At an ad hoc meeting today, the National Development Council (NDC) presented a plan to bolster the nation's economic structure. The plan is to generate a virtuous cycle of innovation, investment and employment in order to bring about structural adjustments and enhance industries' capability to respond to business cycles.
On July 12, Premier Mao Chi-kuo instructed the NDC to formulate short-term practices and long-term "mooring" strategies for addressing issues related to improving export and revitalizing investment. The NDC plan incorporates the measures of related ministries and agencies such as the Ministry of Economic Affairs, Ministry of Finance, Ministry of Transportation and Communications, and Financial Supervisory Commission.
Mao pointed out that the nation's exports declined in the first half of this year, mainly due to the global economic revival not being as robust as earlier anticipated as well as the impact from plunges in international oil prices. However, Taiwan's overall economic fundamentals were still steady, resulting in a net trade surplus.
Nevertheless, from the medium- and long-term perspectives, the situation reflected that the nation must strive to expedite industrial upgrade, augment investment and enhance export competitiveness in order to effect economic structural transformation. In addition, the public and academic sectors have pointed out that domestic economic development has been strongly affected by noneconomic factors such as vigorous upheavals in the political and economic environments.
The premier stated that industrial structural adjustments require long-term efforts to lay a solid foundation and this transformative work must be persistently carried out over time to accomplish its objectives. Therefore, this plan is designated as a mid-term review and consolidation for current existing programs, and it will focus on three aspects: upgrading industries, expanding exports and promoting investment.
In the short term, the primary focuses will be improving investment and promoting export. Incorporation of innovative measures that can be immediately implemented will set the stage for long-term industrial structural transformation and lay the foundation for new development opportunities. In the medium and long terms, the plan will help turn around the past development model of contract-manufacturing exports with low margins, and raise overall national competitiveness via the creation of new models for industries, export and investment. Major points of the plan are as follows:
1. Upgrading industries: When driven by innovation, industries would turn from competing on price to competing on value. To usher in industrial transformation and upgrade, the Executive Yuan has already been promoting such programs as ide@Taiwan 2020 and Productivity 4.0. However, due to slowing global economic growth and rising threats from mainland China's supply chains, Taiwan must beef up its existing policies to augment the efficacy of innovation and startups, and consolidate current industrial competitiveness in order to raise businesses' competitiveness.
2. Expanding exports: Systemic integration will be strengthened to turn from the past model based on intermediate goods to a new model of systematization of goods and services. In order to create this new export model and transform the past model of concentrating on intermediate goods in information communications technologies, the plan will focus on promoting service industries' development of international markets (with systemic integration and whole plant export, as well as cultural and creative industries) and introducing service personnel (such as in health care for elderly people and tourism). It will focus fully on exploring and developing emerging markets' domestic demand and business opportunities in order to advance this new alternative model of systematization of goods and services exports along with the past export model.
3. Promoting investment: Sources of investment funds will be amplified to channel both domestic and overseas private-sector capital as well as governmental resources into industrial upgrading and export expansion. The increase of investment momentum will help revitalize the economy in the short term and drive industrial upgrade in the long term. The government will expand public investment, giving priority to budgeting funds for public construction projects that are conducive to improving the investment environment, such as waste-water processing.