Will Ma Ying-jeou's Three Arrows Miss their Marks?

Will Ma Ying-jeou's Three Arrows Miss their Marks?
China Times editorial (Taipei, Taiwan, Republic of China)
A Translation
August 5, 2013

Summary: Shinzo Abe's three arrows created the desired effect. The key was not the three arrows. The key was the archer's determination and courage. He was determined to restore long lost Japanese national confidence. Can Ma Ying-jeou's three arrows free the economy from the doldrums? Can his arrows reach their targets? Or will arrow upon arrow miss its mark? That will depend on the archer.

Full text below:

Taiwan's economic growth during the first quarter of this year was a meager 1.67%. The attempt to ensure a 2% growth rate during the second quarter was successful, but only barely. Many variables bedevil the second half of the year. The Comptroller General predicts that second-quarter GDP will increase 0.29%. He defines this as a "soft expansion." The annual GDP is expected to remain the same -- 2.4%. A 2% growth rate this year is no problem, but 3% is beyond reach.

The economic malaise lingers. President Ma Ying-jeou recently announced "three major movers" to promote Taiwan's economic growth. They are the Free Trade Zone Pilot Program, additional public works, and increased exports, particularly service sector exports. To rescue Taiwan's economy, President Ma Ying-jeou fired three "Ying-jeou arrows" into the air. Will they hit their targets? Will they enable to administration to think outside the box? Or will all three Ying-jeou arrows miss their mark?

The Ma administration is promoting the Free Trade Zone Pilot Program. Initially only four major industries were included. They are smart logistics, medical tourism, value-added agriculture, and industrial cooperation. CEPD Chief Kuan Chung-ming advocated including the financial industry. Former FSC chairman Chen Yu-chang disagreed. Finally, at the last moment, President Ma Ying-jeou approved its inclusion. On Thursday, Premier Jiang Yi-hua approved the Free Trade Zone Pilot Program. The 4+N pilot industries began operation.

Smart logistics, medical tourism, value-added agriculture, and industrial cooperation are the four major pilot industries. The CEPD intends to use the "shop in front, plant in back" concept to maximize efficiency. But its proposal differs from existing international free trade zones with "shop in front" planning. Take medical tourism for example. The Taipei and Taoyuan Airports are the "shops in front." Tourists arrive at the airports. They promptly enter the "plants in back," i.e., 39 international medical facilities, for health checks or medical treatment. This plan clearly benefits the Free Trade Zones economically. Some worry that Mainland Chinese visitors may vanish into the crowd soon after entry. But we truly need not impose such constraints upon ourselves. We want the program to be comprehensive. But we cannot refuse to open ourselves up out of fear.

The industrial sector expects even more from the Free Trade Zone Pilot Program. It wants expanded scope, added industries, and more tax incentives. The Chinese National Federation of Industries and Minister of Economic Affairs Chang Chia-chu held talks. They recommended another increase in the scope of the Free Trade Zones. They need not be limited to five harbors and one airport. The science parks, export processing zones, even the six light industrial parks could be included. They could be linked into a comprehensive free trade island.

The most eagerly anticipated industry is the financial industry. Newly appointed FSC Chairman Chang Ming-chung and CEPD Chief Kuan Chung-ming have reportedly planned to include the financial industry. Offshore funds and structured products would be given priority through the OBU And OSU (International Securities Business Group). Restrictions against investment by foreign professionals would be relaxed. The ultimate goal would be to enable Taiwan to become an offshore RMB center.

Taiwan's qualifications as an offshore RMB center are, in all fairness, far inferior to those of Hong Kong, Singapore, or London. Hong Kong and London have received public support from the Mainland authorities. Singapore has revealed its ambition to become the biggest offshore RMB center outside of Hong Kong. In July 2010, the Monetary Authority of Singapore and the People's Bank of China signed a 150 billion RMB bilateral currency swap agreement. Singapore has allowed the trading of RMB-denominated securities. It has established conditions favorable for an offshore RMB center.

By contrast, Taiwan authorities still impose many limitations on the free inflow and outflow of RMB. RMB-denominated commodities are in short supply. Mainland industries cannot issue bonds to raise capital on Taiwan. This handicaps Taiwan in its fight to become an offshore RMB center. The incorporation of the financial sector into the Free Trade Zone Pilot Program must await the liberalization of the financial sector. An offshore RMB center is still a long way off.

The second of the three Ma Ying-jeou arrows is more public works. More public works requires more money. Where is the money coming from? According to statistics, four years ago ROC investment in public works was about 446 billion NT. This year it is only 385 billion NT. Every year public funds for public works fall short. They are limited by the debt ceiling and the deterioration of public finances. No matter how clever one may be, one cannot make bricks without straw.

The central government complains that it has no money. But lest we forget, whenever the stock market fluctuates, Four major funds, including the Bureau of Labor Insurance, serve as a fire brigade and prop up the market. They can guide public works investment. They can solve the problem of inadequate financial resources. They can allow the stock market to return to conducting normal market transactions, reducing artificial intervention into the market.

The third of Ma Ying-jeou's three arrows is increased exports. The exchange rate is an important factor in export competitiveness. Central Bank President Peng Huai-nan defended the rights of 15 million scooter riders. The NT exchange rate will remain stable. The devaluation that exporters wanted was explicitly rejected. June export orders unexpectedly declined 3.5%. This was yet another warning.

