How the Hong Kong crisis could boost Taiwan’s economy

Taiwan needs to make itself attractive to businesses and indviduals looking to escape Hong Kong. And it needs to do it now.

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(By Wikimedia Commons)

KAOHSIUNG (Taiwan News) – Here in Kaohsiung, most people are spending the weekend sheltering indoors from the torrential rain that has deluged the city for most of the past week.

In Hong Kong, just a short hop across the Taiwan Strait, they have been suffering similarly inclement weather. But that didn’t stop a huge number of people taking to the streets for the eleventh consecutive weekend to protest against their government’s extradition plans and the brutal efforts of the Hong Kong Police and CCP-back triads to violently put the demonstrations down.

Not only were a remarkable 1.7 million people not put off by the rain but they were also not put off by the high risk of violence they faced or the widely circulated images from the previous week of People’s Liberation Army troops massing just across the border.

Speculation that Hong Kong could be the setting for a Tiananmen Square-style massacre was not enough to stop them from standing up for their rights.

The Taiwanese government, along with almost every free and democratic government around the world, has voiced support for the protestors and urged the CCP to restrain their baser instincts. They have also, quite rightly, offered humanitarian support and the prospect of political asylum to those protestors who do not feel safe to remain in the city.

It is difficult to see how the Hong Kong crisis is going to be resolved to everyone’s satisfaction. The protestors are showing no sign of backing down, while the CCP wouldn’t dare to for fear that the demand for rights and freedoms might spread to China itself.

There is even talk that they might decide to abandon the so-called ‘one country, two systems’ model altogether and simple turn Hong Kong into a directly-administered municipality of China.

Such a move would be utterly illegal under international law, but the CCP hardly has a glowing track record of compliance with international norms, so this is unlikely to bother them too much.

If Hong Kong does end up being subsumed back into China or if there is a military crackdown and the inevitable tightening of control that will follow, Hong Kong's economy is likely to suffer every bit as much as its people.

There will be a scramble for the exit, and this creates a huge opportunity for Taiwan.

Taiwan’s economic opportunity

If companies are looking for a new regional base which offers them the same rights and freedoms that they had in Hong Kong, Taiwan is a great choice. It is close to Hong Kong, has a skilled workforce, offers a gateway to China and the rest of the region, and is a free, democratic state.

Crucially, it has an open and transparent financial system where foreign investors and companies are not under undue pressure from the government (One story that the protests in Hong Kong have masked is the removal of the heads of both HSBC and Cathay Pacific, two flagship Hong Kong businesses).

Taiwan is also in great economic shape, despite the slew of fake news and pro-KMT media reports to the contrary. Growth in the last quarter was 2.4 percent, which outperformed not only Hong Kong but also Singapore and South Korea.

It has been reported that Taiwan is already considering lowering the threshold for Hong Kongers to apply for residency and work on the island. Currently, they must either marry a Taiwanese citizen, enroll in an institution of higher education, get a job, or start a business with a minimum investment of at least NT$2 million.

Lowering these thresholds would undoubtedly attract talented, skilled, and crucially, anti-CCP people to come and live in Taiwan. Immigration from Hong Kong is already on the rise.

But the government should consider going further, much further.

Time for tax and regulatory reform to show Taiwan is open for business

Taiwan should be considering comprehensive tax and regulatory reforms to attract Hong Kong businesses and financial institutions to decamp to the island.

Hong Kong is attractive to international businesses and major financial institutions because of its low-tax policies and light-touch regulatory system. Taiwan’s business landscape is far from appealing on either of these fronts at the moment, and as things stand it is more likely that these businesses will choose somewhere like Singapore.

But with the right reforms, Taiwan could establish itself as a major Asian financial center. If there is a wholesale exodus from Hong Kong in the near future, this could happen extremely quickly.

The benefits to Taiwan in terms of employment opportunities and the knock-on effect of drawing other skilled workers to Taiwan could be profound.

Such a move would attract other businesses to Taiwan too, kick-starting the development of the country away from heavy industry and manufacturing. It has been stuck in this rut for far too long now.

Taiwan is long overdue another economic boom. The economy is doing well under the current government, but that doesn’t mean it couldn’t be doing even better.

Taiwan must offer the people of Hong Kong every support in their struggle against the brutal oppression of the Chinese Communist regime. But they also have to look out for themselves.

If Hong Kong’s crisis can be the making of Taiwan, then the government should do everything it can to make that so. Statements about democracy and rights are important, but now is also the time for a program of reforms to help Taiwan slip seamlessly into Hong Kong’s shoes if the worst should happen.