ARDA chairman Chee Soon Juan, from Singapore, said that the index will help to fathom democratic progress in Asia, will provide an ongoing study of how governments and countries rank according to the index, and will promote democracy.

The survey was carried out by local grassroots organizations, which ARDA deemed to be more reliable and unbiased, using survey takers who were "politically aware."

The Taiwan Foundation for Democracy was in charge of the survey in Taiwan in which 500 people were polled.

The survey questions were divided into six categories: civil rights, elections and political processes, governance and corruption, media, participation and representation, and rule of law.

Questions such as whether people can openly question and discuss official policies without fear and whether the government allows peaceful demonstrations were asked under the civil-rights category, in which Taiwan ranked second.

Taiwan was also ranked in the top five for government transparency and accountability, which fell under the "governance and corruption" category, and for the "rule of law," which indicated a judicial system that effectively protects human rights and democratic principles. Overall, Taiwan was ranked third.

However, the rankings should not be thought of as a mere comparison between the 16 countries, said Paul Scott, a professor at Kansai Gaidai University in Japan.

"For example, Japan cannot be compared to Cambodia in many aspects," Scott said. "The results of the survey indicate the state of democracy as applicable in the country polled."

"What the index and survey results show is that Asia is still promoting democracy and that democratization still has a long way to go in the region," Scott said. "The index measures progress, not results, or else I wouldn't be at this conference."

Sharing his perception on the democratization of Taiwan, Scott said that Taiwan was deemed rather successful.

"People sacrificed a lot for democracy in Taiwan, so they have high expectations of it. Sometimes they even have over-expectations of what democracy can deliver," Scott said.

"Democracy is a learned culture. It takes time to develop, and what is happening in Taiwan with political parties is a predictable and necessary step in the process of democratization," Scott said.

Mark Chen calls for equal international treatment

BY JEAN LIN

STAFF REPORTER

Minister of Foreign Affairs Mark Chen called for the equal treatment of Taiwan in the international community yesterday as he made concluding remarks at the biennial conference of the World Forum of Democratization in Asia (WFDA).

Taiwan is at a peculiar juncture, where the challenges it faces are external rather than internal, Chen said.

Chen hoped that the WFDA conference would help to consolidate the existing democratic alliance and in turn gain support from the international community.

Chen also praised Asia as the world engine of economic development and for stimulating world trade.

Referring to the widespread repercussions of the 1997 economic crisis in Asia, Chen emphasized the global importance of the region. "Whenever Asia catches a cold, the world sneezes," he said.

Chen also mentioned the potential challenges of democratization in Asia.

Democratic countries co-exist with non-democratic regimes in the region and there is a mixture of developed countries, newly developing countries and less-developed countries that still rely on financial assistance from other countries, Chen said.

"We are also faced with the traditional questions about sovereignty and the new threat of terrorism in the region," Chen said.

He suggested that Asia should set up a platform to discuss and overcome the differences between countries and lamented the lack of a pan-Asian organization to uphold democracy.

"Democracy needs to be maintained," Chen said. "This requires efforts by all the democratic countries in the region. We need to exercise collective power."

Wrapping up the conference yesterday, Alliance for Reform and Democracy in Asia Chairman Chee Song Juan said, quoting Mark Twain, "An epilogue is a prologue."

"We urge everybody to try and achieve the ambitions and goals we set in the conference," Chee said.

Taiwan Democracy Foundation President Michael Kau concluded with remarks on the importance of non-governmental organizations (NGOs).

"NGOs are truly committed to the cause [of promoting democracy], not the politics," Kau said.

The Ministry of Foreign Affairs (MOFA) yesterday issued a press release expressing appreciation to Taiwan's diplomatic allies who spoke for the nation in the 2005 World Summit held last week at the UN headquarters in New York.

Nine countries -- Palau, Sao Tome and Principe, Nauru, Marshall Islands, Kiribati, Saint Kitts and Nevis, the Solomon Islands, Tuvalu and Honduras -- praised Taiwan's economic achievement and democratic reform in their representatives' speeches at the summit, the MOFA said.

"They made an appeal to the UN to implement the generality of principle and encourage cross-strait dialogue, which exactly conveyed the call of the Taiwanese people that we want to participate in the UN and we want peace," Chen said in the statement.

Pan-blue's lose credibility -- again

On Friday, the Supreme Court rejected an appeal filed by former Chinese Nationalist Party (KMT) chairman Lien Chan and People First Party Chairman James Soong against a lower court ruling which had found that the Central Election Commission (CEC) did not violate any law during last year's presidential election and that the election was not unlawful. All possible appeals have now been exhausted in this lawsuit.

In another lawsuit filed by Lien and Soong against President Chen Shui-bian (陳水扁) and Vice President Annette Lu challenging the legality of their election win, the Supreme Court gave its final ruling back in June, rejecting an appeal filed by Lien and Soong. Therefore, the curtain has officially come down on all the disputes and controversies surrounding last year's presidential election.

These two lawsuits, the one against Chen and Lu and the one against the commission, were the first of their kind. Equally unprecedented was the amount of social resources diverted into these lawsuits, not to mention the level of social unrest and disturbance surrounding them. For example, the enormous cost incurred in conducting a total recount of the ballots cast in the election, a total of NT$60.10 million (US$1.8 million), was paid by the Taiwan High Court -- except for the NT$17.22 million paid by Lien and Soong -- meaning that the taxpayers picked up the tab.

Of course, Taiwan is a democratic country subject to the rule of law, so Lien and Soong had every legal right to file their lawsuits. On the other hand, these two men are not ordinary citizens; they are political leaders in whom the people have entrusted important powers. In this regard, they need to be politically accountable for every action they take -- including filing such unprecedented legal actions against the head of state and the CEC.

