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Taiwan pins hope on economic zones
Publication Date : 20-09-2013
The flavourful milk tea that has become a signature product of Taiwan may soon be made with tea leaves imported from China.
Mainland agricultural goods that are currently banned from Taiwan may soon be imported through Taoyuan airport, six free-trade ports and an agricultural technology park. This liberalisation is part of a plan to promote high-tech logistics, medical services, agricultural processing and finance.
"Taiwan is small and does not produce enough on its own to support trade, so we have to tap into resources from all over the world, including the mainland," Hsu Kuei-sen, head of the international department at the Council of Agriculture, told The Straits Times.
He cited juice drinks made from imported African fruit and new animal vaccines made by Western pharmaceutical companies as other examples of potential products of the project, called the Free Economic Pilot Zones.
"As long as it's stuff we can add value to, we'll do it," he said.
The project is part of President Ma Ying-jeou's plan to bolster Taiwan's economic growth, which has slowed in recent years amid global uncertainty and a lack of new domestic stimuli. The economy expanded 1.32 per cent last year and is expected to grow 2.31 per cent this year.
Ma also envisions the zones as a demonstration of Taiwan's determination to liberalise trade and join regional free trade areas, namely the Trans-Pacific Partnership that now gathers 13 countries, including Singapore and the United States, and the Regional Comprehensive Economic Partnership, comprising 16 states in the Asian region including Asean members.
"As Taiwan is rather protectionistic, the government has to think of how to take the first step as a trial, so we're proposing the free economic pilot zones in the hope of connecting Taiwan with the world," Ma said at an economic forum in July.
Last month, the Cabinet approved the first phase of the plan, under which 13 regulations on foreign and mainland professionals, land use and import procedures will be loosened by year-end.
Phase Two will kick off after a special Act governing the zones' operations, being drafted by the Council of Economic Planning and Development, is approved by parliament.
The Act is expected to offer businesses tax breaks, free up capital flow and allow the tariff-free import of previously restricted agricultural and industrial raw materials to be processed and exported as Made-in-Taiwan products.
One of the anticipated features is that mainland businesses will also be allowed to invest in the zones, subject to approval from Taiwanese authorities, without being limited to a 20 per cent stake, as stipulated under current rules.
But the initiative has drawn polarised reactions, as is typical in Taiwan for economic policies involving China. While businesses say the plan is not ambitious enough, the China-wary opposition Democratic Progressive Party and others insist it is too much.
The China Times daily noted that the plan merely upgrades existing free-trade ports, instead of creating new zones. The government's focus on a handful of sectors is also too restrictive, it said in an editorial. "The free economic pilot zones are not free."
However, Professor Woo Rhung-jieh, an agricultural economist at National Taiwan University, said: "We have maintained a ban on 830 Chinese agricultural items since joining the World Trade Organisation and signing a free trade pact with China. Wouldn't opening the doors now hurt our own farmers?"