July 14, 2010
I. Global Investors Wooed after ECFA Signing
The Executive Yuan established a task force on July 7 to attract global investments to Taiwan following the signing of the economic cooperation framework agreement (ECFA) between Taipei and Beijing. The task force will actively seek investors from Japan, Singapore, Hong Kong, Europe and North America for participation in industries on the ECFA’s early harvest list.
Foreign investments will also be directed toward the i-Taiwan 12 infrastructure projects (islandwide transportation networks, Kaohsiung free trade zone and eco-port, Taichung Asia-Pacific sea and air logistics hub, Taoyuan Aerotropolis, intelligent Taiwan, industrial innovation corridors, urban and industrial park renewal, farm village regeneration, coastal regeneration, green forestation, flood prevention and water management, and sewer construction), the six emerging industries (biotechnology, green energy, healthcare, high-end agriculture, tourism, and culture and creativity), the four intelligent industries (cloud computing, smart vehicles, green architecture and patent commercialization) and 10 key service industries (improving medical services, globalizing Taiwanese cuisine, etc).
With Premier Wu Den-yih as convener, the task force is expected to put forth the first series of investment promotion plans by the end of this month. In August, the Ministry of Economic Affairs (MOEA) will establish a joint-service center as a one-stop window to match global investors to business opportunities and to help resolve related problems. This year’s goal is to raise US$6 billion in investments.
Minister without Portfolio Yiin Chii-ming will lead a delegation to Japan at the end of July to conduct investment seminars explaining changes in Taiwan’s investment environment and how ECFA can provide more opportunities.
The cross-strait economic agreement is viewed by many as a boon for business. The International Monetary Fund, seeing favorable consumption and investment growth on the island, has raised its forecast for Taiwan’s GDP growth to 7.7 percent for 2010. Economic Minister Shih Yen-hsiang has also said that this year’s objective is to “work for 6 [percent growth], expect 7 and hope for 8.” According to analysis by Minister Christina Y. Liu of the Council for Economic Planning and Development, Taiwan will become a hotbed for investment after ECFA. Domestic and foreign investors as well as Taiwanese businesses operating in mainland China are taking great interest, indicating growing optimism about Taiwan’s economic conditions. Cheng Cheng-mount, chief economist at Citibank Taiwan, predicts that the benefits of ECFA on Taiwan’s economic growth will become visible in the latter half of 2010.
II. Poll: 61 Percent of Taiwan’s People Support ECFA
At the fifth round of talks between Taiwan’s Straits Exchange Foundation (SEF) Chairman Chiang Pin-kung and mainland China’s Association for Relations Across the Taiwan Strait (ARATS) Chairman Chen Yunlin in late June, the SEF and the ARATS signed the Economic Cooperation Framework Agreement (ECFA) and an agreement addressing protection of intellectual property rights (IPR). Results of a poll released July 6 by the Mainland Affairs Council showed that 61 percent of respondents were satisfied with the results of ECFA negotiations, with 63.6 percent affirming the result that 18 of Taiwan’s agricultural and fishery products can now be exported to the mainland free of tariff duties.
As to the trade agreement’s effects, 62.6 percent believed the pact would help Taiwan negotiate free trade agreements with other nations, while 59.2 percent thought that it would be good for the nation’s long-term economic development. Concerning the IPR agreement, 73.1 percent conveyed their approval. Meanwhile, the results of a separate survey published July 11 by the Research, Development and Evaluation Commission had 68.3 of those polled approving of the government’s efforts to improve cross-strait relations.
Minister of Economic Affairs Shih Yen-shiang pointed out that the signing of the ECFA means that mainland China will lower tariffs on 539 products included in Taiwan’s early harvest list. This is expected to help Taiwan’s economy grow by 0.4 percent, or US$1.70 billion, and increase overall production value by 0.86 percent, or US$5.89 billion. Moreover, in the early stages of the ECFA’s implementation, 60,000 jobs will be created.
Half of the 539 products—including auto parts, household appliances, accessories, undergarments, shoes, socks, luggage and similar containers, bananas and tea—are made by less competitive traditional industries, small and medium-sized enterprises (SMEs) and the agriculture sector. As these items were previously subject to tariff duty rates of 10 percent and higher, their inclusion in the early harvest list suggests the country’s manufacturers will be able to expand through increased sales in the mainland, Shih noted.
Meanwhile, the minister said, the Ministry of Economic Affairs has earmarked US$2.95 billion over 10 years in a program to upgrade SMEs and traditional industries impacted by the ECFA by providing counseling, structural adjustment aid and relief to adversely affected parties.