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May 30, 2017

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When does a safety net become red tape?

A couple of months after President Tsai-Ing wen took office, she vowed to improve Taiwan's investment environment to attract more foreign investors. In fact, during her first National Day address, she said that "thanks to our firm resolve and courage to reform, foreign investor confidence in Taiwan has been reignited."

However, now that we are a quarter of the way through 2017 — a year that experts said promised more economic success than the last — we are seeing quite a different picture than the one the president wants us to see and believe.

The American Chamber of Commerce in Taipei's 2017 Business Climate Survey found that most of its member international businesses felt "improvements to market factors in Taiwan were not occurring fast enough to foster more investment and optimism in the country."

Government bureaucracy ranked first in a list of some 40 factors that had impacted companies' operations in Taiwan, with most respondents further reporting that no progress had been made on that front in three years.

Recent accounts from Swiss Mechanical and Electrical Engineering Industries' secretary-general, Christoph Blattler, revealed that a newly implemented regulation affecting imports had caused a frenzy among Swiss suppliers, fearful of the effect it could have on their exports.

According to Blattler, the regulation, which went into effect Jan. 1, requires far stricter testing and certification from exporters than even international standards deem necessary.

On both counts, the number one deterrent for foreign investment and businesses flourishing in Taiwan is government regulations, or in this case, red tape, which raises the questions: Why is there so much red tape in Taiwan and how do we differentiate red tape from much-needed regulations?

Red tape in Taiwan serves as a safety net for businesses, workers and — perhaps more importantly — the officials responsible for the regulations in the first place. Whenever an incident occurs, such as the recent bus crash that killed 33 people, officials resign. Therefore, it makes sense that they would want regulations to be as strict as possible to both prevent incidents like these from happening and to avoid findings showing that these incidents occurred because of an oversight by the government.

Similar concerns exist internationally, but Taiwan isn't dealing with them appropriately. As Blattler suggests, the government should point out its concerns regarding international regulations and seek to have these worries addressed instead of ostensibly supporting them while actually also enforcing its own set of slightly different laws domestically.

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