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."

QUOTE OF THE DAY: 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.

[Taiwan]