'Go south' the only way to go for Taiwan

Lung-chu Chen

Speaking at a meeting of the Council of Taiwanese Chambers of Commerce in Asia, President Chen Shui-bian (陳水扁) said that we can't harbor any illusions about China. To walk its own path, Taiwan needs to expand its markets in Southeast Asia to reduce its dependency on the China market and strengthen the global positions of its businesses.

China's hostile attitude toward Taiwan has never changed, but its cheap labor and manufacturing costs are attracting many Taiwan-ese industries there, putting massive pressure on Taiwan's national security. Even though the government occasionally calls on busi-nesses to restrain their capital flow to China, many Taiwanese businesses are investing massive amounts of capital in China via third countries, putting a squeeze on investments in other regions and limiting the global positioning of Taiwanese firms.

Business interests in the China market are a great incentive. However, given Beijing's unfriendly behavior, endless military threats and diplomatic suppression, we can't ignore the fact that Taiwanese industries are gradually bending toward China.

We must build a secure environment for sustainable development. If Taiwan is to survive and develop, then national security and the interests of the people of Taiwan must take precedence. Only then can businesses have a foundation upon which to expand their international markets.

The government's plan to strengthen the "go south" policy highlights the importance of risk diversification and Taiwan's economic security. In terms of global division of labor or geo-economic considerations, the investment environment of Southeast Asia is stabilizing as the region gradually emerges from the gloom of the 1997 Asian financial crisis.

The region is highly competitive in terms of both labor quality and manufacturing costs. A zero-- tariff policy on raw materials and semi-finished products between ASEAN members will go into effect by the end of this year. Add to this various external conditions, such as ASEAN exports to Europe and the fact that the US enjoys exemption from tariff quota limits and Taiwan has ample room to cooperate with Southeast Asian nations, which could gradually replace China as a manufacturing base for Taiwan-ese firms.

To eliminate Taiwan's economic dependence on China, the government is emphasizing the "go south" policy for business investment. This is the path that Taiwan must walk. To do so, Taiwan needs the support, cooperation and combined effort of her people.

Chen Lung-chu is chairman of the Taiwan New Century Foundation.