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2018 Position Papers released

The ECCT's 2018 Position Papers were officially released at a Premium Event lunch. A copy of the annual publication was officially handed over by ECCT Vice Chairman Olivier Rousselet to the Taiwan government, represented by Dr Chen Mei-ling, Minister of the National Development Council (NDC). The event was also attended by around 100 guests, including board directors, committee chairpersons, European trade office representatives and other ECCT members. A summary of the main theme and overview were presented at the event by Rousselet. Following the lunch, the papers were released to the media at a press conference, which was attended by around 30 journalists from print, television and online media groups.

This year's theme is "Clearing the Hurdles to Economic Progress". The publication includes separate submissions from 25 of the ECCT's 30 industry and support committees and raises 132 issues, 84 issues unresolved from previous years and 48 new issues.

In his presentation to members and NDC Minister Chen Mei-ling at the launch, Rousselet congratulated the government on making progress on about 18% of the issues raised in the 2017 papers and the passage of the Act for the Recruitment and Employment of Foreign Professionals by the legislature on 31 October. He noted that as long as the act is implemented as intended, it would resolve two issues raised by the ECCT's Better Living committee and another by the Human Resources (HR) committee. He went on to give an overview of the papers. The overview of the papers outlines the following major hurdles that are impeding further economic progress:

Labour law
The government has proposed amendments to the Labour Standards Law (LSL) that, if implemented, would resolve some of the issues raised in the HR committee's 2018 position paper. Previous LSL amendments implemented on 1 January have been widely criticized by both employers and employees as being too rigid. They have reduced the flexibly of employers to manage their workforces in a manner appropriate to their needs and increased their personnel and administrative costs. Employees have also complained about the rigidity of the system because they are deprived of the option to work on certain days and earn overtime pay.

Given that Taiwan is facing critical shortages of both white and blue collar workers in several sectors, the ECCT has called for a much greater degree of flexibility in the LSL and/or implementing regulations, particularly regarding rest days and overtime hour policies, allowing unused annual leave to be carried over for up to three years and reporting requirements. The chamber has also called for exemptions for senior managers and employees above a certain level.

Skills shortage
Solving Taiwan's skills shortage requires both investing in upgrading education and training facilities at home and removing restrictions on people and institutions from abroad.

Some procedures to hire foreign nationals remain cumbersome and Taiwan maintains some unreasonable visa and working permit requirements for foreign professionals. Taiwan also maintains restrictions on hiring unskilled labour, which, in the short term, can only be resolved by allowing more foreign labourers to work in the service sector. Another impractical restriction comes in the form of qualification and work experience requirements for hiring foreign employees. The ECCT recommends removing the current hiring restrictions and qualification requirements for foreign employees and allowing companies to hire whomever they deem suitable.

Authorities in Taiwan have made good progress in recent years towards making Taiwan more attractive to foreign residents. However, there remain several areas where foreign nationals are not afforded the same treatment as Taiwan nationals. If Taiwan is to attract the most qualified people, authorities need to eliminate all remaining instances of unequal treatment for foreigners.

In terms of education, there are several areas where authorities could help to upgrade the quality of local educational institutions to meet the needs of the changing economy. Schools which consider establishing a presence in Taiwan to teach internet-related engineering or software engineering subjects face a plethora of laws and regulations which discourage prestigious foreign educational institutions from setting up branches in Taiwan. A simple fix would be to exempt private IT, software, engineering or related schools from the tough requirements of the Private Schools Law.

Energy security and transition
According to Taiwan Power Company, only about 6.5% of the total electricity generated in 2016 was from renewable energy sources, including hydro-electric power. If Taiwan is to reach its target of 20% by 2025, concrete action is required on a number of fronts. There is a strong need for legal certainty and consistent policies related to renewable energy, as well as investments in grid and harbour infrastructure for the renewable energy industry.

Among other recommendations, the ECCT urges greater inter-agency coordination in formulating policies and processes, establishing a collaborative and proactive Energy Industry Supervisory Commission (EISC) or similar body. This body should ensure the implementation of national renewable energy policies and play a crucial role as a market regulator, dealing with issues ranging from regulatory approvals to dispute resolution.

In addition appropriate financing for renewable energy projects should be secured and sufficient grid and harbour infrastructure for renewable energy facilities need to be built. Moreover, since Taiwan's wind energy market is not mature enough for an open bidding system, the chamber recommends maintaining the existing feed-in tariff framework for grid allocation. To spur development, allowing and promoting community ownership and repowering of wind farms is recommended.

Besides renewables, much more could be done to improve energy efficiency, especially in the building sector, which continues to be one of the largest contributors to CO2 emissions worldwide. Furthermore, to prepare Taiwan for the energy transition, the government is urged to develop and implement a master plan for energy storage facilities and charging infrastructure for electric vehicles.

Regulatory uncertainty
Taiwan has a well-established legal system and procedures in place for amending laws and regulations. While the Executive Yuan's directive to extend the notice and comment period for drafts of all regulations from 14 days to 60 days has been generally welcomed, there remain instances of important policy changes that are not properly communicated. In particular, there have been several recent instances where decisions were reversed without due cause and other instances where transparency was lacking. With sufficient transparency and opportunities for feedback and discussion, potential problems that could result from proposed new policies, regulations or rulings can be discovered and dealt with early on in the process.

Not following established procedures and international standards risks undermining trust in the government and the international image of Taiwan. This could be avoided if the Executive Yuan ensures that all government ministries and agencies always follow an established process before making decisions.

Local standards and other trade barriers
While progress has been made in recent years towards international harmonisation, there remain instances where Taiwan authorities maintain standards are not aligned with international standards or practices. These technical barriers to trade are detrimental to both local and foreign firms operating in Taiwan. While the government cannot completely protect Taiwan from global macro-economic factors, the point is made that best way to defend against external shocks is to create and maintain a regulatory environment that is attractive to investors and harmonised with international standards and best practices.

Taiwan remains a trade-driven and dependent economy and therefore vulnerable to changes in the global trade and investment environment compared to other countries. Both the economies of Europe and Taiwan have thrived because they are open and future prosperity depends on their remaining open. It is therefore in Taiwan's best interests to maintain a liberal approach to trade and for authorities to continue to pursue further trade liberalisation measures. For this reason, the ECCT continues to support a Bilateral Investment Agreement (BIA) between Taiwan and the European Union, which it hopes will also address non-tariff barriers.

The overview concludes that the government has demonstrated laudable efforts to tackle difficult problems and support infrastructure and industry development, which, if followed up by meaningful enabling actions, have the potential to produce significant results. In particular, following the ECCT's recommendations would remove the hurdles to Taiwan's economic development and ultimately lead to greater economic and social prosperity.