AmCham 
Publications Topics Archive Topics Archive 2006 Vol.36- No.10 Commentary
Publications Topics Archive Topics Archive 2006 Vol.36- No.10 Commentary | Commentary |
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Not Enough (Real) Politics Taiwan's version of democratic politics is obstructing business-community expectations that political leaders across the spectrum address issues of critical national interest, especially regarding economics. Hopes that the recent Conference on Sustaining Taiwan's Economic Development (COSTED for short) would redirect attention to economic priorities have so far been unfulfilled. The conference, held in late July with 175 political, business, academic, labor, and other social leaders participating, was itself wracked with intense political infighting, especially when conferees tried to focus on cross-Strait economic issues vital to Taiwan's global business strength. Moreover, actually implementing the consensus policy recommendations adopted by the participants will require cross-party coordination to pass 17 new laws and to revise 37 existing laws - no easy undertaking. Instead, the political agenda has continued to be jammed by the headline-dominating six-year battle to depose the president - if not by legal, constitutional means, then by Philippine-style people power. Unfortunately, this effort - effective so far only in crippling executive and legislative efficiency - seems destined to continue right up to the 2008 presidential election. Recent conversations with executives of Taiwanese and multinational companies reveal growing concern, not about Taiwan's economic fundamentals, but rather its ability to sustain economic growth in the face of political inattentiveness to business and trade issues. Despite solid macro-economic figures (roughly 4% GDP growth, strong foreign exchange reserves, and low unemployment), a worrisome malaise is spreading through much of Taiwan's business environment. These positive economic indicators are driven primarily by the IT and LCD sectors, but their strong success overshadows a serious lack of development in other areas of manufacturing and, of even greater concern, the service sector. Although services now account for some 73% of Taiwan's GDP, the spectrum of services available remains narrow for an advanced economy, and the quality is often below developed-economy standards. The service sector's substantial potential for growth notwithstanding, it receives scant attention from the government. Since the Cabinet's adoption of its Guidelines and Action Plans for Service Industry Development in March 2004, little has been heard about the recommendations - also heavily dependent on legislative action - in that document. The frustration for business people is that Taiwan could substantially increase its current 4% growth if only the government would construct a supportive environment, not a constraining one, for business and trade. Too often the government still maintains a patronizing attitude, relying on its own "collective wisdom" rather than trusting market forces. It also has a tendency to throw money at problems instead of seeking private-sector solutions. An example comes from the COSTED post-conference report. In the "Social Security" section, one consensus recommendation called for "establishing long-term care for the elderly." The implication is that the government should use taxpayer money to set up retirement homes for Taiwan's aging citizens. But care for the elderly is a complex business, as the experience in the United States attests. It is hugely difficult to coordinate even the top echelon of care-givers - the surgeons, physicians, therapists, nurses, and dieticians with geriatric-care specialties - let alone integrate the specialized personnel handling facilities construction and maintenance, sanitation and safety requirements, and coordination with insurance agencies and pension funds. The construction and management of nursing homes and other facilities require highly sophisticated knowledge and refined business plans, plus substantial investment. Why should the Taiwan government spend huge amounts of taxpayer money, and in effect try to reinvent the wheel, when it could provide incentives for the private development of such facilities? And given the expertise and track record already present overseas, why not encourage foreign investment in this area of services? The government could put incentives in place to attract private-sector investment, then provide an overlay of international-standard regulatory protections for both businesses and consumers. The government should not itself become a player in the geriatric-care business. If government helps makes a business sector attractive, investors will come. One is reminded of the early economic arguments for building the towering Taipei 101: "If we erect a state-of-the-art building, it will attract international financial-sector firms to Taipei, helping make us a financial center." At the time, foreign bankers proposed a different approach: If the government would only achieve progress with the sorts of financial-reform measures listed in AmCham's annual White Paper, the banks would come and put up their own buildings. It is uncertain whether the government has learned this lesson. To jump-start private-sector healthcare and other areas of business development in Taiwan, the government will have to adjust laws and regulations to encourage domestic and international investment. But how can this happen when what passes for political discourse these days seems little more than the expression of personal animosities writ large? As long as personal agendas subvert and trivialize political discourse, business leaders will continue to downgrade their expectations for Taiwan's economic future. What Taiwan needs is informed and open debate on how best to reach a host of national goals, such as speeding financial reform, transforming the educational system, instituting top-quality labor retraining, and achieving reliable, high-quality water and power supplies. It's also time to stop insisting on reaching full consensus on issues before taking action. In an environment where political parties hold diametrically opposed positions, all that achieves is deadlock. A functioning democracy demands that decisions be based on majority rule and a spirit of compromise. The time has come for politicians to embrace real politics and start working together on the real business of government. Taxpayers deserve it. |
