Thursday, January 2, 2014

Economic Revitalization Requires Both Liberalization and Net Mending

Economic Revitalization Requires Both Liberalization and Net Mending
United Daily News editorial (Taipei, Taiwan, Republic of China)
A Translation
January 3, 2014

Summary: The Ma administration's open-door policy can not be divorced from reality. The government must come up with policies to solve urgent issues affecting peoples livelihood. It must encourage investments to enhance industrial competitiveness. It must eliminate internal and external political resistance. Only then can the economy survive. We hope the Ma administration will take these to heart and make the proper policy adjustments.

Full text below:

On New Year's day, President Ma Ying-jeou called for "national unity for the sake of economic revitalization." He said that this year the government would focus on one thing, "national unity for the sake of economic revitalization." The domestic economy has remained stalled for years. People have less and less faith in the government. President Ma's remarks were his response to public expectations. For years, people have watched as the government struggled to revive the economy. Besides promoting new policies and mending nets, the government must also rekindle hope.

Ma has been in office for nearly six years. His most important policy has been to liberalize the economy. He hoped to revive Taiwan's economy. by breaking the stranglehold the DPP's eight year long closed door policy had on the island. This policy change, especially the breakthrough in the cross-strait status quo, brought Taiwan a multitude of opportunities for economic growth. It also brought unprecedented challenges. Confronted with this new situation, Taiwan needs a stable internal and external environment. It needs visionaries who are able to implement their visions.

Unfortunately the global economy underwent a huge change in recent years. The liberalization of cross-Strait policy has been hampered by Blue vs. Green ideological conflict. Also, the government's policies had structural defects. These undermined the government's ability to respond to changes and to shape its vision. As a result Taiwan was brought to the brink of economic crisis.

We realize that President Ma and his cabinet feel frustrated and unappreciated. But effective economic governance requires confronting illnesses and prescribing remedies. The Ma administration has consistently adhered to liberalization. Now it must also mend nets in order to regain public confidence, overcome difficulties, and reverse its image of ineptitude.

Taiwan is dependent upon trade. It must remain open to the outside world. Only then will it survive. The Trans-Pacific Economic Partnership Agreement (TPP) and Regional Comprehensive Economic Partnership Agreement (RCEP) represent rapid regional integration. Taiwan must adhere to an open-door policy. It must actively participate in regional integration. This is a path it must take. Naturally the Ma administration has made these the focus of its policy. But full liberalization requires more than slogans. One must also confront economic and political realities.

Consider economic reality. A major problem is declining industrial competitiveness. Taiwan's chief export industry is the information and communications industry. This industry is under attack from US, South Korean, and Mainland multinationals. A crisis looms. The petrochemical industry also faces unprecedented challenges from large scale U.S. shale gas exploitation, Domestic industries, including educational services and medical services, are in crisis. The cultural and creative industries are hemorraging talent. Agriculture is in sharp decline. Imports of foreign agricultural products have made food self-sufficiency increasingly infeasible. We face a variety of practical problems. If we emphasize only open markets, that merely deepens industry concerns.

The fact is industry requires long-term competitiveness and continuous investment. It requires research and innovation. The government has a responsibility to create a favorable investment environment and provide incentives. It must shape economic development. In particular, it must offer a cross-Strait economic vision. It must help companies that are willing and eager to invest in Taiwan. President Ma's New Year's Day speech mentioned the Taoyuan Free Trade Zone. He cited it as the key to public investments, expanding cultural and creative financing, venture capital angel funds, and large-scale urban renewal. For the most part, he was plowing old ground. The size and shape of the "Free Trade Zone Pilot Programs" are limited. They are not enough to enhance industrial competitiveness, to enable us to join the TPP, or prepare us for the RCEP. The government must actively and effectively plan for the future and encourage investments. 

Also, liberalization alone cannot solve the problem of unemployment. Living wages and misery index increases are matters of peoples livelihood. The government must win peoples hearts as well as their minds. They must answer the question "Where's the beef?" Only then will the people be willing to support liberalization.

Consider political reality. Cross-Strait factors are obstacles to TPP, RCEP, and other forms of regional economic integration. They are also obstacles to the signing of FTAs. Taiwan will find it difficult to join the US led TPP ahead of the Mainland. The RCEP, led by ASEAN and the Chinese mainland, has announced that other countries will not be able to take part in negotiations before 2015. Before the cross-Strait trade in services agreement and commodity trade agreements are implemented, Taiwan and other economies will find it difficult to negotiate and sign FTAs.

Therefore the government must improve communications with social groups and the private sector. It must eliminate internal resistance to the trade in services agreement. It must aggressively negotiate with the Mainland. It must include priority issues into dialogue and negotiations over cross-Strait issues. Taiwan cannot participate in the TPP and RCEP in the short term. Participation is at the discretion of the United States, Japan, and Mainland China. This strengthens Beijing's hand during negotiations.

In short, the open-door policy can not be divorced from reality. The government must come up with policies to solve urgent issues affecting peoples livelihood. It must encourage investments to enhance industrial competitiveness. It must eliminate internal and external political resistance. Only then can the economy survive. We hope the Ma administration will take these to heart and make the proper policy adjustments.

2014.01.03 04:04 am












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