Major credit ratings agencies Fitch Ratings and Moody's Investor Service each maintained Taiwan's sovereign credit rating at A+ this year on the basis of its strong financial and economic performance, Premier Sean Chen said at a Cabinet meeting today.
Fitch Ratings said Taiwan has healthy external finances and a resilient economy while its public debt is in line with its peers in the ratings. Moody's cited Taiwan's good economic performance, strong ability to service external debt and improved financial position while noting that government revenues are low and have room for improvement.
Officials said the agencies' positive view of Taiwan's finances in light of the fickle international economic environment indicates that Taiwan's robust economy can provide a buffer against external fiscal shocks.
Moreover, in its 2013 Doing Business Report released October 23, the World Bank ranked Taiwan 16th of 185 economies with respect to the ease of doing business there. This was the nation's best result ever in this study, nine places higher than the year before and ahead of Canada, Germany, Japan, and other major countries, the premier noted. "This affirms that the efforts the government has made to reform Taiwan's business environment in recent years have received international approval," the premier stated.
Global economic trends like the spread of the European sovereign debt crisis and the slowing of mainland China's economic growth have impacted Taiwan's exports, the premier noted. To expand overseas markets, the Ministry of Economic Affairs (MOEA) has pinpointed cities of varying size in Association of Southeast Asian Nations (ASEAN) and Islamic countries and researched their market scale, consumer preferences and business opportunities. It is also seeking to establish centers in new markets that do not already have ROC trade representative offices. Kuwait, St. Petersburg and Calcutta will see such centers open this year. The MOEA is also helping businesses make inroads abroad and has presented model companies as leaders in this regard.
Taiwanese monthly exports reached US$27.2 billion this September, the first month with net growth since February and the highest monthly total in 14 months. Aggregate exports to emerging markets over the first nine months of 2012 was 5.6 percent higher than the same period of 2011 and made up 28.1 percent of all Taiwanese exports compared to 26 percent the year before. This clearly indicates Taiwan has regained its export momentum and that the strategy of urging manufacturers to diversify their markets and tap into emerging markets is gradually bearing fruit, the MOEA said.
In addition to boosting exports, the following measures have been implemented over the last month to power up the Taiwanese economy:
1. Build a Yunlin-Changhua golden agricultural corridor
- To solve land subsidence problems along the Taiwan High Speed Rail line passing through Yunlin and Changhua counties, NT$3.3 billion (US$113 million) will be invested from 2013 to 2020. These measures are expected to decrease groundwater pumping by 24 million tons per year, attract about 12,000 visitors for agricultural tours and cultivate 1,650 next-generation farmers.
2. Add innovation to traditional industries
- New life is being injected into traditional industries through the introduction of new elements like information and communications technologies, cultural and creative industries, green energy and eco-friendliness.
- Through August 2019, 50 new product lines will be funded for revitalization, with NT$200 million (US$6.8 million) per plan for a total of NT$10 billion (US$341 million) of support. This is expected to create five international brands, 25,000 jobs and NT$200 billion (US$6.8 billion) of exports while spurring NT$50 billion (US$1.7 billion) of private investment.
3. Bolster backbone enterprises
- Through a customized counseling system, small and middle-sized enterprises (SMEs) with great potential are being developed into globally competitive enterprises that will help constitute the backbone of the Taiwanese economy because they bring sustainable development to SMEs above and below them in the supply chain.
- An estimated 150 firms will be counseled in three years, with goals of attracting NT$100 billion (US$3.4 billion) in investment and creating 10,000 jobs.
4. Develop cross-strait finance
Domestic banking units are being fully enabled to operate renminbi currency services
- Cross-strait cash flow through e-commerce is being facilitated.
- Quality Taiwanese businesses based in the mainland may be listed on Taiwanese stock exchanges.
- Domestic public companies are being permitted to issue renminbi-denominated bonds and other financing tools.
- The role insurance companies can play in finance is being expanded.
- The government is supervising the removal of obstacles to cross-strait cooperation and fighting for favorable conditions for Taiwanese financial institutions to enter the mainland market.
5. Establish a Taiwan-centric wealth management platform
- Financial institutions such as banks, securities dealers and securities investment trust and consulting companies are being assisted in the development of diversified financial products and cultivation of talent.
