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EDITORIAL: Economy
needs effective medicine
Taiwan has for decades been proud of both its advanced technology and economic
development, and its government and businesses have for many years recognized
both the value of innovation and the spirit of entrepreneurship.
However, a speech by Lee Kai-fu (§õ¶}´_), a former head of Google¡¦s China
operations, last week in Taipei appeared to be sounding the alarm about the
local business environment and leading discussions about how to create a new
driving force in the economy.
Lee, a renowned venture capitalist now running a company in Beijing that
incubates technology start-ups, also lamented the lack of ambition and vision
among Taiwanese start-ups, making one wonder how our parents and our
grandparents managed to create Taiwan¡¦s economic miracle decades ago.
In his first public speech since he announced in early September that he had
been diagnosed with cancer, Lee said that for Taiwan to become more competitive,
the government needs to improve the domestic investment environment through
deregulation and stimulation, while business start-ups should be more aggressive
and must look beyond Taiwan to global markets.
That speech on Tuesday last week could be Lee¡¦s last public appearance before he
starts a course of chemotherapy, according to the 52-year-old Taiwanese-born
American. In it, he also warned that a vicious cycle is developing in Taiwan¡¦s
venture capital industry, largely because poor returns on investment have led to
a lack of interest in investing in local start-ups and channeled the money into
the real-estate sector instead. Entrepreneurs trying to raise money in Taiwan
are having a tougher time, he said.
There are certainly some arguments for whether the nation¡¦s information and
communications technology (ICT) start-ups have lagged far behind their Asian
peers in terms of innovation, entrepreneurship and value-added products, as Lee
suggested. However, his warning was made the same way former Acer chairman Stan
Shih (¬I®¶ºa) and many others have made their points in recent years, fretting
about the ICT industry¡¦s woes and stagnant development.
Perhaps more important, according to Lee, the biggest challenge for Taiwan is
that the government is unable to solve difficulties facing both start-ups and
venture capitalists. One might ask: Can the government spend time soliciting
advice and make more of an effort to draft more detailed plans aimed at
improving the investment environment? Yes, it can, but such plans are more often
aimed at demonstrating the government¡¦s bureaucratic performance than serving
any practical purpose.
Therefore, the key to whether Taiwan can create a positive investment momentum
and develop a transformed business model is if the government is able to face up
to its problems and take a serious, honest look at the country¡¦s economic
situation. Taiwan¡¦s economy is not doing well, with annual economic growth in
the third quarter coming in at a weaker-than-expected 1.58 percent, and people¡¦s
wages are not growing, after the latest data show their average real income
having fallen to the level of 16 years ago.
If the government cannot stop fooling itself and continues in its self-indulgent
mindset, it is just avoiding its problems. Over time, this will decrease
investors¡¦ confidence in Taiwan, not only because of the lack of good returns,
but because it is hindering the nation¡¦s long tradition of entrepreneurship.
As Lee said, Taiwan¡¦s investment environment is as sick as he is and it needs
strong medicine if the nation is not only to stay on its feet, but to regain its
past glory.
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