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ECCT releases 2017 Position Papers

The European Chamber of Commerce Taiwan (ECCT) today released its 2017 Position Papers. A copy of the chamber's annual publication was officially handed over to the Taiwan government's National Development Council (NDC) at an ECCT Premium Event Lunch held today. A summary of the main theme and overview were presented at the event by ECCT Chairman Bernd Barkey. This year's theme is "Gearing Up Taiwan's Revival". The publication includes separate submissions from 24 of the ECCT's 29 industry and support committees and raises 143 issues, 85 issues unresolved from previous years and 57 new issues.

The overview of the papers lauds the government's recognition of the importance of innovation in industry and promise to "reshape Taiwan's global competitiveness" by focusing on five major innovative industries. The overview notes that to spur a revival of the economy requires concrete action to provide the practical support and conditions needed to enable and spur innovation. A crucial element of this is a regulatory system that acts as an enabler of rather than a hindrance to innovation. The overview notes that Taiwan's regulatory system remains somewhat clogged with many industries subject to painfully slow bureaucracy in the form of approval processes and procedures which are slowing down their development. It stresses the point that in order to gear up a true revival requires the application not only of international standards but also tried and tested practices.

The overview highlights several areas of blockages in the regulatory system and recommendations for improvements. They are as follows:

Gearing up Taiwan's energy transformation
The government has identified green energy as one of its priority innovative industries. A crucial step to speed up the development of this industry is a liberalization of the electricity market that would enable the efficient and rapid acceleration of renewable energy capacity and usage in Taiwan. Taiwan authorities have completed the drafting of new legislation aimed at deregulating Taiwan's electricity market, but this is still subject to review and passage by the legislature. One of the stated intentions of the new legislation is to allow private participation in the generation, sale and purchase of renewable energy.

Taiwan's natural conditions are ideal for renewable energy (especially wind and solar) while the skilled personnel and technical knowhow are readily available. What is missing is the right regulatory and market conditions to spur a massive increase in renewable energy. The best regulatory environment for renewable energy is one that facilitates the rapid expansion of renewable energy capacity and allows flexibility for both sellers and buyers of renewable energy. Legislation such as the new Electricity Act, the Renewable Energy Act and their supporting regulations should open the market and simplify the process for private operators to apply for, install and operate renewable energy facilities. Operators should be given the flexibility to sell renewable energy either to private companies or to state-run Taiwan Power Company (Taipower) while companies and the general public should have the option to purchase renewable energy either from Taipower or directly from private operators. In addition, it is important to streamline the current cumbersome Environmental Impact Assessment and administrative procedures for renewable energy projects. Besides promoting renewables, renewed efforts are needed to improve energy efficiency, especially in industry and buildings. More incentives are needed to spur companies to upgrade their industrial facilities to improve efficiency. Moreover, Taiwan's building codes are still not strict enough and there are not enough incentives to build low carbon buildings.

Speeding up the pace of international harmonisation
Taiwan has made considerable progress over the years towards international harmonisation but there are still important areas where Taiwan's standards and practices deviate from other developed countries. These technical barriers to trade are detrimental to both local and foreign firms operating in Taiwan. In addition, improvements could be made in the consultation, communication and implementation of regulatory changes. Moreover, Taiwan's regulatory system remains overly focused on pre-market controls as opposed to the system in Europe which places much greater emphasis on post-market surveillance and industry self-regulation.

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. 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. In addition, a sufficient grace period is needed for policies, regulations or rulings to allow the industry to fully understand and adjust their operations to meet new requirements.

Attracting talented people and addressing labour shortages
In the modern economy, attracting and retaining the right people is arguably the most important criterion for success. Taiwan is facing critical shortages of both white and blue collar workers in several sectors. Recent changes to labour laws that restrict working hours and impose strict reporting requirements are an impractical impediment to HR flexibility, are out of step with the demands of the modern workplace and have created unnecessary logistical and administrative burdens for both employers and employees. This could be resolved by reverting to a general consensus reached between the government and industry representatives prior to the most recent amendments to the Labour Standards Law (LSL) which provided sufficient flexibility in terms of when regular days off are scheduled and the maximum number of overtime hours per month.

