Many people have said that with wage levels in China rising, our government should offer incentives to encourage Taiwanese businesspeople to come home. Of course, in order to attract investment and create jobs, it would be necessary to provide them with information and promote the benefits of investing in Taiwan. However, there is no need to give these businesspeople incentives to do so. This would, in fact, only cause problems.
First, Taiwan is the important thing here: It’s about investment and the creation of jobs. Investment by Americans would have the same effect as investment coming from the Taiwanese, so long as there were no political motive or conditions attached.
Second, it is not necessary to hand out awards to people for being “patriotic.” If we suppose that it is a sign of patriotism by Taiwanese businesspeople if they invest in Taiwan, shouldn’t it follow that US citizens who invest here love Taiwan even more? What’s more, if we look at things from the perspective of supporting Taiwan’s sovereignty, we really cannot say that Taiwanese businesspeople are all that patriotic anyway.
Third, in today’s age of globalization, businesspeople invest wherever they can maximize profits. Once Taiwanese businesspeople make profits in Taiwan, they will not necessarily be more inclined to keep investing in Taiwan than other foreign investors. The way in which Taiwanese businesspeople moved into the China market years ago is a prime example of this.
Fourth, it is against the WTO’s principle of non-discrimination to favor investment from one country over that of another. It would therefore be necessary to exploit loopholes in WTO regulations if discriminatory policies were to be enacted. We can already see this happening with the special trade zone between Taiwan and China currently being planned. Furthermore, investment and the setting up of factories are carried out via legal or juristic persons and not natural persons. The identity of stockholders — legal or juristic persons — can change at anytime as stocks change hands. It is therefore very easy for the creation of manmade incentives to become an excuse for collusion between government and enterprise.
Fifth, even given the rules laid down by the principle of non-discrimination, Taiwanese businesspeople already have an advantage over foreign companies because they are familiar with Taiwan’s geographical, cultural and political environment. There is therefore no need whatsoever to give them additional incentives.
As salaries and costs in Taiwan and China gradually converge, the major impediments to Taiwanese businesspeople returning will be unavailability of land in industrial and science and technology parks, making it hard for companies to set up factories, as well as breaks in the production chain and incomplete industrial clusters.
Therefore, land usage in industrial and science and technology parks should be made more efficient. The government should review the current rent and sale policies and facilities should be offered at different price levels depending on their nature. This would see businesses who under-use facilities, or which do not use them at all, moving out, freeing them up for companies that do need access to them.
Next, the government needs to evaluate how integrated and comprehensive domestic production chains and industrial clusters are. In places where the gaps are not too serious, the government can provide help, getting in contact with other industries and companies and getting them to invest in Taiwan. This would minimize the barriers to investment that breaks in the production chain and clusters can cause.
Lin Kien-tsu is a member of the Taiwan Association of University Professors.
TRANSLATED BY DREW CAMERON
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