At an Executive Yuan meeting today to discuss policy goals for 2013, Premier Sean Chen instructed the administrative team to expedite reforms for the structural challenges mentioned in President Ma Ying-jeou's New Year's Day message. Government agencies' responses to these and other challenges are as follows:
1. Restructure industries in response to intensifying global industrial competition
a. The government will promote value-added innovation to effect the structural transformation of Taiwan's industries. This concept was demonstrated in the Three Industries, Four Reforms program, which in 2012 focused on the areas of intelligent living, smart machine tool manufacturing, low-temperature shipping, information services and innovative textiles. Four more industries will be highlighted in 2013: smart handheld devices, product design, high value-added petrochemicals and bicycles.
The Backbone Enterprises Promotion Project was also launched to harness the creative vitality of Taiwan's small and medium-sized enterprises. Each year the government will offer guidance to 50 promising companies and present awards to 10 of the top-performing enterprises in their fields. The project aims to stimulate investments of NT$100 billion (US$3.3 billion) and create 10,000 jobs within three years.
The services industry is another sector where value-added innovation is being emphasized. Between 2013 and 2020, a total of NT$30 billion will be injected into the services industry with a view to spurring GDP growth of 5.14 percent per year in the industry.
To improve basic industrial technologies and create higher-value intellectual property, the Ministry of Economic Affairs (MOEA) will promote the research and development of 10 basic technologies in the areas of materials chemistry, electronics and mechanics, machinery and software. Twenty-five research centers will be established at universities, and at least 50 companies and six nonprofit organizations will be involved in this effort.
As for intellectual property, government agencies will plan the strategic deployment of patents, open up a platform for R&D, and establish a mechanism to help industries and academia better manage intellectual property.
b. To ensure Taiwan has the creativity energy needed to drive economic growth, the government has simplified administrative procedures and made regulations more reasonable. This will enable faster changes to the industrial structure and help companies expand globally.
As of December 5, 2012, a total of 813 regulations had been changed. Insurance funds can be utilized with greater flexibility and efficiency. Restrictions were eased on insurance companies making overseas investments. Minimum capital requirements for establishing companies were abolished, start-up business capital requirements were lowered, and the application process was simplified. The limit on securities firms' investments in foreign companies, overseas branches and mainland China combined was raised to 30 percent of the firm's net worth.
c. The Executive Yuan will carefully review regulations to foster a business-friendly investment environment, and employ innovative financing strategies to attract mid- and long-term investments in public works. The Statute for Investment by Foreign Nationals and the Statute for Investment by Overseas Chinese will be amended to simplify application procedures and allow them to be submitted after the project begins, rather than before (except in special cases).
A major program to win investments from overseas Taiwanese businesses will be implemented from November 1, 2012 to December 31, 2014. It addresses labor problems, provides land-acquisition information, facilitates equipment imports, expands guidance, offers project loans, and accelerates follow-up negotiations on the Cross-Straits Economic Cooperation Framework Agreement (ECFA). Over its two-year period, the program aims to attract NT$200 billion in investments, generate NT$303.7 billion in production value, and create 82,000 jobs.
2. Avoid protectionism, create free-trade island amid accelerated formation of regional free-trade bloc
a. The Executive Yuan has established a free-trade agreement (FTA) task force directly under the premier. And since 2012, the government has been diversifying Taiwan's exports to emerging markets while pursuing economic cooperation agreements (ECA) with non-diplomatic partners. This strategy of taking multiple approaches and signing agreements one by one has yielded solid results so far.
As examples, talks with Singapore are faring well on the ASTEP (Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership). Taiwan and New Zealand announced on May 18, 2012 that an ECA feasibility study had been completed and that official talks would ensue. The government has commissioned think tanks to conduct ECA feasibility studies with India, Indonesia and Malaysia. Israel has agreed to set up a working group by 2013 to consider the feasibility of signing an FTA with Taiwan. And the ROC will continue to lobby the European Union, the United States and Japan to enter into ECA negotiations with Taiwan.
