Industry Crisis Pressing: Partisan Struggles Must End
China Times editorial (Taipei, Taiwan, ROC)
October 20, 2014
Executive Summary: Elections are just around the corner. The Legislative Yuan remains mired
in partisan bickering. Reversing the industry crisis is the shared
responsibility of boththe ruling and opposition parties. This concerns
the next 5-10 years of economic development. It does not involve
ideology, Yet the necessary legislation remains stalled in the
legislature. These bills are not necessarily related to highly sensitive
cross-Strait legislation. But they are crucial to Taiwan's survival and
development. The people have placed their trust in the two major
parties, Can they set aside their prejudices and cooperate, in order to
reverse Taiwan's industrial crisis? How will those in charge of the two
major parties respond? The peoples' eyes are wide open and watching.
Full Text Below;
The Wei Chuan rancid cooking oil scandal rages on. National attention is now focused on food safety, on how to deal with the aftermath of the crisis. Meanwhile, new economic problems have caught up with us, Global economic concerns have caused European and American stock markets to tumble. The TAIEX has stumbled repeatedly, Add to this the impact of the food safety crisis on consumer confidence. All these factors have undermined an already weak economic recovery. Taiwan's industrial transformation and upgrading has slowed. Its competitiveness is gradually diminishing, Global economic and financial volatility have impacted Taiwan more than South Korea, Japan, Singapore, the ASEAN countries, and other trade rivals, A string of global business cycles have eroded Taiwan's industrial competitiveness. A crisis now looms, The ruling and opposition parties must address this problem. They must work together to end the vicious cycle of declining industrial competitiveness, Otherwise Taiwan faces an increasingly bleak economic future.
Taiwan's industrial crisis involves deep-seated structural problems. Taiwan's main export industries are information and communications technology (ICT). The core problem is the over-emphasis on hardware manufacturing, and the high degree of dependence upon "Taiwan orders, overseas production," and a "Mainland manufacturing" OEM export model. The global ICT industry currently faces large-scale supply chain reshuffling. That and the rapid rise of Mainland industry over the past two years have made Taiwan's ICT industry crisis more serious every day.
This year the domestic ICT industry looked as if it was in recovery. Increased orders and exports led to long unseen prosperity. But we must look more closely. The introduction of Apple's iPhone 6 and the rise of Mainland brand smart phones and tablet PCs, led to a significant increase in orders for Taiwan's foundries. But once the iPhone 6 boom subsides next year, Mainland brand industry orders may be replaced by more Mainland OEM orders. Taiwan's ICT industry crisis would once again rear its head.
Even more worrisome is intense competition from Mainland industries. They pose a macro level threat to many Taiwan companies. TSMC and MediaTek head up Taiwan's semiconductor industry. Their competitiveness puts them head and shoulders above their peers. In the ICT industry, they "hold up half the sky." Now however, they too face growing threats. In June of this year, the Mainland State Council announced a "Development Plan for the Promotion of the Nation's Integrated Circuit Industry." It resolved to establish a 600 billion RMB fund to support the Mainland's semiconductor industry. According to recent news reports, America's largest mobile phone chip maker Qualcomm and the Mainland's largest foundry SMIC, are jointly developing a 20-nanometer manufacturing process. Semiconductor leader Intel has a $1.5 billion USD stake in Unis, the Mainland semiconductor design company. This and other advances in Mainland semiconductor design have seriously impacted Taiwan's semiconductor industry. They could even destroy Taiwan's two leading ICT manufacturers. Can the ruling and opposition parties sit by and do nothing?
Taiwan's second largest export industry is the petrochemical industry. It too is in dire straits. In recent years the petrochemical industry has been buffeted by environmental impact assessments, land acquisition difficulties, public opposition, and other domestic factors. The government decided to halt constrution of the Kuo Kuang Petrochemical Plant. The petrochemical industry is making fewer new investments and equipment upgrades. This leads to decreased competitiveness. Add to this the Kaohsiung gas explosion incident, the closing of the Number Five Naptha Cracking Plant and the Dashe petrochemical industrial zone, and disaster is a foregone conclusion. Whither Taiwan's petrochemical industry? That has become a common question.
Meanwhile, international energy technology breakthroughs also pose a severe competitive challenge for Taiwan's petrochemical industry. U.S. shale oil and gas exploitation and possible future exports, Mainland coal processing technology breakthroughs, international energy prices, and the global development of the petrochemical industry, are having an unprecedented impact. Taiwan companies will be forced to seek survival elsewhere. Formosa Plastics Group gave up on the construction of the Sixth Naptha Cracking Plant. It turned to investments in the US. It is currently involved in a joint venture with the Mainland petrochemical industry to build the Guluei Cracking Plant. This is another sign of Taiwan's petrochemical industry decline. Mainland petrochemical industry production is expanding. It is replacing much of Taiwan's petrochemical exports and petrochemical feedstock for manufacturers and downstream industries. This constitutes a major crisis.
In addition to these two major export industries Taiwan's food industry has been threatened by a string of food safety crises involving plasticizing agents, toxic starches, adulterated rice, Clenbuterol, and rancid oils. The food, catering, and other domestic industries have been seriously impacted. Taiwan's reputation as a Mecca for gourmets and food exports has been undermined. The "Free Enterprise Pilot Zones" (FEPZs) are promoting value-added agriculture centers. These would import agricultural raw materials from the Mainland and elsewhere. After processing on Taiwan, they would be labeled "Made in Taiwan," and sold to the Mainland or abroad. But this has become an impractical dream. Responses to the food industry crises are urgently needed.
Taiwan's service industry also faces transitional challenges, especially education and medical treatment. They face systemic crises. If they are not completely overhauled, they are in danger of disintegration.
Industrial development is threatened from all sides. Taiwan's economic competitiveness and ability to respond have been weakened by crises. The economic growth rate in recent years has often been below two or three percent. Lack of employment opportunities, diminishing real wages, and income inequality remain intractable problems. Popular discontent has surged. The public does not support either of the two major parties. Approval ratings for both are falling in synch.
Elections are just around the corner. The Legislative Yuan remains mired in partisan bickering. Reversing the industry crisis is the shared responsibility of boththe ruling and opposition parties. This concerns the next 5-10 years of economic development. It does not involve ideology, Yet the necessary legislation remains stalled in the legislature. These bills are not necessarily related to highly sensitive cross-Strait legislation. But they are crucial to Taiwan's survival and development. The people have placed their trust in the two major parties, Can they set aside their prejudices and cooperate, in order to reverse Taiwan's industrial crisis? How will those in charge of the two major parties respond? The peoples' eyes are wide open and watching.
今年以來，國內ICT業似見到春天，接單及出口皆出現近年罕見榮景，但細究原因，是來自美國蘋果公司iPhone 6面巿及大陸品牌智慧手機和平板電腦崛起，大量增加對台商的代工訂單，一旦明年iPhone 6熱潮減退，大陸品牌業者訂單也可能遭到更多大陸代工業者的取代，台灣ICT業危機勢將再次浮現。
除了兩大出口產業外，台灣食品產業近年發生塑化劑、毒澱粉、混充米、瘦肉精、黑心油等一連串食品安全事件，不僅對食品、餐飲等內需產業打擊深重，而且對台灣美食王國聲譽及食品出口皆構成極負面的影響。「自由經濟示範區計畫」推動加值農業中心，擬進口大陸及其他地區農業原料，在台灣加工後，打著「台灣製造」（made in Taiwan）名號回銷大陸或出口其他國家的願景，也變得虛幻、不切實際。如何因應食品產業危機，亦刻不容緩。