Tuesday, November 11, 2008

Tuesday Round-up

Well, the Special Investigation Unit has detained Chen Shui-bian. Interesting move, the latest in a number of DPP politicians swept up in corruption probes. Let loose, Chen might have caused all sorts of trouble for the DPP, but now he has been removed from the political scene, and may well be transformed into a folk hero to boot.

Meanwhile lots of other things are happening in Taiwan, despite all eyes being on the news about Chen Yunlin's visit (complained about in this letter to FT), the protests, the violence, the student protests, and the spate of arrests and detentions. Jon Adams has a nifty piece in the IHT about the way shamans in Taiwan are changing to meet the exigencies of the current era...

Consulting a jitong is a case in point. The practice has not been totally abandoned, just updated. Chang Yin, for example, regularly sends out text messages via mobile phone to about 300 clients. That virtual network has replaced the tightly knit village setting of old.

One Sunday a month, she invites those contacts to her office for an open spirit medium session.

On this particular day, as she answered petitioners' questions, several elderly men lounged nearby on pillows and chairs, watching the proceedings. Children ran in and out of the room. Chang's assistants bustled around in the office and attached kitchen, lighting joss sticks, washing dishes, tending to accounts.

The scorekeeping also continues, with the government's obsession with restoring Kaohsiung to its former rank among the world's ports reaching new heights of absurdity:

Kaohsiung Harbor chief was urged Monday to be tough enough to rev up the performance of Taiwan's largest international harbor so that it could recover the appeal and status it had a decade ago.

Kaohsiung Harbor Administrator Hsieh Ming-hui was urged at a budget-screening meeting at the Legislative Yuan to show his muscle and not to dodge his responsibility as chief of the harbor to do whatever is needed to improve the seaport's performance.

Ruling Kuomintang Legislator Huang Chao-shun, from Kaohsiung, said it is unbelievable that Kaohsiung Harbor, the world's third largest container seaport in the 90s, might be ranked 12th this year, behind even China's Qingdao Port.
Apparently the rise of China is supposed to have no effect on Kaohsiung's position in the rankings (as if the rankings meant anything), nor are the new ports the government has put in supposed to have any effect either, nor is the fact that so many of Taiwan's factories have moved to China supposed to affect our export volume. *sigh*

Neocon Paul Wolfowitz is head of the US-Taiwan Business Council and has a piece in FEER this week on Taiwan and what it should be doing, basically hitting on stuff foreign businessmen would like it to hit on:

Taiwan's energy market is just one example of a sector needing reform. Foreign investors do not look favorably on an environment where there are major questions about the reliability and diversity of electricity supply. Sectors like energy are going to require a significant reduction in the heavy hand of the state.

A second example is the restrictions on technology investments in China. While the Ma administration has moved forward to modernize its semiconductor investment guidelines, Taipei still needs to move away from restrictions that are focused on outdated technology and base future investment guidelines on an efficient export control regime.

A third example concerns the Agreement on Government Procurement under the WTO. Taiwan's participation in that agreement at the earliest possible date is likely to make execution of a number of initiatives more successful, including the i-Taiwan initiative. There are some challenges in shepherding Taiwan's accession, but the Taiwan government should place a high priority on this effort so that Taiwan can accede as soon as possible.

Also in the area of trade, a fourth example concerns an FTA with the U.S. The atmosphere in the United States for any further free trade agreements is bleak and it is likely that the American elections will produce a Congress that is even less friendly to free trade agreements than the present one. While Taiwan should continue to advocate for an FTA, Taipei should also work on advancing the Trade and Investment Framework Agreement, and try to resolve outstanding trade issues—including those surrounding American beef.

Perhaps the most important thing Taiwan could do to become more competitive is tax reform. President Ma seems to understand the importance of reducing Taiwan's tax burden, even despite—or perhaps because of—the slowdown in the global economy. Recently his administration proposed cuts in the inheritance tax that should encourage savings and investment, as well as an increase in the standard deduction on personal income taxes that will help ordinary taxpayers. Another thing his administration could do would be to reduce Taiwan's corporate income tax rate; at 25% it is twice the rate of Ireland, a small island on the other side of the world which managed to make itself a financial center for Europe.

Speaking of the economy, Taiwan Journal has a piece on the "aerotropolis", the free trade zone that the government is erecting around Taoyuan airport.

