Publications Topics Archive Topics Archive 2009 Vol.39- No.3 Briefs | Briefs |
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MACROECONOMICS
CROSS-STRAIT
DOMESTIC
INTERNATIONAL
BUSINESS
RESIDENTIAL BUILDING
MACROECONOMICSGRIM NEWS CONTINUESBattered by the global financial crisis, Taiwan’s economic performance throughout February continued to be dismal. Figures released by the Ministry of Economic Affairs revealed a record decline in export orders for the first month of this year. A sign of export shipments to take place in the next few months, export orders plummeted a whopping 41.67% in January from the same month a year earlier to come to US$17.68 billion. At first glance, February’s actual exports appeared to be performing more favorably. At US$12.59 billion, they were down by 28.6% from the same month of last year, compared with January’s 44.1% drop, the Ministry of Finance said (imports at US$10.92 billion were down by 31.6%, compared with January’s 56.8%). But analysts cautioned against reading too much into this, saying that the improvement was due to rush orders from China and did not represent a trend. As Taiwan relies on export sales for much of its wealth, the export decline in turn is squeezing the domestic economy, with industrial production also in a free fall; it posted a record decrease of 43.11% in January. That has inevitably aggravated the unemployment picture: the Directorate General of Budget, Accounting and Statistics said the jobless rate in January edged up to a six-year high of 5.31%. The real situation is undoubtedly even bleaker as many companies have ordered workers to take unpaid leave. The Central Bank cut rates for the seventh time in February to 1.25%, but economists are predicting that more rate cuts will come. GDP growth projections from foreign analysts continued to be pessimistic. In contrast to the government’s current prediction of -2.97% GDP growth for this year, the Economist Intelligence Unit and Goldman Sachs are now putting it at -6.5%, UBS at -6.1%, Morgan Stanley at -6%, and HSBC at -5.2%. Ctibank is slightly more optimistic with a forecast of -3.2%,.
CROSS-STRAITLEADING MUSEUMS ENTER INTO CONTACTIn the first meeting of its kind, the head of Taiwan’s renowned National Palace Museum met with her counterpart in Beijing in mid-February to discuss personnel exchanges and cooperation, yet another sign of the détente with China that began last year with the election of the Kuomintang’s Ma Ying-jeou as president. At the time of the KMT’s withdrawal from the mainland in 1949, it took with it nearly 3,000 crates containing more than half a million priceless artifacts from the imperial collection in the Forbidden City, causing Beijing to label those responsible as war criminals. The China Daily reported that Beijing agreed during the exchange to lend Qing Dynasty relics to Taiwan for a joint exhibition in October, but National Palace Museum officials earlier said they would not dare lend any of its art treasures to China, fearing that Beijing might decide not to return them. 1,500 PRC MISSILES NOW POINTED AT TAIWANDespite the various recent goodwill gestures between Taipei and Beijing, the latter has not dropped its ambitions to unify the island with China, by force if necessary. Its arsenal of weaponry aimed at threatening Taiwan continues to increase, with ballistic missiles aimed at Taiwan now numbering 1,500, up 200 from a year ago, according to Mainland Affairs Council Chairwoman Lai Shin-yuan. Chinese officials said the mainland’s military budget this year will rise by 14.8% to reach US$70.24 billion, with analysts saying much of that spending is focused on Taiwan. In related news, U.S. Secretary of State Hilary Clinton said en route to Japan on the first leg of her Asia tour that the Obama administration would maintain Washington’s existing policy on arms sales to Taiwan.
DOMESTICFORMER FIRST LADY PLEADS GUILTYFormer first lady Wu Shu-jen in mid-February pleaded guilty to charges of forgery by using false receipts to claim expenses, in a pre-trial hearing forming part of massive graft charges leveled at former President Chen Shui-bian and his family. Wu, who had previously skipped 17 consecutive court appearances for health reasons, denied other charges leveled at her by prosecutors, including taking bribes in connection with a land deal and a government construction project. Wu, who has also been accused of money laundering, said money she had remitted overseas came from private, not public, funds, and that former president Chen had no knowledge of how she handled her finances. In addition, two of Wu’s close friends and her sister-in-law pleaded guilty to helping Wu launder money in early February, joining the ranks of Chen’s son, daughter-in-law, and Wu’s elder brother. Former president Chen, who is still incarcerated, staged a brief hunger strike once again in late February, and in a second court appearance made various colorful allegations as he accused prosecutors of being “political tools” working in cahoots with Ma to help his presidential bid last year.
