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Saturday, December 01, 2007

Ma's Economic Nostalgia

KMT Vice Presidential candidate Ma Ying-jeou released his latest economic plan, with a sustained hack on the DPP:

"My economic policies consist of more than opening up for more Chinese tourists and cross-strait direct links. Expanding domestic demand is also crucial and for the government to invest in the nation shows love for Taiwan," Ma told a press conference on Thursday morning.

The "i-Taiwan 12 projects" include building and linking rapid transit networks in cities and counties across the country, turning Kaohsiung into a tariff-free port and eco-park, turning Taichung into a center for maritime and air logistics in the Asian-Pacific region, turning Taiwan Taoyuan International Airport into an "air city," developing cultural and creative industries, creating industrial innovation corridors, carrying out urban regeneration, revitalizing rural Taiwan, reviving coastal zones, building 60,000 hectares of new forests to meet sustainable development goals, improving infrastructure designed to prevent flooding and fighting water pollution, and improving the nation's waste water sewage system.

The "i" stands for "infrastructure, investment, information, innovation, intelligence and international," Ma's camp said.

Ma and his running mate Vincent Siew (蕭萬長) said the projects, including the NT$1.4 trillion island-wide rapid transit system, NT$240 billion waste water sewage system and a NT$30 billion forestation project would boost the economy in a sustainable way to enhance the quality of living.

When asked how the projects would be funded, Ma said taxes and revenue generated by the projects would cover the investment costs. Ma also vowed not to raise taxes in the next eight years if elected.

Ma's approach shows a marked improvement over the KMT's previous election campaign -- offering concrete policies that might actually positively impact the island's life if enacted. In '04 Lien Chan and James Soong mailed in their campaign and blew their 20 point advantage. One reason KMT conspiracy nuts are so insistent that the President had himself shot is that they don't want scrutiny of their awful performance in '04. Ma went on to hack on the DPP:

Later in the day, in an address to the US, European, New Zealand and Australian chambers of commerce, Ma accused the government of neglecting Taiwan's economic development over the past seven years, pursuing unstable policies and running an unstable government. Ma pledged to improve the investment environment for foreign companies by normalizing cross-strait economic relations and allowing cross-strait direct flights.

Ma cited the American Chamber of Commerce as evidence, saying its members had decreased from 900 to 700 over the past seven years as a result of shrinking markets and opportunities in Taiwan as a regional springboard.

In addition to opening up cross-strait direct links, Ma promised to establish "twin golden flight circles" among airports in Taiwan, Tokyo's Haneda Airport, Seoul's Gimpo Airport and Shanghai's Hongqiao Airport.

Ma also promised to revise the cap on investment in China, but added that his administration would not open up the agricultural market to Chinese products or open the labor market to China.

Ma's economic plan is now fully revealed. It consists of doing what the DPP is already doing -- investing in economic upgrading, pushing cultural and creative industries, and opening the links to China. Hsieh too has already promised this. Ma's "more government investment" is simply the updated 21st century version of the old KMT Political Economy -- flows of money from the central government to local construction firms underpinning KMT control. Ma is in effect promising that those who now tap those streams can continue to tap them.

For all that Ma's idea appears progressive, it is mostly copied from the DPP or, in the case of large investment projects, from the KMT of the 1970s, or of old ideas recycled -- like the tariff-free ports, a cross-party dream for a decade now (2003 doc). The DPP had draft legislation going on that in 2002....

Note that Ma says he will retain the investment cap -- "revise" does not mean eliminate -- and that he will not permit opening the ag market or letting in Chinese labor. This too is essentially DPP policy (but if Hsieh had advocated these things, the foreign Chambers of Commerce would have hissed....) -- if Ma were to announce that Chinese labor would be allowed into Taiwan, he can kiss the election good-bye. After the election, I fully expect that this promise will be slowly be bent until unrecognizable.

