Mon, Mar 12, 2001 page18

• A finger on Taiwan's pulse

  On his recent week-long swing through Taiwan, Rupert J. Hammond-Chambers, president of the US-ROC Business Council, sat down with 'Taipei Times' staff reporter Patrick Kearns to discuss Taiwan issues relevant to the international business community

  • By Patrick Kearns / STAFF REPORTER
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  Taipei Times: Please give our readers some background on the US-ROC Business Council and its members.

  Hammond-Chambers: The Council has been around for about 25 years, and was started back when there were formal diplomatic relations between Taiwan and the US. So as a consequence this organization was designed to facilitate trade between the two and also offer a platform for government officials to exchange ideas and viewpoints, in a business context.

  

  Robert J. Hammond-Chambers, president of the US-ROC Business Council, discusses his views on Taiwan's place in the global market.

  PHOTO: GEORGE TSORNG, TAIPEI TIMES

  Of course after Jan. 1, 1979, the significance of the council rose significantly because the business relationship became the most dynamic part of the relationship. And clearly over the last 22 years that relationship has grown by leaps and bounds -- and so has our organization. It has really allowed us to play an important role from a business standpoint in helping businesses negotiate the myriad of challenges in doing business internationally and specifically between the US and Taiwan.

  We work very hard to stress to people that we are not a political organization. We are interested in facilitating and growing the dynamic and active business relationship between Taiwan and the US. Today we have approximately 180 US companies as members including Intel, Motorola, General Electric, Cisco Systems and Citibank. We also represent a large number of small to medium-sized firms as well. And we are moving aggressively to offer a bundle of services that empower success in the market.

  Ultimately we help companies build strategic relationships, and let the government understand that US companies are not just here to sell product, but are interested in a long-term relationship with Taiwan. That is an important message to send, and in all fairness a lot of US companies realize that or are happy to embrace it when it is pointed out to them.

  TT: How do US-based firms with commercial interests in Taiwan view the current investment environment here?

  Hammond-Chambers: Companies looking at Taiwan from abroad now are cautious. I think they want to see how the DPP administration settles down in these early days. Clearly we have had some issues surrounding the Fourth Nuclear Power Plant (核四) that have raised concerns in the international business community about the environment, but those concerns are not insurmountable.

  Companies who have a long-term interest here are still here, and they are doing terrific business in Taiwan. If you look at companies like Compaq, Hewlett-Packard and Dell, they are procuring more this year than last year. So for companies who have a long-standing relationship with Taiwan, they're here, they're looking to do more business here, and they are not viewing an exit strategy, but far from it.

  Privately I think many people here view the process of change here on the political side as very positive, positive for the long-term evolution of Taiwan as a functioning democracy. These are values here that the US business community want to see Taiwan embrace. They want to see Taiwan continue down the path of democratic reform, why? Because ultimately it will strengthen the institutions that govern the economy -- the economy will be stronger as a consequence -- and therefore a more desirable place to do business.

  So when companies look to gauge risk, they look down the line and see a lot of things that are positive about Taiwan. We do have an environment for change right now, and that's what the election of Chen Shui-bian (陳水扁) demonstrated, that any change is possible. That is a very healthy thing, change can be very good. While it is often difficult and awkward in the short term, but in the medium to long term the benefits can be enormous. It will take a little political courage on the part of officials, but that courage will be rewarded.

  TT: Did the political infighting surrounding the Fourth Nuclear Power Plant frighten international investors over the stability of Taiwan's economy?

  Hammond-Chambers: I think there was some concern about how the economy would be impacted in the short to medium term on the outcome of that particular fight. However, as you look at Taiwan overall, business people looked at that battle much more in a political context rather than a business context -- to the extent that it paralyzed the reform process in the legislature. [It raised questions like] how is banking reform going to be impacted by the fact that the government was focusing on the nuclear issue? Companies are far more interested in the needs of Taiwan's economy moving forward, as opposed to the pros and cons of nuclear power specifically.

  What we really need to be doing is focusing far more on what reforms are needed in the energy sector for Taiwan to realize the needs and objectives of its people and its businesses, five to 10 years down the line.

  Your paper did a superb article recently about the erratic power supply at the Hsinchu Science Park. This is an issue that the international business community are going to focus on. You have to have clear and reliable power for foreign companies to seriously consider coming in and expending serious capital in building facilities here.

  The government has a lot of work to do in that department, in explaining what it is going to do in the next five to 10 years to insure that Taiwan has the energy it needs to grow.

  TT: As the government starts to open new sectors of the economy and privatize state-run enterprises, are foreign companies being offered a level-playing field in Taiwan?

  Hammond-Chambers: In the telecommunications field Taiwan's intentions are good. Taiwan is committed to deregulation, its committed to partial privatization with the selling of over 50 percent of Chunghwa Telecom -- although I would like to see the government wholly divest itself of Chunghwa, and get out of the business of running businesses.

  While that doesn't appear to be a realistic short-term goal, in the medium-term I think the government should definitely articulate a policy where it withdraws itself from an equity position in state-owned or ex-state owned enterprises. But as for opening of the telecom sector, there is a great deal of debate in the US whether its going too fast or too slow, and what the best way to deregulate is. But the fact is that since 1997 Taiwan has deregulated its telecom industry tremendously.

  Look at wireless: the perfect example [whereby] deregulation of one specific telecom sector offers the most impressive growth rate in the world. So Taiwan's consumers are ready and the government has proven well capable of delivering and providing US companies access to the Taiwan market.

