Taipei Times: Government efficiency had long been an issue of concern for foreign companies with operations in Taiwan particularly in regard to work visa applications and staving off serious impediments to business like power and water shortages at major industrial parks.
How important is it for foreign companies that government efficiency is improved?
PHOTO: CHIANG YING-YING, TAIPEI TIMES
Guy Wittich: What the government could do more about is cooperation between the local and central governments. The problems faced by foreign companies may not necessarily be due to government policy, which was likely in the right direction but was struck down by local politics and local implementation and interpretation. Local government has not really motivated foreign investment and it would be in the interest of European companies to see a very close cooperation between the local and central governments.
Also there is not enough cooperation between ministries, departments and different agencies. What ever economic policy you want to implement you need the full cooperation of all the different departments. You have to make sure whatever you put into law is followed to the letter. It's very important for foreign companies in Taiwan as it creates stability and a certain sense of security for foreign investors here if they know that on specific issues the legal framework will protect them and make sure they can operate.
TT: What are your thoughts on the appointment of the selection of former China Airlines (
Wittich: We'd like the person to be sensitive to the issues concerning foreign companies and we have a lot of trust in Tsung. It will certainly help being a person who has come from industry.
I think it will be an interesting year for companies in Taiwan as we have now come out of the worst of the economic recession. I think there are a lot of questions about what the government will do to make the economic recovery happen.
We haven't seen yet a very clear concrete strategy on how the government will further develop the economy here and attract foreign investment. The Cabinet is new and it's reasonable to give the government some time but I think the government should not wait too long.
TT: In the wake of Taiwan's WTO entry, the ECCT is setting up a mechanism to monitor the implementation of the trade body's rules and agreements. How will this system operate and how will it contribute to resolving implementation problems?
Wittich: The purpose of it is to closely monitor the actual adherence to the WTO agreements that have been signed. We've done a McKinsey& Co-ECCT study that identified 20 industry sectors that will be mostly affected by WTO.
We have made a 80 to 90 page monitoring template that monitors all the different industries. The 20 industries we have identified will be covered here.
We have appointed Baker and McKenzie which will set up a project team of a number of senior lawyers to do the execution of this monitoring. Basically the format is a monthly report that will identify hot areas. We're not going to make it a long story because if you give them a 90-page document nobody will read it. We have to make a selection of the most urgent and critical issues.
We will also have a quarterly report. In the report we have also covered other regulatory barriers that are not directly related to market access agreement which we will be defining together with our law firm but also with our committees. We will have involvement from the trade office as well and get their input to identify what other barriers we're going to monitor. All those grey areas.
We have done this for our own members, to make sure that problem areas are solved or at least address the problem areas with the governments in Taiwan and Europe. We're also doing it together with a number of the European trade offices which are sponsoring the project and also the European Commission in Brusells. And they would like to have our information that will come out of the monthly reports to address the issues in Brussels through their channels.
TT: How exactly will issues raised by the ECCT's monitoring system be passed on to the proper authorities in Taipei?
Wittich: We have been discussing with the MOEA a contact window to be established soon. It's important that we have a window within the government that is somehow directly part of the WTO implementation project.
The idea is that we share the information coming out of these monthly reports with the the government and on the other side we will also report to the European Commission and let them closely be involved with all the issues. The ECCT industry committees will play a role in identifying problem areas.
TT: Taiwan's membership in the WTO will no doubt lend weight to the free trade issues raised by foreign business groups. Do you expect other business issues not directly related to trade agreements to be addressed in the open spirit of the trade body?
Wittich: We have seen on one hand Taiwan enters the WTO, champagne is opened and everybody's happy that Taiwan is part of the global economic family. But on the other hand we see some departments -- like those involved with labor cases -- not working in the spirit of the WTO. There are still some issues such as the inability to invite colleagues from China to work in Taiwan. We have to thank the government they solved part of this problem by allowing those in the manufacturing sector to come here easily with less hassles in getting a work visa. The ability of interaction and movement of labor between Taiwan and China is very important for foreign companies and positioning Taiwan as a regional hub.
Now in the general work environment there are issues like stabilization fees that they have now raised for foreign maids. There is a different stabilization fee levied by the Council of Labor Affairs for foreigners that want to hire foreign maids versus the Taiwanese that want to hire foreign maids. Locals have to pay NT$5,000 the foreigners have to pay NT$10,000. It's probably not a large number of people that are affected but it's not in the spirit of the WTO. On the one hand you decrease your tariff barriers and lift quotas, but on the other hand you raise a fee for foreign companies which is a discriminatory action. Although this is not an issue that is part of the WTO it is an example that if you work as a government towards a certain policy and you want to achieve certain goals you have to try to make sure all the government departments work the same way.
One of the committees we would like to revitalize is the Better Taipei Living Committee. We hope to take up a lot of different issues looking at the total working environment for foreigners here like visa applications, work permits and other things you need here to work so as not to have too many hassles. It's important for Taiwan that companies that are here attract quality local and foreign management because these people might have a voice as part of the board of directors of their own company.They may help make decisions in favor of Taiwan.
It has improved tremendously over the last 15 years if I compare it to 1987 by talking about living and working environment for foreign companies but the problem is that the rest of the world has progressed as well. So it has improved tremendously but it must stay competitive with places like Shanghai, Hong Kong and Singapore which have always had a more favorable environment for expats because they're city states and very much more western oriented, cosmopolitan places, that's the problem for Taiwan.
TT: There has been strong and mounting criticism recently from Taiwan's industry leaders about the government's meddling in the economy particularly regarding investment restrictions on China.
How should the government reevaluate its role in the economy?
Wittich: The Taiwan government should work towards a more open economy, a more deregulated economy. Some would say and I agree it should be more of a "hands off" government and let the free market mechanism play. Let the economy manage itself instead of interfering. But don't get me wrong. You should also make sure if you have policies in place that they are adhered to and create a stable business environment. The links with China are key here as well, establishing links and trying to de-politicize them making it an economic issue for both China and Taiwan. Getting the "three links" established is a basic requirement for Taiwan as it is trying to establish itself as a regional hub. It's a clear sign that people like Morris Chang (張忠謀) have given to the government. It clearly indicates the urgency of the matter.
TT: How do you see Taiwan remaining competitive with its giant neighbor and in the region generally?
Wittich: The points I just mentioned should be in place. That is openness of the economy, a clear transparent legal framework being implemented to the letter and the links with China. Even if you are competitive in a certain area -- and the government has placed a lot of emphasis on high-tech -- you are just not going to get there simply because you need to have that infrastructure in place that makes yourself part of the region. Taiwan needs to be part of the region.
The key issue is how can Taiwan build on its original core competence. We've seen some good initiatives in terms of high-tech promotion and there seems to be a second wave of small companies setting up high-tech based businesses. What they hope to do is become OEM suppliers of high-tech components, which is an area Taiwan is good at. That is what they've been doing and they know how to cater to OEM businesses. That is not something they need to make a huge change or a restructuring of business and that's why I'm a bit skeptical about developing an internationally competitive service industry in Taiwan because it would take too much effort in the near future to build it up. Start with the things you've done before that you've been excelling at and build on that.
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