Weekly News Backgrounder from Taiwan's Government Information Office

News Backgrounder

July 21, 2010

I. GIO Minister Updates U.S. Forum and Media on Cross-Strait Economic Pact
ROC Government Information Office Minister Johnny C. Chiang delivered a speech, “Taiwan—Building Partnerships for Asia-Pacific Economic Integration,” at the Carnegie Council for Ethics in International Affairs in New York on July 13. During his talk, he stressed that the signing of the Economic Cooperation Framework Agreement (ECFA) by Taiwan and mainland China represents a major step toward overcoming Taiwan’s economic isolation, achieving mutually beneficial cross-strait cultural, trade and investment cooperation and speeding up the economic integration of Asia.

Minister Chiang stated that signing the ECFA is only the first part of a longer process. Taiwan is a member of the WTO and has the right to sign FTAs with other WTO members, and President Ma Ying-jeou has already made FTA talks with Taiwan’s other trading partners an “administrative priority.” Now that the ECFA has been signed, there is no basis for the Chinese mainland hindering Taiwan from seeking to negotiate FTAs, he added.

During the subsequent question and answer period, Minister Chiang stated that the ECFA is an economic agreement that has nothing to do with politics. He noted that President Ma has vowed not to address such issues as independence or unification during his term in office. The President has said that building the cross-Strait relationship is a very long process with no set timetable. Minister Chiang observed that over one million tourists from the Chinese mainland have visited Taiwan so far, and he is certain that they now know what democracy is. In his view, this is the optimal way to demonstrate what freedom is all about.

The GIO Minister began his weeklong U.S. visit on July 10, during which he visited such mainstream international media as Time magazine, The Wall Street Journal and Newsweek. He was also interviewed by Jayshree Bajoria of the U.S.-based Council on Foreign Relations.

In response to U.S. media concern about Taiwan’s request to purchase arms from the United States, Minister Chiang replied that mainland China habitually opposes the sale of weapons by the U.S. to Taiwan. However, Taiwan seeks to purchase such weapons not because of an arms race with the mainland but rather to safeguard the security of the people of Taiwan. Taiwan’s stance in cross-strait talks must be backed up with the power to defend itself, and a credible deterrence is essential to prevent any miscalculations that might result in military conflict. Taiwan’s security remains under threat; so, based on the government’s sovereign obligation to protect the Taiwan public, it must continue to purchase weapons of a defensive character from the U.S.

As for how the ECFA will affect Taiwan’s economy, Minister Chiang explained that, given the frequency of cross-strait economic and cultural exchanges, the ECFA was signed to initiate the institutionalization and liberalization of extant economic relations between the two sides of the strait. Currently, 41 percent of Taiwan’s exports go to mainland China and Hong Kong. Once the ECFA takes effect, 539 of Taiwan’s tariff items on the “early harvest list” will be subject to tariff reduction or elimination on the mainland, boosting Taiwan’s GDP growth by 0.4 percent.
Although mainland China is currently flush with capital, Taiwan-based businesses on the mainland nevertheless bring more than just investment capital to that market; they also possess such advantages as management skills, adaptability and market savvy. Thus, the ECFA, once it goes into effect, will boost the regional competitiveness of Taiwan’s industries.
II. Tourism Specials Promise a Summer of Fun
Taiwan’s Tourism Bureau is promoting travel without a car this summer by providing shuttle buses in 10 of Taiwan’s cities and counties. Excursionists can save money and limit their carbon emissions as they travel on 21 routes connecting railway and high-speed rail stations with scenic spots through the bureau’s “Tour Taiwan Sightseeing Shuttle Service.”

From now until the end of September, shuttle buses to the following 11 destinations may be ridden free of charge: Dongshan River and Jiaoxi in Yilan County; Lion Mountain in Hsinchu County; Nanzhuang, Penglai, and Xiangtian Lake in Miaoli County; Xitou in Nantou County; Chiayi City; and Taitung City, Eastern Coastal Areas and Offshore Islands, and East Rift Valley-Luye in Taitung County. Stops for these shuttle buses are located at railway stations and high-speed rail stations near scenic spots and are marked by large, red signposts bearing the Tour Taiwan logo.

Shuttle buses are scheduled to depart every hour during weekdays, and every half-hour on weekends and holidays. Tickets to destinations other than the 11 already mentioned may be purchased at stations or the fare may be paid on the bus. For details, please visit http://www.taiwantrip.com.tw.

One item never far from the top of a traveler’s list is food. The Government Information Office is holding an online contest on Taiwan’s foods, entitled “Taiwan’s Yummy Snacks.” The four rounds of the contest will be held between July 15 and September 28.

For this event, eight of Taiwan’s specialty foods have been chosen to face off in four rounds. In the first round, pig-blood cake battles stinky tofu; then in round two, it’s oyster omelets against Taiwanese meat balls; in the third round, steamed dumplings will be matched up against braised pork rice; and to close things off, pearl milk tea will go toe-to-toe with mango shaved ice. Participants need only log on to the contest website to vote for their favorite food. Contestants may only cast a single vote each round, and all those who voted for the winner will be entered into a prize drawing. To access the contest website, please visit the Republic of China Government Entry Point at http://www.taiwan.gov.tw/.

III. Taiwan to Launch Investment Recruitment Campaign
Following up on the signing of the cross-strait economic cooperation framework agreement, the Council of Economic Planning and Development (CEPD) briefed the Cabinet on July 15 about a global investment solicitation plan aimed at raising Taiwan’s regional competitiveness. CEPD Minister Christina Liu said that a joint-service center for global investment recruitment established by the Ministry of Economic Affairs (MOEA) is scheduled to begin operation on August 8. The various ministries and central-government organizations were asked to submit investment proposals by July 20, from which the CEPD and other ministries would jointly select seven flagship plans. Among those expected to be incorporated into the initiative are internationalization of medical service, globalization of Taiwanese cuisine and digital convergence. The CEPD aims to attract US$55.9 billion in investment over the next six years.

In addition, the CEPD has scheduled investment recruitment seminars for Taipei, Taichung and Kaohsiung on August 23, 27 and 30, respectively. It will put forth a comprehensive action plan before the end of September and, in order to attract more investors, will organize a Taiwan Road Show to Japan, Singapore, Hong Kong, Europe and the United States from October to December.

As cross-strait relations have stabilized, Taiwan is fast becoming a lucrative investment destination. The MOEA announced on June 15 that direct investments by overseas Taiwanese and foreigners totaled US$2.2 billion in the first six months of 2010, an increase of 22.53 percent over the same period last year. Moreover, foreign investors are lining up to establish R&D centers on the island. According to the MOEA, after Microsoft’s decision to invest US$21 million in a “Software and Services Excellence Center” in Taiwan, Hewlett-Packard also applied for MOEA funding to build within three years a large development center that will employ 1,000 people. The MOEA has also granted approval to Sony, DuPont, Corning, Fujitsu, ASML and other multinational corporations to set up R&D centers in Taiwan.

Weekly News Backgrounder from Taiwan's Government Information Office

News Backgrounder
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.