|
The Liberty Times
Editorial: Taiwan must join new revolution
It is perfectly normal for economic data to fluctuate and for the economic
climate to go up and down.
However, in more cases than not, Taiwan’s real economic performance has been
worse than expected and the downward revision of growth forecasts has become a
routine occurrence.
This suggests that there is a problem with the fundamentals of the economy.
Quite simply, it is an issue that cannot be ignored.
President Ma Ying-jeou (馬英九), however, continues to ignore economic warning
signs.
Instead, he maintains an inflated opinion of himself and his government’s
achievements. Ma diverts attention to other matters or selectively releases
information in an attempt to cover up the increasing risk of economic collapse.
Still, numbers speak louder than words. The nation’s economic growth forecast
for this year has been revised downward from 3.59 percent to 2.4 percent, a drop
of about 30 percent.
Last month, the Council for Economic Planning and Development’s economic
monitoring indicators were at “yellow-blue” for the eighth consecutive month.
In addition, according to Switzerland’s International Institute for Management
Development, Taiwan’s global competitiveness dropped from seventh to 11th place
this year.
The nation’s constant downward spiral first reared its ugly head last year, but
this was still not enough to wake up Ma, who has been seen dozing during
important meetings.
Ma keeps claiming that economic growth in the first quarter of this year was the
second-highest of the four Asian Tiger economies — that his government is doing
better than any previous government.
Such comments, and the refusal to reflect on his performance, prove the
commentators who say Ma is incapable of leading the nation to be right.
In the face of our current economic woes, Premier Jiang Yi-huah (江宜樺) recently
rolled out the seventh short-term economic stimulus package since Ma took
office. This time it involves spending NT$3.2 billion (US$106.9 million) to
rescue the economy. Such a response clearly shows that the Ma administration is
at its wits’ end.
Over the next three years, the economy will likely enter a period of prolonged
sluggish growth.
The Ma administration’s seven economic stimulus packages have become
successively smaller — from previously promising NT$500 billion to now offering
a mere NT$3.2 billion. From expanding infrastructure and cutting unemployment
rates to merely offering subsidies on gas containers and gas stoves during the
warm season. They have lost all power to be of any use, except perhaps as the
butt of jokes.
The main reason for this mess is the Ma government does not understand the need
to save money. It wastes money and is corrupt to the core. In addition, it is
incapable of reviving the economy as government revenue falls. It cannot
increase spending and it does not understand the need to cut expenditure.
Instead it ends up raising huge government debt.
In just five years, the Ma administration has raised more debt than its
predecessor did in eight, and is now close to the legal upper debt limit.
This means it has no more funds for infrastructure or to expand internal demand.
The NT$3.2 billion stimulus plan is laughable, like trying to end a drought with
a few drops of water.
To save the economy, the government must move beyond focusing on trivialities
and band aid solutions. It needs to see the bigger picture, get a grip on global
economic trends and implement structural reform to reshape the economy.
Based on past experience, it can be seen how Taiwan managed to overcome poverty
and create an economic miracle based mainly on the right development strategies.
Early on, the creation of export processing zones allowed the nation to
capitalize on the advantages offered by its skilled labor force and the
hardworking spirit of Taiwanese. This brought rapid change to the economy,
transforming it from an agricultural society to an industrial society, laying
the foundations for fundamental change.
The establishment of science and industrial parks was another milestone in the
process.
An example was developing the electronics industry and employing skilled foreign
workers coupled with preferential policies and complete support for target
industries — such as the foundry model of operation for integrated circuit
design in which Taiwan became a world leader.
This entire process led to a further two decades of growth and prosperity.
The main reason the economy has stagnated is that it has become dependent on
China, with the result that it cannot set its own economic direction, for
example in areas such as employment, pay and tax revenue.
Even worse, although Chinese businesses were dependent on the Taiwanese supply
chain in the past, in the past few years, China has leveraged its huge
population advantage as well as its “white-box” brands — inexpensive
multifunction electronic products made by less well-known brands.
China’s brands have thus experienced strong, rapid growth and moved from
quantity to quality in terms of production.
Beijing then used this to spur the development of its local supply chain. This
has threatened the continued existence of China-based Taiwanese businesses.
If Taiwanese industry is unable to upgrade and transform, it will have a hard
time not being passed over.
The second reason for Taiwan’s stagnation is that the global economy is moving
away from the Second Industrial Revolution, which was mainly based on the use of
fossil fuels, toward the Third Industrial Revolution.
This new revolution is based on digital Internet-based technologies, such as 3D
printing and renewable energy sources like solar power and wind, hydraulic,
geothermal and biomass energy.
Renewable energy sources are likely to become a basis for the main industries of
the future, which will include cloud computing, 4G communication systems, online
retailing and electric cars that are already exciting interest.
It is easy to see that the Ma administration is still stuck in the Second
Industrial Revolution.
Look at the example of the Fourth Nuclear Power Plant in Gongliao District (貢寮),
New Taipei City (新北市), and the double hike in fuel and electricity prices.
Add to this Ma’s view of nuclear power as a necessity to cope with future energy
demands because of the government’s failure to adopt alternative energy sources.
As such, it is doubtful Taiwan will see any forward-looking policies in response
to future trends.
If the Ma administration wants to revive the economy, it must stop relying on
China and scrap its outdated Second Industrial Revolution thinking.
It must also have concrete policies — that it carries through — to foster growth
in new industries.
This is the only chance Taiwan has of turning its economy around.
If the government fails to change its thinking and keeps trying to get by merely
focusing on trivialities, it will not matter how many stimulus packages it comes
up with. They will be of no use whatsoever, and will just waste manpower and
resources.
Translated by Drew Cameron
|
