Turning Taiwan into a tiger again

By The Economist
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Taiwan’s president, Tsai Ing-wen, expects reforms to gather pace


In 1996 Taiwan held its first-ever presidential election, marking our transition into a full democracy. There was an atmosphere of optimism and change across the country. The economy was strong, with low unemployment and rising middle-class incomes. As a trade negotiator, I saw first-hand how Taiwan was overcoming hurdles—both domestic and international—to joining the World Trade Organisation.
Taiwan was a bright light in a sea of darkness. But lately, for many Taiwanese, that bright light has dimmed amid an uncertain global environment. I now find myself Taiwan’s leader at a time of vast economic and political challenges. Slow growth, rising inequality and new security threats are testing economic and political institutions around the world. Taiwan, no less than other countries, will be defined by how it responds to these difficulties.
In 2016 the people of Taiwan entrusted my Democratic Progressive Party (DPP) with the twin tasks of reform and renewal. We want to make Taiwan an Asian tiger once again.
My plan for 2017 is for Taiwan to renew its role as a pioneer, preserving our basic social safety net while revitalising the economy with a new development model. We will simultaneously work to reform political institutions, ensuring that economic and social transformations are combined with transparency and a strong democratic culture.
Taiwan’s social safety net is on the brink of bankruptcy. My pension reform aims to make it sustainable and increase the support for the poorest. Taiwan has different pension programmes for different professions: an unfair practice which fuels social divisions. Changing this system will take some effort, but the DPP has a clear democratic mandate to do so.
The proportion of income spent on housing by Taiwanese people has risen sharply amid a real-estate bubble. My administration will help by providing 200,000 units of affordable social housing by 2024 via a public-private investment plan. Our ageing population will also receive new community centres. Our overall goal is to redistribute public resources for a fairer welfare system.
My economic plan for 2017 focuses on upgrading industries and overcoming stagnation. We are laying the groundwork for a more inclusive economic model based on innovation, job creation and the idea that growth should benefit everyone, not just the few. But we will draw on Taiwan’s existing strengths: a mature industrial cluster, R&D capabilities and flexible smaller businesses.
Through smart investment, the government is integrating public, private and global resources to nurture industries of the future: the “internet of things”, biotechnology, smart machinery, green energy and defence. A natural extension of our current industrial capacities, these sectors will enable Taiwan to compete better in the future global economy.
We are refining our capital market and making financial policy more inviting to innovation-oriented foreign investment. We are also changing how we use human capital by providing greater support to entrepreneurs and tech startups. Our new technology minister, a 35-year-old former hacker, provides a direct line between them and the government. We have also loosened regulations on foreign professionals so that Taiwan can become a regional talent hub for emerging industries.
Open for business
To complement this economic transition, the government must take the lead in opening new markets for our products and services. We are stepping up engagement with ASEAN, south Asia, Australia and New Zealand via our “New Southbound Policy”. This focuses on education, agriculture, culture, tourism and other people-to-people interactions beyond trade and investment
We have sought to demonstrate that Taiwan is ready to join multilateral trade regimes: by reducing red tape, entrenching intellectual-property rights and streamlining the procedures governing investment. We will seek accession to the Trans-Pacific Partnership if and when it becomes available. We are also working towards bilateral agreements with important trading partners.
All of this depends on a stable regional environment. We will seek dialogue with all interested parties, including China, to build a framework for peace and prosperity in the Asia-Pacific region. My cross-strait policy is to establish consistent, predictable and ¬sustainable relations under the existing constit¬utional framework.
Ultimately, my administration will be judged by our ability to reform and renew this country. This will demand that we deftly balance a multitude of interests across generations, classes and ethnicities, all in an uncertain international environment.
Yet we go forward with confidence, trusting that our hard-won democracy will rise to the task. Taiwan’s reform and renewal will gather pace in 2017.