As the economy has become increasingly globalized, in order to succeed companies need a multicultural workforce and the flexibility to hire the most suitable people regardless of where they come from. However, some procedures to hire foreign nationals remain cumbersome and should be streamlined.

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 make it easier both for employers to hire people and the environment attractive enough to entice foreigners to Taiwan by eliminating all remaining instances of unequal treatment for foreigners.

Speeding up major infrastructure projects
Investing in the right infrastructure has a multiplier effect for the economy and creating jobs, provided that infrastructure projects are conceived to serve a useful and practical purpose and are well planned and executed. However, there are many instances of projects in Taiwan where planning and execution fall short of expectations and take too long to complete. It is possible to speed up the process without compromising on the need for proper planning and transparent procedures. Sensible and useful infrastructure projects such as upgrading Taichung's airport to an international airport and upgrading Keelung's harbour for cruise ships have the potential to provide excellent boosts to the economies of these areas. Authorities should overhaul procedures for these projects to ensure maximum efficiency and value in the planning and implementation phases.

Speeding up drug and medical device approval processes
Biotechnology and medicine has been identified by the government as one of the priority innovative industries for future development. Taiwan has succeeded in establishing a comprehensive healthcare system that provides a high level of healthcare coverage to its citizens and Taiwan is also an ideal location for conducting clinical drug trials. However, certain aspects of Taiwan's healthcare system are holding back Taiwan from becoming a leader in healthcare research and development, which is necessary for developing the industry. What is lacking is rapid access to new medicines, adequate rewards for innovation, transparent and predictable policies and cost-effective and efficient procedures. In particular, the approval process for new medicines and devices remains long, unpredictable and opaque. To gear up development of the biotechnology and medical industry, authorities will need to address these issues and create a positive environment that rewards innovation and encourages further investments in biotechnology and medicine.

The overview concludes by pointing out that the major innovative industries of biotechnology and medicine, the Internet of Things (or promotion of the so-called Asian Silicon Valley), green energy and precision (or smart) machinery are areas where members of the ECCT have considerable expertise and resources and can make a meaningful contribution to Taiwan's future development. Members of the ECCT have been consistently supportive of Taiwan's progress and a champion of Taiwan's numerous strengths. Collectively, Europeans remain the largest group of foreign investors in Taiwan and ECCT members have demonstrated their commitment to Taiwan through years of building their local operations, generating economic growth and jobs in line with the highest international standards for corporate governance and sustainability. Finally, the case is made that the recommendations in the 2017 position papers, if adopted, would remove impediments and make a positive contribution to the development of the economy, and ultimately help to gear up Taiwan's revival.

Open Door Mission to Brussels
Besides presenting the position papers to the Taiwan government, the ECCT will also use the papers as the basis for briefing the European Commission, the European Parliament and the European Council. To this end, an ECCT delegation comprising board directors, committee chairs and staff will visit Brussels at the end of November for its annual "Open Door Mission", a series of meetings aimed at providing European officials with a comprehensive update on the current political, investment and regulatory environment in Taiwan.

About the ECCT
With over US$38 billion in direct foreign investments, European businesses are collectively the largest group of foreign investors in Taiwan. The European Chamber of Commerce Taiwan is the only foreign nationwide business chamber in Taiwan and the principal organisation promoting European business interests in Taiwan. The chamber represents over 800 members from over 400 companies and organisations. Through a network of 29 industry and support committees, the ECCT has been successful in addressing specific concerns and providing concrete recommendations to all levels of government to facilitate improving the business environment. The ECCT's annual position papers comprise issues identified by its committees as hindering the further development of their respective industries and provide recommendations to the government of Taiwan for improvement of the business environment on general issues as well as industry-specific problems. They also serve to keep the European Commission, the European Parliament as well as the governments of individual European Union member states informed about Taiwan's business environment.