American Chamber of Commerce in Taipei Chairman Wiseman, National Security Council Secretary General Hu Wei-jen, Premier Chen, AIT Director William Stanton, Distinguished Guests, Our Friends from America, Ladies and Gentlemen:
Good evening!
After more than 30,000 kilometers of flight in the air, and more than 3,000 push-ups on the ground, I’m fine. Thank you. Well, it gives me great pleasure to be here this evening. This year's Hsieh Nien Fan is especially meaningful, because we've really had a lot to be thankful for. The ROC's relationship with AmCham has spanned six decades, and in these years AmCham has played a key role in facilitating relations with our most important partner, the United States. So I want to thank all the members of AmCham for your contributions. I am also grateful to the people of Taiwan for once again putting their trust in my administration. But for me, my reelection is not an endorsement to sit back and smile about what we have already achieved, but instead a mandate to accomplish things that we have yet to achieve.
For Taiwan to secure its economic future it must build up its global competitiveness. There are five fundamental pillars that support our effort to achieve this goal—first, trade liberalization; second, comprehensive restructuring of Taiwan's major industries; third, rationalization of utility rates; fourth, internationalization of Taiwan's education system; and fifth, attracting foreign talent to Taiwan's labor pool.
As I see it, international trade plays an indispensable role in the advancement of modern states. The Republic of China on Taiwan joined the World Trade Organization in the year 2002 but had not signed any Free Trade Agreements with its major trading partners until my team came to office in 2008. In 2010, Taiwan signed an Economic Cooperation Framework Agreement, ECFA for short, with mainland China, which is Taiwan’s number one trading partner. Then in 2011 Taiwan signed an investment agreement with Japan, which is Taiwan’s number two trading partner, and started to negotiate an economic partnership agreement with Singapore, and an economic cooperation agreement with New Zealand. Taiwan so far has not been able to start similar negotiations with the United States, the number three trading partner of Taiwan, under the 1994 Trade and Investment Framework Agreement (TIFA), due to, of course, the beef issue. Currently, my administration is working very hard to create the necessary conditions so that TIFA talks can be jump-started. In the long run, Taiwan must join the Trans-Pacific Partnership Agreement to further participate in the economic integration of the Asia-Pacific region.
I envision a future where trade will power Taiwan's transformation into a global center for innovation, and its emergence as a regional economic and trade hub. However, to achieve trade liberalization and the rewards that come with it, Taiwan must take the first step of shedding its protectionist mindset. Free trade is only viable within the context of reciprocity. Only by opening itself up to the world will Taiwan be embraced by the world. And a major step in this direction will be the development of Free Economic Demonstration Zones. These special trade zones will lead the way to liberalization of Taiwan's economy by ushering in deregulation, lower tax rates and more efficient government. The first such zone will be established in 高雄市—Kaohsiung City—then the model will later be extended to other parts of Taiwan so that the fundamental conditions will be created that allow Taiwan to actively join in the regional integration process, especially the TPP, within the coming decade.
The second pillar of Taiwan's national competitiveness will be a comprehensive restructuring of its major industries to stimulate home-grown innovation. The rise of Taiwan’s technology titans has been quite an impressive accomplishment, but the reality is that Taiwan companies by and large remain at the lower rungs of the value-added chain, where profit margins are low and innovation is minimal. Taiwan companies are largely ODMs, or original design manufacturers, that design, assemble and supply finished products to big brand names such as Apple, Google, HP, and Motorola, according to the specifications given by the latter. This must change. To become an innovation center, Taiwan must transition to the marketing and development end of the business. The rewards will be multiple. First, ownership of product ideas will allow Taiwan companies to profit at higher margins. Second, Taiwan will be able to build up its global brand name recognition. And third, being at the creative end will further stimulate home-grown innovation. So trade liberalization will accelerate this process by creating new pressures for Taiwan to adapt to ever-changing global trade dynamics, which in turn will drive its transformation from a cost-down, efficiency-driven economy into a value-up, innovation-driven economy.
