Alexa

Normalization of cross-strait economic ties will bolster Taiwan's competitiveness, says ECCT

Normalization of cross-strait economic ties will bolster Taiwan's competitiveness, says ECCT

Taiwan needs to raise its game to keep up with its capital-hungry neighbors, the largest organization lobbying for European business interests in Taiwan said in its latest report.
In its annual meeting with the Council for Economic Planning and Development, the European Chamber of Commerce in Taipei reiterated its call for Taiwan to normalize cross-straits business relations which the ECCT said is critical to Taiwan having a prosperous, dynamic future.
In a statement, ECCT Chairman Ralf Scheller reminded government officials that European business shares the government's concerns with regard to Taiwan's sustainable economic growth and its competitiveness.
"However, Taiwan is surrounded by highly competitive markets: While Japan and South Korea are leading in high tech industries, China, India, Vietnam and other Southeast Asian countries have become global manufacturing centers. Hong Kong and Singapore have set very ambitious goals to upgrade their economies into global service centers, in particular in the financial industry," the chamber said in a statement.
"Taiwan, on the other hand, seems to have lost its position as one of the locomotives of economic development in Southeast Asia with its GDP growth rate in 2006 again falling behind its Asian competitors. In fact, the Taiwan economy is close to reaching a crossroads where the government will be faced with the stark option of either taking decisive action towards regaining international competitiveness or becoming marginalized."
The normalization of cross-strait economic relations, which means direct transport links, easy access to visas for PRC passport holders, easing restrictions on investments and lifting the import ban on goods from China, would give Taiwan a competitive advantage over its economic rivals. This would also attract long-term foreign investment into the country, the chamber said.
"As the 2006 ECCT-CLSA impact study concluded, cross-strait economic normalization would revive Taiwan's domestic consumption and accelerate the growth of service industries such as retail, tourism, logistics, transportation and real estate. Equally important, a relaxation of transportation and communication links would encourage more Taiwanese firms to keep their head offices in Taiwan, which has a better infrastructure, quality of living and regulatory environment than many cities in China," said the ECCT.
"The knock-on effect would be substantial, boosting related service industries such as financial services, marketing, education, logistics and venture capital businesses."
The longer Taiwan keeps such economic restrictions in place, the more businesses will be inclined to circumvent the restrictions and move their operations elsewhere, the chamber warned.
"In this respect, it is important that Taiwan not only embraces cross-strait cooperation, but that it also works towards integration into regional economic cooperation developments," said the ECCT.
More competitive corporate and personal tax rates could also give Taiwan a competitive advantage over its neighbors.
"Competing markets like Hong Kong and Singapore are further lowering corporate and personal income tax rates to develop into regional service centers and attract highly skilled professionals and talent," the ECCT said.
"Consistent interpretation and enforcement of tax laws as well as full transparency in the government's medium- and long-term tax reform plans are all important in bolstering confidence in Taiwan as a place of investment."
The government also needs to enact key initiatives to promote investment and attract the brightest workers.
"A transparent and predictable regulatory environment, with simple rules that do not overly restrict business operations, further supports sustained competitiveness. In particular in financial services, bolder reform measures are needed in the asset management, banking and insurance sectors to better cater to the financial needs of Taiwanese corporations and consumers," the ECCT said.
"A plethora of regulations restrict the use in Taiwan of international financial instruments such as hedge funds, derivatives and any new investment techniques that are deployed in neighboring, more liberalized markets."
Meanwhile, the ECCT announced that it will be holding its 2007 Europe Day Dinner today.
The Europe Day Dinner is the premier business event of the foreign business community in Taiwan and annually commemorates the first move towards the creation of what is now known as the European Union. This year's guest of honor is President Chen Shui-bian.


Updated : 2021-04-16 19:14 GMT+08:00