Taiwan Briefs
By Tim Culpan
MACROECONOMICS
Economic Indicators Paint A Gray Picture
CROSS-STRAIT
SARS Provides Some Ammunition
DOMESTIC POLITICS
VP Lu Offers to Step Aside
Nobody's Surprised
BUSINESS
VISA-Free Period Extended
Taiwan Economic Freedon Ranked
COMPUTEX A No-Show
Chugnhwa Profits Fall...
...As Rival Connects 3G
Two Named Asia Heroes
Apple Daily Takes A Bite
Taiwan loses its SARS innocence
By Tim Culpan
MACROECONOMICS
Economic Indicators Paint A Gray Picture
Taiwan's economy showed signs of weakness even before SARS came to town. The Council for Economic Planning and Development (CEPD) says its March leading indicator fell 0.8 percentage points from the month before. The figure fell to 99.3 points from 100.1 points in February. The March figure is the lowest point since December 2001 for the leading indicator, which gauges the future shape of the economy. Components of the indicator fell across the board, with only construction permits and working hours showing positive signs.
At the same time, the CEPD's coincident index, which tracks the current state of the economy, also fell in March. The index fell from 103.8 in February to 102.1 points for March. That figure is the lowest the index has been since the same month last year. Meanwhile, the CEPD's monitoring index maintained a slightly negative yellow-blue, while three-month business expectations remained steady with a slightly positive weighting.
Put together, the stats tend to point to current and future weakness for the economy even as sentiment appears to remain slightly bullish. The CEPD currently forecasts GDP growth this year of 3.7 percent compared to the IMF's world growth estimate of 3.2 percent. The effects of SARS have not yet been factored into the data or the forecasts.
The CEPD is recommending fiscal stimulus to boost Taiwan's economic recovery.
CROSS-STRAIT
SARS Provides Some Ammunition
It's a fabulous time to be a bear toward China. The elements in Taiwanese political and business circles that have been suspicious of the PRC have found new reasons this past month to cast a finger at the mainland, none more so than the Taiwan Solidarity Union and its patriarch, ex-president Lee Teng-hui. Papa Lee told a gathering known as Friends of Lee Teng-hui that those who don't support the notion of "one country on each side" undermine Taiwan's strength.
It's a familiar rallying cry, but one which has gained weight this past month because of the deadly SARS virus and its arrival on Taiwan shores. "It has made many Taiwanese people think twice about doing business with an authoritarian government" was the reported comment from Democratic Progressive Party (DPP) legislator Hsaio Bi-khim.
Economists meanwhile have started testing their forecasting skills with diverse predictions about the future of the world's most populous nation. "It'll hit China hard," say some. "In the long term, China is still a growth story," say others.
With Taiwan's presidential elections less than a year away, the "dangers of doing business with an authoritarian government" is sure to be a theme we'll hear more of.
DOMESTIC POLITICS
VP Lu Offers to Step Aside
One person who may not be weighing into the cross-Strait debate as heavily as in the past is Vice President Annette Lu. She announced last month that she would step aside at the end of her current term rather than run for re-election together with President Chen Shui-bian.
Whether or not that will stop her vocal, and often controversial, commentary on domestic and foreign politics remains to be seen. Lu said she wants to step aside to allow the DPP to move forward, and announced the decision early to give Chen plenty of time to find a new running mate.
Nobody's Surprised
Lien Chan and James Soong finally shook on it. After months, or perhaps years, of courtship, the Kuomintang chairman and former-KMT maverick dotted the i's and crossed the t's to make their joint ticket for next year's presidential election official. The dynamic duo is likely to give President Chen a run for his money given that their falling out in 2000 was the major reason Chen made it to the presidential office in the first place. For his part, Soong says he could win the election without Lien's help, but prefers a joint ticket to ensure that the winner gains the mandate derived from polling more than 50 percent of the vote. Last time around, Soong split from the KMT and scored 37 percent of the vote, just behind Chen's 39 percent but well ahead of the 23 percent for Lien.