Ma's platform, largely borrowed from the DPP, met with applause from the European Chamber of Commerce.

The European Chamber of Commerce later issued a statement saying it is very pleased with Ma's comprehensive outline of his economic platform.

The statement expressed support for Kaohsiung becoming a tariff-free port with direct shipping links to China and for the the Taiwan Taoyuan International Airport "air city."

The statement also said that Ma had not presented a clear tax roadmap and tax environment or elaborated on how he would improve the flow of human talent to Taiwan and reduce greenhouse gas emissions. It also said Ma did not touch on issues such as how he would step up intellectual property rights protection.

I think it is great the ECCT asked about greenhouse gas emissions -- the KMT's service to sustainable development is entirely lip service. Improving the flow of human talent into Taiwan would entail massive changes in Taiwan's society and education, which neither party appears capable of bringing off. Finally, the tax questions are pertinent for both local and international firms. I don't believe that all this investment will pay for itself.....thus, Ma is essentially arguing for increased public debt (don't miss AmCham's great article on the development of public archecture in Taiwan).

Sadly, nobody at the listening Chambers appears to have challenged Ma's one-sided construction of Taiwan's economic status.....or noticed that when Ma presented DPP economic ideas to them, the ECCT thought they were great (but then the ECCT is quite confused about our cross-strait policy anyway). Hey, but Ma speaks English! And...he jogs! And went to Harvard, and that is all ye know of Ma, and all ye need know.....

Why are the foreign Chambers so exasperated with the DPP? Consider this editorial from AmCham:

A new regulatory proposal illustrates the problem. At the urging of the architectural profession, the government’s Public Construction Commission (PCC) has drafted an amendment to its Regulations for Selection and Fee Calculation of Technical Services Providers Entrusted by Entities and circulated it to various government agencies and relevant local business organizations – but not foreign ones like AmCham – for comment. Under Chapter 5 of the amendment, only architects would be authorized to take the lead in public projects involving “buildings,” rather than the engineering consulting firms (known as A/Es for “Architect/Engineers”) normally in charge of such infrastructure projects. That would be the case even for a power plant or MRT station, even though the building itself may not be the key portion of the facility.

With this change, all A/Es – regardless of size – would soon end up as subcontractors of architectural firms on major infrastructure projects. The tail would be wagging the dog. The proposal is equally objectionable on other grounds:
• The quality and reliability of projects would suffer. A/E firms employ professional engineers from many disciplines, including electrical, mechanical, piping, and environmental engineering. Architects might hire subcontractors in these fields, but they themselves would be incapable of supervising and reviewing work that is totally outside their scope of professional knowledge.
• Architectural firms are usually operated by an individual architect or as a partnership, and do not have the financial strength of A/E firms organized as corporations. For large-scale projects requiring performance bonds, that financial capability is a crucial factor.
• Under current laws and regulations, foreign investors are permitted to operate A/E firms in Taiwan, but not architectural firms. As a result, the impact of the proposed amendment would be to exclude foreign-invested companies from large segments of the market – a move contrary to the spirit, if not the letter, of Taiwan’s commitments as a member of the World Trade Organization.

Implementing the proposed change would be another distressing example of a Taiwan-unique regulation departing from international norms. Already Taiwan is the only country in which A/Es are barred by law from practicing architectural work. Instead they have to rely on external architects either to do the design under subcontract or to take a fee for signing off on the designs of the A/Es’ in-house architects by attaching their “chops.”

One of the major problems with Taiwan's economy, from outsider's perspective, is that it is often a game outsiders are not allowed to play. The Chambers of Commerce appear to be of the opinion that this will change if Ma is elected. Lotsa luck, guys. Because after Ma "opens" the economy, AmCham editorials are going to read like this:
"While in principle we welcome the new openness shown by Taiwan during the first two years of President Ma's administration, AmCham wishes to express its growing concern over the preferential treatment given firms from China....."

