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EDITORIAL: Stimulus
plan a good starting point
As export-reliant Taiwan faces growing economic headwinds, the government¡¦s
latest plan to help stimulate the economy should help both consumers and local
manufacturers. The policy includes subsidies for consumers who purchase
energy-efficient home appliances next year. However, the government should
expand the scope of the plan and move more aggressively to accelerate the
development of the green-energy industry with a more long-term focus.
Under the ¡§green consumption¡¨ initiative the Cabinet revealed on Thursday as
part of its economic stimulus package, the government will provide subsidies of
NT$2,000 (US$66) per item for people who replace old home appliances, such as
air conditioners, refrigerators and washing machines, with new, energy-saving
models during a three-month period beginning on Jan. 1. The government said it
hoped the plan would help promote awareness about saving energy and boost
private consumption.
This plan is also targeted at supporting domestic industries, being applicable
only to purchases of Taiwan-made appliances. According to preliminary estimates
by the Ministry of Economic Affairs, this subsidy is expected to trigger demand
for 300,000 appliances next year.
Given the intended multiplier effect, the plan is expected to generate NT$7.9
billion in consumption and benefit a wide range of domestic industries,
including home appliances makers such as Tatung Co, Sampo Corp and Sanyo
Electric Taiwan Co, as well as component manufacturers and domestic distributors
and retailers, according to the ministry.
While the plan shows policymakers are moving in the right direction to boost
domestic demand and promote green consumption, it also reflects the severity of
the headwinds facing the nation¡¦s exports and puts more pressure on the
government to take further action in the face of a global economic slowdown.
Moreover, some are skeptical about the short-term nature of the stimulus plan,
while others have questioned how many people would replace their foreign-brand
appliances with Taiwan-made models simply because of a NT$2,000 subsidy. Another
issue is the extent to which the plan can ease the impact of the international
economic downturn.
In late 2008, during the global financial crisis, the government introduced a
NT$83.26 billion consumer voucher scheme, or NT$3,600 for each person, as it
aimed to raise GDP by 0.66 percentage points. In the end, the scheme only
managed to boost growth by between 0.28 and 0.43 percentage points in 2009,
according to the Council for Economic Planning and Development. Therefore, how
much of a boost will the latest subsidy plan actually achieve?
The plan to subsidize purchases of energy-efficient appliances is a good one,
but it is not on a scale that will have a great impact on the economic outlook
and business sentiment. What the government should consider is extending the
plan to include a wider range of goods, such as LCD TVs, LED lights and
solar-panel roofs, as this could help domestic flat-panel makers and the LED and
solar energy industries, which have been hit hard by the current downturn.
The government did say on Thursday that it planned to spend NT$2.4 billion to
install 320,000 LED streetlights around the country. However, it would be even
better if the government allocated more resources to subsidize consumer
purchases of energy-efficient LED lights and solar panels.
The government¡¦s green consumption plan is a good start, but it should be
followed by more measures to better stimulate the economy and help nurture the
green-energy industry. If so, this could prove to be a turning point for the
nation¡¦s long-term economic structure, rather than little more than a short-term
policy that fails to promote significant change.
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