Despite a generally free economy, Taiwan's rating in a respected global gauge of economic freedom was dragged down by corruption, onerous labor laws and the government's continued heavy role in the financial sector last year.
The report, the 2007 Index of Economic Freedom, was released on Tuesday by the Heritage Foundation and the newspaper, the Wall Street Journal.
The rating of 157 countries put Taiwan 26th in the world and 6th among 30 countries in the Asia-Pacific region. The previous year, Taiwan ranked 37th.
For the 13th consecutive year since the index was first published in 1995, Hong Kong was rated the world's freest economy. Singapore was number two.
Taiwan's overall score was 71.1 percent, a shade higher than the previous index, but much of that improvement reflected a change in methodology, the Foundation and the newspaper said.
While the editors commented that corruption in Taiwan is relatively low, the nation received a score of only 59 percent in the "freedom from corruption" category. The score was largely influenced by a corruption index published by, Transparency International, which ranked Taiwan at 32nd among 158 countries for 2005.
The editors of the Heritage-Journal index noted that their data dated generally from last June, well before the latest cascade of corruption and embezzlement scandals hit the headlines in Taiwan.
This seems to indicate that the corruption score would have been lower if the data went through the end of the year, the Transparency International report covering last year.
The government's continued ownership of banks and financial controls hurt Taiwan's score even more than corruption.
In the financial freedom category, Taiwan scored 50 percent. The Foundation and Journal noted that while nine banks were privatized between 1998 and 2005, the government still controls four banks, including two of the three largest domestic banks. The report also cites restrictions on foreign financial operations in Taiwan.
In a new category, covering labor regulations, the authors gave Taiwan a score of only 56.7 percent, in view of the perceived negative impact of labor laws on businesses.
"The labor market operates under inflexible employment regulations that hinder overall productivity growth," the generally pro-business Foundation and Journal said. "The non-salary cost of employing a worker is moderate, but dismissing a redundant employee is relatively costly," the index said.
China gained a higher score than Taiwan in the labor category. While China ranked only 119th of the 157 countries covered with a score of 54 percent, it received a "labor freedom" score of 63.5 percent.
It earned the score even though its labor market "operates under restrictive employment regulations that hinder employment and productivity growth. The non-salary cost of employing a worker is very high, and dismissing a redundant employee can be relatively costly," according to the index.
Taiwan received its highest scores in the categories of fiscal freedom, 84.7 percent, thanks to a relatively low corporate tax and overall tax burden; in "freedom from government," 89.8 percent, because government expenditures are "moderate" as a percentage of GDP; and "monetary freedom," 81.3 percent, as a result of low inflation.
TAKING STOCK: A Taiwanese cookware firm in Vietnam urged customers to assess inventory or place orders early so shipments can reach the US while tariffs are paused Taiwanese businesses in Vietnam are exploring alternatives after the White House imposed a 46 percent import duty on Vietnamese goods, following US President Donald Trump’s announcement of “reciprocal” tariffs on the US’ trading partners. Lo Shih-liang (羅世良), chairman of Brico Industry Co (裕茂工業), a Taiwanese company that manufactures cast iron cookware and stove components in Vietnam, said that more than 40 percent of his business was tied to the US market, describing the constant US policy shifts as an emotional roller coaster. “I work during the day and stay up all night watching the news. I’ve been following US news until 3am
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
COLLABORATION: Given Taiwan’s key position in global supply chains, the US firm is discussing strategies with local partners and clients to deal with global uncertainties Advanced Micro Devices Inc (AMD) yesterday said it is meeting with local ecosystem partners, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), to discuss strategies, including long-term manufacturing, to navigate uncertainties such as US tariffs, as Taiwan occupies an important position in global supply chains. AMD chief executive officer Lisa Su (蘇姿丰) told reporters that Taiwan is an important part of the chip designer’s ecosystem and she is discussing with partners and customers in Taiwan to forge strong collaborations on different areas during this critical period. AMD has just become the first artificial-intelligence (AI) server chip customer of TSMC to utilize its advanced
Six years ago, LVMH’s billionaire CEO Bernard Arnault and US President Donald Trump cut the blue ribbon on a factory in rural Texas that would make designer handbags for Louis Vuitton, one of the world’s best-known luxury brands. However, since the high-profile opening, the factory has faced a host of problems limiting production, 11 former Louis Vuitton employees said. The site has consistently ranked among the worst-performing for Louis Vuitton globally, “significantly” underperforming other facilities, said three former Louis Vuitton workers and a senior industry source, who cited internal rankings shared with staff. The plant’s problems — which have not
RSS