BUSINESS
VISA-Free Period Extended
The Ministry of Foreign Affairs has increased the visa-free limit for Taiwan entry from 14 days to 30 days effective May 1. The move is aimed at boosting tourism by giving overseas travelers added flexibility and more time in Taiwan.
Foreign passport holders from 25 countries can currently enter Taiwan without a visa, but their stay cannot be extended if they make use of the visa-free entry system. All criteria for visa-free entry remain the same, including at least six-months validity of the passport, confirmed outward ticket, and no overstays in Taiwan within the past year.
Meanwhile, new SARS measures have put a temporary halt on all visas for people travelling from SARS-affected areas.
Taiwan Economic Freedon Ranked
Two different rankings released recently point to an improvement in Taiwan's business environment.
The Hong Kong-based Political and Economic Risk Consultancy (PERC) put Taiwan at number 6 out of 14 countries in the Asia-Pacific region. The PERC ratings are based on perceived political and economic risks associated with doing business, divided into ten categories.
"Foreign Investor Variables" was considered Taiwan's weakest point, while "Expatriate Living Conditions" was the strongest category and showed an improvement from last year. Taiwan is now ranked fourth in Asia Pacific for expat living conditions.
Upcoming presidential elections were cited by PERC as casting a shadow over economic issues on the island in the coming year. Singapore, the U.S., Australia, Hong Kong, and Japan topped the PERC list, in that order.
By comparison, the annual Economic Freedom survey co-sponsored by the Heritage Foundation and the Wall Street Journal ranked Taiwan in 27th place out of 156 economies worldwide. Taiwan's ranking is two places up on the previous year's results. "Regulation and Fiscal Burdens" were considered the weak points for Taiwan, while "Monetary Policy" was identified as the country's strength. Hong Kong, Singapore, and New Zealand topped the worldwide rankings.
COMPUTEX A No-Show
Taiwan's largest trade show, Computex, was postponed to sometime later in the year after exhibitors pressured organizers not to proceed with the June schedule. Quarantine rules and fears among buyers about traveling to Taiwan because of SARS made exhibitors concerned they would be all dressed up with no one to show to.
Recent trade exhibitions such as TaiSpo, Giftionery, and OptoElectronics all saw empty halls as buyers stayed away and exhibitors were left footing the bill for booth-space that drew few visitors.
The organizers had already canceled Softex, a software trade show scheduled for the first week of May that had drawn big international names such as HP and IBM to the exhibitors' list.
Computex is Asia's largest and the world's third-largest IT trade show and is considered an important part of local manufacturers' marketing program. Show officials are eyeing dates in September, October, and December for the delayed Computex, examining how schedule clashes with other shows could be sorted out.
Chugnhwa Profits Fall...
The (still) state-owned Chunghwa Telecom posted a year-on-year profit slide of 14 percent for the first quarter. But it was still a profit nevertheless, to the tune of NT$10.8 billion (US$310 million). Total revenue for the period was NT$43.2 billion (US$1.2 billion), a slight year-on-year increase of 1.7 percent.
The profit slide and moderate revenue growth don't bode well for the government's persistent efforts to privatize the company by year end -- the same goal it had set last year and the year before.
...As Rival Connects 3G
Third-ranked cell-phone provider Far Eastone has won bragging rights for making Taiwan's first 3G phonecall. The call was made on an LG Philips phone by company chairman Douglas Hsu complete with voice and video.
The event took place under the shadow of SARS with no reporters in attendance.
Far Eastone has contracted Ericsson to build out its 3G network and was able to prove that the network does indeed work, at least in Far Eastern's own "The Mall" shopping center. The rest of the population will have to wait until the end of the year to chat by mobile videophone.
