Use SARS as Excuse to Reinvest in Taiwan

SARS is frightening, but so is the 'economic Sinocization' that threatens Taiwan, says Huang Tien-lin, a national policy adviser to Taiwan's President Chen Shui-bian. In this opinion piece from the Taipei Times, Huang suggests that by encouraging Taiwanese businesspeople to stay home in relatively safe Taiwan, "the [SARS] crisis will not only boost the nation's GDP but also reduce the domestic unemployment rate." Taiwan's business community is increasingly enamored of the cheaper labor available in China, but the political leadership in Taipei remains uneasy over the outflow of investment and jobs to China. – YaleGlobal

Use SARS as Excuse to Reinvest in Taiwan

Huang Tien-lin 黃天麟
Monday, April 7, 2003

The Council for Economic Planning and Development announced on April 1 that the nation's GDP is expected to shrink about NT$10 billion this year due to the breakout of severe acute respiratory syndrome (SARS). I have a different view: If Taiwan handles this appropriately and resolutely, the spread of SARS will serve as a god-given chance for the island to effectively brake its "economic Sinocization." That being so, the crisis will not only boost the nation's GDP but also reduce the domestic unemployment rate.

According to local newspaper reports, the council's figure took into consideration the World Travel and Tourism Council's (WTTC) bleak prediction. The WTTC believes that the US-Iraq war and SARS will have an extreme negative effect on the nation's tourism.

But the WTTC's evaluation has its blind spots. First, the battlefield of the US-led war is in the Middle East, not East Asia. Second, the WTCC ignored the fact that 3 million Taiwanese travel to China about every year. Since the battlefield of SARS is in China, Taiwan's domestic consumption will increase about NT$30 billion if one-third of those travelers stay on the island. This will be more than enough to cover the huge loss of domestic tourism caused by the war.

In addition, we all know that the serious unemployment problem, and the constant decline of domestic real-estate prices and our fortunes, are a result of the magnetic pull of China's market. Taiwanese businesspeople invested over US$400 billion in China last year. The spread of SARS may discourage them from traveling to China and therefore reduce their investment across the Taiwan Strait.

If the amount of their Chinese investment decreases by about one-third, the capital available in Taiwan is likely to increase by NT$130 billion. If that money is reinvested into our stock market, the TAIEX index will jump up several hundred points -- which will increase our fortunes by several trillion NT dollars. Not to mention that a "multiplier effect" will surely occur if the money is used for domestic investment. This will help to boost the nation's GDP not just NT$10 billion but over NT$100 billion.

Can the nation turn the SARS crisis into a turning point? The answer is self-evident in light of my analyses. After all, the economy is dynamic in nature, and it all depends on human effort. The key to success lies solely in government leaders' passion and their sense of mission for the island.

Perhaps we should seize the chance to promote domestic travel, so as to achieve the Cabinet's goal of doubling the nation's tourist industry. We should also ban Taiwanese from traveling to China for the moment, and implement strict disease-prevention measures against every airplane arriving from China and Hong Kong -- in order to quarantine Taiwan from the disease. Meanwhile, we should actively attract business to keep businesspeople's capital here. That being so, SARS will serve as Taiwan's turning point, not a disaster.

We should take the 23 million people of Taiwan as our priority at all times. Some lawmakers recently suggested that the government launch charter flights between the two sides of the Taiwan Strait so our businesspeople can directly return home without stopping over in Hong Kong or Macau, where the epidemic is severe. They even suggested that the Mainland Affairs Council ask the Chinese government to postpone its joint college entrance examinations, so the Taiwanese students who wish to study in China can take the exams later.

Taiwan will pay a considerable price if this kind of thinking that values businesspeople over the 23 million people continues.

Huang Tien-lin is a national policy adviser to the president.

Copyright © 1999-2003 The Taipei Times

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