The draft bill has been submitted to the Legislative Yuan for approval. MOTC officials said the ministry hoped the bill will be passed by the end of this year, so that the planned state-run airport firm can begin operation in 2010.

The bill contains 46 articles divided into nine chapters covering general operation guidelines, program planning and revisions, airport park management, aviation city development and construction.

Under the proposal, the airport park will be granted privileges similar to free trade ports, which enjoy greater flexibility than regular businesses in hiring foreign laborers and local workers.

According to MOTC, the new airport company would be exempt from business tax on airport service charges and other revenues, while airport buildings and airport lots would be exempt from housing tax and land tax, respectively. The airport company, however, will be required to remit part of its profits to the Taoyuan County government to promote local ventures and help finance the nation's airports that are suffering losses.

Conservative columnist Richard Halloran rounds up skeptical commentary on the US election from around the Pacific...

Singapore Prime Minister Lee Hsien Loong said he had written to Obama: "Many issues will claim your attention. May I make a case for the importance of Southeast Asia to the U.S., a region which is not unfamiliar to you?" referring to Obama's childhood in neighboring Indonesia. A writer for the Straits Times, Joanna Lee, however, was skeptical of Obama's emphasis on hope: "Alas, I'm not sure hope is enough."

In New Delhi, the Times of India commented: "Obama will be a breath of fresh air in almost every part of the world ... Why, then, is India keeping her fingers crossed?" The paper said: "There is little clarity on how the chips will fall on several issues ... Pakistan, China, terrorism, nuclear issues, trade, all issues on which India has had a prickly relationship with the Democratic Party."

A columnist for The Australian, Greg Sheridan, wrote: "For Australia, Obama is a very mixed bag. Despite a couple of years in Indonesia as a kid, Obama has little knowledge of, or interest, in Asia." Pointing to President Bush's support for Australia, Sheridan concluded: "Don't expect Obama to be anywhere near as mindful of Australia."

: From the New Republic blog:

People inside China have no choice but to accept this distortion of language [anti-China]. People outside do have a choice, but we often fail to exercise it. For example, our country's small contingent of "China policy managers" (officials and academics who have kept relations with China's rulers "on track" ever since Jimmy Carter) routinely use the word "China" to refer only to the views, attitudes, and "sensitivities" of the Chinese political-economic super-elite with whom they directly deal. The policy managers speak of "Chinese" sensitivities toward Falungong as if Falungong believers were not themselves Chinese; of "Chinese" views on Tibet, as if forgetting that the Chinese government itself claims that Tibetans, too, are Chinese; and of U.S. congressional critics of the Chinese government not as bashers of authoritarianism but as "China" bashers.


Anonymous said...

Australia, a sparsely populated, but quite wealthy state continuously gets way too much attention from the world. It way overpunches for someone its weight in the international arena, and the full story isn't that it has lots of raw materials (see Saudia Arabia, Iran). It's also probably one of the Western countries where racism is most in-your-face and deep-rooted, except for maybe Russia. If the US gives them less attention, it's because they are paying more attention places like, say Pakistan, population 164 million (Australia, 20 million, hard to believe, I know).

Dixteel said...

Many interesting information...

There seems to be a lot of discussion of KS port recently. I have no idea why. And it seems to me KMT is indeed obsessed with amount of cargo in KS port...they have to realize time has changed, a lot of product export from Taiwan now use air instead of sea transportations. There are also changes in the international shipping route due to changes in cargo ship sizes etc. There is no way KS port can change back to 90s.

What KS port should do is diversifying from cargo shipping. Do something else...like more navy installation maybe? more ship construction for export? maybe change some port area to recreational or research facilities? There are a lot of possibilities. I think they really need to get their heads out of 1990s and into the 2000s.

For the economic I think the challenge Taiwanese tech companies face are really R&D and branding. Those 2 will assure their success, competitiveness and survival in global economy. If they have some better and more expensive things to do of course it makes perfect sense to shift some of their lower tech productions outside of Taiwan. Although I would prefer them investing into places like Vietnam and other SE countries instead of China, because it's just more strategically sound.

Anonymous said...

Although I would prefer them investing into places like Vietnam and other SE countries instead of China, because it's just more strategically sound.--

are you realy sure those countries will find it OK when taiwan-chinese triad clans will invest there and start to take away their control of the local economy and poor "ready to became corrupt" local politicans? Taiwan should start to clean own busnessmen family clans and economy from "chinese compatriots" and their triad organisations instead to feed them and let them to proceed working for chinese intelegense services.

