I am delighted to attend the 50th anniversary economic forum hosted by the United Daily News; hopefully through sharing this insightful information, you may have new inspiration regarding our national development. In addition to analyzing Taiwan’s recent developments, we will also refer to successful experience of other countries. We believe that with our joint efforts, Taiwan will have a better tomorrow.
From the skylines of Abu Dhabi, the capital of United Arab Emirates, its largest city Dubai, and Doha, the capital of Qatar, it is not difficult to notice that despite being surrounded in the desert areas with extreme weathers, these cities are able to foster economic developments and the tourist industry with proper planning. Surprisingly, even on the Emirates Airline A380 plane, business travelers can enjoy the innovative service to take shower before landing and go directly to work. Comparatively, Taiwan is gifted with greater conditions and is supposed to exhibit more and bigger opportunities for development.
Aside from the vast area possessed by UAE, Singapore and Hong Kong that were once in line with Taiwan in “Asian Four Tigers” have already outperformed Taiwan by their modern urbanizations and dynamic economic developments. In terms of GDP per capita for example, Singapore recorded US$52,888, Hong Kong US$42,390, yet Taiwan only US$22,288. According to IMD ranking, out of the 61 nations being rated, Hong Kong topped the list, Singapore ranked at the 4th, and Taiwan stood behind at the 14th.
Reflecting back on the four stages of Taiwan’s industrial developments: from import-substitute in the 1950’s, to export-oriented in the 1970’s, then the electronic sector leading industrial upgrading in the 1980’s, until liberalization of the banking and telecom industries in the 1990’s to bring forth diversified industries. From labor-intensive, capital-intensive, to technology-intensive, and now into knowledge-intensive era, as compared to the neighboring countries we stand equally in terms of knowledge level; however, we continuously suffer the economic decline, the reason can be attributed to our lack of overall strategy. For instance in infrastructure planning, all cities are currently fighting for budget of the “Infrastructure Development Plan” which is quite controversial. If the government could evaluate the overall needs of each region and make adequate allocation, perhaps these disputes could be avoided. Now that many countries are actively deploying large-scale economic zones, China is also connecting 5 mega cities to merge into greater economic power; Taiwan should consider taking the similar approaches.
On the other hand, according to World Investment Report by UN 2016, global foreign direct investment (FDI) inflows in 2015 amounted to US$1.76 trillion, with a year-on-year increase of 38%; comparatively, Taiwan’s FDI has been decreasing consecutively during the past years whilst China, Hong Kong, and Vietnam enjoying the increase. As to ease of doing business, Taiwan ranked at the 11th in the world, behind the other three Asian Tigers. The 2017 Business Climate Survey by AmCham revealed that the factors that impacted their operations in Taiwan include government bureaucracy, cross-Strait relations, and lack of clarity in labor laws. Executive Opinion Survey by the World Economic Forum in 2016 pointed out the most problematic factors for doing business in Taiwan included policy instability, insufficient capacity to innovate, tax regulations and inefficient government bureaucracy. The above are impressions on Taiwan from the outside world, if we refuse to make changes, it will be difficult for Taiwan to attract any future foreign investors.
In contrast, Singapore, our neighboring country with regard to WEF’s evaluation on competitiveness, has outstanding performances in government regulations, infrastructure, and capacity to innovate. Thus, exploring the possibilities of Taiwan’s future direction, we may exemplify based on Singapore experience.
1.Financial Policy and Technology
According to Connecting Global FinTech: Hub Review by Deloitte in 2017, among the 21 global financial hubs Singapore ranked second in terms of “Global FinTech Centre”, “Doing Business” and “Global Innovation Index”, because it simplifies the authorization process and regulatory approval for the start-ups. The Monetary Authority of Singapore (“MAS”) has issued new guidelines for the FinTech regulatory sandbox (“Sandbox Guidelines”) to continuously encourage firms to develop and apply new technologies to the financial ecosystem. If Taiwan could deregulate its financial policies to drive FinTech innovation, this will help increase profit and boost economic development.
Of course, to generate fund resources is key to a country. Many Asian nations have established non-resource type of sovereign funds to invest in targets both domestically and abroad. For instance, Singapore’s GIC and Temasek sovereign funds, since their establishments ROE were at least 4%~15%. However, Taiwan’s four major funds (Public Service Pension Fund, Labor Insurance Fund, Labor Pension Fund, and ChunWha Postal Fund) amounting to US$350 billion, though the fund size is not as large as other nations, the ROE by Central Bank only stood at around 2%. If we can strive to improve investment performance, perhaps can help resolve the long disputed pension reform as well as other social welfare issues.
Furthermore, Taiwan has abundant fund, excessive savings amounted to around US$80 billion. It is worth noted to have significant savings, but it is a pity if it sits idle. If the government can encourage investment, an active capital market will contribute significantly.
2.The Impact of 4th Industrial Revolution to the National Development
From the 1st industrial revolution of utilizing steam power to elevate production efficiency, until now entering into the 4th industrial revolution by integrating physical systems and virtual data to achieve smart production, not only the industries must think through how to evolve from mechanical to smart manufacturing to heighten efficiency, speed and agility, the nation must also elaborate how to embrace the 4th industrial revolution with a more open and integrated mindset.
Singapore President Lee Hsien Loong expressed that his vision for Singapore is to become a smart nation, elevate its overall national competitiveness through digital infrastructure. The government can serve as the bellwether to offer incentive policy and encourage start-ups to reinforce the positive ecosystem developments. On the smart nation platform, people can have better lives, better business opportunities, and more healthy social developments.
