Ma says Taiwan ready to take on economic challenges

Taipei, Jan. 1 (CNA) President Ma Ying-jeou pledged in his New Year's Day address to reinvigorate Taiwan's economy and rebuild people's confidence by taking measures to meet key economic challenges facing the country. With the global economy now beginning to show the first signs of a recovery, Taiwan must seize the opportunity to speed up reforms, the president said. In an address titled "Taking Strong Action to Redirect Our Future," Ma said the government needs to take bold measures to meet four very difficult challenges. "The first challenge we face is that global industrial competition is growing more intense," Ma said. In the past, Taiwan's high-tech sector focused on electronics and information and communication technology products and depended on expensive foreign patent licenses for key technologies, he said. "Even so, we built a highly efficient OEM system made successful by excellent quality control and cost control measures and became an important link in the global supply chain." But a changing global economic climate has generated increasingly fierce international competition, posing a threat to Taiwan's OEM model, he said. "The second challenge is the accelerating formation of a regional free-trade bloc," Ma said. The initiative referred to by the president is a proposed Regional Comprehensive Economic Partnership, on which talks are scheduled to begin early this year. The plan is to create the largest free-trade bloc in the world, covering a region that is home to more than 3 billion people and accounts for more than a quarter of global GDP. In addition, mainland China, Japan, and South Korea will hold formal talks on an East Asia Free Trade Area in March or April of this year, Ma said. The United States, meanwhile, is actively promoting the more exclusive Trans-Pacific Partnership. Taiwan is not involved in any of those initiatives, primarily because of China's opposition, and Ma said the country's ability to take part in the process of economic integration will be a key determinant of whether Taiwan can expand its economic and trade presence. "The third challenge is the clear mismatch between how we are training students and what industry is actually calling for," the president said. "The mismatch has made it difficult for people with advanced degrees to find employment," he said, noting that businesses have complained about the lack of basic technicians or advanced R&D talent despite the many people with master's and doctoral degrees. "If this mismatch between the classroom and the workplace persists, it is certain to seriously affect Taiwan's development in the future," the president said. "Our fourth challenge is the effect a low birthrate and an aging population will have on our pension systems," Ma said, warning that the pension systems face potentially massive funding shortfalls. "While these problems are not now on our doorstep, the longer we wait to deal with them, the more difficult they will be to resolve," he said. Ma stressed that his administration would do whatever is needed to overcome these challenges. He pledged that the government will engineer a structural transformation of Taiwan's industrial base by embracing value-added innovation. This will position the country as a major provider of key components and precision equipment in the global industrial supply chain, and make Taiwan an indispensable member of the global economic and trading system, Ma said. Taiwan also has to rid itself of protectionist thinking and steer Taiwan in the direction of gradually becoming a free-trade island, Ma asserted. Even as Taiwan establishes "free economic demonstration zones," it will also seek to make inroads into emerging markets on fair and reciprocal terms. On Taiwan's structural challenge, Ma proposed to reshape Taiwan's research system, strengthen cooperation between industry and academia, and enable educational institutions to play a substantial supporting role in industrial technology R&D. As for pension reform, the president said the government intends to enact "comprehensive, pragmatic, incremental, and transparent improvements to our pension systems," to make "them fairer and ensure that the needs of future generations are even better served." The president also touched on building a peaceful and friendly environment. Cross-strait peace is one of the keys to peace in the Asia-Pacific region and a prerequisite for economic development and increased willingness to invest, Ma said. The past four-and-a-half years have shown that improving cross-strait relations and gaining expanded room for maneuver in the international community go hand-in-hand. In the future, the ROC will continue to play a constructive role in the promotion of peace and prosperity in East Asia. "As for our relations with other parts of the world, we have always treasured our long-term friendship with the United States. We therefore were pleased that President Obama chose to visit Asia right after his re-election, and that Washington has continued to play a key role in maintaining security and order in East Asia," he said. Ma also expressed the hope of working with China's new leader, Xi Jinping, in "continuing to promote peaceful development across the Taiwan Strait on the basis of the "1992 Consensus." Under the "consensus," which is not accepted by opposition political parties, Taiwan and China acknowledge the existence of "one China" but maintain their own interpretation of what that means. "We intend to accelerate the pace of follow-up negotiations under the Economic Cooperation Framework Agreement in order to expand and deepen all aspects of cross-strait ties. "We will also seek to further loosen restrictions on investments from mainland China, and will further open our borders to mainland students and free independent travelers," Ma said. (By Kelven Huang and Lilian Wu)