Premier Chang Chun-hsiung (張俊雄) has repeatedly trumpeted the Executive Yuan's "8100 public construction and investment projects" (8100台灣啟動), as if Taiwan's future economic development depends on the implementation of this stimulus package. However, not many people seem to know about the package.
The "8100 projects" refers to the government's NT$810 billion budget to be used on public infrastructure and investment for the fiscal year 2001. The budget mainly comes from two sources:
One, the original NT$698.5 billion budget for public construction for fiscal 2001 -- including the allocations for government agencies, state-owned enterprises and non-business funds.
Two, the recently drawn-up stimulus plan, which brings forward the government's NT$111.5 billion budget for public construction for the next fiscal year to this fiscal year, by way of supplementary budgets. This money includes NT$24.1 billion for 921 earthquake reconstruction, NT$75.2 billion for investments in government agencies and NT$12.2 billion for state-owned enterprises and the non-profit revolving fund.
As the above numbers show, the newly available funds in the package amount only to NT$111.5 billion, almost NT$700 billion having originally been budgeted in the fiscal year 2001 budget.
Apart from government investment, domestic economic development is mainly supported by private investment. According to Directorate General of Budget, Accounting and Statistics (DGBAS) estimates, however, first-quarter growth in domestic consumption declined to 2.02 percent this year from 7.65 percent in the same period last year. The first-quarter growth of our private investments has also dropped to minus 7.54 percent this year from 18.41 percent in the same period last year. This rapid downturn has mainly resulted from people's lack of confidence in the government, which has significantly reduced domestic consumption and private investment.
As for the newly added NT$111.5 billion budget for the "8100 projects," in view of the time-consuming nature of the budgeting procedure, agencies will not be able to spend the money until the second half of fiscal 2001, when the budget supplements have been reviewed and passed by the Legislative Yuan. I know from my experience as a former deputy director of the DGBAS that only about NT$50 billion of the supplements will have been spent by the end of this fiscal year. That being so, the package will account for only 0.4 percent of this year's economic growth rate at the most. The term, "8100 projects" is nothing more than a fine-sounding slogan that provides little actual help.
According to the government's economic indices, the nation's growth rate fell to a 26-year low of 1.06 percent in the first quarter. The leading index, from the Council of Economic Planning and Development, has also dropped to a new low while the growth rate for exports has seen negative growth. In addition, both the unemployment and the total "misery index" for the people have jumped to new highs, while industry tends to be pessimistic about future prosperity.
The DPP must realize that stimulating domestic demand is only one of the possible solu-tions. It cannot be taken as the primary solution to Taiwan's overall economic slump. The past two years demonstrate that increased government expenditure has made no contribution to domestic economic growth at all.
Economic problems need to be solved by economic strate-gies. The government must come up with clear industrial policies, improve the investment environment, encourage local industries to upgrade and restore public confidence. It should stop empha-sizing slogans like "8100 projects"and deceiving its people.
Chang Che-shen is chairman of the KMT's Central Finance Department.
Translated by Eddy Chang
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