Five years after it struck, the nation is still feeling the effects of the global economic crisis. The government has come under pressure to do more, but engineering an economic recovery and overhauling industrial infrastructure is difficult.
Early this year the new Cabinet unveiled its plan to establish “free economic pilot zones,” but their impact has been disappointing, and disagreements within the government over how the plan should be implemented have not died down. This led to a rather limited relaxation of current legislation, and several opinion leaders have expressed reservations about the policy.
However, after China started promoting the China (Shanghai) Pilot Free Trade Zone, the government was forced into a bolder relaxation of these restrictions. It this month initiated amendments in seven main areas including promoting the free movement of personnel and commodities, and opening up to the global market.
The government also said that the zone scheme would be extended to extra locations. In addition to the creation of seven free trade ports, it designated an agricultural biotech park in Pingtung County and international healthcare centers within the four international airports.
Although Taiwan is not regarded as a major market by foreign investors, it has many advantages, including manufacturing resources and capabilities.
While the traditional industrial manufacturing base has moved overseas, the nation still has much to offer, including people with considerable production management experience, together with a strong IT and electronics manufacturing industry.
The country is also a good destination for foreign investors in terms of human resources. Salary stagnation means workers are underpaid for their skill level.
Another ace in the nation’s sleeve is its links with China and ASEAN. Hong Kong has its robust services industry, finance and international trade; Taiwan’s advantage resides in its manufacturing industry, along with all the associated derivative industries. Taiwan also boasts a hinterland several times the size of those in Hong Kong and Singapore, and it is much better equipped to serve as a base of innovation based on the Chinese cultural model. We must capitalize on all of these factors.
Economics and the lessons of other countries’ development tell us that small economies neighboring large markets require an environment of economic and trade deregulation to thrive. Such an environment helps their companies operate and facilitates investment activity.
This is the reason foreign investors are willing to pour resources into a country’s industrial development, and why those already there can shine.
In other words, the ease by which companies can enter and exit a market, the relative competitiveness of the tax system, and an infrastructure and regulatory environment beneficial to logistics and the flow of monetary and human resources, including speedy customs clearance, clear and transparent financial regulations and a comprehensive network of communications and air and sea transportation are all crucial factors in ensuring that foreign and local investment capital remains within a country.
If the country plans to develop into a regional processing or logistics hub, it must further relax customs regulations between the pilot zones and the outside world.
If Taiwan is to become a regional center for research and development, the process for assessing patent and intellectual property transactions must be more closely aligned with systems in other countries.
Finally, if the nation is to be the preferred choice for regional headquarters in a range of sectors, it must consider copying the system other countries use to tax inward dividend remittances for foreign investors and for expatriates’ incomes.
In addition, a consensus needs to be formed, and quickly, on what special treatment flows of resources across the Taiwan Strait receive. Any unnecessary restrictions should be relaxed, otherwise the economic zones will be less attractive to both domestic and foreign companies, and the policy will continue to fall short.
Steven Yang is director of research division VI at the Taiwan Institute of Economic Research.
Translated by Paul Cooper
Speaking at the Copenhagen Democracy Summit on May 13, former president Tsai Ing-wen (蔡英文) said that democracies must remain united and that “Taiwan’s security is essential to regional stability and to defending democratic values amid mounting authoritarianism.” Earlier that day, Tsai had met with a group of Danish parliamentarians led by Danish Parliament Speaker Pia Kjaersgaard, who has visited Taiwan many times, most recently in November last year, when she met with President William Lai (賴清德) at the Presidential Office. Kjaersgaard had told Lai: “I can assure you that ... you can count on us. You can count on our support
Denmark has consistently defended Greenland in light of US President Donald Trump’s interests and has provided unwavering support to Ukraine during its war with Russia. Denmark can be proud of its clear support for peoples’ democratic right to determine their own future. However, this democratic ideal completely falls apart when it comes to Taiwan — and it raises important questions about Denmark’s commitment to supporting democracies. Taiwan lives under daily military threats from China, which seeks to take over Taiwan, by force if necessary — an annexation that only a very small minority in Taiwan supports. Denmark has given China a
Many local news media over the past week have reported on Internet personality Holger Chen’s (陳之漢) first visit to China between Tuesday last week and yesterday, as remarks he made during a live stream have sparked wide discussions and strong criticism across the Taiwan Strait. Chen, better known as Kuan Chang (館長), is a former gang member turned fitness celebrity and businessman. He is known for his live streams, which are full of foul-mouthed and hypermasculine commentary. He had previously spoken out against the Chinese Communist Party (CCP) and criticized Taiwanese who “enjoy the freedom in Taiwan, but want China’s money”
A high-school student surnamed Yang (楊) gained admissions to several prestigious medical schools recently. However, when Yang shared his “learning portfolio” on social media, he was caught exaggerating and even falsifying content, and his admissions were revoked. Now he has to take the “advanced subjects test” scheduled for next month. With his outstanding performance in the general scholastic ability test (GSAT), Yang successfully gained admissions to five prestigious medical schools. However, his university dreams have now been frustrated by the “flaws” in his learning portfolio. This is a wake-up call not only for students, but also teachers. Yang did make a big
RSS