Yet Another Willfully Blind Government

Yet Another Willfully Blind Government
China Times Editorial (Taipei, Taiwan, ROC) 
A Translation 
November 24, 2016

Executive Summary: External uncertainties have increased. Internal consumption and investment remain low. The ruling administration must not underestimate the risks. It must not be overly optimistic. It must not reduce investment because business prospects are dim. It must not turn a blind eye to TransAsia Airways early dissolution. It must remain pragmatic, and reform the laws and regulations. It must free up the economy, create a sound environment for investment. Only then can industry upgrade itself and the economy prosper. Wishful thinking, assuming that "If you plan it, they will come" is no answer. How would this government be any different from past governments that turned a blind eye to harsh economic reality?

Full Text Below:

The board of directors of TransAsia Airways, the oldest airline company in the ROC, has decided to close the company down. The news came as a shock. Two consecutive years of air disasters imposed a  heavy burden on TransAsia Airways. It also undermined the image of its brand, making the resumption of normal operations difficult. Financially speaking, TransAsia shares were selling at over seven NT per share. But the board decided to close the company's doors because its "prospects were dim". Major shareholders were reluctant to continue investing. According to Chairman Lin Ming-sheng, it was better to close the company down while assets still exceeded debt. This would enable the company to better deal with debts, staff salaries, and accident compensation.

Before this, only the impact of reduced Mainland tourism on restaurants and souvenir shops went noticed. Travel industry related businesses went belly up. The powerful Lealea Enterprise Company turned pessimistic about the domestic economy, including domestic industries. It announced the closing of its Kaohsiung International Youth Hostel. Investment incentives declined across the board. The domestic housing market continued to fall. The risk of power shortages continued to rise. Private sector business leader Formosa Plastics Group announced a reduction in domestic investment. Over the next several years it would focus more on overseas investments, especially in the United States. The Apple supply chain is critical for exports. During the second half of this year, iPhone7 sales were disappointing. Orders will be cut by the end of the year. Bad news continues to roll in.

People are pessimistic about the economy. Only the ruling administration remains optimistic. One news report quoted Tsai government "chief aides and officials" who said that the past six months was merely a stage during which "obstacles would be cleared away, and a foundation laid for the future". Now, they said, several industrial projects are “in the pipeline”. By next year the economy will be better than this year. Therefore “the economic environment will be more beneficial to the ruling administration".

Frankly, the ruling administration has misjudged the situation and is being much too optimistic. They are equating rhetorical flourishes with economic achievements. Their “Five Plus Two Industrial Innovation Program” includes an Asian Silicon Valley, biotech medical treatment, green energy technology, and smart devices. They assure us that these are now in the pipeline, therefore the economic outlook is bright.

But what precisely is “in the pipeline”? If administration officials define the completion of planning and design, and Executive Yuan approval of them as being “in the pipeline”, then of course, they are “in the pipeline”. But the completion of an economic plan or industrial plan, the approval of the plan by the Executive Yuan, and the completion of administrative procedures, has nothing to do with the economy or industry. The real question is how much capital investment will these projects bring? What benefits do they offer? Do any watershed examples exist that one can point to? Eight years ago, when Liu Chao-hsuan was premier, he approved "Six New Industrial Projects". The plans long been "in the pipeline" forever. But what benefits and results have they yielded over the years? None. Therefore how can anyone claim that “It's in the pipeline, and the economy is looking up”?

Equating completion of paperwork with completion of a plan that leads to real world benefits, is wishful thinking. Leave aside the ridicule industry insiders have heaped upon these plans for the moment. Can these plans be implemented? Can they lead to real world benefits? Can they contribute to industry and the economy? That all depends on business investment. But given the concerns of the business community and their responses, it is clear that private investment will be quite limited.

The ruling administration has declared that "The economy is expected to be better next year than this year, and the economic environment will be more favorable to the government next year". Its blind optimism fails to understand business cycles and ignores business risks. According to statistics released by the Executive Yuan General Administration of Taxation, the estimated third quarter economic growth rate is 2.06%, higher than the 1.99% forecast in August. The estimated growth rate for the entire year is 1%. Three consecutive quarters of economic recession, plus two consecutive quarters of positive growth, have led to an economic bottom. But suppose the estimated growth rate of 1.88% is achievable next year? Suppose as suggested by the SDC, it reaches 2%? Is that really anything to cheer about? Whether it is 2% or 1.88%, both are low growth rates.

This means that Taiwan may be facing an L-shaped economic trend rather than a V-shaped economic trend. They economy may no longer be declining. But the recovery may remain weak, and maintain a low rate of growth. In fact, almost all major economies have experienced L-type recoveries in recent years. Japan has has remained at the bottm for many years. Europe is in the same situation. The United States has made a comparatively strong recovery. But following the financial tsunami, it too spent several years at the bottom before finally making a clear recovery. Even the Mainland has remained mired in L-type growth for three years.

Domestic economic risks are exceedingly high. Foreign economic risks are far from low. Mainland economic prospects are cautiously optimistic. Trump being elected President of the United States has led to uncertainty. So far, no one is sure what his presidency means. Trump's trade protectionism is obviously detrimental to Taiwan's economy, which relies on export trade. Our exports and export orders in September were positive. October was disappointing. Clearly the economy has yet to begin a smooth upward trend. Volatility and risk remain high.

