After the failure of a no-confidence motion against Premier Sean Chen on September 22, the premier expressed gratitude to Legislative Yuan President Wang Jin-pyng for his excellent coordination throughout the process and to the majority of legislators for their support and encouragement. He stressed that the government will devote every effort to carrying out the latest economic stimulus plan and other major policies in the short, medium and long term in order to realize the vision of President Ma Ying-jeou's Golden Decade national development plan.
"Adjusting our industry structure, integrating Taiwan into the global economic system, continuing the follow-up talks of the Cross-Straits Economic Cooperation Framework Agreement (ECFA) with Beijing, and expediting the signing of reciprocal trade and investment agreements with other countries remain our top priorities for boosting Taiwan's economy," said the premier, who commented that although these tasks would not pay off immediately, they are crucial to achieving sustainable development.
On the need to change the industrial structure, Chen said Taiwan's economy transformed from labor-intensive to capital-intensive in the 1990s, and whereas laborers could easily share the fruits of economic growth before this change, entrepreneurs who provide capital have stood a better chance of earning profits ever since. Furthermore, without rights to technology, Taiwanese enterprises can only make products with low added value or supply intermediate goods through original equipment manufacturing (OEM) partnerships, and consequently, they have low profit margins, making it difficult to give employees pay raises and limiting increases in job opportunities, he asserted. In addition, since Taiwan's export markets are largely concentrated in a few major economies, when these economies suffer slowdowns due to financial crises or debt woes, Taiwan is quickly affected, Chen said.
To get to the roots of these problems, Taiwan should create a service-oriented manufacturing industry, an internationalized and high-tech services industry, and a specialty-oriented traditional industry, putting industries on sounder footing and increasing their products' competitiveness and value, the premier said. Chen pledged to help the manufacturing sector increase basic industry standards so more companies could become "backbone enterprises" with key technologies and brands, develop emerging markets, diversify risk and exploit business opportunities.
The premier emphasized that adjusting the industry structure and tapping into emerging markets are major items in the government's economic stimulus plan and have already produced results. Many smart living, machine tool, logistics, information services and creative fashion textile enterprises have transformed themselves and grown robustly thanks to the government's plan; moreover, Taiwan's exports to emerging markets grew 3 percent in the first eight months of the year, he said.
Chen also stressed that participating in regional economic integration and mitigating the burden of customs duties on Taiwanese exports are crucial to raising Taiwanese exports' competitiveness. To strengthen Taiwan's efforts to sign economic cooperation agreements and participate in regional integration, he has taken over as convener of the recently-renamed International Economic and Trade Strategy Task Force.
Chen indicated that talks for the Agreement of Singapore and Taiwan Economic Partnership (ASTEP) and an economic cooperation agreement (ECA) with New Zealand are going smoothly, while the United States will send a delegation to Taiwan in the near future to discuss preparations for re-launching Trade and Investment Framework Agreement (TIFA) negotiations. Moreover, the government is planning to sign free trade agreements with Israel, India, the Philippines and Indonesia. Meanwhile, a task force will be established to spearhead the effort to join the Trans-Pacific Partnership (TPP) within eight years, in concert with the gradual institutionalization of the Free Trade Area of the Asia-Pacific (FTAAP). As for following up on ECFA, cross-strait talks on trade in goods and services will be launched, and agreements will be signed successively as discussions progress.
In addition to the above efforts, the current government has improved 794 laws and regulations to expedite the reorganization of the economy, bring companies in line with international standards and reposition Taiwanese corporations in international trade, Chen said.
To stimulate the domestic economy, the government has started several large-scale infrastructure projects, such as the creation of the Taoyuan Aerotropolis and new facilities in the ports of Keelung and Kaohsiung. It expects to reach its annual goal of NT$1 trillion (US$33.34 billion) in investments in these developments by tapping into national assets and using private finance initiative to attract private sector participation.
To further stimulate the Taiwanese economy, the government is considering rolling out measures concerning regulations, land, labor and other issues to attract investment in Taiwan from overseas Taiwanese businesspeople, mainland China and other countries.
Besides a competitive industry structure and diverse export markets, a high-quality, well-trained labor force and a vigorous and stable financial system are pillars of sustainable business and economic development, the premier said. He noted the economic stimulus plan includes programs to boost the training of industry personnel, the development of sustainable finance and the quality of tourism. To meet its labor and financial targets, the government will revise the educational program for vocational schools, cultivate talents for emerging markets, make timely adjustments to labor regulations, establish a cross-strait currency clearing mechanism, and develop the cross-strait financial industry.
The government considers tourism an exportable service industry which can provide more employment opportunities. The number of foreign tourists visiting Taiwan has almost reached 7 million per year and is increasing steadily. In addition to improving the quality of tourism, the government is also attempting to integrate existing cultural, religious and folk activities with the emerging convention and exhibition industry to create more output value and job opportunities.
Premier Chen reiterated that the stimulus plan has several programs related to the vital aspects of the nation's sustainable development, spanning mid- and long-term measures. There are also short-term projects such as a NT$10 billion (US$333.5 million) appropriation by the Executive Yuan's National Development Fund (NDF) to steer venture capital investment and a NT$10 billion (US$333.5 million) NDF allocation to subsidize low-interest loans for the green energy industry.
Measures like boosting development of "backbone businesses," developing the Taoyuan Aerotropolis, expanding the ports of Kaohsiung and Keelung and joining in regional economic integration have either been implemented already or are undergoing expansion. For example, numerous infrastructure projects and preliminary plans related to the Taoyuan Aerotropolis have already been executed, including overhauling Terminal 1 of Taiwan Taoyuan International Airport, relocating a military airport and developing both a special zone for high-speed rail and a mass rapid transit system for the airport. Moreover, development of Terminal 3 is about to be contracted out. Through the coordinated efforts of central and local governments, many more related developmental projects will be completed between 2014 and 2030, including the aviation and industrial park which have already been planned, Chen asserted.
The premier called for all citizens to share in the fruits of economic growth, saying that notwithstanding the government's determined efforts to stimulate development despite a poor global environment, it has not neglected responsibilities such as protecting the disadvantaged, maintaining environmental sustainability and increasing the quality of culture and education. The medical care environment will be improved, and active assistance will be provided for disadvantaged workers and unemployed youth so more people can live in peace and enjoy their work, he promised. At the same time, the government will continue to strengthen energy-saving and carbon-reducing measures to make Taiwan a low-carbon home. The government's 12-year national education plan is meant to provide deeper roots for the talents required for Taiwan's cultural and creative industries to grow, he explained.
Chen emphasized that short-, mid- and long-term policies are all essential to national development. He also said government has to listen carefully to public opinion, look after citizens' livelihoods, and let them appreciate and share in the fruits of successful policies. He also noted that in addition to releasing the economic stimulus plan, the Executive Yuan recently decided to postpone electricity rate hikes while continuing to urge Taiwan Power Co. to improve its operational efficiency. The rate hikes have been delayed until October 1, 2013, after which a floating electricity price mechanism based on international fuel prices will be established.