Premier Jiang Yi-huah today said building free economic pilot zones in Taiwan will not only be conducive to the nation's entry into regional trade organizations, but also spur investments, create jobs and add momentum to economic growth.
After hearing the Council for Economic Planning and Development's (CEPD) plan for the zones, Jiang said Taiwan has promoted liberalization and globalization policies many times in its history, and each change has paved the way for the next stage of growth. Free economic pilot zones are a major initiative for realizing President Ma Ying-jeou's "Golden Decade National Vision" guideline and have been included in the Executive Yuan's Economic Power-Up Plan.
The CEPD's plan seeks to open Taiwan's market wider by significantly easing restrictions on the flow of goods, people and capital. The premier said these efforts mark the start of another wave of liberalization since the ROC acceded to the World Trade Organization a decade ago.
Faced with globalization challenges, Taiwan must push proactively for deregulation in order to keep up with regional economic integration and create favorable conditions for joining the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership, Jiang said. Otherwise, local industries will become less competitive while investments and talent drain away.
He directed ministries and agencies to support the CEPD's efforts and plan to include more economically viable industries in the zones. Successful experiences thus gained can be applied to other parts of the country to transform Taiwan into a "free trade island."
Under the CEPD plan, the pilot zones will focus on intelligent logistics, international medical services and value-added agriculture—all niche industries with high potential. For instance, Taiwan is at a geographically advantageous location, offers excellent air and sea port facilities, and its free trade ports have already exceeded NT$500 billion (US$16.7 billion) in trade value. Health care technologies are also highly competitive—the international medical services industry alone soared 80 percent in production value in 2012.
Furthermore, the zones will promote cross-national cooperation—without restriction on the type of industries—to bring foreign capital and cutting-edge technologies together with Taiwan's industrial chain and commercialization advantages. The zones will also tap into mainland Chinese and other emerging markets.
To foster a fully liberalized, globalized business environment, the CEPD's strategy is to break through the present regulatory framework by creating new supervision mechanisms. This includes relaxing restrictions on foreign white-collar professionals working in Taiwan, eliminating import/export tariffs on raw and processed agricultural products, opening Taiwan's services market and easing investment rules, simplifying land-use regulations while offering favorable rental prices, and providing one-stop service.
To the extent permitted under actual investment conditions, companies inside the zones will also enjoy preferential tax treatment when remitting foreign earnings back home, acquiring patented technologies, hiring foreign talent, conducting research and development, and setting up operation headquarters.
Free economic pilot zones will be developed in two phases. In the first phase, the six free trade ports in northern, central and southern Taiwan will be designated as the pilot zones, which remain special areas "inside national territory but outside customs territory." These areas are expected to generate wider economic benefits by linking with nearby industrial parks and local businesses.
Phase two will begin after a special law governing the zones is passed. While an overall blueprint will be drawn up by the central government, the CEPD said all local governments will be invited to design their own plans for developing inland areas and transportation facilities.
As for concerns that mainland agricultural imports or international medical services would be expanded at the expense of Taiwanese citizens, the CEPD said a comprehensive set of measures has already been formulated. All mainland produce processed inside the zones will be exported to a third destination without entering Taiwan's market. International medical service facilities will cater primarily to foreigners not covered by Taiwan's National Health Insurance (NHI) program, even paying additional business permit fees to support the NHI. The CEPD believes domestic industries will in fact reap benefits from the zones.