15 comments:

  1. Speaking about ports, if the KMT takes control, another source of income will be the re-fitting of naval port facilities from ROCN to PLAN.

    You can bet your bottom NTRMB that China will base ships in Taiwan if there is a "peace" agreement with the KMT. The first PRC ship that enters a Taiwan port will probably be named the LienChan (or FartWind in PigLatin) in grateful recognition of his groveling.

    After the KMT "wins back Taiwan", they, along with the PLAN, can win back the Diayatos(?) from Japan and Ma can fulfill his student wet dream. With PRC ships in Taiwan, the oil flow to Korea or Japan can also be pinched whenever necessary. All they have to do is pull a "war game" excuse and not allow tankers to pass near Taiwan.

    BTW, look what is happening in Hong Kong ~ The entire Central waterfront area is being ripped apart. The old historic Star Ferry Terminal is now gone (which is a crying shame since this is what gave HK it's unique character). In it's place is a new park, but hidden from everyone is the likely possibility that a PRC Navy warship port is being built at the nearby site of the old Queen's Pier. I know its not officially planned since the HK'ers would go bonkers about this news, but I think it is coming. We will soon find out the truth.

    My2cents: The financial problems that are unwinding in the States are what will control Taiwan's destiny. Taiwan's economic roadmaps just don't matter at this point since a global economic meltdown has begun.

    Taiwan is cursed by the same political mess that the USA id experiencing. In the USA we have Bush and his fucktard followers, here we have the KMT and their blinded dupes. In the USA we have the incompetent Democrats, here we have the incompetent DPP. In the USA we have politicians fighting any bill that is worthy just to spite the opposition, here the same thing. In the USA we have massive Jewish political meddling, here its the PRC. For Americans expats, we have to suffer not once, but twice watching this stupidity play out. To bad there isn't a Taiwanese Ron Paul to give people some hope. (!)

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  2. Nice comment, man. So true. Where does one go when the meltdown gathers steam?

    Michael

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  3. Meh, the minimalist 1950s Star Ferry Terminal has no architectural merit and does not belong in the historic club. The new terminal has retro architecture but its location is inferior.

    As for the possible Navy berth, since you know about it, just about everyone else does too. Nobody's really hot for these things but what could they say when Queen's Pier was built just for the Queen? Oh wait, they tried awfully hard to PROTECT that thing from being disassembled!

    I think what I really wanted to ask was...how is this related to Ma's economics platform?

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  4. Man, the number of KMT commercials these days is ridiculous. The DPP, who has no billion dollar war-chest of illicitly obtained party assets, has barely any.

    Ma's economic proposals are stupid. Vision without a way to pay for it is stupid. It's just like that retarded "international" opera house going up in Taichung. Who the fuck is going to go to Taichung to watch opera no matter how "great" the design of the opera house is? Because it sure as hell isn't going to be packed with Taichungers.

    Michael you briefly mentioned attracting foreign talent to Taiwan. I think it's actually okay if you want people to come to Taipei. It's clean, modern, transportation is good... HK and Shanghai are bigger, but they are smoggy, dirty hell holes when you're sober enough to be aware of it...

    Central and southern Taiwan on the other hand have one big problem that would need to be solved to attract foreign talent. It's actually relatively cheap to solve it. Schools for foreign children. Yep, there is nothing like Taipei American School or Hsinchu Experimental School in either central or southern Taiwan.

    They should just drop a hundred million and get a private school for rich locals/kids of foreign talent going in like Tainan (in the middle). It'd be great for rich locals that want something to prepare their kids for college education in the US and foreigners would have an option for their kids other than a boarding school back home.

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  5. Actually, there's Morrison Academy in Taichung, which has a wonderful campus and low price, but religious indoctrination is mandatory. Taichung American School allegedly on illegal slopeland outside the city, is totally out of reach of all but richest locals. In Kaohsiung there's another Morrison, huge and new, but way out of the city. Kaohsiung American school too.

