Launch of the 2014 Position Papers
Launch of the 2014 Position Papers
On 7 November, the ECCT's 2014 Position Papers were officially released at a Premium Event lunch. On behalf of the chamber, ECCT Chairman Giuseppe Izzo handed over a copy of the papers to the government, represented by Dr Kuan Chung-ming, Minister of the Council for Economic Planning and Development (CEPD) at the lunch. The lunch was also attended by around 70 guests including board directors, committee chairpersons, trade office representatives and other ECCT members. Following the lunch, the papers were released to the media at a press conference.
Position Paper Overview
In his presentation at the lunch, ECCT Chairman Izzo introduced the papers. The theme of this year's papers is "Getting the Balance Right". The papers call on the government to put in a place strategies and take the necessary practical actions to encourage local and foreign companies to increase investments in the economy to ensure Taiwan's future economic growth and prosperity. Given negative trends such as Taiwan's slowing economic growth, declining EU-Taiwan trade and investment and stagnant competitiveness rankings, the papers urge action by the government to put in place balanced and progressive regulations, adopt international standards, pursue a trade deal with the European Union and work much harder to put Taiwan on a path to sustainable economic growth. The papers raise 119 issues (75 unresolved from previous years and 44 new issues) proposed by 22 of its committees that the chamber believes will help Taiwan to achieve the right regulatory balance.
In his presentation at the lunch, ECCT Chairman Giuseppe Izzo, lauded the progress Taiwan has made in recent years. Taiwan's competitiveness rankings have risen in recent years and the general quality of the living environment continues to improve. The government has also taken steps to address a number of issues raised by ECCT members in the 2013 Position Papers. The chairman noted that 25% of issues raised by ECCT member companies in the 2013 Position Papers have either been resolved or seen progress towards resolution compared to only 14% last year. He also said that it is encouraging to learn of plans to establish Free Economic Pilot Zones in Taiwan because it demonstrates a commitment to greater liberalisation.
Despite these positive developments, there are a number of areas where no progress has been made in a number of years. Moreover, there have also been several instances of unbalanced or poorly thought through regulations that have already had or are very likely to cause unintended consequences in the future. In addition, there is a lack of proactive planning in important areas, notably sustainability and energy policy. "Democracy and freedom of speech are hallmarks of an open and free society to be cherished," he said. "However, there are instances where the government overly panders to whichever group happens to make the most noise. Laws drafted without proper consultation with all stakeholders are very likely to be unbalanced and have unintended consequences. It is the government's difficult job to listen to all sides and to make decisions to create the right environment to attract investment, generate growth and create jobs. Our message to the government is that it is essential to get the balance right in the regulatory system to move Taiwan forward and our position papers offer our recommendations on how to do this," he said.
In his presentation, Izzo outlined some negative economic trends. Taiwan's GDP rose by only 1.26% in 2012 and growth in the first three quarters of 2013 have missed the government's forecasts. The WTO has cut its forecast for global trade growth for 2013 to 2.5% and to 4.5% for 2014 while the IMF has cut its global forecasts to 2.9% for 2013 3.6% for 2014. Leading indicators for Taiwan have improved but show the outlook remains challenging given global economic trends.
The trend in EU-Taiwan trade and investment is also negative. "The decline in both EU-Taiwan trade and the level of EU investment in Taiwan should be a cause of concern for the Taiwan government and business," the chairman said. Bilateral EU-Taiwan trade in goods declined by 5.2% in 2012 and Taiwan's exports to the EU in the first six months of 2013 declined 8.3% from the same period a year earlier. Taiwan's underperformance versus other countries is notable. The EU's exports to the rest of the world rose by 8.2% while imports from the rest of the world increased by 4% in 2012. Notable examples in Asia are the EU's bilateral trade with South Korea, which grew by 10.2% while trade with Hong Kong rose by 5.7% in 2012.
Taiwan's Ministry of Economic Affairs' statistics show a declining trend for Taiwan's market share of overall trade with the EU over the past five years, from 1.5% in 2008 to 1.3% last year. As a consequence of declining trade, Taiwan slipped from being the EU's 19th largest trading partner in 2011 to 23rd place in 2012. Based on trends so far in 2013, Taiwan will slip further this year.
Europeans remain the largest source of direct foreign investment in Taiwan with accumulated investments of US$32.3 billion. This is well ahead of the United States, Japan and China. However, the level of investment this year has declined from previous years and compared to the United States, Japan and China. Last year Europeans invested US$1.3 billion in Taiwan but investment in the first six months of 2013 was only US$350 million. This is a decline of 49% from the same period last year. "We believe this slowdown is a clear indication that Taiwan needs to do more to attract investment," the chairman said.
Taiwan is relatively competitive by some measures but behind its regional rivals in others.
Taiwan was ranked 16th among 183 global economies in the World Bank's 2014 Doing Business report, the same position as last year and behind its Asian competitors, Singapore, which was ranked No. 1, Hong Kong (No. 2), South Korea (7th) and Malaysia (6th). In the survey Taiwan's rankings improved in four areas and declined in six areas. Taiwan ranks in the top 10 in two categories "Dealing with construction permits" and "Getting Electricity" but the relatively low rankings in other areas indicate that more needs to be done to improve the regulatory environment.
"Given the background of an uncertain global economic outlook, negative trends in EU trade and investment and stagnant competitiveness rankings, we believe there is work to be done," the chairman said.
Izzo then went on to outline the main action points set out in the Overview of the 2014 Position Papers. To get the balance right, the papers outline action on several fronts. They urge the government to put in place balanced and progressive regulations, adopt international standards, pursue a trade deal with the European Union and work much harder to put Taiwan on a path to sustainable economic growth.
Chairman Izzo concluded his presentation by saying that Taiwan remains a dynamic player in the global economy, has good transport and communications infrastructure, a relatively consistent legal system, a highly skilled and stable workforce and a functioning universal healthcare system. Compared to some of its regional competitors, Taiwan's quality of life is also good in terms of air quality, public transport and traffic and a wide variety of entertainment and leisure activities. For these reasons, Taiwan remains a good place to live and do business.
However, Taiwan faces fierce competition from its regional competitors. For this reason, the government has to work hard to make every aspect of living and doing business in Taiwan better than its regional rivals. Creating a regulatory system that balances the need for protecting the health, safety and welfare of citizens with the need for investment, economic growth and creating jobs should be the government's priority. Taking action to create the right balance would help Taiwan to reach its full potential.