Anonymous said...

Unfortunately, because of Benq stopping to pay for the German division of the company filed for bankruptcy in a Munich court in 2006. This sparked a big debate in Germany over whether BenQ only acquired the Siemens mobile division for all its patents and IP, and that it didn't intend to continue manufacturing mobile phones in Germany. BenQ has stated that it intends to continue its mobile business from Asia.



With such actions Taiwan lost all kudos in the european business comunities a same with political suport and popularity in the europe. Do you think taiwanese triads and their managers have learned this lesson? i dont think they do it. neither they want it because they have a big red chinese markets and support there.

Tommy said...

Dixteel, Kaoshiung's focus on cargo is not bad at all, and they probably can realise acceptable growth by adding capacity and attracting more transshipment cargo. The port is not really on the decline.

The problem is that, in Taiwan, too many people are fixated on the glories of the miracle years and they forget that their economy has developed a lot since then, therefore it has slown down. The KMT is obsessed with throughput because they have staked a lot on getting Taiwan back to the miracle years.

In terms of the port specifically, they also forget that Kaoshiung simply doesn't have the capability to grow back into the top 10 and maintain a place there. But it can still grow and be profitable. Until those at the top realise that an absolute decline is not the same thing as a relative decline, the issue of Taiwan's "decline" will continue to be a favourite subject of politicians.

Dixteel said...

ah yes, I heard about that dispute before I think...

That's exactly my reasoning why it's more strategically sound to invest other places than China. Taiwan needs international supports. And economic cooperation can encourage that. (Of course unfortunate business disputes always happen, it's unavoidable...but like you said, maybe Taiwanese business just focus too much on the Red China instead of the rest of the world, which is also my point).

I mentioned South East Asia because currently their situation might be suitable for certain components and products manufacturing. And indeed some business from Taiwan already invested quite a bit in Vietnam. And I am not talking about colonizations or taking control. Taiwan don't have that much power, wealth or luxury to do it...I am talking more like cooperations. As for corrupted officials...it's a concern but...China probably has a lot more...and Taiwan had the same problem as well...and god knows, maybe those countries are using Justice system for political purpose like Taiwan...All these things are negative but nothing in this world is perfect. And it all depends of objective assessments...My HD is made in Thailand, you think they don't have corrupted officials?

The reason I don't like companies invest into China is because, I am sure you know, China is hostile to Taiwan on international stage and its ultimate policy toward Taiwan is to annex it. Investing in China carries high risks and low reward for Taiwan as whole I think, and Taiwan will become a puppet of China, because all the capitals, personnels etc will be in China's hand which they can use as pressure points to manipulate Taiwanese policies. (It already happened several times before during elections).

You have a good point on the Taiwanese Chinese triad problem. That's also one thing I often think about, and I dislike a lot of big business people in Taiwan because they just keep kissing Beijing's ass. There is not much you can do about them though. But I am pretty sure not all business people in Taiwan are Taiwan-Chinese triad. In fact I know some small/mid business owner in Taiwan who don't even like China (even if they have factories in China).

That's also why I think trying to encourage diversifying into other places or have more cooperations with companies from other countries will break the triad...because then more business people will realize there are opportunities around the world, not just in China.

But in the short and mid term though, what Taiwan really need is investing in Taiwan itself I think. Too much fortune was already spent in the foolish conquest of Chinese economic development (which is kind of stupid, invest in the enemy...just sounds really dumb but it happened). And perhaps attracting investment and cooperation from EU, US, Japan and India. But given the current global economic condition it's probably more everyone for themselves now so that might not be possible.

Dixteel said...

Also...I gave South East Asia as an example only...there might a lot of other places that are suitable for investment from Taiwan that I haven't thought of...places that are suitable but people don't pay attention to, like maybe some African countries, East Europe countries or Central, South America and Caribbeans.

Language barriers might be an issue but I think think it's too big if it's just doing business. In fact I think a jean company from Taiwan setup manufacturing facility in an African country, a few years ago...

Anonymous said...


Uhh... more like BenQ didn't look at Siemens' books carefully enough and do their due diligence. Siemens was going to shit, and the question is why BenQ didn't know that, not why they didn't stick with Siemens. BenQ was hurt very badly by the bankruptcy, even if they were partly able to isolate it to just their mobile business subsidiary.