    But that's a huge problem already in Hong Kong -- not enough international schools. Same here in Taipei. People talk about setting up foreign presence here -- but there isn't the infrastructure for it. Taichung would be ideal, with its excellent weather and broad streets, and many empty houses, but we don't have enough foreign schools -- Morrison won't/can't expand.

    Michael

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  6. I have never heard of a navy warship port being built near the old Queen's Pier, but even the thought of it seems absurd. Why the hell would you build a dedicated port for warships right in the middle of a city with limited land space and millions of eyes that can see everything you do? It makes no strategic sense and it makes no economic sense either.

    Any port or berth requires land...... a lot of it. The thought of so much land being reclaimed as to build any kind of berth for any ship of any significant size in the location of Queen's Pier without jeopardising the current plans for a green space along the waterfront is simply stupid. Sorry, it is just that... stupid. The current plans for the area include a green, park-like space, as far as I have heard. This in itself will require a reclamation, and those are controversial in themsevles (even for building parks).

    So what you are saying is the PLA will turn around and tell the HK people that they will have no park, and the whole plot of land between the former Star Ferry Pier and the exhibition centre will become a berth for warships?

    One of the problems for the CCP is that HK still has a semi-autonomous system until 2047. So the Chinese can't be too heavy handed in HK until after then, even though they have authority in the realm of national security issues. This means that they would have to plan any such move at least 40 years in advance, since any revelation of such a plan before then would have the whole territory up in arms (figuratively). The protests would dwarf the ones over Article 23, and this would cause a PR disaster for the PRC which would make the Kitty Hawk/minesweeper thing seem tiny.

    Land reclamation is no small issue in HK, and land reclamation to build a warship berth would certainly not sit well among anyone. Want to reverse the electoral gains of the BJ-friendly Legco camp? What a great way!

    Furthermore, why would you build a miltary port right in the middle of a city with tons of skyscrapers where anyone can see exactly what you are doing in the port 24 hours a day? You might as well just hand potential spies a video explaining exactly how the PLA navy conducts its affairs.

    Sorry, you are sounding like a loonie taipeimarc. I absolutely agree with you that the KMT being in control of Taiwan is not a good thing at this moment in time. But what you are saying about building a port for the PLA navy in the middle of Victoria Harbour makes no sense.

    If the PLA really wanted a port for warships in HK, and I see no reason why they should, there are many many many many more less-controversial, more secure (um, any piece of land in HK that is not in the 24-hour field of view of 100 tall buildings would be better), and more economically sensible pieces of land to choose from.

    AND WHAT THE HELL DOES THIS HAVE TO DO WITH THE KMT? The KMT wants to win back the kingdom, not invite the PLA in. Although I do think they might extend the invitation if it would help them gain public support in Taiwan.

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  7. Taipeimarc,

    Good comments, though I have to respond to your comment about Jewish political meddling. I think that is too general a statement, especially when compared to PRC, which is a government. I believe you are referring to the pro-Israel lobby, which is not just comprised of Jews; there are also evangelical Christian organizations, with their own agendas, who are part of that lobby. It also involves neo-cons, which do not represent Judaism. And as if political meddling in the US is just a Jewish phenomenon (Is it bigger than right ring Christian meddling or the meddling from the energy or defense or pharmaceutical or telecommunications industries?). For me, the larger problem is corporate, or large institutional, meddling, but that's just me.

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  8. Thomas, I agree it sound like a bad idea, but if you see the size of the reclamation project going on, this isn't outside of the realm of possibilities. I go to HK at least once or twice a month and I hear many people talking about this.

    Also, its worth mentioning that the PLA army has a major presence already in Central area since the old Prince Edwards building complex is now a PLA base. BTW, nowhere did I say the whole area will be a military port.