INTERNATIONALU.S. SUED FOR FAILING IN DUTIES AS “OCCUPIER”The United States is neglecting its duty as a military occupier of Taiwan, a group of Taiwanese independence activists are charging – and they are fighting to change the situation in federal court in Washington. Plaintiff Roger Lin says the 1952 San Francisco Peace Treaty, which formally ended World War Two and dealt with territories that had been colonized by Japan, did not award sovereignty to either Taiwan or China. Instead, the island’s legal status was left in limbo. Subsequent agreements did little to change the situation, he argues, so that under international law Taiwan is still the military territory of Japan’s conqueror, the United States. Lin contends that the Republic of China was awarded authority over this region in the 1952 treaty as an agent of the allied powers, with the United States designated as Taiwan’s “principal occupying power.” “Currently, Taiwan is an occupied territory of the U.S, and Taiwan’s statehood status is disputed and uncertain,” Lin wrote in the Taipei Times. After a district court in the U.S. capital threw the case out, arguing it was a political matter and beyond its jurisdiction, the Taipei Times said, the case went to the Court of Appeals in early February. Lin and other Taiwanese involved in the case are seeking a judicial declaration of their rights under the treaty, such as a right to a U.S. passport. A U.S. government lawyer argued at the appeal that legal documents such as the 1979 Taiwan Relations Act superseded the 1952 treaty on the issue of Taiwan’s sovereignty. The activists say they plan to take the case to the U.S. Supreme Court if the appeal goes against them. UK INCLUDES TAIWAN IN VISA WAIVER PROGRAMThe British Trade & Cultural Office announced in early February that starting this month Taiwan passport-holders who wish to visit the United Kingdom for less than six months – whether for business, tourism, family visits, or study – will no longer require a visa. “Britain enjoys strong commercial and cultural ties with Taiwan,” BTCO Director David Campbell said in a statement. “Lifting the visa requirement for stays of less than six months will help to build on that to the benefit of both British and Taiwanese people.” The BTCO, which received over 28,000 visa applications in 2008, predicts that the volume will fall to around 6,000 to 8,000 per year after the new system is in place. IN MEMORIUM: HARVEY FELDMANHarvey Feldman, a retired U.S. diplomat who in recent years served as a distinguished fellow in Asian studies at the Heritage Foundation, the Washington D.C. think tank, died in late February at the age of 77. He was one of AmCham Taipei’s regular contacts during the annual Doorknock visits to the U.S. Capital. The Taipei Times referred to him as a “giant within Washington’s tight community of China watchers and a good friend of Taiwan.” Feldman headed the political section of the U.S. embassy in Taipei during the mid-1970s, and he was the State Department’s desk officer for Taiwan at the time of the switch in U.S. diplomatic recognition from Taiwan to the PRC in 1978.
BUSINESSBRITISH LIFE INSURER SELLS TAIWAN UNIT
In another sell-off by a foreign insurance company, the U.K’s Prudential Plc (unrelated to the U.S. Prudential) said at the end of February it will sell most of its local insurance business to China Life. The British firm will take a nearly 10% stake in China Life, valued at about US$64 million. After the capital injection, Prudential will become the Taiwanese life insurer’s largest shareholder, with a 9.95% fully diluted stake, with the deal expected to be completed by the third quarter of this year. Prudential will retain its Taiwanese bancassurance and telemarketing business. Recently the Netherlands’ ING sold its Taiwanese life insurance unit to Fubon Financial, and local media reports have said that Aegon and AIG are both looking for buyers for their Taiwanese insurance operations. European insurers are under pressure to resolve capital and reserve shortfalls in the Taiwan market under the stricter accounting and solvency standards being applied in the EU. The AIG case is more related to the global financial crisis and the company’s consequent need to raise money to deal with problems back home.
RESIDENTIAL BUILDINGPERMITS FALL SHARPLYResidential building permits in Taiwan fell in 2008 in the steepest drop in seven years, Bloomberg reported, at first due to a rise in interest rates and then because the global financial crisis triggered a recession. The Ministry of the Interior last year issued licenses for 18.4 million square meters of residential construction, 15% less than the previous year and the largest drop since 2001, according to data posted on the ministry’s website. The largest declines came in November and December, when the number of permits each month fell by more than 33% from a year earlier. Construction companies including Farglory Land Development, Taiwan's largest real-estate developer, and Huaku Development Co., the sixth-largest, have delayed projects or shifted properties designated as residential to other uses, Bloomberg said. According to the ministry, commercial property construction permits climbed by 9% last year, after falling by more than 50% in each of the previous two years, as builders bet on lower material prices and increased demand from companies after the economy rebounds. GOVERNMENT PLANS NEW DRAM COMPANYThe government announced plans in early March to set up a new company for overhauling and consolidating the local dynamic random access memory (DRAM) sector, after local companies posted heavy losses over the past year or so due to factors such as the global financial crisis and oversupply. It said it wants the new company to partner with Japan’s Elpida or U.S.-based Micron in order to access technology. ProMOS Technologies, Taiwan’s third-biggest DRAM maker, which has shown the least profitable performance to date, dominated local news headlines through February as it struggled to drum up funds to help repay an NT$11 billion (US$316 million) overseas convertible bond it issued on February 14, 2007. In mid-February, a banking syndicate consisting of eight state-run banks agreed to give it a loan of NT$3 billion (US$86.7 million), less than the NT$5 billion (US$144.5 million) it sought. The new company, which will be named Taiwan Memory Co., would restructure the sector to combine research, production, and brand marketing. The government hopes that six local chip makers will merge into the new company to solve the problem of oversupply. Details about the new company are sketchy, but the government is likely to invite private investors to participate in the new company, which will be headed by semiconductor expert John Hsuan, who currently serves as honorary vice chairman of United Microelectronics. TAIPEI RANKED 6TH IN ASIA IN LIVEABILITY SURVEYLondon-based ECA International, which annually ranks cities around the globe in terms of their attractiveness for expatriates to reside, listed Taipei as the sixth most desirable location in Asia in its recently released 2008-2009 survey. Singapore ranked first for the 10th straight year. Others placing ahead of Taipei were – in order – Kobe, Yokohama, Tokyo, and Hong Kong. Among the factors measured are climate, air quality, health services, housing, personal safety, and infrastructure. CHINESE GLUCOSE METERS MAY NOW BE IMPORTEDIn its latest review of products banned from import from China, the Bureau of Foreign Trade agreed to release 28 items from the list upon receipt of applications from prospective importers, while rejecting another 33 items. Of particular interest to AmCham’s Medical Devices Committee was the removal from the list of blood glucose meters. Last year, the government retained the item on the formal prohibited list while agreeing to allow imports from China under a special quota system. This time it accepted the argument that wholly opening the market to made-in-China glucose meters would have no detrimental impact on domestic industry.
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