20120104 Taiwan’s economy takes dive under Ma

Taiwan’s economy takes dive under Ma

By Huang Tien-lin 黃天麟

Last year, and indeed throughout the three-and-a-half years in which President Ma Ying-jeou (馬英九) has been in office, Taiwan has been a straggler in the economic index league tables.

Taiwan won a gold medal for diving as its stock market last year took the biggest plunge in East Asia. On Friday, the TAIEX closed at 7,072 points, marking a fall of 21.18 percent compared with the beginning of last year — and NT$4.63 trillion (US$153 billion) evaporated from the market.

Over the same period South Korea’s index fell by 10.98 percent, Hong Kong’s by 19.86 percent, Japan’s by 17.34 percent, Singapore’s by 16.55 percent and Thailand’s by 0.96 percent, while Indonesia’s climbed 2.98 percent and the Philippines’ rose by 4.07 percent. China is left off this list because its stock exchange is not a free market. The TAIEX dove deeper than its East Asian counterparts, despite the government’s intervention in the market for several days in a row.

Taiwan’s GDP growth has also trailed behind its peers. On Dec. 19, the Directorate General of Budget, Accounting and Statistics issued a press release saying that countries worldwide use either an arithmetic average or a geometric average to measure their growth rates. Taiwan uses the geometric average method to calculate average growth rates between 2008 and 2010, according to the GDP figures recorded by the World Bank based on current prices.

The results are as follows: Taiwan’s economy grew by 1.79 percent, South Korea’s by 2.9 percent, Hong Kong’s by 2.13 percent, Singapore’s by 4.85 percent, the Philippines’ by 4.28 percent, Indonesia’s by 5.56 percent and Thailand’s by 2.57 percent. Apart from Japan, which was hit last year by a major earthquake, tsunami and nuclear accident, Taiwan’s economy has been the slowest-growing in East Asia over this period, which explains why the TAIEX performed so poorly.

Taiwan is also a straggler in terms of its export growth. The Ma government often talks about how detente across the Taiwan Strait has boosted overseas trade — but has it really? If the export growth rate is calculated for Taiwan and other East Asian economies over the past three years, again using a geometric average, the results are as follows: Taiwan 3.64 percent; South Korea 7.88 percent; Hong Kong 4.7 percent; Singapore 5.54 percent and China 8.93 percent.

In other words, under the Ma government’s policies centered on cross-strait factors, Taiwan’s export growth has been the slowest of the four East Asian Tiger economies and less than half of that scored by South Korea. As for last year, figures published by the Ministry of Finance show that year-on-year export growth for October had fallen to 1.3 percent.

Finally, salaries in Taiwan have been even more depressed during the past three years than they were before and Taiwan’s wage situation is the worst in East Asia. Central bank figures for average monthly earnings for industrial and service employees show their salaries dropped 2.49 percent between 2008 and September last year. Average monthly salaries were NT$44,414 in 2007 and NT$43,304 as of September last year. Over the same period, salary growth was 16.2 percent for South Korea, 4.85 percent for Singapore and 0.79 percent for Hong Kong, so Taiwan was the only economy among its peers to register a fall in average salaries over this period.

At the same time, Taiwan’s unemployment rate in November was still 4.28 percent, higher than South Korea’s 3.1 percent, Hong Kong’s 3.3 percent and Singapore’s 2 percent.

The Ma government often tells us that China has been helping Taiwan by conceding benefits to us. If that is the case, why has Taiwan’s economy performed so badly?

Huang Tien-lin is a former national policy adviser to the president.

Translated by Julian Clegg