    And you ask why would they want it there? It could be for a show of force to remind people who is in control. Also, just think what will happen if the Shanghai/HK stock markets collapse and the social turmoil that will happen in the country, including HK. Perhaps this will be the area the PRC uses to resupply the PRC garrison stationed on HK Island.

    Channing, I agree the old Star Ferry building wasn't the most visually attractive, what I meant was the whole dynamics of that area. The new Star Ferry terminal is so far away now, its not used for its main purpose anymore which was a viable transport system for daily commuters. Now its just 2nd rate tourist attraction that looks like an American strip mall type building.

    What does it have to do with the KMT? Well guys, I don't have time to comment regularly on Michael's post, so yeah, my first comment was kind of a mishmash between his earlier US port denial article and Ma's ideas for ports. On the other hand, you both waste your time with a critique of my comment instead of contributing to Mike's post so what's the difference? So what if I comments are not exactly on target.

    Michael, I don't have an answer about a safe place, but If I had children here I would have a plan of action set in case anything happens. At the very least I would have some open airline tickets bought and set aside. As we all know the airports with be jammed with dual citizenship Taiwanese at the first sign of trouble.

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  9. >>
    ... but there isn't the infrastructure for it. Taichung would be ideal, with its excellent weather and ...
    >>

    >>
    Improving the flow of human talent into Taiwan would entail massive changes in Taiwan's society and education, which neither party appears capable of bringing off.
    >>

    Michael,

    Could you please elaborate a bit more on what you meant by infrastructure and what kind of changes in society and education will higher influx of foreigh talent entail?

    I know Hsieh is quite serious on making it easier for highly skilled foreigners to come to Taiwan for employment. A bit more concrete on this very topic might really help.

    Thanks.

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  10. As I said, taipeimarc, the land being reclaimed in that spot is already slated for use. The would be no space for any port or even a single berth unless the PRC overturned the land-use plans already under consideration. This would cause an enormous outcry due to the sensitive nature of land reclamation in HK. What you have been hearing must therefore be no more than rumours. And, by the way, just adding one berth for a medium-sized warship would use more land than you expect.

    As for reminding the HK people who is boss, as I said, that would be a catastrophe at this moment in time. Beijing has been slowly winning over hearts and minds in Hong Kong by being far away, not by shoving the presence of its military in the face of the people of HK. Beijing is well aware of this, which is why they must tread so carefully, even when they do something such as publish a "reinterpretation of the Basic Law" for example.

    Yes, the PLA does have an office building in Wan Chai. But having an office building is not the same thing as building a warship berth, mainly because an office building contains... well... offices.

    About the only thing that would be left for the PLA would be to build a symbolic berth for a vessel that is clearly no longer under active duty that they could station there almost as a tourist attraction. And due to the dear cost of land in that area, you can be sure that this in itself would cause huge headaches.

    Once again, this makes no sense. If you have heard something about this from a credible source, please come out with it. I terribly dislike the CCP and the PLA, but criticisms of them should at least be somewhat rational. Otherwise, you offer nothing but fodder for those who say that the pro-Taiwan types just dont understand China and will say anything irrational to debase the land of Mao in the name of a cause.

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  11. I haven't much to add, but as a side comment, any speculation on HKSAR's future after 2047 is just that...

    In the worst case that China does not change at all in 40 years, an extension of the SAR and the Basic Law should not be out of question. Beijing knows well, as today's China still relies on the talent of a developed society. If any of you here have been to both HKSAR and the mainland, forcefully integrating the former into the latter is simply asking for social disaster by mass emigration, thus crippling East Asian economic stability and national pride--PRC's only leading world city and information hub.

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  12. You know, I just love how Ma claims that Kaohsiung Port will drop to number 10 in the world if Hsieh is elected from today's number 6. He also attributes the port's slipping from number 3 to number 6 to Hsieh's term as Mayor of Kaohsiung.