Unfortunately, both men have repaid the trust of the voters with utterly irresponsible behavior. The lawsuits were brought because these two leftovers from the days of martial law have a sense of entitlement. They simply could not believe -- or accept -- that it was possible to lose last year's election. In truth, they still haven't gotten over their individual losses in the 2000 presidential election.

Not one shred of credible evidence turned up in support of the government "conspiracies" or "cover-ups" they alleged about last year's election and the the election-eve assassination attempt on Chen and Lu -- now known to have been carried out by a Lien-Soong supporter -- while the alleged large-scale tampering with the ballots by the government turned out to be isolated, minor clerical and administrative errors by individuals.

Without an inkling of semi-credible proof supporting their allegations, how could they have decided to file these lawsuits? How could they destroy the sense of legitimacy in the entire constitutional process in the eyes of their supporters simply because the system failed to give the result they wanted? Their actions were irresponsible. In some countries such actions would have been seen criminal -- seditious libel. And all to prolong political careers which should have been over the day they lost last year's election.

Lien's career is over anyway, now that he has reluctantly stepped down as KMT chairman. As for Soong, his political influence has rapidly declined to the point that it could hardly be damaged any more.

The feud between Chen, Lien and Soong that started with the 2000 presidential election has finally come to an end. However, those hoping that inter-party hostility and obstructionism could be replaced by cooperation remain disappointed. Under the new leadership of KMT Chairman Ma Ying-jeou, the behavior of the pan blues -- especially in the Legislative Yuan -- is worse than ever.

Foreign investors appear muddled

By Huang Tien-lin

`Taiwan is not Hong Kong, nor is it Singapore, and it is not true that things will become better the more we deregulate.'

Taiwan's stock market remains weak and it seems impossible to reinvigorate it. This has resulted in severe losses for individual investors over the past few years. The same seems to hold true for foreign investors. The situation in other Asian countries is, however, very different.

For example, Singapore's stock index grew by 21.64 percent last year, South Korea's by 27.25 percent, the Philippines' by 25.06 percent and Japan's by 14.98 percent, while Taiwan's stock index only grew by 4.23 percent. This means that most individual investors in Taiwanese shares would have taken a loss last year. So far this year the South Korean stock market has outperformed others in the region with a growth of 20.9 percent. Japan's stock market index has grown by 10.5 percent, the Philippines' by 6.2 percent, Thailand's by 4 percent and India's by 18.2 percent. Taiwan's stock market index has fallen by 1.7 percent, which means even more people lost money compared to last year.

The odd thing is that foreign investors have bought Taiwanese shares worth US$10.92 billion (approximately NT$350 billion) this year, making Taiwan second only to Japan as a target for foreign investors in Asia. Foreign investors have only invested US$840 million in South Korean shares so far this year.

Beginning early this year, foreign investors have taken a positive view of Taiwan's stock market. The asset management company JP Morgan even predicted that the stock market index might break through 10,000 points. But reality and expectations run counter to each other. Because the New Taiwan dollar once again has fallen to NT$32.75 to the US dollar, the foreign investors who invested a total of NT$630 billion this year and last are now caught in the awkward situation of losing money on both the stock and forex markets.

This begs the question why foreign investors who see themselves as clever investors are losing money in Taiwan.

First, as they have always told the government, the more Taiwan deregulates, the better the economy will do. As a result, Taiwan today has the freest economy in Asia -- Singapore and Hong Kong excluded -- and it is far freer than South Korea or Japan. But the more Taiwan deregulates, the less power it has to resist China's attraction. This is intensifying the problem with Taiwanese capital flowing out of the country and causes the stock market's lackluster performance.

Second, they always use a Western approach when analyzing the economic relationship between Taiwan and China in the belief that investing in China will help develop Taiwan's economy. Their analyses are only concerned with immediate individual economic benefits and completely fail to understand that Taiwan's annual investments in China on average make up 4 percent of Taiwan's GDP. This is 130 times more than the US' 0.03 percent of GDP, and about 20 times more than South Korean investments in China.

In the long run, this makes for an extremely bearish outlook on the local stock market, but that is unfortunately not something that foreign investors have discovered.

Third, they always see direct links, charter flights, harmonious co-existence and other things that may promote cross-strait exchanges as beneficial to Taiwan. As a result, all the bad news that ought to spell a bearish future for Taiwan's economy are interpreted as bullish news. This completely ignores the huge size difference between Taiwan and China.

When joining together a small and a large economic body, it is unavoidable that people and capital from the smaller body will flow toward the economic hub in the larger body. This is not good for the development of Taiwan's economy or its stock market.

Misunderstandings create bad investment decisions, and this is why we have seen predictions that Taiwan's market will break through the 10,000-mark and that the New Taiwan dollar will once again go below NT$30 to the greenback.

Experience tells us that the "no haste, be patient" policy had a bullish influence on Taiwan's stock market. In August 1997, the market index reached 10,156 points, a result of the implementation of the policy one year before. In the late 1990s, investments in Taiwan Semiconductor Manufacturing Co, United Microelectronics Corp and other technology stocks brought quite good returns on investment as a result of that same policy.

Experience is knowledge, and I hope that foreign investors will be able to take the latest painful lesson to heart. Taiwan is not Hong Kong, nor is it Singapore, and it is not true that things will become better the more we deregulate. They should try to gain a better understanding of Taiwan. They should realize that Taiwan already has invested too much in China and that Beijing has ambitions towards Taiwan. They should stop urging the government to further open the doors to China.

If we could all return to the concept of using business to pressure the government into improving its policy of effective management toward China, Taiwan's stock market would be certain to return to the glory days of the 1980s. This would give foreign investors the chance to reap the benefits of the combined US$87 billion that they have invested in local securities.

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