President Ma Ying-jeou on the morning of July 30 attended the "2013 Turning Point: Blazing a Trail for Taiwan's Economy" summit organized and hosted by the United Daily News (UDN), in which he explained that the seven major recommendations reached at last year's summit have demonstrated substantive results. The president also stressed that the government in the future will focus on three major engines to drive Taiwan's economic growth, namely: initiating free economic pilot zones (FEPZs), expanding investment in public works, and strengthening the expansion of exports.
In remarks, the president stated that the UDN Group has long strived to promote Taiwan's economic development and has used its influence as a major media group here to "exert influence and instigate change." He said that the group's efforts in this regard have already had an important impact on the formulation of government policy. For instance, during last year's summit, seven major recommendations to forge economic growth were made, including enhancing cooperation between Taiwan and Japan, making adjustments to Taiwan's growth model, introducing greater deregulation, promoting free trade agreements and the Cross-Straits Economic Cooperation Framework Agreement (ECFA), developing talent, and promoting reform in higher education. The president noted that in looking back at the effects of instituting these suggestions over the past year, it is obvious that considerable results have been achieved.
With respect to enhancing cooperation between Taiwan and Japan, President Ma stated, Taiwan and Japan two years ago signed the Taiwan-Japan Bilateral Investment Arrangement, which has yielded enormous benefits in enhancing relations between the two countries. He pointed out that in 2012 Taiwan's exports to Japan were valued at US$18.99 billion, while the number of Japanese investments in Taiwan hit 619, both of which were new record highs.
As for adjusting Taiwan's economic growth model, the president mentioned, the government in last September introduced the Economic Power-Up Plan and also aggressively sought to encourage overseas-based Taiwan companies to come back. He cited data showing that from last November to the end of this June, the government has approved 58 such investments, which have an aggregate investment amount of NT$213.6 billion that will create 2,800 employment opportunities.
President Ma further explained that Taiwan's economic growth over the past five years has averaged 2.9%, which is the second highest of Asia's four little dragons behind only Singapore, while outpacing Korea and Japan, he said. In addition, according to the Executive Yuan's Council for Economic Planning and Development's (CEPD) monthly report, Taiwan's economic monitoring indicator for this June flashed the "green" signal, marking steady growth, the president stated. He commented that since August 2011, this marked the first time in 23 months that the indicator was in the "green" signal. Furthermore, he noted, the leading indicators continued to remain in an upward trend for the 11th consecutive month, while the coincident indicators also rose for the third straight month. All of this data suggest that Taiwan's economy has already begun a gradual recovery, he said.
In terms of introducing deregulation, President Ma stated, as of June 28 of this year, administrative agencies have completed deregulation of 854 financial- and economic-related laws and regulations, which has enabled Taiwan to move up considerably in the World Bank's World Business Environment Survey. As for the development of talent and the reform of higher education, the president stated, the government has already elevated regular meetings of talent policies to a Cabinet-level and Premier Jiang Yi-huah (江宜樺) is personally overseeing and holding the meetings. This mechanism is addressing problems, such as imbalances in higher education, schools not producing sufficient graduates in fields required by industry, and a brain drain, and is formulating strategies and measures in response, he said. President Ma remarked that the unemployment rate, which the public closely follows, has declined from 5.85% in 2009 to 4.24% last year. The rate has fallen further this year, with the average in the first half of this year at 4.14%, he said, adding that this indicates that the unemployment rate is declining steadily.
The president then discussed Taiwan's participation in regional economic integration. He stated that Taiwan and New Zealand on July 10 this year signed the Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Cooperation (ANZTEC), specifically noting that this pact marked many firsts. To begin with, this is the first time the ROC has signed an economic agreement with a developed nation, with a country that does not maintain formal diplomatic relations with it, and with a country in the southern hemisphere, he said. Most importantly, President Ma emphasized, this is the first economic cooperation agreement (in the three years since the signing of the ECFA in June 2010) between the ROC and a nation with which it does not maintain formal diplomatic ties. This shows that the government's efforts to improve cross-strait relationship is also helping Taiwan to expand its participation in the international community, he remarked.
President Ma explained that New Zealand is a charter member of the Trans-Pacific Partnership (TPP) and a member of the Regional Comprehensive Economic Partnership (RCEP). The signing of the ANZTEC between Taiwan and New Zealand not only demonstrates Taiwan's determination to participate in regional economic integration, but also creates conditions advantageous to Taiwan's effort to join the TPP and the RCEP, he said.
The president also pointed out that the United States on October 2 of last year announced that Taiwan would be the 37th participating nation in its Visa Waiver Program, and at the same time would become the only country in the initiative with which the United States does not maintain formal diplomatic relations. He also explained that at present 133 nations and areas throughout the world provide ROC nationals with visa-free courtesies or other visa conveniences, which indicates that the ROC is widely respected throughout the international community.
