20130811 EDITORIAL: Bureaucracy hampers liberalization
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EDITORIAL: Bureaucracy hampers liberalization

Deregulation and liberalization have been the focus for markets recently and the Cabinet is once again making a case that reform is necessary for long-term economic development. The government’s problem lies in its poor policy execution and inefficient bureaucracy, leaving it with a string of empty promises.

On Wednesday, Premier Jiang Yi-huah (江宜樺) finalized the government’s third-party payment policies at a Cabinet meeting, allowing non-bank payment processors to provide online transactions on behalf of merchants and consumers. Under the plan, non-banks will be allowed to provide third-party online payment services pursuant to the Act on Issuance and Management of Electronic Monetary Cards (電子票證發行管理條例), with the maximum amount allowed in online stored-value accounts set at NT$10,000 (US$334) each. Businesses offering such services must have at least NT$300 million in paid-in capital.

By the end of the year, the Financial Supervisory Commission (FSC), the Ministry of Economic Affairs and other government agencies will draw up new legislation and management guidelines for e-commerce and third-party payment services.

On Thursday, the Cabinet approved the Council for Economic Planning and Development’s proposal for establishing “free economic pilot zones” in Taiwan. With the planned deregulation in the flow of goods, talent and capital, the government aims to develop intelligent logistics, international medical services and value-added agriculture and industrial innovation centers in Taiwan. Other industries suitable for liberalization that have growth potential, such as financial services, will also be considered for inclusion in the zones in the future. The Cabinet’s next step is to enact a special law governing the zones, which will include large-scale deregulation measures and tax incentives, pending legislative approval.

In view of the underdeveloped service sector, the slow progress in industrial transformation and a lackluster track record in attracting foreign investment, the Cabinet’s plans for third-party payment services and pilot zones show policymakers’ desire to stimulate economic growth. The government has removed roadblocks to pursue the development and competitiveness of domestic financial services and electronic commerce providers through a partial Cabinet reshuffle, especially the removal of former FSC chairman Chen Yuh-chang (陳裕璋), who had been at odds with economy and technology officials over several issues.

As promising as the government’s plans are, proper execution of the plans remains a challenge. The government has not divulged much information about the contents of its policies, nor the operational conditions and complementary measures for companies. Businesses are wondering whether the government’s policies and the scope of deregulation are viable — that is, whether the Cabinet’s plans make sense.

There are complaints from e-commerce businesses that the ceiling of NT$10,000 for individual online stored-value accounts is too low. Also, there are worries that the pilot zones plan will be a privilege only a few businesses can enjoy, rather than being a platform allowing companies to upgrade their operations to provide high-end services on a level playing field.

It is understandable that the government aims to further the nation’s development through deregulation and liberalization at a time when the global and domestic economies remain weak. Taiwan does need reform policies and visionary plans to revitalize itself, but it also demands a government with more efficient civil servants, less red tape and a strong ability to implement policy.

A survey released by the German Trade Office Taipei last month warned that Taiwan is losing its competitive edge to China in terms of business friendliness and government efficiency. Personnel recruitment is posing the biggest challenge. Before the Cabinet can confidently voice optimism about its plans, it must solve its bureaucratic inefficiency.

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