New Southbound Policy paying early dividends

  • Date: 2017-05-15

I. Background

In September 2016, the Executive Yuan approved the New Southbound Policy Promotion Plan to develop comprehensive relations with Association of Southeast Asian Nations (ASEAN) member states, South Asian countries, Australia and New Zealand.

Based on the principles of settling in for the long haul, seeking comprehensive development, and creating mutual benefits, the plan aims to build broader links and dialogue with the target countries, establish closer collaborative ties, and foster joint development and co-prosperity in the region through four strategies: economic and trade collaboration, people-to-people exchanges, resource sharing and regional connectivity.

In the months since the promotion plan was approved, action plans initiated by individual government agencies have already paid early dividends. In the six-month period ending March 2017, the number of Taiwan-bound visitors from the New Southbound target countries jumped 28.64 percent year-on-year, far outpacing the growth rate of arrivals from all countries. During that same period, Taiwan’s trade volume with New Southbound countries grew 20.33 percent year-on-year, also outpacing aggregate trade growth. And for the 2016 academic year, the number of foreign students from the target countries studying in Taiwan grew 10 percent over the previous year, which was also faster than the overall growth rate.

II. New Southbound Policy achievements to date

A. Economic and trade collaboration

1. Steady trade growth: For the 10-month period ending March 2017, Taiwan’s trade volume with the target countries grew 10.11 percent year-on-year, which was higher than the 7.76 percent growth rate for trade with all countries.

2. Increased investments by state-owned and government-invested companies: Taiwanese companies including Taiwan Sugar, Taiwan Fertilizer, Taiyen Biotech, Chunghwa Telecom, petroleum refiner CPC Corp., shipbuilder CSBC Corp. and China Steel Corp. have invested in 31 projects in ASEAN countries to date.

3. Expanded industrial collaboration:
(1) The Taiwan-Indonesia Industrial Collaboration Summit was held in March 2017.
(2) “Taiwan Desks” were set up in the Philippines, India, Myanmar, Thailand and Vietnam to help Taiwanese businesses navigate the logistics of investing in those countries.
(3) Taiwan’s small and medium-sized enterprises have participated in economic and trade activities with New Southbound countries.
(4) The Taiwan Halal Center was established April 21 to tap the region’s Muslim markets.

4. Innovative approaches to expanding product markets:
(1) A Machinery Marketing Alliance was established to make inroads into supply chains in the target countries.
(2) Taiwan Products Marketing Centers have been set up in major cities to provide Taiwanese companies with customized business services.
(3) Overseas Business Centers were established in Australia, Bangladesh and Vietnam to offer Taiwanese investors discount prices on office rental space.
(4) An association of Taiwanese enterprises was created to share information and experiences concerning New Southbound markets.

5. Easier financing through state-owned bank branches overseas:
(1) Taiwan’s state-owned banks have added eight branch offices in New Southbound countries since May 20, 2016.
(2) The Export-Import Bank of the ROC has set up a syndicated loan platform for the export of systems integration, turnkey project and engineering solutions that will gradually increase capital to NT$32 billion (US$1.1 billion) by 2018.
(3) The three major credit guarantee funds—the Small and Medium Enterprise Credit Guarantee Fund of Taiwan, Overseas Credit Guarantee Fund, and Agricultural Credit Guarantee Fund—have provided a total of NT$50 billion (US$1.6 billion) in financing.

6. Taiwan Agricultural Development Co. (International): Focusing on New Southbound countries and Japan, the newly established company will help consolidate the production and marketing supply chains of Taiwan’s agricultural industry, and build domestic and overseas sales channels.

7. Systems export teams for power plants, petrochemicals, electronic toll collection, urban mass transit and environmental infrastructure: The total value of contracts won by these teams rose from NT$15.6 billion (US$489 million) in 2015 to NT$23 billion (US$711.6 million) in 2016.

B. People-to-people exchanges

1. Personnel training:
(1) Training for children of immigrants: Taiwan’s schools will compile 126 textbooks for languages from seven countries and set up a nationwide pilot program by the end of 2017. Technical colleges are offering for-credit courses for second-generation immigrants on Southeast Asian languages and industries. Subsidies are available to help children of immigrants explore their cultural roots and to encourage scholastic exchanges with New Southbound countries.

(2) Training industrial talent: The government is providing colleges and universities of technology with subsidies for short-term training programs for overseas youth as well as industry-university cooperation courses. Opportunities have been expanded for bright students from ASEAN and South Asian countries to study or train in Taiwan, and Taiwanese students are encouraged to gain experience in ASEAN and South Asian countries.

2. Recruitment: A New Southbound personnel webpage is being set up, along with a platform for Taiwanese companies to register and seek personnel for New Southbound work opportunities. The government is also promoting overseas life experience programs to connect second-generation immigrants with their native countries.

C. Resource sharing

1. Agricultural cooperation: Taiwan has signed bilateral agreements (and memorandums of understanding) on agricultural cooperation with Australia, Myanmar, India, Indonesia, the Philippines, Thailand and Vietnam.

2. Cultural exchange: Thirty cultural leaders from Southeast Asia and Taiwan have been invited to attend 11 forums and Southeast Asian film exhibits. Taiwan’s indigenous peoples have formed sister communities or sister associations with indigenous groups in Indonesia, Malaysia, New Zealand and the Philippines.

3. Medical cooperation:
(1) Regional disease control networks: Information systems have been established to monitor dengue fever, tuberculosis and other communicable diseases in the region.
(2) Regulatory harmonization: Exchange and cooperation channels for laboratory technologies have been established, and regulations for medical equipment and pharmaceuticals are being harmonized to facilitate the sale of Taiwan’s medical products abroad.

4. Technological cooperation:
(1) International industry-university cooperation and marketing: Taiwan signed a memorandum of understanding on cooperation with Thai dentistry schools in December 2016, opening the dental equipment market in Thailand to Taiwanese businesses.
(2) Personnel training and bilateral exchanges: Taiwan offers grants for Southeast Asian teachers and government officials to receive training in Taiwan.
(3) Regional cooperation on scientific research: Each year, through the Asia-Pacific Economic Cooperation forum or bilateral scientific and technological cooperation agreements, Taiwan promotes at least 10 mission-oriented research project groups on topics that leverage Taiwan’s technological strengths, or topics of regional concern.

D. Regional connectivity

1. Stronger bilateral exchanges: Taiwan’s dialogues with governments in the New Southbound countries have been broader, more frequent, and at higher levels, featuring more high-level delegation visits over the past year.
2. Bilateral investment protection agreements: To protect the investments of Taiwanese companies, the government is in active discussions with New Southbound countries to sign and update investment protection agreements.

III. Conclusion

Since its launch, the target countries as well major nations outside the region have welcomed Taiwan’s New Southbound Policy and expressed interest in cooperating. Moving forward, the government will promote five flagship projects that build on Taiwan’s strengths: personnel development for industry, public health cooperation and industrial chain development, innovative industrial cooperation, regional agricultural development, and a New Southbound Policy forum and youth exchange platform. All of these efforts will strengthen and expand Taiwan’s market presence, generate new business opportunities, and deepen Taiwan’s ties with New Southbound countries.