Over the past year, Taiwan has continued to receive well-deserved praise and attention for several reasons. It was one of the only economies globally to experience growth in 2020, has demonstrated good democratic governance, and was able to effectively contain the initial outbreak of COVID-19, freeing it to assist other countries in need with medical supplies and other support.
At the same time, a series of tough challenges, including Taiwan’s continued exclusion from international organizations such as the World Health Assembly and limited access to COVID-19 vaccines, threatens the admirable progress it has made since last year. Taiwan’s government and chipmakers have also been under heavy pressure to expand manufacturing capacity to help plug a global semiconductor shortage, while China has stepped up coercive military actions against Taiwan. A new coronavirus outbreak of locally transmitted infections has exacerbated an already difficult situation.
Yet Taiwan remains undeterred. Its economy is forecast to grow nearly 5% in 2021 and its exports of goods continue to increase. AmCham’s member companies also provided a strong show of confidence in Taiwan’s future economic prospects in the Chamber’s most recent Business Climate Survey. Still, Taiwan will need to work harder to adapt to an evolving world economy and successfully weather the difficult conditions caused by the pandemic.
ACCELERATING DIGITAL TRANSFORMATION
A surprising amount of the operations of business and government in Taiwan is still conducted manually or on paper, rather than digitally, putting Taiwan out of sync with international trends. In addition, many businesses in Taiwan were ill prepared to institute remote work arrangements or maintain smooth continuity of operations when the pandemic hit. Taiwan’s shortcomings in this area are concerning and could ultimately reduce its competitiveness on the world stage.
AmCham appreciates certain steps taken by the government to improve the digital business environment, particularly in light of the recent COVID-19 outbreak. One example is the Financial Supervisory Commission’s decision to allow, temporarily, virtual options for purchasing insurance products and filing claims.
We look forward to the government’s pending establishment of a Ministry of Digital Development. If organized correctly, this body could help to overcome tensions between digital and traditional industries and improve the regulatory framework for developing Taiwan’s digital economy.
Taiwan must continue its path toward digitalization, drawing on the resources, creativity, and respective strengths of government, industry, and society.
BOLSTERING SUPPLY CHAINS
Taiwan’s supply chains are strong, but they are not invulnerable. If action is not taken to make them more resilient, they could easily be impacted by geopolitical tensions, global crises like the pandemic, and cyberattacks.
Ensuring that Taiwan’s supply chains remain safe, secure, and reliable requires cross-border collaboration and public-private partnerships. The government should also do more to encourage the involvement of Taiwanese companies in useful events like the SelectUSA summit in Washington, D.C. that can better prepare them for operating in foreign markets. Taiwan’s inclusion in bilateral or plurilateral agreements would greatly benefit domestic tech industries and their global partners.
Recent power supply disruptions caused by a sudden increase in remote work, drought-induced hydropower shortages, and high summer temperatures have once again raised questions about Taiwan’s long-term energy sufficiency.
To sustain the flow of investment from multinational tech companies and the reshoring of manufacturing operations from China, Taiwan needs absolute certainty that energy supply will be adequate in the coming years as the government moves forward on its plans to transform the energy mix by 2025.
The government must work harder to increase gas-fired, wind, and solar capacity in Taiwan. It can accomplish this by simplifying the permitting and approval process, promoting grid-scale energy storage, and liberalizing Taiwan’s energy market. It should also find ways to improve power transmission and distribution and grid stability in order to prevent damage caused by interruptions in industrial production or cyberattacks.
MAKING TAIWAN BILINGUAL
The government’s initiative to make Taiwan bilingual by 2030, while ambitious, is a worthy effort. The Chamber supports this program but recommends that certain steps be taken to increase its effectiveness.
A top priority will be for Taiwan to begin incorporating new forms of learning into its English-language education model, which still emphasizes spelling and grammar at the expense of speaking and listening comprehension. More English multimedia content in school curricula would help improve these oft-neglected aspects of English-language learning.
Technology is another important facet of teaching and learning English, one which has become increasingly relevant as the pandemic has forced schools around the world to resort to remote learning. Taiwan should look to the example of other countries like the U.S. in incorporating more technology and digital tools into its English education.
Taiwan should also promote cooperation and linkages between its schools and universities and educational institutions in English-speaking countries. Approaches might include offering joint degree programs or including online courses from overseas schools in Taiwan’s own degree programs.
AmCham is taking a role in promoting bilingualism in Taiwan by encouraging its member companies to improve the English capabilities of their staff and provide more English services to the public. The Chamber encourages Taiwanese people to join our public events as a way to improve their English skills.
While Taiwan continues to explore opportunities arising from the shift in global supply chains, it has yet to adopt one of the most powerful tools for enhancing international connectivity: an internationally focused sovereign wealth fund (SWF).
An SWF that invests in Fortune 500 companies would give Taiwan direct access to global business leaders and a voice in how these leaders shape their business strategies.
Such a fund would also allow Taiwan to generate better returns on its enormous foreign reserves. These reserves cannot, under the current conservative investment approach of the Central Bank, meet Taiwan’s most pressing needs, such as shortages in the pension system, a rapidly aging population, and unanticipated global events.
A globally oriented SWF would have the dual benefit of addressing these urgent issues and raising Taiwan’s international profile.
Thanks to the close cooperation and receptive attitude of our partners in the Taiwan government, a record 13 issues from last year’s White Papers were deemed to be completely resolved. Another 23 issues were rated as making good progress.
Newly resolved issues included those raised by the Asset Management, Banking, Capital Markets, Cosmetics, Chemical Manufacturers, Energy, Intellectual Property & Licensing, Infrastructure & Engineering, Private Equity, and Technology Committees.
AmCham values the time and effort expended by the Taiwan government to work constructively with our Committees through tough regulatory and industry issues.