The rationalization of rates for Taiwan's public utilities, such as electricity, gasoline, and natural gas, is the third important pillar supporting our efforts to achieve national competitiveness. Returning to market mechanisms, so that utility rates gradually come to reflect true market prices, will promote the efficient allocation and usage of resources. In fact, trade liberalization, economic restructuring and rationalization of utility rates will be synergistic forces that power the next phase of Taiwan's technological development. At the same time, market forces will drive the advancement of Taiwan's green energy industries, which will be a crucial step toward sustainable energy and stronger global competitiveness.
The next pillar of Taiwan's global competitiveness is the internationalization of its education system. Taiwan is one of the most highly educated countries in the region, with a 97% literacy rate and a 92% college enrollment rate. However, in recent years the growth of higher learning institutions has outpaced growth in the numbers of available students. For instance, 44 years ago, when I took the college entrance examination, the admission rate was only 27%, but today it’s 92%. So in those old days, it was not very easy to get into a university. But these days, it’s not easy to be rejected by universities. So this has given rise to problems of low admission requirements, over-extension of education resources, and inconsistent education standards. To increase the competitiveness of Taiwan's universities we must open our doors to students and faculty from other parts of the world. Under our plan, the number of foreign and Chinese mainland students, who currently account for less than 5% of the total student body, will go up to at least 10% by 2020. Internationalization of this sort will raise the bar of Taiwan's education system toward higher international standards, and in the end will also make our own students and professors more internationally competitive.
The last pillar of Taiwan's international competitiveness will be our ability to attract, to employ and retain foreign talent in Taiwan. This objective will be largely driven by the successes of the other pillars of trade liberalization, economic restructuring, and the internationalization of Taiwan's education system. And in conjunction with that, Taiwan must also adopt a farsighted immigration policy that will not only attract foreign talent but also encourage their desire to make a long-term contribution to Taiwan's society. We actually look toward the United States as a great success story that has tapped into the potential rewards of cultural diversity. An influx of foreign talent will bring in new skills and know-how that help propel Taiwan's economy forward. So, Taiwan's society must foster greater cultural diversity and tolerance so that instead of stifling creativity it brings out the best in people. The above five pillars represent integral parts of a larger vision. Together, they will create a self-reinforcing momentum that ushers in a golden decade of economic prosperity in Taiwan.
To secure Taiwan's position at the forefront of a global trade system that is fast evolving, the government, the political system and the people will need to demonstrate strong determination. There is no room for indecision or hesitation; in today's fast-changing world one person's indecision is another person's opportunity. For Taiwan to achieve its goals, both the citizenry and political bodies must be willing to take on short-term challenges for the greater good of achieving long-term rewards. For its part, the government must work to ease the associated growing pains. Pursuing the five pillars will inevitably have certain short-term consequences for Taiwan's society, but these disruptions can be limited by pursuing intelligent policies. This is why my administration is revamping the taxation system in order to achieve a more equitable distribution of wealth that will help the less privileged members of our society. We intend to adopt new taxes that will bring in new revenue. A luxury goods tax will come first, followed later on by a capital gains tax. My administration will then be able to afford a more comprehensive social security scheme. Our primary focus will be on helping disadvantaged groups, such as low-income families, persons with disabilities, and indigenous people, while also building a better unemployment safety net that features such items as government-sponsored retraining programs and more education opportunities. The goal is to help level the playing field so that the less privileged will have opportunities to close up the gap.
But in the end, it is the people of Taiwan who must show the determination to fight for their own economic future. The world is changing, and Taiwan must rise to the occasion or be left behind. This will require new skills, new knowledge and new ways of thinking. To deal with the challenges that lie ahead, Taiwan's political parties must also learn to work together. Taiwan's future cannot be stalled by bitter infighting or extreme partisan politics. Differences in the methods and strategies employed to achieve a goal may exist, but we as a people must always stand firmly together for the preservation of our country. Only through rational discussion can we achieve the truth. And based on the results of such truthful dialogue, my administration will implement the bold policy initiatives necessary to move the nation forward. Right now there is no other issue as urgent as our economic future. This matter demands our full engagement in the type of rational debate that I envision. While international trade will bring in many challenges, we must know that “the future doesn’t belong to the fainthearted.” The coming four years will be four years of great transformation for the Republic of China on Taiwan.
Thank you very much!