To weave a more comprehensive trade network, the MOEA will help expand Taiwan's exports and strive for participation in regional economic integration. More guidance on labor, marketing and branding will be offered to companies branching out abroad. All of these efforts are expected to raise overall export by 5.5 percent in 2013 with two-digit growth in emerging markets.
b. The government has drawn up plans to create "free economic demonstration zones" to keep up with international trends, increase national competitiveness and bolster production output. Regulations will be adjusted within these zones to facilitate the flow of goods, personnel and capital and attract diverse industries and private capital, paving the way for Taiwan's entry into Trans-Pacific Partnership talks.
3. Strengthen industry-academia cooperation to match personnel training to industrial needs
a. The Council for Economic Planning and Development holds regular cross-ministry meetings to coordinate policies related to training, retaining and recruiting talents.
b. The MOEA and the National Science Council are working together to implement academia-industry alliance programs. The government will inject NT$400 million per year to ramp up R&D at universities and enterprises and make Taiwan more competitive.
c. Plans are afoot to promote "model technology universities" with the goals of strengthening academia-industry links, talent training and R&D. Six universities were chosen in March 2012 for preliminary testing of such plans, while funding was provided to set up academia-industry R&D centers at two other universities.
d. The quality of vocational education is being improved by the hiring of more industry professionals as teachers. In 2012, a total of 90 schools received subsidies to recruit 2,138 professionals as instructors and to provide students with internship opportunities. In addition, 77 hands-on training classes enabled 3,600 students to improve their employment prospects while continuing their studies.
4. Reform pension systems in a manner that fosters tolerance and mutual assistance
The Executive Yuan has established a task force under Vice Premier Jiang Yi-huah to promote the fiscal health of pension systems under the principles of sound finances, social equity, consideration of all generations, pragmatism and stability. The task force is assessing the civil servant pension and benefit system, farmers' health insurance, labor insurance, military employees' insurance as well as the National Pension Fund.
Since December 2012, some 100 occupation-specific forums on reform have been held around the country by government agencies. In addition, the Executive Yuan and Examination Yuan have each held large cross-occupational forums. The task force is currently processing the conclusions of each symposium. In mid-January, it will propose a reform plan for the Labor Insurance Fund and make suggestions regarding the other funds.
5. Continue working toward a Golden Decade with peace in the Taiwan Strait
The Executive Yuan is working toward three goals under the Golden Decade national vision plan: Cross-strait exchanges and dialogues between civic organizations about topics such as democracy, human rights, rule of law and civic society are being held to enhance mutual understanding and allow strong mutual trust. More administrative offices will be set up on each other's side to broaden cross-strait services for residents. Revisions to the Act Governing Relations between the People of the Taiwan Area and the Mainland Area are being discussed to allow mainland students to join Taiwan's National Health Insurance program, and to unify permanent residency requirements for mainland spouses and spouses from other countries.
The government will continue to uphold the principles of "no mutual recognition of sovereignty, no mutual denial of jurisdiction" under the ROC Constitution, and maintain the status quo of "no unification, no independence and no use of force." Further expansion of institutionalized talks and cross-strait exchanges would be based on the 1992 consensus that each side acknowledges the existence of "one China" but maintains its own interpretation of what that means. The government seeks to improve the well-being of both sides through stable and long-lasting cross-strait relations.
Conclusion
In 2012, the European financial crisis, slow recovery of the U.S. economy and sluggish growth in emerging economies weighed heavily on Taiwan's trade, investment, production and consumption performance. However, recent Taiwan economic indices—for example, the CEPD gave the economy a yellow-blue light from September through November, indicating a transition to recovery—show that domestic demand has regained momentum.
Looking forward to the new year, Premier Chen said the Executive Yuan will face the challenges head on, proactively promote people's well-being, plan policies that are comprehensive, and communicate and execute them with sophistication. "This will help reinvigorate the economy as swiftly as possible and meet the expectations of the people of Taiwan."