In the face of global economic and trade liberalization, Taiwan’s establishment of the free economic pilot zones is about to enter a second phase, which is also the focus of the government’s economic policy at the beginning of the year.
The core concept of the free economic pilot zones is to loosen regulations and innovate systems within the zones. If the zones are successful, they can be duplicated across the country.
The policy also serves as preparation for Taiwan’s bid to join the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership, but the success of the zones depends on the government’s ability to implement the policy promptly.
Through liberalization regulations concerning manpower, goods and cross-border capital movements, the policy aims to attract a large number of local and foreign companies to promote industrial development within the zones. In addition, the zones are intended to promote five potential sectors: intelligent logistics, international healthcare services, value-added agricultural processing, financial services and education innovation.
Through Taiwan’s information service advantage, the intelligent logistics industry will be able to build an e-commerce platform and expand the scale and depth of processing in the zones.
The international healthcare services industry hopes to boost the development of medicare, biotechnology, medicine, rehabilitative care, health enhancement and other sectors.
The value-added agricultural processing industry hopes to promote the brand-imaging of Taiwanese agricultural products.
Observers often think that the opening measures could be harmful and that the import of Chinese agricultural products could threaten to Taiwanese products.
However, this contradicts fact. If products are sold from the zones to other areas in Taiwan, the government will levy taxes on them without any preferential measures. Products that are not currently allowed to be imported will still not be able to enter Taiwan, just as is in the case of “bonded factories.”
The spirit of the free economic pilot zones is to loosen regulations in order to attract more business investment in Taiwan, establishing factories and companies and creating more job opportunities. By attracting greater investment, the goal is to boost Taiwanese exports.
Through processing, the export of local agricultural products and semi-finished goods will create added-value for Taiwanese products. This will benefit the nation’s agricultural, engineering and service industries and increase farmers’ income while creating job opportunities.
Trade competition in East Asian countries is extremely tough, as these countries compete over speed in signing free-trade agreements and establishing free-trade zones. China has actively pushed for the establishment of the China (Shanghai) Pilot Free Trade Zone, Japan is planning for a free-trade zone and South Korea established the Incheon Free Economic Zone in 2003. If Taiwan wants to succeed, the key is speed, speed and speed. If the nation hesitates on the free economic pilot zones, there will be no chance of success.
In order to break the economic deadlock, the ruling and opposition parties must cooperate. They should promptly pass the draft special statute to launch the second phase of the establishing the free economic pilot zones.
This is the only way for Taiwan to boost its economic growth with internationalized, liberalized and advanced industries.
Chu Yun-peng is an economics professor at National Central University.
Translated by Eddy Chang
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