Industrial Policy Favoritism toward the Electronics Industry
China Times editorial (Taipei, Taiwan, ROC)
September 16, 2010
Academia Sinica President Wong Chi-huey is a wooden academic, a man of few words. During a September 11 meeting with business representatives however, he loudly criticized the government's industrial policy. Wong Chi-huey pointed out that the ROC government's industrial policy too heavily favors electronics. Many companies within the electronics industry are low-margin OEM firms that require precise control over mass production techiques. Therefore the government's one-sided policy is probably detrimental to Taiwan's overall economic development.
For the past thirty years, the electronics industry has been Taiwan's most important economic asset, the goose that laid the golden egg. But this electronic goose is showing its age. It no longer lays as many eggs as it once did. Recently the heads of Foxconn and Compal spoke guardedly about the future of their companies. The electronics industry faces a bottleneck, just as Wong Chi-huey noted.
Government officials are not unaware of the electronic industry's plight. But although the problem is obvious, little has been done to seek a solution. Over the past two years, we have seen few industries adjust their policies.
As early as one year and five months ago, then Premier Liu was making much of the "six new industries." These include biotechnology, green energy, creative culture, tourism, international health care, and high-quality agriculture. After taking over last September, Wu Den-yih added digital convergence and cloud computing. The arguments these two premiers have offered on behalf of these seven or eight industries sound plausible enough. Each of them has long-range plans. Each of them has inter-disciplinary plans. Each plan includes page after page of slide presentations submitted to the Executive Yuan. But plans are plans, and briefings are briefings. For the past year or so little progress has been made. If the old electronics industry reaches a bottleneck, but new industries are merely plans on paper, what happens to Taiwan's economic future? How can anyone who cares about Taiwan's economic development not be concerned?
On economic issues, the Democratic Progressive Party has a clear but relatively straightforward problem. Apart from sporadic cases as the Number Four Nuclear Plant, or the DuPont Plant for Lukang, the DPP is not anti-business as such. The DPP's real Achilles Heel has always been cross-Strait relations. For the past eight years, it was consistently unwilling to confront the Mainland's economic strength and avail itself of the Mainland's economic opportunities. Instead, it excluded Taiwan from the Mainland's economic circle. It forsook the Mainland market, it squandered precious opportunities, it lost the chance to gain an early advantage. But apart from this cross-Strait Achilles Heel, the Democratic Progressive Party, is a fierce and youthful political party. It has fewer systemic shackles than the KMT. Unfortunately this Democratic Progressive Party Achilles Heel is an incurable disease. For years the DPP has remained captive to a tiny contingent of die hard fundamentalists, unable to break free. Even two and a half years in the opposition has not inspired the DPP to reexamine its cross-Strait policies. Beijing is not the only one who sees the DPP as trouble. Most businesses on Taiwan see DPP rule as unconducive to their Mainland operations.
Ma Ying-jeou's Kuomintang of course harbors no hostility toward the Mainland. It feels no obligation to avoid contact with Beijing. But the KMT is one hundred years old. It has accumulated problems and scars far more complex than the DPP's. The KMT is plagued by covert internecine struggle, by complex crony factionalism. It traditionally squelches the ambitions of younger party members. It must mediate between the interests of an Honorary Chairman and an Honorary Vice Chairman. It is plagued by a wide range of illnesses. The causes of these illnesses are difficult to diagnose. Consider some of the new industries. Frankly, the department heads who made many of the original proposals did so under the pressure of deadlines set by the premier. Their content was often mere slogans and abstractions. They contained everything under the sun, but lacked any and all focus. The touched all the necessary bases, but failed to see forest for the trees.
People who understand politics know that to successfully promote a policy, one must have a capable leader who understands what is important and what is not. He must be able to get to the core of the matter. He must be able to follow through, keeping his eye on the ball every step of the way. Allow us to be blunt. Neither of the last two premiers have ever understood the core issues behind the new industries they promoted. Because they never grasped the core issues, they never knew what to keep their eye on, or what direction to take. The aforementioned leaders lacked the ability to implement the policies they promoted. The Presidential Office Financial Advisory Group has been pointing the finger at everyone else. Recently a former premier launched a technology forum. Nominally it will consult with the current Executive Yuan and offer it guidance. Add to this complex, century-old, chronic illnesses and complex entanglements inherent in one party rule, and it is little wonder Wong Chi-huey is concerned about industrial development.
The road ahead for Taiwan industries is going to be rough. In 2008, fears of a heart attack were allayed. But if new policies cannot be implemented, kidney failure looms. Wong Chi-huey said he saw "neither vision nor content" in the government's industrial policy. This is a revealing characterization from the leader of a leading academic institution. Shouldn't the ruling administration wake up? Shouldn't it address the problem?