The Southbound Policy as remedy for Taiwan’s ‘brain drain’

SE Asia and India are more than strategic regions for investment, they are Taiwan's best likely source of new talent

1770 Bonne Map of Southeast Asia and India (By Wikimedia Commons)

TAIPEI (Taipei News) – Taiwan's brain drain has been one of the most worrying problems for Taiwan's tech industry and overall economic forecast for over a decade. The New Southbound Policy is being applied to remedy the problem.

The IMD World Talent Report published on Monday Nov. 20 ranks Taiwan 23rd out of 63 countries for its ability to develop, attract, and retain talent.

The results of the analysis are neither surprising nor dire, but they are worth noting. Taiwan's overall ranking is well behind Hong Kong (12) and Singapore (13) but is ahead of regional neighbors Japan (31) and S. Korea (39).

Over the past ten years, Taiwan's ranking on the evaluation has fluctuated from between 27 and 19, so despite some weak areas, and no major improvement, talent in Taiwan appears to at least be holding steady.  

The flight of well-educated and skilled professionals, often referred to as brain drain has been affecting Taiwan's competitiveness in key areas for many years. Despite Taiwan's relatively well-developed tech industry and educational systems, the average salary a professional can earn in Taiwan is simply not enough to remain competitive with salaries offered in Europe, the US, or China.

Especially China. A report released by the Taiwanese government earlier this year concluded that 60 percent of Taiwanese professionals working abroad were in China.

Whereas job requirements, language ability, and more pronounced cultural differences set the bar a bit higher for Taiwanese who seek employment in the West, the job market in China presents none of those barriers. On the contrary, the Chinese government specifically offers incentives to Taiwanese professionals to make the move across the strait.

Those incentives will only continue to grow, and according to a report from the Liberty Times on Nov. 13, they may represent far more than just businesses and government agencies seeking qualified candidates to fill positions in China's ever-expanding market.

Some academics suggest that the brain drain being experienced by Taiwan, and which disproportionately benefits China, is part of a political strategy to "undermine the Taiwanese economy and political will."

There is some conventional wisdom of the modern era that suggests the power of economic markets ultimately determines governmental policy far more than governmental policy is able to determine the course of economic markets.

Given such a perspective, encouraging a talent drain to stall economic development and decrease public confidence in the economic outlook and political structures of Taiwan, would be a pretty keen strategy on the part of Beijing.

In fact, there is no shortage of pessimistic attitudes concerning brain drain and economic development in Taiwan, which may attest to some measure of success of Beijing's supposed brain drain strategy.

To be certain, the problem is a serious one. As Taiwan News notes "if Taiwanese professional talent continues to move out of the country, and if no foreign highly-skilled professionals arrive to balance their absence, (this) will further diminish an already drained talent pool.”

It will also further impact the economic and political future of Taiwan by entrenching an inordinate number of Taiwan's best and brightest into Chinese society via their paycheck.

The situation might seem pretty bleak if it were not for the fact that a remedy to the problem has already been devised and is already being implemented.

The Southbound Policy of the Tsai administration

President Tsai Ing-wen (Image: Central News Agency)

On Monday Nov. 20, the Ministry of Economic Affairs Investment Commission (MOEAIC) reported considerable increases in investments reflecting the Southbound Policy introduced by the current administration in May of 2016.

Taiwanese investment in targeted SE Asian countries from January to October totaled US$115.84 million, representing a 99.51 percent year-to-year increase. Alternately in the same period, SE Asian countries’ investments in Taiwan numbered 462 projects, totaling US$229.35 million, which translates to a 22.85 percent increase over 2016.

After only a year of the Southbound Policy being implemented, there is every indication those numbers will continue to rise. While the Southbound Policy is generally couched in terms of trade and investment, it is important to recognize the networking and flow of people that will also inevitably increase.

After encouraging stronger business ties in South and Southeast Asia, the Taiwanese government and academic institutions will have their role to play in developing training programs and offering educational scholarships for young people in the SEA region. Given the increased economic ties between their countries and Taiwan, Taiwan will become an attractive option for study and employment.

Taiwan may face serious difficulty attracting and retaining talent relative to the attractiveness of salaries in Europe, North America, or China. However compared to average salaries in Southeast Asia, Taiwan's job opportunities and relative cost of living are unquestionably attractive alternatives for ambitious young people in the region.

This is why the bilateral business investments of the past year are an especially important first step for Taiwan's grand strategy.

India is a prime example of a country full of highly talented young people, both with technical expertise, as well as crucial language abilities. Add to that the expectation that bilateral trade between India and Taiwan is likely to reach US$10 billion in just a few short years, and the solution to Taiwan's talent woes couldn't be clearer.

An article published by the American Chamber of Commerce in Taiwan recently outlined the benefits and enticing prospects of a strengthened relationship between Taiwan and India.

The Taiwan government appears to have recognized the difficulty it will face in attracting talent from the West, and retaining its own talent in the face of China's economic allure. In response it has chosen to go all in to embrace its best source of investment and trade, and its most likely source of young talent.

There have been some arguments made against the Southbound Policy as being shortsighted and economically misguided (even paternalistic and racist). The argument is that to be a leader in the key industries of the 4th Industrial Revolution, the most important business partnerships and most vibrant markets are not to be found in Southeast Asia.

This analysis might be sound if viewed purely from the economic perspective, which is the same perspective that China is ostensibly using to assess its own strategy towards Taiwan. However, this perspective, while useful, remains shortsighted.

There is another piece of conventional wisdom that has been floating around in recent years which poses a challenge to the markets uber alles thinking; that is the idea that politics is ultimately downstream from culture and ideology.

It is an understanding of this concept that ultimately forms the rationale, and will underpin the success of Taiwan's Southbound policy; the idea of a common vision and shared interests.

At this stage, opposition to Chinese regional hegemony is essentially all the fuel that the Southbound Policy requires. Taiwan's civic minded democratic society, and its impressive cultural pluralism are qualities that will help attract talent from SE Asia to Taiwan, rather than China, if students or young professionals are given a choice between the two.

The government has simply recognized that for the ASEAN nations and India, Taiwan's developed tech industry and political situation happen to align very nicely with the needs and interests of the countries in the region.

The boat headed for China may be leaving with some of Taiwan's top talent aboard, but the docks are being prepared for a fleet of talent from Southeast Asia and India that will be arriving shortly.