Has the Asian-Pacific Platform Been Resurrected?
United Daily News editorial (Taipei, Taiwan, ROC)
April 21, 2010
Over the past few months, President Ma has been battered by the 8/8 Typhoon, the U.S. beef controversy, and a long string of other crises. These have led to him being characterized as weak and incompetent, and lacking any plan for governing the nation. Subsequent hikes in health insurance fees, confrontations between Yuan Presidents and Bureau Chiefs, and endless litigation, led to Health Director Yang's angry threat to resign. The Ma administration has been like a chicken with its head cut off, panicky and at a loss what to do.
The recent cabinet reshuffling left more than a few major national policy measures high and dry. The first time the new Minister of Economic Affairs spoke to the public, he announced plans for an "economic zone," one that had been studied and debated for months. But the Ministry of Finance strongly opposed lowering business taxes, and the Council of Labor Affairs brazenly refused to delink wages for foreign workers with the minimum wage. No consensus was reached even on these two matters. The Minister of Economic Affairs was left alone, hung out to dry, forced to abandon his plan.
Yet the "special economic zone" was a far more important policy than flood control bills, regulation of U.S. beef imports, and health care reform. It was a measure that could have extricated Taiwan from its economic predicament in one fell swoop. It could have allayed public doubts about economic liberalization. It could have provided momentum for economic growth. It could have underscored Taiwan's geographical advantage. It could have strengthened Taiwan's strategic hand in cross-Straits negotiations. Promoting the plan was a heavy responsibility, one that should have been borne by the nation's leaders. Instead, it was shouldered by a lowly minister. He was expected to override ministry heads of the same rank, and to determine its feasibility. How could he possibly succeed? People cannot help wondering, where were our leaders?
When the health insurance rate hike reached an impasse, President Ma suddenly laid down the law. The rates would be hiked according to the approach suggested by Health Director Yang. Health Director Yang withdrew his resignation. The public, which had sided with Yang, was mollified. But even as the rates were being hiked, low income insurees were being granted subsidies. Seventy percent of all insurees' fees would remain the same. Therefore Premier Wu's suggestion would also be honored. This amounted to a compromise, but one with careful thought behind it, and allowed both parties to hold their ground. President Ma also promised to promote the second generation health insurance plan. This may enable the first generation health insurance plan, with all its accompanying baggage, to be phased out. The rule of law, considered box office poison by the Legislative Yuan and frozen for years, rose like a phoenix from the ashes. The bill may even become law within the current legislative session. This "fling open the doors" approach has been much too rare since President Ma took office.
Disputes over health insurance have subsided. But the Industrial Innovation Act is again making waves. The Industrial Innovation Act should have been passed last year. Its purpose was to continue investment incentives and industrial upgrade measures introduced a half century ago. Its purpose was to provide companies on Taiwan with tax breaks and subsidies. Unfortunately over the past half century, the situation has changed dramatically. The government's finances are strapped. Tax breaks have been fully exploited. The Ma administration has no more tricks up its sleeve. The result has been a trendy catchphrase, "industrial innovation" -- nothing more than old wine in an old bottle.
Nor could the opposition DPP offer any sound alternative to this controversial legislation. The DPP knew only how to engage in blind obstructionism, and to create legislative deadlock. It obstinately dragged the process out, 100 days past the sunset of the Statute for Upgrading Industries. No resolution is in sight. Amidst this senseless stalemate, ruling party legislators quietly added an ultra low 15% operations headquarters tax for financial consortiums. This provoked an unexpected public backlash. The DPP took advantage of the situation to reduce the operations headquarters tax to 17.5%. The DPP was overjoyed, and promptly embraced it as an alternative to the Industrial Innovation Act. It won public approval, checked its opponent, and took the wind out of the ruling party's sails.
The DPP assumed that the KMT would not dare to follow suit. They never realized President Ma would "go with the flow." Ma swiftly made substantial changes to the party's version of the bill, dropping the tax rate to 17%. In retrospect the Ma administration clearly wanted to make major cuts in business taxes. But they was afraid to make the first move. They knew if they suggested any, the DPP would assume a contrarian stance. But once the DPP proposed a substantial tax cut, the Ma government pulled out its ace in the hole. The opposition Democratic Progressive Party has now lost its leverage. It has unwittingly played into the Ma administration's hand. Even more surprisingly, President Ma announced that wages for foreign laborers could probably be delinked from minimum wages within certain economic and trade zones. In one fell swoop, he removed two major obstacles standing in the way of an economic and trade zone. The public now realizes that tax cuts were actually chess moves intended to promote an economic and trade zone. The Industrial Innovation Act was merely an appetizer.
Was this chain of decisive moves merely a whim of the moment? Was it merely a lucky shot in the dark? Was it part of a well thought out plan? Was it merely an opportunistic move? Is the "Asian Pacific Platform" and "special economic zone" long anticipated by the public finally beginning to emerge? We will have to wait and see. If the Ma administration follows through, if all this turns out to be real, Taiwan will be far better prepared to face the challenges of the future.
2010.04.21 02:10 am