Taiwan leader Ma Ying-jeou expressed confidence in Taiwan’s economy Dec. 12, stating that it is on the road to recovery and possesses a promising outlook.
“We have begun seeing the light at the end of the tunnel,” Ma said. “Our economy is rebounding, albeit at a very slow pace, but I find no reason for us to be pessimistic.”
Ma, who made the remarks in an interview with business news network CNBC Asia Pacific, said Taiwan’s economic growth would hit 0.98 percent in the third quarter, up from 0.59 percent and -0.12 percent in the first and second quarters. He added that the government has revised upwards the annual growth forecast from 1.05 percent to 1.13 percent, and predicted it could hit 3 percent next year.
The fact that exports account for 70 percent of Taiwan’s gross domestic product makes the country’s economy more vulnerable to global economic fluctuations, Ma said. “The government is leaving no stone unturned in expanding exports and bolstering Taiwan’s economic partnership with other countries.”
Ma said Taiwan’s negotiations with Singapore and New Zealand to conclude economic cooperation agreements are in line with the ROC government policy of attaining greater regional economic integration.
These pacts, along with the Cross-Straits Economic Cooperation Framework Agreement (ECFA), Taiwan-U.S. Trade and Investment Framework Agreement and Taiwan-Japan investment pact, will improve bilateral economic cooperation and lay the foundation for the nation to join regional trade pacts such as the Trans-Pacific Partnership, he added.
The TPP is a proposed trade agreement comprising negotiating partners Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the U.S. Other nations such as Canada, Japan, Mexico and South Korea, are also looking to join discussions on the nascent pact.
“There is still a long way to go but we can create favorable conditions one step at a time. Changing our mindset to create a more liberal and free market is part and parcel of this process and must be accomplished by the government and corporate sectors, as well as the public.”
On economic development, Ma said that R&D is key to growth and Taiwan must do more in this regard. “Taiwan spends 3 percent of its GDP on R&D, a rate lower than South Korea but not bad compared to Organisation for Economic Co-operation and Development countries.”
The president said the government has a number of initiatives in the works to spur R&D investment by the private sector. These include programs transforming 100 small and medium companies into “hidden champions” within three years and assisting them in branding, intellectual property rights protection and marketing.
Championed by Hermann Simon, a German author and business leader who heads renowned consultancy Simon-Kucher & Partners, “hidden champions” refers to companies that are relatively small but highly successful in their respective areas.
“There is no two ways about it,” Ma said, “we must spend more on R&D as this investment is pivotal to fostering innovation and added-value products and services.”
According to Ma, the programs seek to build homegrown firms into the backbone of the nation’s economy on the strength of their core technology and original branding.
“For example, Taiwan turns out world-class smartphones but is forced to import an array of critical components,” Ma said. “These programs will help companies, especially those in the information and communications technology and optics industries, to enhance R&D capabilities and manufacture such parts locally.”
Concerning Taiwan’s stagnant wages, the president said Taiwan businesses cannot rely on low consumer prices to maintain cost advantages in the marketplace. They must move from an efficiency- to innovation-driven model, which will deliver higher returns and create improved conditions for paying higher wages to retain talent, he added.
“The high quality of our workforce is indisputable,” he said. “This is illustrated by the fact that we rank fourth in the world for patent applications accepted by the U.S. Patent and Trademark Office, and No. 1 per capita.
“The real question is how we can harness this powerful sea of innovation and inventive capabilities to manufacture world-class products that sweep all before them in the global market,” Ma said. “This challenge remains one of the government’s top priorities.”