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Kuan Chung-Ming: FEPZs are like ‘brain surgery’

Kuan Chung-Ming: FEPZs are like ‘brain surgery’

CEPD Minister Kuan Chung-Ming pointed out in an interview Monday that the key to success for Taiwan’s Free Economic Pilot Zones (FEPZs) lies in demonstrating their value in harnessing innovation and applying new businesses management models that will be fruitful for the government, business and the people.

Taiwan’s first FEPZ is set to begin operations later this year as a first step in Taiwan’s efforts to enter into regional trade liberalization agreements (FTAs). Interviews with government officials are gradually revealing the regulatory framework and innovative management mechanisms behind the FEPZs as well as the benefits they will bring to industry and the challenges they will face.

Kuan said recently a lot of business people have asked about "Smart Logistics" and other details of zone regulations. As long as the government gives businesses a bit of freedom in their operations in the zones, says Kuan, "industry will come up with innovative models that the government could never have imagined."

The “Special Bill Regulating Free Economic Pilot Zones" has been sent to the Legislative Yuan and is expected to face close scrutiny in its next session. Billed as a prescription for Taiwan’s ailing economy, the zones are being touted as the "brains" steering Taiwan’s economy in the future, with new models for the government, business and the public to examine and apply in their own operations in the future.

Kuan likened the process to "open brain surgery," noting that for example, demonstrating certain concepts in the pilot zone can convince the Ministry of Finance to support reforms in Taiwan’s customs procedures that will lead to improvements in the local logistics industry.

Kuan examined why Taiwan’s domestic economy has become so "bogged down." He pointed out that economic activity is very slow and few new industries have been introduced in recent years, mainly because government controls are too tight. To create new jobs and raise salaries, he said, what is needed is deregulation and allowing the industry to set its own quotas.

Kuan cited examples from Taiwan's past, noting that medical care and education are not industries, but the concept of the pilot zone can still be applied to show the benefits of deregulation and how those in affected industries can come up with ways to upgrade their operations.

Kuan stressed that the regulations being integrated in the FEPZs are based on those in FTAs between Korea and the US and Korea and the EU. He noted that following this line ensures that everything is done to international standards, and if liberalization in Taiwan encounters any problems it will not be because operations do not meet international standards.

Kuan said Taiwan wants to join the US-led Trans-Pacific Partnership Agreement (TPP), but other member countries will ask what Taiwan has done to earn its way into the group. Kuan said Taiwan must demonstrate that it is making a concerted effort to improve its economic structure, noting "we must have something concrete to show them."

He cited another example, saying that in the past Taiwan has been very strict about allowing in talent in management and professional services. In the FEPZs foreign managers and professionals (including personnel from Hong Kong and Macao but excluding China) will be allowed to work or provide services in the zones. This means that qualified lawyers, accountants and architects will be able to work in the offices of foreign investors in the zone.

Kuan emphasized that TPP member states will be watching to see what Taiwan does in setting up its FEPZs. They will be especially interested in how Taiwan performs once FTAs are signed and in place, and whether there will be any technical barriers or strange or hidden rules that may handicap companies operating in the zones.

Kuan said Taiwan it must be clear that with the inauguration of FEPZs, Taiwan's views on how to do business are really not the same as before.

Updated : 2021-10-18 05:21 GMT+08:00