During a meeting on the morning of November 16 with the directors and supervisors of the General Chamber of Commerce of the ROC (ROCCOC), President Ma Ying-jeou said that the current economic downtrend will continue for a period of time, but encouraging results will be seen if all sectors of society work together.
In remarks, the president stated that the business services sector constitutes an important force behind Taiwan's economic development. Last year, he noted, the contribution of the overall services sector to Taiwan's nominal GDP was about NT$9.4 trillion, or about 70% of total GDP. Some 6.27 million people were employed in this sector, which accounts for about 58% of Taiwan's overall workforce, he added, pointing out that this highlights the contribution of the business services sector to Taiwan's economic competitiveness.
President Ma stated that in the wake of the 2008 financial tsunami, Taiwan's share of exports of goods to major markets throughout the world did not rise, and in fact in some cases fell. The main reason for this, he explained, is insufficient economic liberalization of Taiwan's economy. Even though the government had already signed four free trade agreements with five of the ROC's diplomatic allies in Central America prior to his taking office, the volume of trade with these nations accounts for only 0.2% of Taiwan's total external trade. In order to break new ground on this front, the president said, since taking office he has actively pursued the signing of economic cooperation agreements with major trading partners. To date, Taiwan and mainland China have signed the Cross-Straits Economic Cooperation Framework Agreement, and Taiwan and Japan have signed the Bilateral Investment Arrangement, he said. Meanwhile, he mentioned that talks with Singapore and New Zealand on economic cooperation accords are progressing smoothly, and some Southeast Asian and South Asian nations have also expressed interest in discussing the possibility of such accords with Taiwan.
President Ma stressed that exports account for some 70% of Taiwan's GDP. However, free trade agreements or economic cooperation accords currently in place cover less than 5% of Taiwan's exported products, compared with 17% for Japan, 35% for Korea, and 70% for Singapore. This shows that Taiwan lags significantly behind in economic liberalization, he said. In particular, free trade agreements at present are mainly high quality agreements, which means that after signing these deals, tariffs on some 95% of goods are cut to zero. Even though this will constitute a considerable blow to Taiwan, since the rules of the game have already been set, the president said, Taiwan has little room for choice.
With respect to the positive effects of these economic cooperation agreements, President Ma commented that since Taiwan and Japan signed an open skies agreement, the number of cities served by direct flights between Taiwan and Japan has increased by 90% and the number of flights has risen by 45%. Furthermore, with the US presidential election having come to a conclusion, the president expressed his hopes for a resumption of talks between Taiwan and the US under the Trade and Investment Framework Agreement as soon as possible.
President Ma said that Taiwan's industry is very efficient but is weak on innovation and therefore does not manufacture enough high value-added products, and income growth in the industrial sector is not keeping pace with economic growth. To create value, industry must move in the direction of manufacturing key components and precision equipment, the president stated, adding that the Ministry of Economic Affairs is actively promoting a plan to form backbone enterprises within various industries to spur industrial transformation.
President Ma emphasized that while Taiwan's economy at present is in the doldrums, quite a few international research organizations have actually pointed out that Taiwan remains competitive. For instance, Business Environment Risk Intelligence (BERI) from the United States this year rated Taiwan's investment environment as the fourth best in the world, while the World Bank in its Doing Business 2013 report rated Taiwan 16th in the world for ease of doing business, which was a leap of nine spots from last year, he said. Also, in the Forbes Magazine 2012 list of the Best Countries for Business, Taiwan was listed at 16th in the world, up by 10 spots from the previous year, ranking third in Asia and higher than Japan and Korea, he added.
President Ma noted that many government agencies, including the Ministry of Economic Affairs, have been working quietly away for many years without a lot of fanfare. Judging from the increase in foreign investment, Taiwan's investment environment is in fact improving, he said. In addition, the government has also relaxed restrictions on land acquisitions and on the number of foreign laborers that can be used. These changes have been made to encourage Taiwan companies to come back to Taiwan and invest here, he stated. At the same time, in a bid to encourage this investment, the government will also further adjust the ratio of foreign laborers that can be utilized by domestic enterprises with plants here that are interested in making new investments, the president stated. While the current economic recession will continue for a period of time, the president expressed confidence that encouraging results will be seen if all sectors are able to work together.
The 22-person delegation from the ROCCOC was led by Chairman Chang Pen-Tsao (張平沼) to the Presidential Office to meet President Ma. Also attending the meeting were Deputy Secretary-General to the President Hsiung Kuang-hua (熊光華) and Vice Minister of Economic Affairs Cho Shih-chao (卓士昭).