The latest Global Financial Centres Index (GFCI), compiled by London-based consultancy Z/Yen Group and Shenzhen-based think tank the China Development Institute, ranked Taipei 30th in the world for competitiveness as a financial center and as the 12th-most favored in the Asia-Pacific region.
Survey No. 23 provided ratings for 96 major financial centers around the world, with the new addition of Astana, Baku, New Delhi and Tianjin. London and New York remained the world’s top two financial centers, followed by Hong Kong, Singapore and Tokyo.
Taipei’s ranking as a financial center — in terms of business environment, human capital, infrastructure, financial sector development and reputation — fell three notches from 27th in the survey published in September last year.
The top nine centers in the Asia-Pacific region all rose in ranking, with Hong Kong and Shanghai rising markedly, but Taipei slid a second time, lagging not only behind Hong Kong, Singapore and Tokyo, but also Shanghai, Beijing, and even Shenzhen and Guangzhou.
Taipei’s showing was the worst since the city was first included in the poll in 2009. This has naturally invited knee-jerk reactions from those who prefer to question the government’s efforts and determination to develop Taipei into a regional financial center, rather than ask a more fundamental and pragmatic question: How does Taiwan envision itself and how can it leverage its management capability, banking system, professional services and regulatory framework to become a magnet for businesses and investors? One should focus on how the nation could find a niche in the world’s fast-changing financial landscape and what that niche should be.
There has been no lack of large, inappropriate and badly planned financial development programs from the government over the past two to three decades, such as making Taiwan an “Asia-Pacific financial center,” an “Asia-Pacific fundraising and asset management center” or a “yuan-related wealth management center,” but such grandiose visions will never be realized unless authorities analyze the nation’s advantages and disadvantages, such as research and development (R&D) spending, tax regime and labor laws, in its pursuit of such goals.
Speaking ahead of a meeting of the Legislative Yuan’s Economics Committee on Wednesday last week, Financial Supervisory Commission Chairman Wellington Koo (顧立雄) said the government would look into the reasons for Taipei’s slide in the GFCI.
However, he added that developing the nation into a “regional wealth management center” might be a more realistic approach, and the first step toward achieving that would be encouraging domestic investors not to move their funds into foreign securities.
No concrete measures have yet been announced by the commission, but Koo’s suggestion to create an environment in which domestic investment trust companies can strengthen their product R&D and present better offerings to consumers is a good start.
Rejuvenating momentum in the local wealth management market is an option for Taiwan, where local investors are more interested in investing abroad than participating in the domestic market, and which has seen net outflows in the financial account for 30 consecutive quarters as of the end of last year.
Taiwan was a latecomer as a financial center and will continue to lag behind its regional peers, which see new demand generated from within. Therefore, the nation needs to differentiate itself in terms of its market and service offerings.
If there is anything one can take from Koo’s remarks, it is that one needs to take an honest look at Taiwan’s strengths and then commit to making the best of them.
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