Therefore, increased exports must be freed from outdated electronics industry-orientation. The government should fully support the more promising e-commerce market. Service industry exports should replace traditional manufacturing industry exports. The liberalization of third-party payments is clearly more urgent and important.

Shinzo Abe's three arrows created the desired effect. The key was not the three arrows. The key was the archer's determination and courage. He was determined to restore long lost Japanese national confidence. Can Ma Ying-jeou's three arrows free the economy from the doldrums? Can his arrows reach their targets? Or will arrow upon arrow miss its mark? That will depend on the archer.
   
中時電子報 新聞
中國時報 　2013.08.06
社論－英九三箭 切勿箭箭落空
本報訊

    　台灣今年第1季經濟成長率僅1.67％，第2季勉強保2成功，由於下半年變數仍多，主計總處將第2季GDP回升0.29個百分點，定位為「軟性擴張」，全年GDP還是維持原預估值2.4％，今年只能「保2有餘，無力拚3」。

    　面對揮之不去的悶經濟，馬英九總統日前喊出需靠「三大引擎」推動台灣經濟動能，分別是自由經濟示範區、擴大公共建設及增強出口，尤其是擴大服務業出口。馬英九總統射出拯救台灣經濟的「英九三箭」，能否發揮效益，有賴行政體系打破舊思維，「英九三箭」，切勿箭箭落空。

    　馬政府推動的自由經濟示範區，原僅有4大示範產業，包括智慧運籌、國際醫療、農業加值及產業合作等，經建會主委管中閔力推的金融產業，前金管會主委陳裕璋有不同意見，最後一刻在馬英九總統拍板下納入，行政院長江宜樺將在周四正式核定自由經濟示範區方案，4+N示範產業將點火上路。

    　智慧運籌、國際醫療、農業加值及產業合作等4大示範產業，經建會擬以「前店後廠」的概念發揮一條龍效益，和國際間現行經濟特區僅有「前店」式的規畫不同。以國際醫療為例，松山和桃園機場是「前店」，旅客扺達機場後，快速入關到「後廠」的39家國際醫療業進行健檢或醫美，此一規畫確實可放大特區的經濟效益。至於部分人士擔心的陸客入關後的無故失蹤後遺症，實不必畫地自限，力求配套方案完整，總不能因為擔心，就不開放。

    　產業界對自由經濟示範區期待更大，包括擴大適用範圍，增加營業項目、租稅優惠等，工總與經濟部長張家祝座談時，建議自由經濟示範區的範圍要再擴大，不必拘限在五港一空，科學園區、加工出口區、甚至六輕園區都應適用，串連成完整的自由島運作模式。

    　最值得期待的示範產業則是金融業。據報載，金管會新任主委曾銘宗與經建會主委管中閔對自由經濟示範區納入金融業已擬妥腹案，境外基金及境外結構型商品，將優先透過OBU（國際金融業務分行）及OSU（國際證券業務分公司），對外國專業投資人鬆綁，最終目標是要爭取台灣成為人民幣離岸中心。

    　台灣爭取人民幣離岸中心的條件，平心而論遠不如香港、新加坡和倫敦。香港和倫敦都已獲得中國政府公開表態支持，新加坡則是展現強大的企圖心，有志成為香港以外的第2個人民幣離岸中心。早在2010年7月，新加坡金融管理局即與中國人民銀行簽署1500億人民幣的雙邊貨幣互換協定，新加坡並已允許人民幣計價證券掛牌交易，建構成為人民幣離岸中心有利條件。

    　反觀台灣在人民幣的自由流入與流出上仍有諸多限制，人民幣計價商品不足、陸企更無法在台發債籌資，都讓台灣在爭取成為人民幣離岸中心落居下風，自由經濟示範區納入金融業，只能視為踏出金融自由化的一步，與人民幣離岸中心的規格落差仍大。

    　「英九三箭」的第二箭是擴大公共建設。擴大公共建設要錢，但錢從哪來？根據統計，4年前，我國在公共建設的投資約4460億元，但今年只剩下3850億元，公共建設資金年年短缺，受限於舉債上限與政府財政惡化問題，早已巧婦難為無米之炊。

    　雖然中央政府喊沒錢，但別忘了，每當股市波動時，擔任救火隊護盤的勞保等四大基金，可導引投資有償性公共建設，不但解決中央政府財源不足問題，也讓股市回歸市場正常交易，減少人為護盤干預。

    　「英九三箭」的最後一箭是增強出口。出口競爭力的強弱，匯率是重要因素之一，在央行總裁彭淮南全力捍衛1500萬機車族權益下，台幣匯率仍會維持動態穩定，出口業者期待的貶值，已被明確否決，而6月外銷訂單意外衰退3.5％，更是警訊。

    　因此，增強出口這一箭，應跳脫舊有的電子產業導向，全力輔導「錢」景看好的電子商務市場，以服務業出口取代傳統的製造業出口，第三方支付的開放更顯其急迫性與重要性。

    　安倍三箭創造出超乎預期的效果，關鍵不在於三箭的「內容」，射箭人的決心與魄力帶動大和民族失去已久的信心；「英九三箭」，能否打破悶經濟，是箭箭正中紅心，還是箭箭落空，就看射箭人了。