Taiwan’s New Southbound Policy: Creating a model of cooperation
NEW TAIPEI — Taiwan is upbeat about its new external economic strategy – the New Southbound Policy (NSP) – to “deepen its connection” with the 10 member countries of the Association of Southeast Asian Nations (ASEAN), the six states in South Asia (India, Pakistan, Bangladesh, Nepal, Sri Lanka, and Bhutan), Australia, and New Zealand.
Instead of setting up manufacturing bases in ASEAN and South Asia, Taiwan intends to pursue bilateral partnerships and expand exchanges of personnel, capital, technology, culture, and education with the 18 countries. The effort aims to create a new and mutually beneficial model of cooperation.
Under the policy which started to be implemented in September last year, Taiwan hopes to achieve regional prosperity through economic collaboration, talent exchange, sharing of resources, and forging regional links.
The NSP hopes to forge new partnerships by integrating the supply chains of “southbound countries,” connecting with their domestic markets, and cooperating on infrastructure projects. It will set up a “Taiwan desk” in the 18 countries to gather local resources and help overseas Taiwanese enterprises form business clusters.
Closer collaboration “The gist of the New Southbound Policy is to bring us closer so we can work together and overcome the challenges in a way to achieve development. We need closer collaboration between peoples, governments, and agencies,” said Jeffrey C. Kau, senior negotiator and executive secretary of the Office of Trade Negotiation under the Executive Yuan.
Kau recently explained Taiwan’s new economic strategy to visiting foreign journalists.
“The New Southbound Policy is not intended to compete or replace the One Belt, One Road. We are looking at our own merit, at what Taiwan can do because Taiwan has transformed itself over the years. We have accumulated a lot of knowledge, experience, and we are willing to share these hard-earned knowledge with our neighbors. We are good at soft power,” Kau said.
Taiwan has transformed from an agricultural to a modern industrialized society where international trade is the lifeblood of the economy. Taiwan is a top world supplier of high-tech products, semiconductors, computers, and precision machinery.
According to the UNCTAD World Investment Report 2016, by the end of 2015, Taiwan’s foreign investment reached US$336.127 billion. The growth of 4.6 percent over 2014, made Taiwan the 5th biggest investor in Asia, the 18th worldwide.
In 2015, seven Taiwan –made products were ranked No. 1 in the world market; 23 were ranked among the top three. These products were in the semiconductor foundry market, IC packaging and testing, high-end bicycles, glass fiber cloth, green algae, functional textiles, and portable navigation device.
“Taiwan has a lot of natural disasters and the only thing we don’t have is natural resources, but the government is investing heavily in the only resource it has – human resource. That is why we are called the economic miracle of Asia,” Kau said.
Visa waivers
In making Taiwan accessible to the Philippines, its closest neighbor, Kau said Taiwan will start issuing visa waivers for Filipino tourists going to Taiwan for a year starting in June to open up its tourism market. In September this year, Taiwan will hold an exhibit at the SMX Convention Center in Pasay City.
“Taiwan wants to create a new future for countries in the NSP. We are a community, not just a production base. We want to integrate and build a real friendship,” Kau added.
Bilateral trade between Taiwan and the Philippines amounted to US$9.7 billion in 2015 increasing to US$ 10.8 billion in 2016. Data from the Taipei Economic and Cultural Office (TECO) in Manila showed that Philippine exports to Taiwan reached US$3.1 B while Philippine imports from Taiwan reached US$2.3 billion. Taiwan has already established seven banks in the Philippines
Taiwan and the Philippines maintain close cooperation also in the field of tourism and education.
Last year, visitor arrivals from the Philippines reached 172,475, increasing by 23.89 percent from 2015’s 139,217. Taiwan relaxed its E-visa policy in October, 2016.
On the other hand, visitor arrivals in the Philippines from Taiwan also increased by 30.62 percent, reaching 196,617, compared to arrivals in 2015.
Dr. Chui-Cheng Chiu, deputy minister, Mainland Affairs Council, under the Executive Yuan, explained the NSP is different from the previous Southbound Policy. “The difference is we focus more on the exchange of talent and focus more on the sharing of resources. Because we found a lot of complementaries in these southbound countries and we are going to have more cooperation and communication with these countries,” Dr. Chiu said.
Complementary policy
He said the NSP “is not a replacement of our cross trading or commerce. It is actually a complementary policy because of the busy activity of commerce and trade in Southeast Asia and South Asia. Taiwan industry is looking forward to a structure of change and adjustment and try to find a larger market to connect with NSP countries.”
“Taiwan is a close neighbor of the Philippines and there are more student exchanges involving Taiwan. We feel that there has been economic growth in the Philippines lately. The Philippines has attracted Taiwanese investors who have since relocated to the Philippines,” he added.
Seven months into its implementation, Kevin C. F. Lin, deputy director general of the Department of International Information Services, said: “We already have seen a very tangible increase of tourists from other countries, including Thailand, Vietnam, Philippines, and other Asian countries, even India. We are happy to see that. Chinese tourists coming to Taiwan dropped dramatically. ”
By linking resources, talent, markets, and technologies with ASEAN, South Asia, Australia, and New Zealand, Taiwan is looking to create a new model of economic development and help drive growth and prosperity in the entire region.