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EDITORIAL: Innovative
thinkers required
The government has been calling on local manufacturers to develop new products
and services to remain competitive. However, there is a blind spot that the
government has failed to detect. That is the government has itself forgotten to
develop innovative policies to assist firms to cope with new industrial
challenges, such as the recent global economic slowdown.
Tough medicine is required these days. Last week, the Directorate General of
Budget, Accounting & Statistics (DGBAS) lowered its export growth forecast for
this year to minus-1.72 percent, with the eurozone debt crisis, the fragile US
economic situation and wobbly Chinese economy making it unlikely that Taiwan
will be able to eke out annual growth of 0.07 percent as it had been expecting
in May. That prompted the agency to slash its annual GDP growth projection from
2.08 percent to 1.66 percent this year. To buoy decelerating exports, the
Ministry of Economic Affairs last week proposed extending tax rebates to the
full range of export goods. Such a tax refund is nothing new for Taiwan and it
is a seemingly effective tool in many developing countries.
Four years ago, this kind of stimulus measure was implemented to boost exports
during the global financial meltdowns which froze private consumption and
crippled exports. In July of last year, when the US-South Korea free-trade pact
took effect, the government used this trick again. This allowed exporters to
recoup custom tariffs in order to minimize the pact¡¦s annihilation of Taiwan¡¦s
exports by South Korean firms.
The fact is offering tax rebates helps lower the price of exports, but it does
not enhance the value of locally made products. For the same reason, the central
bank is facing constant pressure to keep the New Taiwan dollar weak against the
US dollar. This gives exporters a price advantage over competitors. However, the
central bank has realized that devaluing the currency is not a cure-all. It has
also realized that cheaper products will not help exporters. New remedies are
required immediately.
In a rare call, central bank Governor Peng Fai-nan (´^²a«n) said recently that
government agencies should assist HTC in exporting more phones overseas,
implying that government agencies need to use more effective and inventive ways
to stimulate exports. The DGBAS attributed a 20 percent monthly decline in
exports to the US last month to HTC¡¦s poor performance. Compared to the previous
month, the Taoyuan-based company shipped US$730 million less of goods to the US
last month.
Peng¡¦s brief comments sparked a debate on how to rescue HTC and prompted
patriotic calls to buy more HTC phones. It would be pragmatic to help HTC in
their patent battles with Apple and other rivals. As a result of an intellectual
property lawsuit with Apple, HTC¡¦s new smartphones were temporarily barred from
entering the US market in May. This development affected HTC¡¦s second-quarter
sales figures. However, HTC was allowed to enter the US market and ship new
products to its partner T-Mobile after the company submitted evidence that it
has revised its products to circumvent disputed patents.
As patent wars become a way for big brands to keep local firms at bay, the
government should better utilize the patent portfolios and resources owned by
the state-funded research body Industrial Technology Research Institute.
This may not be a traditional way to boost exports. However, if local firms can
establish a better position in these disputes they can sell more goods, which in
turn will secure exports.
Some unconventional and innovative thinking is required from government
officials to help the nation boost its exports.
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