Since China’s opening to foreign investment in 1978, about 88,000 Taiwanese enterprises have invested more than US$400 billion in China, mainly in the manufacturing sector, and created about 16 million jobs for Chinese, The Economist said.
Meanwhile, China has replaced the US as Taiwan’s largest export market. Taiwan’s export dependence on China — measured by dividing the aggregate value of exports to China over a period by the total value of Taiwan’s exports for the same period — has increased from zero in 1978 to 40.1 percent in 2016, indicating an increasing reliance on the Chinese market.
To make Taiwan’s economy less dependent on China and improve cooperation and exchanges between Taiwan and countries in Southeast Asia, South Asia and Oceania, President Tsai Ing-wen (蔡英文) launched the New Southbound Policy on Sept. 5, 2016.
Taiwan intends to develop comprehensive ties with 18 countries — 10 ASEAN members, six South Asian nations, as well as Australia and New Zealand, building strategic partnerships that will create regional prosperity.
Four concrete policy tasks are to be implemented: Promotion of economic collaboration, talent exchanges, shared resources and the forging of regional links.
In talent exchanges, Taiwan is to expand scholarships to attract more students from ASEAN, South Asia and Oceania.
Tsai has indicated that the number of foreign students in Taiwan would increase by 20 percent annually under the scholarship program, so the total number of foreign students could reach to 60,000 by next year, and work experience is to be offered after graduation to improve their skills.
In the meantime, the government would like to establish a points-based system allowing residency extensions for foreign professionals.
In a reciprocal arrangement, Tsai also indicated that the government would like to fund 12,000 Taiwanese going to study or research in one of the aforementioned 18 countries, expanding educational exchanges.
On Nov. 14 last year, Tsai said that the southbound policy had entered its operational phase and that the Executive Yuan would be responsible for policy implementation.
To make the talent exchange a success, it is preferable that Taiwan learn from other countries.
The US has probably the most successful scholarship program in the world: the Fulbright Program, which began in 1946. This program is still operating today and has produced tremendous results for the US. Taiwan should study and emulate this great US experience.
The Fulbright Program was a bill initiated by then-US senator William Fulbright in 1945 to establish an international educational exchange program. The bill passed in 1946 and a scholarship program that bears his name was launched.
The program aims to promote peace and mutual understanding between people living in the US and people visiting from other countries through educational exchange. This is also the aim of the New Southbound Policy talent exchange.
The Fulbright Program works in two ways: A US citizen is selected on merit and might receive funding to study, conduct research, or exercise their talent in a foreign country under the respective student, scholar, teacher or professional grants; citizens of other countries can qualify to do the same in the US.
The program fund comes from the proceeds of selling surplus US government military equipment. The program provides 8,000 grants annually to undertake graduate study, advanced research and university lecturing. It operates in more than 160 countries around the world.
The program is administrated by the US Department of State’s Bureau of Educational and Cultural Affairs, with an annual appropriation from the US Congress.
Since its establishment, more than 360,000 people have participated in the program, 59 Fulbright alumni have won Nobel prizes and 82 have won Pulitzer prizes.
The major reason underlying the US’ success in international educational exchange is adequate funding, which makes the program sustainable.
For Taiwan’s future success, it is also necessary to have sufficient funding to implement exchanges.
The Taiwan Scholarship Program would be best established through the legislature. The program could be sponsored by setting up a Bureau of Culture and Education under the Ministry of Foreign Affairs.
Funding should come from the interest on Taiwan’s foreign-exchange reserve investment in the US.
Taiwan’s foreign-exchange reserves reached US$450.5 billion in November last year, the fifth-largest in the world. Of this, about US$183.9 billion was invested in US Treasury bills, which yield an annual interest rate of 2.42 percent or US$4.5 billion in interest.
Right now, while Taiwan is engaging in important foreign policy, it is essential to use a portion of interest revenue to fund a talents exchange budget.
In 2016, there were 34,330 foreign students and 91,648 professionals in Taiwan, the Ministry of Education said.
If the government wants to increase the number of foreign students annually by 20 percent, that is about 6,833 people. Based on tuition fees, board and other expenses, the annual cost for each student studying in a public university is about US$6,000, so 6,833 students would cost about US$41 million.
To attract 5,167 foreign professionals, an average annual stipend of about US$30,000 is expected, which would cost about US$155 million.
Therefore, total funding for 12,000 foreigners to undertake graduate study, advanced research or lecturing in Taiwan would cost about US$196 million under the proposed talents exchange.
Suppose the funding for 12,000 Taiwanese going to other countries to study and research is the same, then the overall funding required is US$392 million annually, which accounts for only 8.7 percent of interest revenue generated from our foreign-exchange reserve investment in US Treasury bills.
The talent exchange is an innovative idea and one that has proven to be beneficial to the US. Therefore, it is also necessary to be innovative when tackling the costs.
Lee Po-chih is professor emeritus of economics and former vice president of National University of Kaohsiung.
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