External uncertainties have increased. Internal consumption and investment remain low. The ruling administration must not underestimate the risks. It must not be overly optimistic. It must not reduce investment because business prospects are dim. It must not turn a blind eye to TransAsia Airways early dissolution. It must remain pragmatic, and reform the laws and regulations. It must free up the economy, create a sound environment for investment. Only then can industry upgrade itself and the economy prosper. Wishful thinking, assuming that "If you plan it, they will come" is no answer. How would this government be any different from past governments that turned a blind eye to harsh economic reality?

又是一個蒙著眼睛過日子的政府
2016/11/24 中國時報

國內最老牌的復興航空董事會決定解散公司，消息傳出令人震撼。興航雖然因為連續兩年發生空難，造成嚴重的財務負擔，同時也影響品牌形象，讓其營運難有起色，不過以財務面來看，復興航空每股淨值仍有7元以上，相較扁朝時70億的累積虧損，財務體質算好，但董事會仍決定解散公司，原因就是「看不到前景」，大股東不願繼續投資。依照董事長林明昇的說法，寧可在資產大於負債時先把公司結束掉，還有能力好好處理債務與員工資遣與安頓問題，傷害可以減到最小。

之前，外界已看到陸客減少對觀光餐飲、禮品業的負面效應浮現，旅行業出現倒閉現象，國內頗有實力的力麗集團看壞產業與經濟前景，宣布終止承租高雄國際青年會館；企業投資意願整體低落、缺電風險提高、國內房市持續滑落、民營企業龍頭台塑集團宣布減少國內投資，要把未來幾年投資重心移往海外，特別是美國；今年下半年對出口挹注良多的蘋果供應鏈，傳出因iPhone7銷售不如預期，年底將砍單，壞消息頻傳。

民間對經濟前景悲觀，唯獨執政團隊抱持樂觀態度。近日一家媒體引述了蔡政府團隊「主要幕僚與官員」的說法，認為過去半年是「清障礙及打地基」階段，現在幾個產業計畫已上路，明年景氣又比今年佳，因此「大環境會對執政團隊較為有利」。

坦白說，這個執政團隊可能錯估情勢又太過分樂觀，更把文書作業錯當經濟成果。他們認為產業創新五加二計畫中，包括：亞洲矽谷、生技醫療、綠能科技、智慧機械四項都已陸續上路，經濟前景樂觀可期。

何謂上路？如果官員認為完成規畫與計畫，經行政院通過定案就是上路，那當然是確定無誤。但實質來說，一個經濟計畫或產業規畫，完成計畫並經行政院核定，只是完成行政程序，其實與經濟或產業毫無關係。真正的重點在這些計畫帶來了多少投資？引發什麼效益？甚至是否已有指標性的個案成形，否則，8年前劉兆玄在行政院長任內，不早就核定「六大新興產業計畫」，這些計畫也早已「上路」，但多年來到底帶來什麼效益與成果呢？答案當然是否定的。那麼，現在又憑什麼說計畫上路，經濟就可以樂觀？

把完成文書作業當成完成計畫，以為效益就會滾滾而來，是過分的簡化及盲目的樂觀。撇開業界一直對這些計畫內涵的嘲笑與批評不談，這些計畫要能落實到發揮效益，對產業與經濟有貢獻，終究要靠企業的投資。但由企業界的反應與憂心來看，顯然民間投資意願仍然相當低落。

執政團隊「明年景氣預期比今年更好，大環境會對政府較為有利」的樂觀，是對景氣循環統計數字的誤解，也是對風險的無知。根據行政院主計總處公布的今年第三季經濟成長率概估為2.06%，較8月預測的1.99%高，全年經濟成長率篤定可「保1」，在去年連續3季經濟衰退後再拉出連續2季正成長，這波經濟谷底算是已經通過。但問題是即使明年經濟成長率預測值1.88%可達成，或甚至如國發會所說的「一定可破2%」，但這值得欣慰嗎？老實說，無論保2或1.88%，都是低成長率。

這代表台灣面對的可能是Ｌ型的經濟走勢，而非Ｖ型走勢，即經濟不再下滑但復甦力道微弱，持續保持在低度成長。事實上這幾年幾個主要經濟體的經濟幾乎都是出現Ｌ型復甦─日本固然在低檔徘徊多年，歐洲也是如此，今日復甦力道較強勁的美國，在金融海嘯的谷底後，也是花了多年才出現明顯的復甦；甚至大陸這3年也陷入增長放緩的Ｌ型。

國內經濟風險極高，外部風險不低。除了大陸經濟勉強可以樂觀外，川普當選美國總統帶來的不確定性，至今仍無人能評估，單以其貿易保護主義基調而言，倚賴出口貿易的台灣經濟，顯然只見其弊難見其利。我們單由出口與外銷訂單在9月表現良好，10月又不如預期，就可看出經濟尚未進入平穩向上趨勢，波動與風險仍高。

外部不確定風險增加、內部消費與投資雙冷，執政團隊不該低估風險、過度樂觀，卻對企業界看淡前景因而減少投資，甚至如興航般趁早打包解散的事實視而不見。要務實推動法令改革、開放改革，打好投資環境，才可能見到產業升級、經濟上揚。若還是一廂情願以為「計畫完成投資就來」，那麼，這個政府與那個蒙著眼睛過日子的政府，又有什麼不同呢？