Trade ties up as Taipei looks ‘south’

One year af­ter Tai­wan launched its New South­bound Pol­icy to spur trade in the re­gion, Malaysia has seen more busi­ness be­tween the two coun­tries amidst hold­ing fast to its ‘One China’ pol­icy.

The Star Malaysia - - Focus - By THO XIN YI thoxinyi@thes­tar.com.my

SINCE Tsai Ing-wen be­came Tai­wan pres­i­dent in May last year, Taipei’s ties with main­land China have strained due to her in­sis­tence that Tai­wan is not an in­te­gral part of China.

Bei­jing has made known it can­not tol­er­ate rhetoric that chal­lenges its un­com­pro­mis­ing “One China” pol­icy.

Amid the sim­mer­ing ten­sion be­tween Bei­jing and Taipei, as well as ris­ing in­ter­na­tional iso­la­tion of Tai­wan due to China’s rise, Malaysia has un­ex­pect­edly become one of the ben­e­fi­cia­ries in trade and in­vest­ments.

In­vest­ments from Tai­wan into Malaysia had de­clined in re­cent years on the back of China’s emer­gence. But devel­op­ments this year are up­lift­ing for Kuala Lumpur, with bi­lat­eral trade and tourism data record­ing sub­stan­tial growth in the first half of this year.

Tai­wan’s econ­omy has been re­ly­ing heav­ily on China, with China be­ing its top trad­ing part­ner and main an­chor for out­bound Tai­wanese in­vest­ments.

Last year, cross-Straits trade to­talled US$179.6bil (RM752.9bil), more than dou­ble that of Tai­wan’s trade with its close ally United States at US$84.9bil (RM355.9bil).

In the name of eco­nomic di­ver­si­fi­ca­tion, Tsai revived the island’s south­ward pivot last Septem­ber, call­ing it the New South­bound Pol­icy (NSP).

She in­tended to move Tai­wan’s fo­cus to South-East Asia, South Asia and Aus­trala­sia – with Malaysia as one of the coun­tries given pri­or­ity.

While the NSP looks eco­nomic in na­ture, it is seen by an­a­lysts as a par­tial veil to strengthen ties with these coun­tries.

Al­though Asean na­tions ad­here to the “One China” pol­icy, they have main­tained trade and eco­nomic ties with Tai­wan.

The four main ways to achiev­ing NSP ob­jec­tives are via eco­nomic co­op­er­a­tion, tal­ent ex­change, re­sources shar­ing and re­gional con­nec­tiv­ity.

Out of the 18 coun­tries in­cluded in this pivot, Malaysia is among the six given spe­cial fo­cus, along with the Philip­pines, Vietnam, Thai­land, In­done­sia and In­dia.

The rest are other Asean coun­tries, Bangladesh, Bhutan, Nepal, Pak­istan, Sri Lanka, Aus­tralia and New Zealand.

“Geo­graph­i­cally, Malaysia is strate­gi­cally lo­cated in the cen­tre of South-East Asia. Most im­por­tantly, Malaysia can be a spring­board for us to ven­ture into the vast global Mus­lim mar­ket,” James Chang Chip­ing, the rep­re­sen­ta­tive of the Taipei Eco­nomic and Cul­tural Of­fice in Malaysia tells Sun­day Star.

The Mus­lim fac­tor

Malaysia has gained in­ter­na­tional recog­ni­tion for its ha­lal cer­ti­fi­ca­tion is­sued by the Malaysian Is­lamic De­vel­op­ment Depart­ment (Jakim).

Tai­wan, with its es­ti­mated 100,000 lo­cal Mus­lim res­i­dents and 400,000 for­eign Mus­lims, is eager to tap into the huge global mar­ket of 1.8 bil­lion Mus­lims.

“We want to strengthen our co­op­er­a­tion in the ha­lal in­dus­try. Through Malaysia, we can ac­cess Asean coun­tries and the global Mus­lim pop­u­la­tion,” he says.

It aims to have more Mus­lim-friendly fa­cil­i­ties within its shores and learn the know-how of pro­duc- ing ha­lal goods and ser­vices, he says.

Plans are afoot to at­tract more Mus­lim tourists to the island.

“The whole of Tai­wan has 103 restau­rants and ho­tels with ha­lal cer­tifi­cates is­sued by Jakim; 45 of which are in the cap­i­tal city of Taipei,” Chang says.

In April last year, state-owned Tai­wan Ex­ter­nal Trade De­vel­op­ment Coun­cil set up a ha­lal in­dus­try pro­mo­tion cen­tre.

“With 2017 be­ing the ‘year of ac­tion’ of NSP, we will al­lo­cate more re­sources to build a friendly en­vi­ron­ment for Mus­lims.”

