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TAIWAN


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2002)
GDP
Millions of US $  406,000    
         
GNI per capita
 US $ 18,000
Ranking is given out of 208 nations - (data from the World Bank)

Books on Taiwan

REPUBLICAN REFERENCE

Area (sq.km) 
35,980 

Population 
22,603,001

Capital 
Taipei

Currency 
New Taiwan dollar (TWD)

President 
Chen shui-bian




Update No: 025 - (31/01/06)

Ructions within the DPP
Under normal circumstances January, in any Chinese society, is a quiet month. It signifies the time between the start of the new Calendar year and the end of the old lunar year. It is generally a time of preparation and house cleaning; debts should be settled but no new ventures undertaken until the birth of the new Lunar Year. Well, that may be the case under normal circumstances, but this past month proved that to every rule there is an exception. January proved to be a time of considerable change - upheaval might be a better term - especially for the ruling Democratic Progressive Party. 
The immediate cause was the defeat of the DPP in the December 2005 provincial elections but, in fact, this was only the catalyst. The poor showing of the ruling party at the polls was a cause for much soul-searching by its leaders which should have been debated within the confines of committee rooms. Yet, tension between the rival factions runs so deep that inevitably, it caused a fracturing of the alliance that held these factions together. 
Central to the debate is the influence that Taiwan's President, Chen Shui-bian still exerts over the party and its policy direction. One message that should have been clearly heard from the recent election result was that the anti-China sentiment espoused by the president does not sit comfortably with the bulk of Taiwan's population. A population that, increasingly, has become dependent on China's emergence as an economic power for its own well-being. The die has already been cast in that department and Taiwan's fate is inextricably bound to that of China. It is no longer a matter of "if" Taiwan reaches a modus vivendi with the mainland, rather it is a matter of "when." 
Taiwan's president does not see it that way of course and is still intent on pushing the envelope as far as he can, much to the chagrin of Washington, of Beijing, of a majority of Taiwan's 13 million voters and - increasingly - members of his own party.
President Chen's New Year message to the people of Taiwan sent a clear signal that he was not softening his stance vis--vis the mainland. Indeed it was quite the reverse. In his address he announced that he was anxious to slow down the rate of investment into China by Taiwan's business sector through a new policy of "active management - effective opening." While the details were not spelled out, that announcement coupled with a renewed focus on developing a new Constitution for Taiwan was taken as a hardening of the official position sufficient to rattle investors. Taiwan's stock index suffered its biggest decline in two months immediately after the speech. Many took it to mean that the government would start to meddle with companies that were seen to be too actively "pro-China." The power of audit could be selectively applied.
Clearly many within the party were unhappy with the position taken by the president and his advisors - and particularly, Taiwan's Premier Frank Hsieh (now former premier), who is considered to be much more of a pragmatist. The DPP had been damaged also in the run up to the election by a series of corruption scandals that did much to erode public confidence in the ruling administration. Further alienation of voters seemed to be most unwise at this time.
Differences of opinion between the premier and his Cabinet on the one hand and the presidential office on the other erupted into the public domain. When the opposition dominated legislature voted down Premier Hsieh's budget - including controversial arms related measures designed to strengthen Taiwan's missile defences against China - it proved to be the stroke that brought down the entire house of cards. After the vote, Mr. Hsieh had sought presidential approval to resubmit his budget but the presidential office denied his request. The premier then took what many considered to be the only honourable course of action and resigned his position. His entire cabinet resigned with him.

New Prime Minster and Cabinet
The move was not entirely unexpected and it appears that President Chen and his advisors had a hand in engineering a situation whereby the likeable - but non compliant - Mr. Hsieh would be forced to step aside. President Chen immediately appointed his former Chief of Staff, Su Tseng-chang as the new premier. Many within the new Cabinet line up have not yet been appointed and an announcement is not expected until the after the Lunar New Year holiday, in early February.
Mr. Su, is a former chairman of the ruling DPP and is considered to be one of its frontrunners for the 2008 presidential race. Many people believe that President Chen handpicked Mr. Su in a bid to shore up his own poor approval rating which has plummeted to a record low in recent months. Mr. Su is an extremely popular figure but whether his appointment to the premiership will bolster the image of the president is another issue entirely. Clearly President Chen wants to maintain tight control over policy, especially towards China, and this hard-line approach seems destined to alienate the general populace - as well as the business sector - even further. 
The fracturing did not stop there. Lin Yu-shi, former DPP chairman and a prominent opposition figure from the days of martial law (his wife and daughters were murdered by persons unknown during the white terror period in the early days of KMT rule on Taiwan) resigned from the party over the factional strife which he called a blow to the party's credibility. Mr. Lin is held in high esteem within Taiwan and the manner of his going can only signal the urgency of the need for the DPP to put its house in order and agree on a coherent political line.
Frank Hiseh, a former Kaohsiung City mayor, retains membership of the DPP but has resigned from all positions in public life. Reports suggest that President Chen offered him the position of Secretary-General of the Presidential Office but Hsieh wisely turned down the offer. He took the premiership only in February 2005 and served a little under a year. His early departure is probably a pity since he showed every sign of being a genuine reformist. He leaves the economy in relatively good shape,

The economy
Taiwan's economy appears to have performed better than expected last year. While official figures have not yet been announced, it is believed that the final numbers will be above the officially forecast GDP growth rate of 3.8 percent. The government is hoping that 2006 will be even better with a forecast of 4.5 percent for the coming year.
Unemployment has fallen to a five year low. In December 2005, Taiwan's unemployment rate stood at 3.86 percent - down from 3.94 percent the previous month. On a seasonally adjusted basis, the December rate was 4.0 percent. This was better than the 4.21 percent recorded in December 2004. Taiwan's labour participation rate stands at 57.85 percent.
Inbound investment last year was slightly down on previous levels. At US$3.12 billion for the first eleven months, this represented a decline of 5.3 percent over the same period last year. Looking at outbound investment, the Taiwan government approved some US$7.96 billion in the period to November 2005 - down by 13.4 percent on the previous year. Investments into China dropped by only 8.7 percent and amounted to US$5.62 billion or 71 percent of the total. Investment into countries other than China dropped by 22.8 percent in the same period. Perhaps, these numbers explain the concern of President Chen Shui-bian although they also illustrate how far he appears to be out of touch with Taiwan's own business community that sees its own future securely locked in with that of China.

Vietnam gains
Interestingly Taiwan is now Vietnam's largest overseas investor. Total approved investment to Vietnam last year was around US$674 million or 29 percent of the remaining total outbound investment to other destinations. Taiwan's business community has now poured more than US$10 billion into Vietnam.
Taiwan's currency has also strengthened. The New Taiwan dollar peaked at a five year high last month and reached 32.016 to the US$ before falling back. For the year as a whole the local currency appreciated by almost 3 percent against its US counterpart. Taiwan's main stock index rose by 6.7 percent for the year as a whole.

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