  Other interesting areas include submarine cable licenses that have just been awarded, as well as the process for third generation wireless being worked out by the Directorate General of Telecommunications and the Ministry of Transportation and Communications. These offer a lot of new business opportunities and many of our member companies are very interested in participating. We at the council want to see an active, competitive environment for all businesses.

  On the energy side, its too early to see whether its going to be a free and fair environment for foreign companies.

  Again, I am still waiting for the government needs to articulate what it is doing to insure Taiwan's future energy needs.

  Yes, the government has talked about independent power projects. Yes, the government has talked about LNG (liquid natural gas), but the fact is we are no closer to resolving the issue at the second LNG terminal up in the north of Taiwan, and there are still issues surrounding the independence of the Energy Commission, land reform, the privatization of Taipower and deregulation of the industry as a whole.

  The government needs to state policy more clearly, so we can understand the government's plans. Then the international business community can work with the government to achieve its goals and objectives. It is in the interests of this group and all businesses in Taiwan to have an environment that provides a steady energy supply at a competitive price.

  In the area of finance, I hope the government is learning from the experience of other Asian countries in trying to deal with [non-performing loan] problems. The message here is the extent that officials work to create a level-playing field has a proportionally positive impact on the issue that they are trying to address.

  TT: What should the government be doing to allow businesses to realize the economic benefits of closer China trade ties?

  Hammond-Chambers: The government has to clearly define its policy on financial institutions providing funding to cross-strait business. I appreciate the fact that there are some political realities here, and that we are probably not quite ready yet to deal with actual direct trade between the two sides -- that's clearly a political decision. But from a business standpoint it would be nice if the government started to generate some discussion on how foreign companies are going to be able to participate in those sorts of opportunities.

  Clearly banks are going to want to provide financial services to businesses that have aspirations both in Taiwan and China -- and they're not going to want to deal with two different institutions on the two sides of the strait.

  They are going to want a single relationship that offers a bundle of financial services that empower them to succeed and be healthy. We are waiting for the government to start opening the doors to discussion on these issues.

  TT: What is your reaction to recent hints from Beijing that foreign businesses may be shut out of the cross-strait transportation business?

  Hammond-Chambers: The [real cross strait] business opportunity comes when both sides become committed to free trade across the strait.

  Yes, the council very much wants to see that its a level playing field, and that foreign companies are allowed to participate. Shipping is a great example because trade with China is the trend. Regardless of the government's attempts to limit domestic firms with policies like "No Haste, Be Patient," clearly Taiwanese companies are moving aggressively into China.

  So it is an issue of concern when we hear language supporting cross-strait shipping as an internal Chinese matter. We very much hope that all companies will be allowed to participate in these potential business opportunities, and be allowed to ply the Taiwan Strait.

  TT: Is the Council for Economic Planning and Development's plan to shift to a knowledge-based economy possible in the near-term, and can Taiwan stay ahead of China technologically for the next, say five to 10 years?

  Hammond-Chambers: Yes, I think Taiwan can make the shift [to a knowledge-based economy]. What Taiwan has done well is it has recognized that actually the way to be successful is not to try and succeed at everything, but to try and focus in on areas where it can be the leader. Supply-chain management is a good example, and interestingly I see companies like Taiwan Aerospace that, for example, rather than trying to build entire airplanes, are focusing on parts for planes.

  Getting a niche area, growing a competency in it, producing with excellence and as a consequence gaining a reputation for it. I think that Taiwan has some inherent strengths that can, in fact, allow it to stay ahead of [China] beyond five years.

  The difference is that China is always going to be the big market, but that doesn't necessarily mean Taiwan, in certain areas, isn't going to be a player. In the knowledge-based side of things, I would like to look at this issue of content ... and 3G wireless and broadband networks that allow massive amounts of data and voice to travel very quickly. We are about to enter an era where consumers can access information at high speeds, wherever they are, through a myriad of electronic devices.

  When you think about where the quality content will come from for these services, I see Taiwan. Yes, there is alot of content in China, but content with value? No, not really. In time, China will be part of the global Chinese community, but for now Taiwan is the link [for the West] to Chinese groups that are affluent, educated and online. So there are areas where Taiwan can position itself to use its strengths to move forward into a knowledge-based economy. Many international companies are focusing on ways to develop intellectual property for the region and they are looking at Taiwan to do it.

  And they are looking to Taiwan because the relationships are historically here already. They will continue to work with Taiwan because companies naturally go to who they know. If we want to talk about a knowledge-based economy there has to be the free movement of content and ideas. If you seek to control that you are retarding that evolution, and that is what will separate Taiwan from China. Taiwan's system empowers entrepreneurs to think out of the box and say what is on their mind.

  TT: Where does Taiwan stand in the global war to attract and retain international professionals?

  Hammond-Chambers: This is an area that many countries around the world are wrestling with. The US, for example has just passed a law to dramatically increase the number of visas that specialized professionals can access to come and work in the US. The drive behind that law was basically technology companies that are screaming for qualified people.

  And when they look at Asia they look at China, Taiwan and India, and see a vast potential of people. Companies can only be as successful as the quality of people that work within them.

  So Taiwan is increasingly faced with this same challenge that the rest of the world is facing: How do you retain your own talent while making the environment attractive enough to bring in new talent so you business can choose from the best.

  Because, make no mistake, Taiwan is in a global competition for its talent, and it cannot rest on its laurels nor can Taiwan say 'People who are Taiwanese should work in Taiwan.' The government needs to put some serious thought to how it is going to compete in the global labor environment.

  People are increasingly being presented with opportunities all around the world and moving to those opportunities.
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