    He does not mention that the same will happen if he is elected president and would have happened if he had been Mayor of Kaohsiung. The slipping of Kaohsiung in ratings is due to the rise in ports elsewhere (primarily China). And the rise of these ports is due to the enormous quantity of goods coming out of China. Kaohsiung will never be able to compete with the new mega ports (Shenzhen and Shanghai have grown from handling negligeable amounts of cargo to being the world's number 2 and 4 ports in just over a decade) no matter what Ma does. Taiwan simply has passed the high-volume, low-quality manufacturing peak of earlier years.

    So Ma claims that Kaohsiung Port will drop in rankings. Then, later on, if he is not elected, he can say "I told you so" when the port drops in rankings. If he is elected, he just will decline to mention the decline.

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  13. unless the PRC overturned the land-use plans already under consideration.

    Yep, that is the gist of my argument. I was there just a week ago and had a chance to take a good look at the engineer drawings for the waterfront. They are posted in several areas for the public to see.

    From what I could tell, even though a lot of the reclamation work is in progress, the layout is still not finalized. That is what gives many Hk'ers some doubt about what may materialize. Who is to say there isn't a second set of blueprints in the works?

    This would cause an enormous outcry due to the sensitive nature of land reclamation in HK.

    Yep, said that too.

    As for reminding the HK people who is boss, as I said, that would be a catastrophe at this moment in time

    Correct, but the key phase is "at this moment in time". Re-read what I said if there is a stock market crash. The Chinese know the US financial system is on thin ice and something big is about to happen. (no consumers = no need for more factories = investors going bust = crash = ?)

    That's What you have been hearing must therefore be no more than rumours.

    Thomas, I will be the first to admit this is a rumor. I never said this is a fact.

    I don't see anything wrong with discussing a rumor though since many rumors come true, especially regarding China. For example we heard rumors about the anti-secession law a year in advance and look what happened. In this regard, I would be careful labeling someone a loonie too quickly.

    BTW, The Prince Edward site, now home to a PRC garrison, is not just a office building. It is a fairly large space (for HK)on the waterfront and is surrounded by a 15+ foot high stone wall. It looks like a military complex to me.

    Wuligren, I realize corporate lobbying is a parasite on the way the US functions, but AIPAC and JINSA are right at the top for manipulating congress. I understand what you are saying though, but don't want to get into it on this thread.

    BTW: I really enjoyed your The Dutch Roots of NYC and Taiwan article from a few months back.

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  14. Taipeimarc,

    I agree with you about groups like AIPAC. They are a negative force in American politics, and have played a major role in driving the US into an insane war in Iraq, and are now pushing for war with Iran. I guess I was just reacting to the notion that such groups represent the totality of Judaism. There are also a lot of progressives who are Jewish. But I guess this is all getting off topic. Thanks for your complement about my "Dutch roots" post.

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  15. Rumours from someone who may be somewhat knowledgeable about the situation (such as speculation by a HK government official, or someone top in the maritime industry, or by someone working on the reclamation itself) are fine. Rumours by the average Joe on the street who probably can't even read a blueprint properly? Those I have a bit more trouble with, especially when they make no economic or military sense. And especially when they are introduced as a "likely possibility" as you did in your first post.

    And whyever would the HK residents be more inclined to welcome a naval berth after a crash? Would they find the Chinese navy reassuring? Do you really think that while their economic world was crashing down on them that the HKers would welcome the collapse of their political one too? Something tells me that might rattle them a bit more specifically at that moment in time.

    And take a look at any satellite photograph of that office complex in Wan Chai in any satellite photograph. You will see two tennis courts, two swimming pools, a parklike green space and some low buildings.... hidden behind those tall white walls. This is hardly the stuff of a spy thriller, but I suppose the PLA might have drilled tunnels under the whole area and have a massive complex underground... James Bond style.

    I am not trying to be argumentative. I am just trying to emphasise that the word of the guy on the street is often not authoritative. And as I work at a port in the area, I am a bit more inclined to be a bit more stringent when it comes to rumours such as this one.

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