- International investment positions are being proposed for Taiwan's four major funds (the Postal Saving Fund, Labor Insurance Fund, Labor Pension Fund and Public Service Pension Fund).
- Foreign exchange management of the financial industry's administration of securities is being relaxed.
- Incentives are being provided for financial businesses to cultivate local talent.
6. Develop emerging markets
- The government will establish bastions in big business cities of emerging markets where there are not yet Taiwanese business offices. Three will be established this year—in Kuwait, St. Petersburg, Russia and Calcutta, India—with another in Myanmar next year. The Philippines, Brazil and other markets are being evaluated.
- It will also help local enterprises develop overseas business channels by making long-term cooperation arrangements with major distributors in those markets and creating venues to showcase high-quality Taiwanese products there.
- To nurture the vanguard of Taiwan's relations with these countries, beginning in 2013, more students from Brazil, Russia, Mexico, Poland, India, Vietnam, the Middle East, Turkey and Indonesia will come to Taiwan on scholarships, and they will subsequently be introduced to businesses and talent-matching agencies here.
7. Expand invitations for investment opportunities
- On September 28, the MOEA hosted a summit with the theme "Embracing Taiwan" to encourage Taiwanese businesses to invest in the island and publicize its competitive edge and opportunities created by the Cross-straits Economic Cooperation Framework Agreement.
- On October 8, it hosted the 2012 Taiwan Business Alliance Conference to secure foreign investment in Taiwan.
8. Hold private investment promotion conferences
- The Public Construction Commission has established a platform to attract private investment for public works.
- A promotional conference was held October 23 with the goal of generating NT$100 billion (US$3.4 billion) annually in committed private investment.
9. Encourage overseas Taiwanese firms to invest back in Taiwan
- Beginning November 2012, the government will implement six measures to eliminate obstacles to hiring personnel in Taiwan.
- This initiative is expected to raise investment by NT$200 billion (NT$6.8 billion), generate NT$303.7 billion (US$10.4 billion) in output value and create 82,000 job opportunities.
10. Build the Taoyuan Aerotropolis
- Work on building a commercial and industrial "aerotropolis" around Taiwan Taoyuan International Airport officially began September 18.
- A task force to oversee this project led by Vice Premier Jiang Yi-huah was established on October 2 and held its first meeting October 4.
11. Redefine Songshan Airport
- Songshan Airport will be redefined as the capital city's business airport and a domestic aviation hub.
- Mainly serving international flights within the Asia-Pacific and across the Taiwan Strait, the airport will integrate resources from its surrounding areas and promote Taipei City's economic development.
12. Drop re-registration requirements for personal vehicles
- Periodic renewal of personal automobile and motorcycle registrations will no longer be required as of January 1, 2013. The Ministry of Transportation and Communications will update related regulations and information systems in the meantime.
- This measure is expected to save motorists NT$1.19 billion (US$40.7 million) per year in registration costs.
13. Ease restrictions on hiring foreign caregivers for the elderly
- To make providing for loved ones easier for families, the government relaxed restrictions on hiring foreign caregivers for seniors aged 80 and above. This move will preserve the supplementary nature of foreign labor without disrupting Taiwan's long-term care system.
- Since September 19, families have been permitted to apply for a foreign caregiver if the senior has been professionally evaluated as requiring round-the-clock care (scoring 60 or less on the Barthel Index per Department of Health standards). This policy will benefit approximately 33,000 families.
14. Establish actual-price registry of real-estate transactions
- Starting August 1, parties to a real-estate transaction have been required to register the actual selling or rental price of the property within 30 days of the deed transfer, contract signing or consignment expiration.
- The registry was opened to the public on October 16 to help stabilize housing prices in Taiwan and promote a healthy real-estate market.
As external trade is a lifeline for Taiwan's economy, the MOEA will continue analyzing the needs of target markets, integrate marketing of related goods and services, work with the local retailers and wholesalers there to set up permanent Taiwanese product exhibitions and coordinate exhibition tours of neighboring markets. Care will be taken to avoid short-lived marketing campaigns so as to address export challenges head-on. More international buyers will be invited to Taiwan to bring in business and boost sales.
On the whole, the government will help businesses weather the global economic downturn through aggressive efforts to develop new markets and attract investments, creating a positive long-term outlook for exports and growth.