Tuesday, August 25, 2009

No Determination, No Growth

No Determination, No Growth
China Times editorial (Taipei, Taiwan, ROC)
A Translation
August 25, 2009

Recently a number of economic indicators have jumped. The global economy appears to be emerging from the worst recession since the 1930s. Taiwan's economy is gradually turning the corner along with the global economy. Last Thursday the DGBAS changed its estimate for Taiwan's GDP growth rate for this year to -4.04%. If post-disaster reconstruction proceeds smoothly in the wake of Typhoon Morakot, this estimate may be increased to -3.75%. Nevertheless we find it impossible to share the government's official optimism. The road to reconstruction is long. Tens of thousands of families have lost family members and homes. They have no idea where they will live.
Recently the economic indicators of major countries in Europe and the United States have offered good news. For example, July sales for existing US homes have increased for four months in a row, and established a ten year record. The Eurozone August Purchasing Managers Index unexpectedly rose. When U.S., European, Japanese and other central bank presidents attended the World Bank Annual Meeting last Friday, the World Bank president betrayed a rare smile. Asia's emerging countries grew substantially faster than Europe and the United States during the second quarter, to the amazement of many economists.

Recently the Economist magazine investigated the surprising recovery of the emerging Asian countries. It believes the emerging countries in Asia recovered more rapidly than those in Europe and the United States because of the manufacturing cycle. Asian governments have established generous financial revitalization programs. Their banking systems suffered relatively minor damage. Their private sectors have high rates of saving. The critical question however, is whether the Asian countries' growth rates are sustainable.

The global economy has gradually returned to normal. But Taiwan was hit by heavy rains from Typhoon Morakot, the biggest typhoon in a century. Landslides and mudslides have changed the face of the land. The livelihood of hundreds of thousands of victims remain in doubt. In response to the disaster wrought by Morak, the Executive Yuan recently expedited special provisions for reconstruction. It provided 100 billion NT for post-disaster reconstruction. It estimated that reconstruction would take three years. Yesterday President Ma Ying-jeou personally promised survivors that the reconstruction of Hsiaoling Village would be completed during his term.

Just how badly did Typhoon Morakot damage Taiwan's economy? The DGBAS estimates that the impact of the disaster on the economy was not that great. Massive reconstruction projects will boost demand. They may even increase the economic growth rate. Financial chiefs are also optimistic in their predictions. The impact of the financial tsunami has passed. Taiwan's economy may recover by the fourth quarter.

Typhoon Morakot destroyed southern Taiwan. It is now badly scarred. For the victims, every time a typhoon strikes, both lives and property are threatened. Farmland, orchards, fish ponds were completely destroyed. Families were destroyed. These are burdens too heavy to bear. They are not something cold statistics can show. If post-disaster reconstruction proceeds rapidly, as President Ma hopes, that may also increase economic growth. That would of course be ideal. But disaster victims have many misgivings. They wonder how an incompetent ruling administration can possibly complete the work of reconstruction in a timely manner.

Indeed, the impact on the tourism industry in the south is more serious than outsiders can imagine. Tens of thousands of victims lost their livelihoods. Revenue from tourism has evaporated. Take one of the most important tourist attractions for example, Mount Alishan. No one has any idea when the minitrain will be reopened to traffic. The tourist attractions in the Paolai Hot Springs District in Kaohsiung have also been buried under earth and rock. These cannot be repaired any time soon. Mother Nature has lashed back with a vengeance. Future relocation and reconstruction will require new building sites and environmental impact assessments. These are not tasks that can be rushed.

Everyone knows that the key to success when it comes to reconstruction is determination. Past experiences have been disappointing. Ten years ago, during post-disaster reconstruction following the 9/21 Earthquake, many hill-tribe village relocation projects were delayed six to seven years. Victims were forced to live in pre-fab temporary housing. They endured countless typhoons and landslides. Some tribes relocated to new sites faced new landslide threats. The Ma administration estimates that reconstruction work will be completed within three years. But without a strong administrative team coordinating central and local government resources, no one really knows when it will be finished.

The Ma administration's ineptitude during initial disaster relief efforts has already disappointed the public. If reconstruction is carried out by the same bunch of insensitive bureaucrats oblivous to the people's suffering, the public will find it hard to be optimistic.

Asia's Four Tigers are in a race to recover from the global financial tsunami. The DGBAS has revised Taiwan's economic growth rate. But Taiwan's economic performance this year still lags behind South Korea's and Hong Kong's. It is only slightly better than Singapore's. Faced with fierce international competition and constant domestic disasters, we find it hard to be overly optimistic.

Typhoon Morakot has sent the Ma administration approval ratings into freefall. President Ma must summon up his revolutionary drive. He must demonstrate administrative competence. Only then can he restore public confidence. As long as the ruling administration remains incompetent and knows only how to apologize, no amount of reconstruction funds will raise Taiwan's economic growth rates.

中時電子報 新聞
中國時報  2009.08.25
沒有執行力 那有成長率












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