Office of the President Republic of China(Taiwan)

February 20, 2001

President Banko, Mr. Cassingham, distinguished guests, ladies and gentlemen:

Since Taiwan’s first transfer of political power between parties last year, this is my first time to attend the annual Hsieh Nien Fan banquet of the American Chamber of Commerce. I feel privileged and honored to be with you on this occasion.

Under the efforts of the Chamber and all of the distinguished guests present this evening, the trade and economic cooperation between Taiwan and the United States in recent years has grown closer and closer, bringing benefit and prosperity to both countries. In particular, the Chamber has acted as a great bridge for communication between foreign businesses and the ROC government. Its contributions to the increasing ROC-US trade and to the economic development of Taiwan are remarkable. The Chamber’s Taiwan White Paper and the regular and irregular meetings it has sponsored to voice foreign businesses’ concerns over our financial and economic policies have been valued by our administration as reference for improving these policies. Having said that, I would like to avail myself of this opportunity to extend my sincerest gratitude to our closest trade partner and most respectable friends—the American Chamber of Commerce and its members.

The 1990s witnessed robust growth of the US “new economy,” which was a major propelling force behind the growth of the world economy and trade. During this decade, the complementary and mutually beneficial trade and economic relations between the ROC and the US have been further strengthened. Through the booming trade and investment with the US, Taiwan has experienced rapid export increases and industrial structural transformation, and has thus become an indispensable member of the global high-technology community. Looking to the next decade, I am sure that on the basis of mutual benefit, the two countries will continue efforts to enhance bilateral economic cooperation. We will also take up a greater responsibility of promoting prosperity and peace in the Asia-Pacific region and in the entire world, based on the universal values of freedom, democracy and human rights we share.

I have always believed that the future of Taiwan’s economy lies in maximizing our competitive edge in manufacturing, and in following in the Silicon Valley’s footsteps of research and development, innovation, and entrepreneurship. Our aim is to build a knowledge-based economy that is characterized by innovation, speed and value. Therefore, in my inaugural address on May 20 last year, I particularly presented the vision of developing Taiwan into a “green silicon island.” Our administration has already mapped out a “knowledge-based economy development plan,” and has drawn up 57 concrete programs for the plan’s implementation, heralding that Taiwan will enter a new economic era that is based upon knowledge and innovation.

Since the beginning of this year, the US economy has shown signs of a possible “hard landing,” posing a concern to many other economies in the world. Last year, our economy registered a robust 6.5 percent growth, above the targeted 6.1 percent, thanks to the strong export figures and private investment. However, the economy began slowing down since the fourth quarter of last year, with growth rate dropping from 7.9 percent in the first quarter to 6.0 percent in the fourth.

In order to cope with the slowdown of the world economy and global information industry, revitalizing the economy is this government’s top administrative priority for this year. We have set up both long- and short-term goals, and have made a multitude of efforts in both economic and non-economic areas. On the one hand, the government has implemented plans to boost the economy in the short term by moderately relaxing its monetary policy. It will also increase the public construction budget by NT$111.5 billion, in order to complete the “project for enhancing public investment and revitalizing the economy.” On the other hand, we have undertaken overall improvements in the environment for private investment, in the hope of raising the private sector’s investment as well as its confidence in consumption. I would particularly like to point out that a short-while stagnation is possible, but this should not cause panic. As far as the economic revitalization and stability are concerned, I am confident that our government is walking on the right track and we will not divert from the current direction.

With the arrival of the century of globalization and the ever-rising interdependence among different economies, I am convinced that Taiwan must respond to changes in the international environment as necessary. As a small country highly dependent on other economies, Taiwan needs to adapt itself to and to capitalize on the international environment, so that it can maximize its merits and ensure a better development. In the area of improving the investment environment, last January our government held the National Economic Development Conference to review, on a comprehensive basis, the limitations that enterprises face in both economic and non-economic fields. We will draw up concrete action programs within the shortest possible time, with the objective to build an obstacle-free investment environment. Especially in view of the deteriorating constitution of local financial institutions and administrative inefficiency, the government is aware of the public concern and is adopting several innovative and feasible measures to make improvements.

I firmly believe that, as Taiwan has a first-rate manufacturing industry, Taiwan must have first-rate financial services. Taiwan must upgrade its financial service industry to meet the international standards. This year will be a crucial year for Taiwan’s financial system to undergo an overall transformation. Taiwan fortunately survived the Asian financial crisis in 1997 but missed the opportunity for financial reform. However, problems cannot be solved by hiding the truth. Taiwan needs reforms to establish an open financial market, for without reforms, there will be no sound and open financial environment. Only through reform can Taiwan establish a financial system that can meet the needs of globalization. Through the legislation of the “financial institution merger law” and the “financial holding company law,” the government hopes to encourage mergers of financial institutions and expedite the establishment of management mechanism for financial holding companies. Especially, our international competitiveness in the financial sector will be strengthened as a result of foreign bank mergers or investment in our financial institutions.

Regarding promoting the efficiency of our government, your Chamber’s “Year 2000 Taiwan White Paper” published last September points out that poor administrative efficiency is a major obstacle to foreign businesses operating in Taiwan, and to the upgrading of Taiwan’s international competitiveness. I am fully aware that foreign businesses have invested in Taiwan because they consider Taiwan to be a fair market full of opportunities. Therefore, in my inaugural address, I pledged to “build a government that is clean, efficient, far-sighted, dynamic, highly flexible and responsive.” I also announced in my New Year Message that enhancing administrative efficiency would be a top priority on the government agenda this year. I called on all government agencies to abandon obsolete attitudes and instead identify deficiencies and responsibilities of each organization, so that we can improve administrative efficiency.

At this particular moment when Taiwan is pushing to join the World Trade Organization, we are much willing to help local and foreign enterprises based in Taiwan completely grasp the business opportunities offered by Taiwan’s globalization. In this light, we will spare no effort in implementing the Global Logistics Center Plan to expedite the flow of goods, capital and information and to create a favorable environment for multinational corporations.

Ladies and Gentlemen, Taiwan will soon officially join the economic system of the world. And I fully realize that we must conceive our future in a global perspective and further enhance globalization in the areas of rule of law, finance, education and culture. Globalization will not only make Taiwan reach the world, but make the world reach Taiwan. It is my hope that each of you will continue your support for Taiwan and your efforts in strengthening investment and other economic activities in Taiwan, in order to share the fruits of our prosperity in the new century. Amid our globalization, I am looking forward to your valuable suggestions.

In closing, I would like, once again, to express my appreciation for the longtime and active contributions to our economic development by the American Chamber of Commerce and all the distinguished guests present. I wish each of you great success and good health. Thank you.