TAIPEI (Taiwan News) — The Tsai Ing-wen (蔡英文) administration may need to recalibrate its New Southbound Policy, which is aimed at diversifying Taiwan’s export markets and reducing economic reliance on China, experts suggest.
Taiwanese exports to the 18 New Southbound nations accounted for 18.4 percent of its total exports in the first five months of 2020, when China and Hong Kong together took up a whopping 41.5 percent, according to the Ministry of Finance.
While trade with the Southeast Asian countries has been hurt by the coronavirus pandemic, there are more fundamental problems that need to be addressed before more Taiwanese businesses will consider relocating from China, wrote China Times. Citing business tycoons, the report argues that multiple factors are hampering the government’s New Southbound push.
The trade obstacles include rising labor and operation costs in countries like Vietnam, labor shortages, poor administrative efficiency, limited domestic demand, and most important of all, the lack of a bilateral investment agreement between Taiwan and ASEAN nations.
Rather than urging Taiwanese companies to move production from China to Southeast Asia, the government should serve as a coordinator and provide them with more comprehensive investment advice, said Kuan Chun-hsiu (關春修), CSO of KMPG Taiwan. KPMG is a multinational providing audit, tax, and advisory services.
More effort is also needed to make Taiwan a hub for business headquarters as part of industry restructuring. The government can help companies build stronger brand reputations and increase their presence in Southeast Asia by taking advantage of tax incentives provided by countries like Malaysia and Thailand, UDN quoted her as saying.
New Southbound nations include Singapore, Vietnam, the Philippines, Malaysia, Thailand, Indonesia, Cambodia, Myanmar, Brunei, Laos, India, Bangladesh, Pakistan, Sri Lanka, Nepal, Bhutan, Australia, and New Zealand.