20100516 The trick to success lies with global markets

The trick to success lies with global markets

By Ko Wen-che 柯文哲
Sunday, May 16, 2010, Page 8

Many concerns have arisen from the planned economic cooperation framework agreement (ECFA) that is being negotiated between Taiwan and China; however, one of the largest ones is this: Why doesn’t President Ma Ying-jeou (馬英九) negotiate an ECFA with the US or Japan instead of rushing to conclude such an agreement with China?

Ma is doing all he can to tie the Taiwanese and Chinese economies closer to each other. By doing so, he has created a situation in which it seems as if Taiwanese businesses would be ruined if the country did not sign the economic pact with China. The implication is that by rejecting the agreement, the government would prohibit Taiwanese industries from accessing the Chinese market, and that would be too costly a consequence.

However, if Taiwan and China sign an ECFA, it is the general public that will be ruined instead. If that happens people will run the risk of losing their jobs. That puts Taiwan on the road to doom, regardless of whether an ECFA is signed or not. To solve this problem, Taiwan must find another way out so that it can escape from the trap posed by the current dilemma.

In the 1970s, Taiwan’s economy took off with the help of export processing zones and original equipment manufacturing of semiconductors, making Taiwan one of the four Asian Tigers — along with Hong Kong, Singapore and South Korea. However, success is the mother of failure. This economic model was so successful in the past that everyone kept relying on it in the hope that it would continue to bring success. The result is that innovation aimed at industrial upgrading has been neglected. As salaries and the cost of environmental protection have shot up, industry has been forced to move to China.

As a result of this move, the Nantze Export Processing Zone in southern Taiwan has been replaced by Shenzhen, and Hsinchu Science Park replaced by Kunshan in China’s Jiangsu Province, while Taiwanese businesspeople have continued to make money.

Two decades later, however, salaries and environmental protection costs have risen in China’s Pearl River Delta and the Yangtze River Delta. Hence, these same Taiwanese businesspeople have now been forced to move to Vietnam. In the future, they might even have to make a further move to South Africa.

If we don’t make an effort to upgrade our industries instead of continuing to follow the old formula for success, history is very likely to repeat itself.

If Ma’s economic policies continue to focus on past economic models and tie Taiwan to a “one China market,” then Taiwan will be unable to resolve the dilemma posed by the trade pact with China. The way to do so is to first dismantle Ma’s “one China market” framework by making a firm decision to upgrade industry and embrace the global market.

Ko Wen-che is chief of the surgical intensive care unit of National Taiwan University Hospital.