect next year, which is when things are likely to speed up.
The projects that we are pursuing in progressive stages all have tremendous social importance and are associated with industries focused on quality of life, such as elderly care, childcare, social housing and urban improvement.
Elderly care, for example, is an industry that needs a large number of trained personnel. The government has already invested several hundred million New Taiwan dollars into an initial model care facility that will incorporate local resources, which will begin operations this month. Taking care of the system itself can spur the creation of jobs and the development of the industry.
Developing the elderly care industry would also mean developments in site administration, medical equipment, catering and transportation industries that serve the various needs associated with caring for elderly people.
Implementation of elderly care services relies on a tremendous amount of quality social workers, nurses, physical therapists, occupational therapists, nutritionists and other relevant professionals, which means a large number of employment opportunities.
Renovation of older buildings and social housing would also spur another type of market demand.
There are about 140,000 to 150,000 old buildings in Taiwan occupied by more than 1 million families. Many of these were built 30 or 40 years ago in the period of industrial development. About 100,000 of these are in the more densely populated Taipei and New Taipei cities with many others in Taoyuan, Taichung, Tainan and Kaohsiung.
Urban renewal is comprised of many aspects including large-scale urban environment reconstruction and reconstruction of business areas.
However, after discussing the issue in the central government we decided that renovation of older buildings is more relevant to the safety and quality of life of the nation’s population — it should be a priory.
Renovating residential buildings would be a large and necessary expenditure for Taiwanese — the government needs to come up with an incentivized and comprehensive plan. We need to prioritize having a consensus on how the government should provide assistance, as well as be sure there is the ability and willingness to provide resources for the renovations.
We would also need to prioritize those areas where older structures represent a clear danger to the safety of residents.
This project can directly create large-scale construction output, not to mention all of the associated economic activity — it is of very considerable economic value. This is a very important project for creating domestic demand.
As far as social housing goes, I have already seen plans drafted by the Executive Yuan.
In terms of where public housing can be built and how much progress can be made in each of the cities and municipalities over the next few years, it is all specifically planned.
It can be off the ground by next year. From what I understand we can have 40,000 housing units built by 2020, as well as 40,000 unused privately owned units rented by the government for use as social housing.
The implication for the economy is NT$150 billion [US$4.69 billion] generated in construction and related-services revenue. This is in addition to more than NT$400 billion generated by other related economic activities.
Translated by Staff Writers Jonathan Chin and William Hetherington
This is part II of a two-part interview. Part I was published yesterday.
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