Two Named Asia Heroes
Time magazine has named wheelchair-bound First Lady Wu Shu-chen and a two-dimensional kid as Taiwan's inclusions in its annual Asian Heroes lineup. Wu, wife of president Chen Shui-bian, was named as an inspiring hero for refusing to become a shut-in despite her confinement to a wheelchair. She was paralysed in a suspicious hit-and-run accident back in 1985, but has continued to campaign for democratic reform.
Cartoon character A-kuei has remained ten years old since his "birth" in September 1999. Time picked him as a hero because his "appeal is that he's forever a child." Viewed on the Internet by 1.5 million people in Taiwan, Japan, and China, A-keui "keeps us young at heart," said the magazine report.
Apple Daily Takes A Bite
After months of preparation and reams of pre-launch publicity, Apple Daily finally rolled off the presses in Taiwan. The Taiwan version of the Hong Kong publication promises to "expose the truth" and deliver to readers what they really want, according to its publisher, Next Media.
Apple Daily joins Next Magazine in dishing up owner Jimmy Lai's recipe for ruthless investigative reporting and splashy photo-heavy layouts. Pre-launch sample runs, which hit the streets just as the Iraq war got underway, proved popular, especially with younger readers. The entrance of Apple Daily caused other papers to freshen-up their layout and spice up their reporting in preparation for the new competition.
Taiwan loses its SARS innocence
Within just a few short weeks, SARS went from being everyone else's problem to being very much Taiwan's problem.
While the economic and financial cost of SARS had been recognized early on, the real pyschological damage didn't come until the last week of April. Within three days, Taiwan lost any innocence it had left regarding the virus. On April 24, the authorities shut and sealed the Taipei Municipal Ho-ping Hospital after a suspected outbreak. Three days later, a 56-year-old man in Taichung died from SARS, having contracted it from a relative who had returned from China on a business trip.
The Ho-ping Hospital lock-in was Taiwan's first large-scale quarantine and indicated that the situation might now be getting out of control. The death of the Taichung man hit home the deadly nature of the syndrome. Just as Ho-ping Hospital was being sealed, Taiwan's health minister, Twu Shiing-jer, painted an upbeat picture for an assembly of foreign businessmen and diplomats.
"We have reason to believe SARS in Taiwan is under control," he said.
Later in the session he was candid about the reality and predicted that a death was inevitable. "We will have a fatality, but we will do our best to save everyone," he said.
In his address that day, Twu was honest and blunt. He painted a picture for his audience that did not gloss over the complications or attempt to sweep problems under the rug. The strongest criticism Twu received, and it came from many quarters, was that information was not being passed frequently enough to the foreign representative offices. Huang Chih-peng, director general of the Board of Foreign Trade, joined with Twu in pledging to issue regular announcements.
Soon after, the issuance of regular briefings was to become the least of Twu's worries. Having to confine 1,100 people because of the virus was not something Taiwan expected to happen here. Unsurprisingly, those trapped for 14 days were unhappy about it. One committed suicide after believing his wife had contracted the illness, and scores of others broke the quarantine -- among them a nurse who fled to Kaohsiung. Those on the outside shook their heads and murmured something about the sad necessity of the quarantine. Apart from close family and friends, not many have been clamoring for their release.
Also attracting a lot of headshaking and murmuring from within Taiwan have been new rules imposing a compulsory ten-day quarantine on arrivals from affected areas such as Hong Kong, China, and Toronto. It's unfortunate, locals can be heard saying, but necessary.
That rule led to the cancellation of the annual Golden Melody music awards, since dozens of pop stars and executives from Hong Kong and China would have had to be quarantined ahead of the event on May 3.
With China's annual May Day observance, thousands of Taiwanese businessmen had been expected to return to the island for a ten-day vacation. Even with that holiday cancelled, most were expected to make the trip anyway, since they are usually the bosses and managers who could still take the time off.
"We cannot stop them from coming here, because they are Taiwanese," said Twu.
--- Tim Culpan