Instead of promoting a single-case project approach, Taiwan should also re-engage in overall planning. Such as ETC, aside from enabling drivers to pay toll fees without the need to stop at the toll stations, but also to contribute more on the construction of smart transportation and smart city.
3.How Singapore Build Its Startup Ecosystem
While Singapore ranked the 12th place in the 2017 Global Startup Ecosystem ranking, it tops the world for attracting top talents; yet for Taiwan, the outflow of talents continues, and very difficult to attract talent from abroad. When worrying that too many foreign labors might affect the working right of local labors, we should also reconsider that labor shortage will cause challenges for labor-intensive manufacturing sector.
4. Balance between Economy and Sustainability
Taiwan and Singapore both focus on the electronic, communications and mechanical products. Petrochemical industry is also one of Singapore’s core industries. It is closely connected to the upstream and downstream businesses, and has tremendous impact on investment and employment. Taiwan used to lead in the petrochemicals industry in Southeast Asia. Nowadays, Singapore’s annual EG capacity has already reached 3 million tons, which is equivalent to our level. Hope that while being eco-friendly, we cannot afford to sacrifice the industrial developments.
5. The Development of Tourism and Exhibition Businesses
Singapore government has divided its tourism industry into three sectors, namely general, health care, and conventions and exhibitions, in particular the conventions and exhibitions. Each year Singapore holds about 3,200 large conventions. Business travelers from different sectors can generate tremendous commercial value to Singapore. To develop the tourism business, Taiwan should also think about how to promote tourism value more thoroughly.
6. Population and Immigration
Low birth rate and aging society are the same problems faced by both Taiwan and Singapore; the on-going trend will bring forth social structural changes, decreased labor force, and caring needs. Therefore, Singapore government plans to bring in new citizens, encourage permanent residence for foreigners to strengthen the population structure. Hopefully, the ratio of immigrants will grow to 45% by 2030. Aside from bringing in population from abroad, the government also needs to prepare a series of corresponding measures such as residence, nursing, and etc.
7. Education and Talent
In terms of education, Singapore and Germany both set very defined policies on education. Taiwan is relatively not big in terms of area, but encompasses 150 universities. While it is well noted to have high education level, manpower planning policy would need to be re-evaluated. Technology serves as the corner stone of national industrial development. In future, we should focus on vocational education as well as industry-university collaboration, and enhance skills that can transit students from the training in the school to the workplace.
Singapore imposes strict control of its land resources, takes the lead in developing and constructing residential houses, and strives to stabilize real estate prices via The Home Ownership for People Scheme and Residence Subsidy policies. Taiwan can also think about how to enhance the construction of public housing on public land to increase supply, thus lower housing prices.
9. Resource Policy
Due to lack of water resources, Singapore has been actively promoting recycled NEWater and seawater desalination. According to “the Economist”, “No country is more successful in managing water resources than Singapore.” While Taiwan possesses abundant water resources, there is also serious water loss that led to constant water scarcity. Therefore, we should improve the control and management of water resources.
As to electricity resources, Singapore has been dedicated to promoting clean energy, among which power generated by natural gas accounts for 95% of total supply. Renewable waste power is also an important project. Taiwan should consider besides banning nuclear power, how to seek clean alternative energy, since the industrial development and people’s livelihood all depend on the support of stable electricity.
The United Nations adopted 17 Sustainable Development Goals, which can be divided into three categories: 1. Economic Growth including Affordable and Clean Energy, Decent Work and Economic Growth; 2. Social Progressing focusing on No Poverty, Good Health and Wellbeing, Quality Education, Gender Equality, Reduced Inequalities, plus Peace, Justice and Strong Institutions; 3. Sustainable Environment protecting Life Below Water and Life on Land, Climate Action, together with Clean Water and Sanitation. All the above goals are equally vital and indispensable. For example, sustainable environment is important, but cannot totally forbid development of the cement industry, after all there is no country in the world which does not produce cement, let alone the quarry site only occupies a small portion of the whole mountain.
Among the above 17 goals, I would like to emphasize that Quality Education is in particular a key element. With decreasing number of students in Taiwan and the constantly expansion in education budget, why can’t we have better education policy and quality? Furthermore, Sustainable Cities and Communities are also worth striving for. The 2017 Groupe Speciale Mobile Association (GSMA) World Mobile Congress listed 8 Smart City indexes including Transportation, Safety, Healthcare, Entertainment and Tourism, Utilities, Government, and Commerce. We should strive to achieve smart cities and smart nation for Taiwan. However, developing key success factor to master the digital transformation process would involve leadership and institutional capabilities, enabling policies and regulation, and a high-quality broadband network as well as strong IT infrastructure.
Last but not least, I would like to raise a few issues for everyone to elaborate. Firstly, is Southbound Policy the best development at the moment? After all the Southeast Asian market size accounts for less than five provinces of China, and certain part of its national development has already surpassed Taiwan. Secondly, is mass protest the only way to achieve policy communication? With reference to policy communication, must the ruling party and opposition party be against each other? Of course, the stable tax system is quite important so as to attract foreign investment. In addition, the opening of population policy is worth noting too. With difficult application process to employ foreign technicians to work in Taiwan, this will affect the industrial development. As to the purchase and actual needs of weapons for national defense, cross-Strait relations and the 1992 Consensus, and resource planning for long-term elderly caring are all issues that require comprehensive research.
Just as quote by William Shakespeare: “Oral speculation is just some hope of dangling, the actual action to produce the result of the decision.” Actions speak louder than words. Let’s work together to give our people a better friendly living environment.＃