President Ma then turned the topic to a subject that has raised considerable attention here – the Cross-Strait Trade in Services Agreement. He acknowledged that this agreement has triggered much debate in the public and the political arena. However, he emphasized that much of this discourse has not been sufficiently rational, but rather based on misinformation and rumors as a means to refute the agreement. The president provided several examples, first saying that the agreement does not open Taiwan's doors to mainland laborers and will not allow mainland Chinese taxi cab operators to set up taxi businesses here. Consequently, he said, claims by some that "Taiwan's taxi cabs are going to be overtaken by mainland Chinese ones" are groundless rumors. In addition, he stated, mainlanders allowed to come to work here are mainly those investing in businesses here, managerial-level personnel, and a small number of skilled technicians. He stated that since Taiwan's doors were opened to investment from mainland China, the total amount of investment from there has been just some US$700 million. In addition, of the over 300 instances of investment here, the number of mainland Chinese coming to work here is just 216, whereas the investments have created over 6,700 job opportunities for Taiwanese, he said. President Ma commented that this highlights that mainland Chinese investment in Taiwan can help to generate more jobs for people here.
The president further explained that the government has adopted a Program to Assist Industry Adjust to Trade Liberalization to provide assistance and services to industries, enterprises, and laborers impacted by trade liberalization, so they can make the necessary adjustments, and to provide financial relief for losses suffered as a result. The ultimate goal of this mechanism, he said, is to enhance the competitiveness of Taiwan's industries and support their transition.
The president stated that in order to respond to the expectations of the public and to spur the domestic economy, the Legislative Yuan on June 25 this year passed amendments to the capital gains tax legislation, eliminating the provision that provides for the imposition of the tax from 2013 to 2014 should the Taiwan Capitalization Weighted Stock Index exceeds 8,500 points. He noted that in the one month after the revisions to the law were passed, the average daily turnover value on the stock exchange stood at NT$103.9 billion, which was considerably higher than the average volume in the same period last year of NT$73.2 billion. The president also said that during this period, the Taiwan stock index has also risen by 6.95%, which exceeds the scale of gains in Shanghai (at 3.77%), in Singapore (at 5.9%), and in New York (at 6.2%), which further attests to the stable state of the market.
The president stressed that the first engine to drive Taiwan's economic growth is to develop the FEPZs. The government, he said, has also selected smart logistics, international medical services, value-added agricultural processing, and industrial cooperation as the development focuses. The president stated that the government hopes that these pilot zones, which feature five ports and one airport (Suao Port, Keelung Port, Taipei Port, Taichung Port, Kaohsiung Port, and Taoyuan Aerotropolis), will enjoy deregulation with respect to the movement of people, goods, and money. This will enhance administrative efficiency and attract greater amounts of foreign and domestic capital, thereby forging greater economic liberalization here and enabling Taiwan's economy to be more in sync with that of the global economy, he said. In addition, the CEPD is also in the process of including the financial industry into this initiative with the hope of attracting capital and financial talent that previously left Taiwan back here, the president stated.
President Ma noted that the expansion of investment in public works will serve as the second engine to drive economic growth momentum here. The government is presently engaged in drafting plans to redevelop national assets into sources of fund to finance infrastructure projects. Efforts in this regard not only will help to improve the government's fiscal position, but will also pay benefits to the public, he said. Moreover, the amount of public infrastructure spending should return to reasonable levels, he commented, pointing out that in 2013, government spending on major public infrastructure amounted to only 2.54% of GDP. The president said that in the future the government will re-examine the allocation of budgets with the hope that public infrastructure projects will be carried out to support economic development. More importantly, he commented, the government has to improve the effective and efficient implementation of public infrastructure projects, as well as ensuring that such projects are well-planned.
President Ma further explained that the third engine to drive economic growth momentum in Taiwan is strengthening the expansion of exports. The government will not only continue to diversify our export markets and products, but also will promote an overall expansion of exports, the president said. At present, it is formulating strategies to expand the export of services, hoping to take advantage of Taiwan's strengths in various service industries, such as banking, insurance, computers, and information to expand the export of these services. This will enable the export of modern services to become Taiwan's another major source of exports, he stated.
Lastly, the president stressed that amid the global trend of regional economic integration, Taiwan cannot afford to be absent in this international race towards economic and trade liberalization. He reiterated that "engagement brings prosperity, while isolation brings atrophy." At present, the president noted that the service sector in mainland China accounts for only 46% of GDP, while Taiwan's service sector comprises over 60% of its GDP. President Ma said that Taiwan's service industry is quite competitive and the signing of the Cross-Strait Trade in Services Agreement will offer a good opportunity for Taiwan enterprises to develop business in mainland China. He expressed hope that lawmakers from ruling and opposition parties will jointly discuss the question: Will Taiwan reach out or not.