Taipei Times: Many observers inside and outside of Taiwan claim that foreign companies are "fleeing" Taiwan in an effort to focus on China. Anecdotal evidence suggests that there are fewer foreign businesspeople coming to Taiwan than there were 10 years ago. Do you agree with this assessment?
Tung Tai-chin (童台琴): AmCham’s membership has remained rather stable in recent years; in fact, there was even some slight growth in the most important category of corporate sustaining members. So we would certainly not say that multinational companies are fleeing this market.
On the other hand, we believe that the growth in the foreign business presence could have been much more substantial if cross-strait air travel were made more convenient. Most multinational companies now have business operations on both sides of the Taiwan Strait, and regard both markets as important. They would like to integrate their regional business plans more than they do now, to achieve efficiencies and fully utilize their Taiwan staff and experience to support mainland operations, but that simply isn’t possible when so much time is wasted flying back and forth.
PHOTO: CHIEN JUNG-FONG, TAIPEI TIMES
Judging from what our members say, if the frequency and convenience of cross-strait travel is increased, multinational companies would choose to base more of their executives and even more of their business units in Taiwan because the quality of life is better here, the air is cleaner, and there is better IPR [intellectual property rights] protection and rule of law.
TT: What measures could President Ma Ying-jeou (馬英九) enact to improve the competitiveness of Taiwanese companies seeking to do business abroad?
Tung: Our member companies have found that the human resources in Taiwan in most respects are excellent, but one drawback is that people here lack an international mindset. They are not accustomed to international business practices, social habits and ways of approaching problems. That is not only a problem for foreign companies doing business in Taiwan, but also for Taiwanese companies seeking to do business internationally.
What the government can do to help is to do more to promote language learning, encourage the holding of more international conferences and seminars in Taiwan, allow foreign educational institutions to set up branches here and make it easier for foreign professionals to come to Taiwan to work. An excellent way for local employees to learn international practices is to work side by side with colleagues from all over the world.
Recently Taiwan has taken some big steps in liberalizing its rules. Last year it created a system for the first time for companies to bring in overseas interns. Just last month it announced that regulations on residence and work permits would be eased. AmCham was very pleased to see those changes, which will contribute to tying Taiwan more closely to the global economy.
TT: Do you believe that there will be any progress with Taiwan’s status on the US’ Special 301 Watch List for IPR violators?
Tung: USTR [The Office of the US Trade Representative] said that it would conduct a special out-of-cycle review of Taiwan’s status this summer, and would look at progress in three areas: one, establishment of the IPR Court, due to take place July 1; two, Ministry of Education efforts to crack down on textbook piracy and stop use of its TANet [Taiwan Academic Network] Web site for illegal uploading and downloading; and three, passage of an Internet Service Provider bill by the Legislative Yuan.
Since we are told that Taiwan expects to see results in all three areas, the prospects seem good for Watch List removal.
TT: What is the single biggest issue impacting Taiwan-US trade at this point? What can the Taiwanese government do to address these issues?
Tung: The biggest trade issues tend to be about agricultural products — for example, Taiwan’s continued ban on cuts of beef containing bone and on US pork. But AmCham does not get much involved in those issues, which are largely handled government to government.
If the question were broadened to say “Taiwan-US economic relations” rather than just “trade,” a few years ago, a major issue was IPR protection. But Taiwan has made great strides in improving first its legislation, then its enforcement, and now its judicial handling of such cases [a specialized IPR court is due to start July 1]. Because of that improvement, AmCham has come out in favor of Taiwan’s removal from the Special 301 Watch List that the US keeps, listing countries with poor IPR records.
Today the main issues are largely sector-specific:
The pharmaceutical and medical device companies encounter various regulatory barriers to their market entry or competitiveness for innovative products; that is because of concern here with controlling costs for the National Health Insurance program, but it is a problem for industry and doesn’t assure the best care for patients.
With the Ma administration about to launch a series of new infrastructure programs, AmCham is reminding the government that US and other Western construction firms have been largely frozen out of the market for public projects for some time because of the way the bidding process is organized and the way the contract terms and conditions are worded. To ensure world-class quality in infrastructure, that needs to be corrected.
In the educational sphere, US universities are unable to open branches here the way they have in other Asian countries.
Telecom and media companies have been discouraged from investing as heavily as they might because a proper regulatory framework has not been put in place to manage the convergence of broadcast, cable, and telecom. The new National Communications Commission got bogged down in political and even constitutional complications.
The White Paper provides our suggestions, sector by sector, on what the government might do to address these problems.
TT: What sectors stand out as opportunities for US companies interested in accessing Taiwan’s markets?
Tung: The dynamic growth in Taiwan’s high-tech sector has attracted some major US players. The best example is Corning, whose Corning Display Technologies unit has invested more than US$2.5 billion in the past few years — and is still expanding. They have plants in both the Central and Southern Science Parks making the glass substrate to go into flat panel displays for monitors, TVs, etc. The reason they’re here is because their customers are here — Taiwan is the world’s biggest maker of flat-panel displays.
Another example is asset management. Taiwanese households have substantial amounts of wealth to invest, and in recent years the market has been opened to enable them to invest in international mutual funds so as to diversify their portfolios and spread their risk. This has attracted a lot of interest from American financial institutions.
For the future we see high potential in other portions of the service sector. Although services already account for about 73 percent of GDP, which resembles the level of a mature economy, in fact the service sector in Taiwan is not yet very developed. Many specialized and sophisticated service businesses that you might find in the US and Europe — real estate appraisers to cite just one example — are absent or in short supply. The aging of the Taiwan population should bring opportunities in such fields as retirement homes and geriatric care. American companies have a great deal of expertise and experience that they could offer.
TT: What is the US government doing to help facilitate the economic relationship between the two countries?
Tung: The US government, through AIT [the American Institute in Taiwan], is actively involved in facilitating the economic relationship. The Commercial Section helps to do matchmaking between US exporters and prospective importers, distributors, and joint-venture partners here. The Economic Section discusses policy issues with the various Taiwan government departments. From our perspective, they are both very effective in these roles.
Each year the US and Taiwan hold a negotiating session called the TIFA [for Trade and Investment Framework Agreement] Talks. The next round will probably be held in Taipei in September. This is a very good opportunity to discuss any trade differences at a high level and try to reach some conclusions. Taiwan last year set up a specialized Office of Trade Negotiations under the Ministry of Economic Affairs, so that Taiwan now is even better prepared than before to pursue these issues.
TT: How do you think the upcoming US election will affect Taiwan-US trade ties?
Tung: There is a new government already in place in Taiwan, and there will be one in the US next year. Whenever a new administration comes into office, it provides an opportunity to deepen and broaden the relationship. We’re optimistic that with the right approach, the Taiwan-US trade ties will only get stronger.
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