Premier Mao Chi-kuo today expounded his views on current economic and social issues in a keynote speech at the Third Wednesday Club. During exchanges with entrepreneurial leaders, Mao reiterated that there is no "miracle drug" to improve gross domestic product (GDP). If the GDP downslide is of a structural nature, the government will guide the economy to an upward path by assisting industries to innovate and transform. The government's position is very clear: In any areas where it can exert efforts, it will do its utmost and not waste a second in bringing out adjustment measures to lead industries to develop on a new track.
The premier stated that the nation's economy and exports in the short term appear to be dwindling, with declined GDP and depressed stock markets. However, seen from a macro perspective, this is a circumstance of the international business cycle being at a low tide, albeit Taiwan harbors an additional issue of industrial transformation and upgrade. Taiwan's consumer electronics products, which constitute a chief element of its overall industry and GDP, have reached their maturity stages. In addition, its traditional industries have exhibited insufficient export growth momentum, and mainland China is promoting a policy of replacing imports with domestic supply. All these conditions have affected growth. Therefore, the country's industries must transform and upgrade to meet these challenges.
Innovation and entrepreneurship are of utmost importance for industrial transformation and upgrade, the premier pointed out. Traditional small and medium-size enterprises and innovative young businesses alike must be injected with the DNA of an innovative economy. To remove the three major obstacles to innovation development—unfavorable laws and regulations, difficulty in raising capital and lack of international linkage—the government has striven to promote the third party payment act, issued entrepreneurial visas, set up joint public-private funds such as the Taiwan Silicon Valley technology fund, sought the financial sector's loan support for startup businesses and established the Taiwan Rapid Innovation Prototyping League for Enterprises, among other measures.
The premier also mentioned the trend of the "fourth industrial revolution": Industry 4.0, an integrated online to offline production and distribution system founded on linking the Internet of Things with big data. The core concept of Productivity 4.0 also lies in the Internet of Things, and is based on analysis of "icloud" big data to establish a smart value chain system, Mao noted. Applied in smart industries, services and agriculture, it serves as a major tool for industrial transformation. In light of Taiwan's decreasing labor force and aging society, implementing Productivity 4.0 is a necessary policy direction, the premier affirmed.
Mao further pointed out that transformations in export and industries are two sides of the same coin. In the past, the nation placed emphasis primarily on components and business-to-business (B2B) marketing; in the future, it must shift to business-to-consumer (B2C) marketing of finished products and systems. In the past, Taiwanese businesses produced goods in developing countries and then exported them to markets of developed nations. In the future, they will produce and sell goods in developing countries.
Obviously, the government wishes manufacturers to produce in Taiwan, Mao said. If they should produce overseas, however, they must get hold of products and distribution networks to be profitable. Furthermore, the government hopes to make the ASEAN (Association of Southeast Asian Nations) Taiwan's primary export destination and make inroads into the Indian market. Hon Hai/Foxconn Technology Group, Cheng Shin Tire, and ASUSTeK Computer Inc. have already become exemplars of this success model.