Taiwan needs to improve the environment for foreign direct investment or risk losing out to China, the head of the new European Economic and Trade Office said yesterday.
"I happen to think [incentives given by local authorities] may be one of the keys to China's attraction, which does not have the same productivity or entrepreneurial advantages of other entities like Singapore, Taiwan, South Korea, etc, and may point to the need to adopt more positive incentives for foreign direct investment," Brian McDonald told members of the European Chamber of Commerce Taipei (ECCT) yesterday.
PHOTO: CHIANG YING-YING, TAIPEI TIMES
European Chamber chief executive officer Guy Wittich agreed.
"Businessmen and head offices need a stable regulatory environment," Wittich said yesterday.
"For companies intending to invest here, we need transparency across the board," he said.
Disincentives to foreign firms investing in this country include the government's failure to draft regulations governing dispute resolution between foreign companies and local partners, Wittich said.
In addition, there are no clear guidelines for capping the financial liabilities of foreign companies
involved in infrastructure projects, he said.
Foreign players have been put off when they see the left hand of the government doesn't know what that right hand is doing, he said. For example, local authorities have outsourced projects to overseas companies, only to have them overruled by central government officials.
"We need consistency and predictability," Wittich said.
Another impediment to trade for European companies is barriers to the free flow of goods and people across the Taiwan Strait.
Contrary to WTO rules, the government bans around 50 products from China, including household appliances, automotive parts, mobile phones, soap, textiles, and certain food and milk products.
"Our members are being treated unfairly as we can export [from factories in China] to any other territory except Taiwan," Wittich said, adding that chocolate was one example.
"Milk powder is allowed, but chocolate is not and we don't see why. There is not a large local chocolate industry [in Taiwan], nor is chocolate a threat to national security," he said.
Meanwhile, McDonald said the government needs to open up local infrastructure projects to foreign bidding, a commitment it made when it joined the WTO in January last year.
The government has yet to sign the Government Procurement Agreement, which has been delayed because of protests from Beijing.
"It is very important that we find a solution to this soon as it will give a needed lift to trade and to efficient investment in Taiwan's infrastructure," McDonald said.
The opening of direct links is also considered imperative.
"From a business point of view, the opening of direct links is just a practical issue we want to see resolved," Wittich said.
But McDonald urged Taiwan and China to look beyond the Taiwan Strait.
"The China/Taiwan relationship will increasingly be seen and developed in a regional or global context and can no longer be perceived in a cross-strait perspective only," he said.
McDonald also echoed statements by other foreign trade representatives that the protection of intellectual property rights (IPR) is a major sticking point between foreign nations and Taiwan. Bilateral relations could be improved if Taiwan addressed "questions surrounding intellectual property rights and their consistent enforcement," McDonald said.
"Taiwan has made progress in IPR, but not enough in our opinion," Wittich said.
The European Economic and Trade Office is expected to open next month.
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