Close eco­nomic link

Eco­nomic co­op­er­a­tion be­tween Tai­wan and Malaysia has been very close since the early 1990s, which saw the in­flux of Taipei in­dus­tries and the out­ward push of the strong Tai­wanese currency.

Tai­wan in­vest­ments in the early 1990s, mainly in the steel and man­u­fac­tur­ing sec­tors, had helped lift Malaysia from is eco­nomic re­ces­sion.

“We used to be Malaysia’s largest in­vestor in the 1990s when we en­cour­aged Tai­wanese busi­nesses to in­vest here.

“To­day, we have more than 1,700 Tai­wanese en­trepreneurs here, in­clud­ing 22 listed com­pa­nies, with a cu­mu­la­tive in­vest­ment of US$12.3bil (RM51.6bil) as at end of last year,” Chang says.

Bi­lat­eral trade to­talled US$14bil (RM59­bil) last year.

Tai­wan is Malaysia’s fourth in­vest­ment part­ner and eighth largest trad­ing part­ner.

On Malaysia’s part, it is Tai­wan’s eighth largest trad­ing part­ner and se­cond largest trad­ing part­ner in Asean, af­ter Sin­ga­pore.

“For the first half of 2017, bi­lat­eral trade recorded was US$8.2bil (RM34.4bil), a year-on-year in­crease of 25%. We fore­see this year’s to­tal will be higher than last year’s, which is a fruit­ful re­sult for us.”

Tai­wan’s in­vest­ment in Malaysia this year will see a marked in­crease as Ho­tayi Elec­tron­ics (M) Sdn Bhd has rein­vested RM1­bil to ex­pand its plant in Pe­nang to cre­ate 1,000 jobs.

Peo­ple-to-peo­ple link

Tai­wan is no stranger to Malaysians, es­pe­cially the Chi­nese com­mu­nity.

Chi­nese Malaysians love its pop cul­ture and lit­er­ary scene. They like to visit this island for its mouth­wa­ter­ing food and beau­ti­ful land­scape.

Last year, Tai­wan wel­comed 474,420 Malaysians, an in­crease of nearly 10% and the high­est among Asean coun­tries.

In the first half of this year, 256,703 Malaysians trav­elled to Tai­wan – a year-on-year in­crease of 19.2%.

“From 68 flights a week when I first ar­rived here in Oc­to­ber 2015, we now have 130 flights a week by five air­lines serv­ing the Tai­wan-Malaysia route,” Chang says.

There are 16,051 Malaysian stu­dents in Tai­wan this year, top­ping the list of for­eign stu­dents there. And over 60,000 Malaysian stu­dents have com­pleted their stud­ies there.

Malaysians are tak­ing up un­der­grad­u­ate pro­grammes, mas­ter’s and doc­tor­ate de­grees in science and en­gi­neer­ing, busi­ness administration, so­cial sciences and arts.

“This year, stu­dent visa ap­pli­ca­tions we pro­cessed from Jan­uary to July in­creased by 10%,” Chang says.

Tai­wan’s Ed­u­ca­tion Min­istry has also in­creased its quota of full schol­ar­ships for Malaysia from 20 to 35.

There are also other types of schol­ar­ships and fel­low­ships re­served for Malaysians.

NSP vs Belt and Road?

As the NSP is tar­get­ing many coun­tries un­der China’s Belt and Road ini­tia­tive, this in­evitably leads to talk that the NSP is com­pet­ing with China’s huge eco­nomic-cum-diplo­macy plan.

But Chang ex­erts that this is not the case; as the Belt and Road plan has made much head­way in Malaysia and other Asean na­tions.

“Malaysia and Tai­wan al­ready have close bi­lat­eral ties all these years, from in­vest­ment and trade to peo­ple-to-peo­ple ex­change,” he ex­plains.

“We used to have South­bound Pol­icy, which fo­cused on set­ting up fac­to­ries, man­u­fac­tur­ing and be­ing orig­i­nal equip­ment man­u­fac­tur­ers (OEM).”

The NSP, he says, en­com­passes all ar­eas with the aim of build­ing a com­pre­hen­sive new part­ner­ship (with coun­tries) through strength­en­ing com­mu­ni­ca­tion and co­op­er­a­tion.

“If we see suit­able ar­eas for us to es­tab­lish co­op­er­a­tion, be it cul­tural, com­mer­cial, ed­u­ca­tion or oth­ers, we will work on them.”

Many at­trac­tions: The sun­rise at Alis­han is one of the many things that cap­ti­vate Malaysians about Tai­wan.

Chang: ‘Malaysia and Tai­wan have en­joyed close bi­lat­eral ties.’

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