Taiwan has lost its competitiveness in comparison with other Asian countries, according to the annual position papers released by the European Chamber of Commerce in Taipei (ECCT) yesterday.
Under the theme "Face Reality: Normalize Cross-Strait Economic Relations to Secure Taiwan's Prosperity," the ECCT's position papers urged the government to normalize trade relations with China in order to ensure economic survival.
Government over-regulation in the retail, banking, auto-parts making and other sectors, a lag in the development of the service industry, non-compliance with WTO commitments and an unfavorable tax climate were also priority issues the ECCT called on the government to improve in its position papers.
"We didn't see major progress on issues we have addressed in the past," Ralf Scheller, chairman of the ECCT, told a press conference yesterday. "Instead, the situation got a lot worse."
In response to the ECCT position papers, Council for Economic Planning and Development Chairman Hu Sheng-cheng (胡勝正) said the council will look into the problems mentioned and propose appropriate measures for improvement.
To accelerate cross-strait business normalization, the ECCT said that the government should lift bans on direct transportation, visas for Chinese visitors or workers and Chinese goods and abolish the 40 percent investment cap for Taiwanese companies in China.
"Many of the policies are politically motivated ? the government plays the card of China's threat too much," Scheller said.
Taiwan's GDP growth projection for this year is about 4 percent, the lowest among Asia's "Four Little Dragons," the papers said. South Korea expects to see its GDP grow at 5 percent, Hong Kong projects 6 percent and Singapore estimates its figure will hit 6.9 percent.
Allowing 3,000 Chinese tourists per day to enter the country, for example, would create more than 3 percent of GDP growth a year for Taiwan, Peter Sutton, head of CLSA Asia Pacific Market's research division said.
Taiwan's direct foreign investment for the first nine months of the year reached a record US$9.33 billion, up 268.32 percent from a year ago. But Scheller said the figure reflected several big merger and acquisition cases. Information collected by the chamber from many European companies, shows that interest in investing in Taiwan is decreasing, he said.
In recent years, the ECCT pointed out that a number of European companies had downsized operations or moved out of the Taiwanese market altogether. This was due to the worsening business environment stemming in particular from the import ban on Chinese goods, Guy Wittich, chief executive officer of the ECCT said.
One issue that worries foreign companies here is the backward position in protecting intellectual property rights (IPR), after the Ministry of Economic Affairs granted compulsory licenses for five essential CD-R patents of Royal Philips Electronics NV to Gigastorage Corp (
The ruling goes against principles of international law whereby rights of a patent owner can only be revoked in case of an extreme public need within a country, said James Li (
The lack of IPR protection will concern many high-tech companies in bringing their key technologies to Taiwan, Li said.
"Taiwan can't afford not to address these issues... they can't wait until 2008," Scheller said.
The government also needs to deregulate the banking sector and allow local
banks to capitalize on the Chinese market, said Lawrence Liang (梁敬思),
managing director and country manager of ING Bank NV's Taiwan branch.
Saying bluntly that Taiwanese banks “have no competitiveness at all”
outside the country, Liang said many measures in the consumer banking sector
need to be improved, or the nation will only become a “non-performing loan
center” rather than a financial center.
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