Sat, Jun 17, 2017 - Page 4 News List

New Southbound Policy: Local firms look to boost regional clout

‘COLLABORATION’:Taiwanese firms should not deem Southeast Asian nations backward economies or try to cut corners, Deloitte Taiwan partner Jerry Gung said

By Kuo Chia-erh  /  Staff reporter

Company representatives from Taiwan and the Philippines on Thursday meet at a trade event organized by the Taiwan External Trade Development Council in Manila.

Photo: CNA

President Tsai Ing-wen’s (蔡英文) government has been urging local businesses to bolster their trade ties with 18 nations in South and Southeast Asia to mitigate Taiwan’s economic reliance on China.

Under the “new southbound policy” introduced last year, the government aims to develop reciprocal trade deals by offering credit guarantee funds and renewing bilateral investment protection agreements with the nations targeted by the policy.

“It is not the first time that the government is encouraging companies to shift investments to Southeast Asia, but the mindset of the new policy is totally different,” said Y.C. Tsai (蔡允中), a negotiator from the Office of Trade Negotiations, the Cabinet-level agency responsible for implementing the policy.

“The southbound policies of former administrations were more supply-oriented, as policymakers back then only thought about how to export Taiwanese products to the region,” Y.C. Tsai said in an interview earlier this month.

However, the Democratic Progressive Party government hopes to shift the focus to the actual needs of Southeast Asia, taking local characteristics into account, he said.

Walter Yeh (葉明水), executive president of the Taiwan External Trade Development Council, a trade promotion agency, echoed those remarks.

Taiwanese firms need to identify the key differences among Southeast Asian nations and must be sensitive to the rapid changes in customer needs there to stay competitive, Yeh said on Friday last week.

“The top priority [for local companies] is to develop a profound understanding of Southeast Asian nations and get rid of stereotypes about them,” Yeh said.

The council is working on several projects to help local firms obtain halal certification, he said.

For example, pork, alcohol and intoxicating beverages are prohibited in the Islamic market, Yeh said.

In April, the council launched the Taiwan Halal Center in Taipei as part of its efforts to provide information to the market and match business partners who show an interest in Southeast Asia.

The council hopes to help Taiwanese companies grab more business opportunities through collaborations with e-commerce operators in Southeast Asia, Yeh said.

Blibli.com, the largest online shopping platform in Indonesia, will start selling Taiwanese-made cosmetic and maternal and infant care products in the third quarter, the council said.

TIREMAKERS

Some Taiwanese firms have launched plans to expand their presence in Southeast Asian markets, including Kenda Rubber Industrial Co (建大輪胎), one of the biggest tire manufacturers in the nation.

Kenda’s plant in Vietnam has been in operation for 20 years, with daily a production capacity of 35,000 motorcycle tires and 40,000 bicycle tires, while its factory in Indonesia — which started production last month — can produce 200,000 bicycle tires per day.

The decision to expand capacity in Southeast Asia reflects not only the attraction of lower labor costs there, but also a need to increase exposure to potential customers in the region, a company official told the Taipei Times.

“We had to form a joint venture with Vietnamese companies to conform to local rules regulating foreign investments there,” the official said, adding that the restrictions put immense pressure on the plant’s profitability in the early years.

However, the challenge has not stopped the Changhua-based firm from undertaking more investments in Southeast Asian markets, backed by a robust demand for vehicles in the region.

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