Taiwan will lose more than NT$2.5 trillion (US$75.14 billion) in foreign income annually if the country's manufacturing industry is allowed to move overseas, a local economist warned yesterday.
Giving a speech on the challenges and future of the manufacturing industry, Taiwan Thinktank chairman Chen Po-chih (
Chen, former chairman of the Council for Economic Planning and Development, said he agrees that a high-income country should pay attention to research and development and marketing, but this does not mean that the manufacturing sector -- now accounting for 23 percent of Taiwan's economic production and a large share of the country's exports -- can be done away with.
Noting that manufacturing still accounts for approximately 20 percent of the economic production of most developed countries, Chen said Taiwan has no reason to give up the manufacturing industry.
According to Chen, the manufacturing industry's production lines can remain in Taiwan despite competition from countries with low labor costs as long as their products are developed using advanced expertise.
For example, he said, although China has the ability to manufacture commercial planes, the country continues to purchase aircraft from Boeing and Airbus, mainly because of those companies' expertise.
With at least one million out of the total of 2.7 million workforce in Taiwan's manufacturing industry being labor-intensive, the exodus of the industry will seriously impact local society and the economy, Chen said.
If the manufacturing industry moves out of the country, it will be difficult for those working in the sector to find other jobs, which will worsen the unemployment problem, he pointed out.
In addition, the financial, transportation and electrical power industries, which mainly serve the manufacturing industry, will shrink significantly if the manufacturing industry no longer exists, he said.
According to the Directorate General of Budget, Accounting and Statistics, the nation's trade surplus, adversely affected by industry migration overseas, is this year expected to slump to a new low of US$4.66 billion, beating the previous low of US$4.8 billion recorded in 1983.
During the first 11 months of the year, the trade surplus has declined by 32.7 percent to US$4.87 billion from a year earlier, according to the Ministry of Economic Affairs' statistics.
Instead of adopting a laissez-faire attitude toward the manufacturing industry, Taiwan should encourage the manufacturing industry to produce distinctive products in order to enhance their competitiveness, Chen said.
In response to questions from the media, Chen added that the government should consider relaxing the ceiling limits on China-bound investments if the investing businesses are not in debt in Taiwan, if they are not involved in any capital-labor disputes and if their scales of production do not rely heavily on their operations in China.
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