The government's pouring money into the stocks of traditional industries will not help channel capital from the electronics sector to traditional sectors, industry experts said yesterday.
At best, state-controlled funds investing in a traditional firm's stock will prevent banks from selling the company's collaterized shares, they said.
"It is hard to change the trend of money going to the electronics sector, which has greater potential than other traditional industries," said Lee Chih-hui, an analyst at MasterLink Securities Corp.
Traditional industries have been overshadowed by the electronics sector in the recent years.
Following Vice President Lien Chan's (
One such measure being considered is the easing of the tax burden on manufacturers, who do not benefit from investment incentives as much as the electronics firms do.
To boost the shares of traditional firms, the government is also now using state-controlled funds to invest in traditional industries.
It is also considering the use of the Executive Yuan's Development Fund for the same purpose, according to Chang Chi-song, fourth division director of the Industrial Development Bureau under the Ministry of Economic Affairs.
However, Kung Ming-hsin, deputy director of research division II of the Taiwan Institute of Economic Research, had reservations about the government's new measures.
According to Kung, Taiwan's national comparative advantage over other countries is its abundant capital, technology and manpower. As a result, those industries that rely heavily on those factors will thrive.
"Investors see a future and growth in high-tech industries, so their money will go to those sectors," Kung said. Taiwan's economy is mainly supported by the high-tech industries, so it should be encouraged, he said.
Also, despite complaints of unfairness by manufacturers of traditional industries, the incentives introduced by the government for these should not be compared with those implemented for the high-tech industries.
"The incentives implemented for the Taiwan high-tech industries should be compared with those for the high-tech industries in other countries because Taiwan's high-tech industries have to compete with those of other countries," Kung said.
However, Paul Chen, general secretary of the Taiwan Feed Industry Association and supervisor of Formosa Oilseed Processing, attributed the tumbling stock prices of traditional industries to the government's favorable policy toward high-tech industries. They also enjoy greater resources, he said.
"The government's strong promotion of the high-tech industries is misleading investors, making them believe that these industries have greater potential than traditional ones," Chen said.
According to Chen, only 3 percent of Taiwan's labor force is employed in the high-tech industries, while the remaining 97 percent work in traditional industries. The government's neglect of traditional industries will create a higher unemployment rate, he said.
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