Taiwan risks becoming irrelevant: AmCham

In its annual report on the local business environment, the 2004 Taiwan White Paper, the chamber said closer economic ties with China were crucial to the island’s future competitiveness.

“Increasingly it is the quality and the variety of links across the Taiwan Strait that for multinational companies determine whether Taiwan will remain an important economic player,” said the report representing the business interests of the chamber’s over-800 members, which will be presented to key U.S. officials, politicians and think tanks.

Summarizing priority issues identified by AmCham’s industry-focused committees in the form of recommendations for the government, the report said overall Taiwan’s economy seemed set for its best performance in at least three years.

However, the government’s legal and regulatory restrictions were impeding economic growth, particularly in the management of cross-strait relations.

“Taiwan’s proximity to China must be embraced as an economic strength and not just guarded against as a political risk,” said AmCham President Andrea Wu.

Taiwan’s economic recovery was being driven in the larger part by trade with China, but restrictions on the flow of people, good and capital across the Taiwan Strait diluted Taiwan’s attractiveness as a hub which could form a springboard into regional markets, the report said.

“Without the links Taiwan’s plans to develop the island as a regional hub are also in jeopardy,” Wu said.

The report Taiwan might be geographically close to China but the increased time and expense caused by the lack of direct transport links had already become a serious impediment to business and was forcing many multinational companies to relocate Greater China Operations from Taipei to Hong Kong, Singapore or Shanghai.

“...a position on a map means little if goods and people have to take circuitous routes to reach their destination...,” the report said.

“...it has moved from being a travel-schedule annoyance primarily for CEOs to a major time and cost factor for top and middle managers of all sizes.”

Taiwan’s skilled, industrious and entrepreneurial work force, and long-term international experience gained through Original Equipment Manufacturing, also gave it many advantages that would work well in a regional hub, encompassing regional operations, global logistics and regional training.

But, the report said, the absence of links also tarnished Taiwan’s international business image, symbolizing Taiwan’s self-isolation from China and daily reminding local and international business people that the government was acting to hinder, not facilitate business operations.

China had for the first time replaced the United States as Taiwan’s top trading partner, with Taiwan investors pouring upwards of US$70 billion into some 50,000 businesses, the report said.

“Knowledgeable analysts say that more than 60 percent of China’s IT exports are produced by Taiwan-invested factories,” the report added.

The report said the two sides of the Taiwan strait had complementary manufacturing strengths, and Taiwan could work to integrate low-end manufacturing operations in China with high-end value-added manufacturing and services in Taiwan.

Wu said the first thing the island should do to fix the situation is start communicating and resume talks with its giant Communist rival.

The Mainland Affairs Council Vice Chairman Chiu Tai-san, responded by saying that the government would consider any recommendations on opening direct links when formulating policy.

He said the government would open direct links according to a gradual series of steps and preparations for the planning stage were almost complete.

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