At the Cabinet's weekly meeting today, Premier Lin Chuan said that although Taiwan's export, business and economic indicators have all trended positive since the second half of 2016, because investments are still the main driver of long-term economic growth, the government must improve Taiwan's investment climate and create investment opportunities.
After a briefing by the National Development Council's (NDC) on the state of the economy, Premier Lin said the government is promoting the "five plus two" innovative industries plan and the Forward-looking Infrastructure Development Program to show its commitment to expanding public investments. In addition to public sector investments, private sector investment is essential, and the government will have to work hard to lift private sector investments out of their protracted doldrums. He asked government agencies to redouble their efforts in five areas:
1. Deregulation: Many innovative ideas worth investing in cannot be fully implemented without deregulation, so government agencies should ease their regulations and create supportive environments where great ideas can become reality.
2. Reduce investment uncertainties: The government is working to further reduce uncertainties for investors regarding environmental impact assessments, water and electricity supplies, and accessibility to land.
3. Bring in high-level professionals: This is the most effective way to enhance Taiwan's competitiveness and improve wage levels. The Executive Yuan has already submitted a foreign professionals recruitment and hiring bill to the Legislature for priority review. Government agencies should also incorporate measures for attracting high-level professionals to Taiwan into their administrative policies.
4. Lower compliance costs for companies: Too many government administrative requirements will only drive up expenses for companies that comply with those requirements. For government to be effective and competitive, each agency should thoroughly review its regulations and eliminate unnecessary controls.
5. Hedge against external factors: External factors that affect Taiwan's economy include export demand, investments from abroad, and even changes in the diplomatic environment. The new U.S. government's trade policies have driven up the value of the New Taiwan dollar, and many Taiwanese businesses will have to change their investment strategies as the U.S. brings manufacturing jobs back to its shores. Taiwan's government agencies should monitor these developments closely and take appropriate steps to keep these factors from impeding Taiwan's economic growth.
The NDC said in its report that the global economy is gaining momentum this year, with the International Monetary Fund in April raising its projection for 2017 global growth to 3.5 percent, mainly due to simultaneous recoveries in advanced, emerging and developing economies. In Taiwan, the Directorate-General of Budget, Accounting and Statistics also revised up the nation's first-quarter growth estimate to 2.56 percent—0.11 percentage point higher than the previous forecast—on the back of better-than-expected investments. March business cycle indicators flashed "green," indicating stable growth, for the ninth consecutive month, and April exports continued to expand, all of which point to steady growth in Taiwan's economy.
Other economic trends reported by the NDC: commodity export momentum continued to rise, retail and food industry sales increased, the job market is stable, real regular earnings grew, and consumer prices remained steady. Domestic economic institutions maintain a rosy outlook and have successively raised Taiwan's 2017 growth forecast to above 2.0 percent.