Confident Taiwan moves ahead

Confident Taiwan moves ahead

In light of the severe health and economic crises the world is facing today, countries that manage to maintain internal stability will be the ones best positioned to survive and thrive faster than others.

Taiwan is a good example in this case. The island nation is moving forward even as other Asian nations are scrambling to deal with domestic issues including the coronavirus outbreak. President Tsai Ing-wen seized an opportunity last Wednesday when she announced that Taiwan would further liberalise its economy and offer more financing products, aiming to become an Asian financial and asset management hub.

Everybody knows that Taiwan has a competitive, dynamic capitalist economy driven largely by industrial manufacturing. It's a major exporter of electronics, machinery and petrochemical products but remains heavily reliant on China.

Ms Tsai is signalling that Taiwan is trying to diversify away from its traditional reliance on trade with China, its largest trading partner but also a political rival. Beijing, which claims democratic Taiwan as its own territory, has stepped up its military activity around the island, including flying fighter jets, since Ms Tsai won reelection by a landslide in January on a platform of standing up to Beijing.

The timing of a flight by Chinese air force jets, which briefly crossed the mid-line of the Taiwan Strait on Aug 10, was no coincidence. It came a day after a visit to Taipei by US Health Secretary Alex Azar, the highest-level US official to visit in four decades. The visit was condemned by Beijing amid sharply deteriorating US-China relations.

Ms Tsai is proposing a new role for Taiwan at a time when Chinese-ruled Hong Kong is in turmoil, especially after Beijing enacted a new national security law there. How long the city can remain Asia's dominant financial centre is now a big question.

While Taiwan is unlikely to supplant Hong Kong immediately, analysts say the Tsai government hopes to seize the opportunity to attract professionals and capital from the city.

Taipei will also be competing with Singapore, Southeast Asia's financial and trade centre, which is still battling the pandemic although infections have been flattened lately among the large foreign migrant worker population. Taiwan, meanwhile, has been hailed for having one of the most successful Covid-19 responses in the world, thanks to its early and effective steps to fight the disease that have kept case numbers below 500 in a population of 24 million.

Another major move by Taiwan involves a proposal to negotiate a free-trade agreement with the United States, something Ms Tsai has declared will be a centerpiece of her second term. This would face strong opposition from Beijing but could also make many policymakers in Washington nervous about offending China any further.

In any case, Ms Tsai clearly emphasised to business leaders in Taipei that "removing trade barriers and advancing overseas expansion would allow Taiwanese companies to diversify their businesses even more".

At the same time, Taiwan has unveiled new regulations to tighten screening of Chinese investments on the island, joining forces with Washington to prevent Beijing from getting around regulations governing sensitive technologies.

Taiwan imposes strict regulations that only allow Chinese investors to own up to 30% of Taiwanese companies in various sectors from semiconductors and electronic components to solar energy. Any such investments also have to be screened on a case-by-case basis. However, the new rules mean that Chinese investors will be barred from indirectly acquiring stakes in Taiwanese companies that own sensitive technologies through a third-party company.

The new directives, due to take effect later this year, will also screen investors behind companies from Hong Kong and Macau.

Back at home, meanwhile, Thailand's political stability is now threatened by the massive student-led demonstrations of recent months. The Aug 16 gathering in Bangkok claimed to draw at least 20,000 people, making it one of the largest anti-government protests since the 2014 coup that brought Prime Minister Prayut Chan-o-cha to power.

The anti-government rallies come at a time when Thailand is dealing with what might be its first locally transmitted coronavirus case in nearly three months. The government, meanwhile, is poised to extend the state of emergency through September to deal with any eventualities.

As a journalist, I believe in freedom of expression, and protest is a common practice in a democratic system. But honestly, now is a bad time to further shake domestic stability, as the country needs unity to sail through the countless challenges we are facing.

Nareerat Wiriyapong

Acting Asia Focus Editor

Acting Asia Focus Editor


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