Taiwanese Association of American June 2005 Thomas M. F. Yeh Vice Chairman Council for Economic...
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Transcript of Taiwanese Association of American June 2005 Thomas M. F. Yeh Vice Chairman Council for Economic...
Taiwanese Association of American
June 2005
Thomas M. F. YehVice Chairman
Council for Economic Planning and DevelopmentExecutive Yuan (Cabinet), Taiwan
Taiwan’s Economic Situation
and Outlook
2
I. ECONOMIC SITUATION IN TAIWAN
Economic Growth
Private Investment
Foreign Trade
Employment
II. TAIWAN’S DEVELOPMENT STRATEGY
Challenges
Policy Initiatives
III. FUTURE PROSPECTS
CONTENTS
3
4.174.88
1.143.97
5.80 2.54
3.25
5.277.886.72
5.88
-0.12
3.21
-8
-6
-4
-2
0
2
4
6
8%
The business monitoring indicators flashed “yellow-blue” for the first time since July 2003, signaling the
economy’s shift to a slower pace of expansion
I. ECONOMIC SITUATION IN TAIWAN
1. Economic GrowthTaiwan’s economy grew by 5.71% in 2004, the best performance in the last seven years.
2002 2003 2004 2005
Growth 3.94 % Growth 3.33 % Growth 5.71 %
I II III IV I II III IV I II III IV I
4
2. Private Investment
Domestic demand is the driving force of economic growth. Private investment grew by 28.2 % in 2004, the biggest increase since 1993.
Economic Growth
(yoy)
Net Foreign Demand
Domestic Demand
Private Consumption
Private Gross Fixed
Capital Formation
Others
2001 -2.2 -4.8 0.6 -4.6 -0.8 2.6
2002 3.9 1.2 1.3 0.4 -0.5 2.8
2003 3.3 0.5 0.5 -0.2 0.2 2.8
2004 5.7 5.7 1.9 3.1 0.7 0.02
2005f 3.6 2.9 1.8 1.1 -0.02 0.8
Contribution to Economic Growth
Units: US$ billion, %
Trade Exports Imports
Balance Value Growth Value Growth Value Growth
2000 288.3 24.1 148.3 22.0 140.0 26.5 8.3
2001 230.1 -20.2 122.9 -17.2 107.2 -23.4 15.6
2002 243.1 5.7 130.6 6.3 112.5 4.9 18.1
2003 271.5 11.7 144.2 10.4 127.2 13.1 16.9
2004 341.9 26.0 174.0 20.7 167.9 31.9 6.1
2005 Jan-Mar
85.4 10.1 42.8 7.8 42.6 12.6 0.3
Exports and imports both posted very large double-digit increases in 2004, with two-way trade growing 26% to just under US$342 billion.
3. Foreign Trade
5
6
2.9
1.8
2.6 2.7 2.7 3.0
4.65.2 5.0
4.4 4.2
1.9
1.11.0
1.2
1.20.3 1.2 0.8
1.3
2.2
-1
0
1
2
3
4
5
6
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Employment Growth Rate
Unemployment Rate
%
4. Employment
The unemployment rate dropped to 4.4% in 2004, continuing a steady descent from its historic high of 5.2% in 2002.
(Jan-Mar)
7
Green, energy-saving drive
Development of clean energy and green production chain
Sustainable national strength
Global structural changes
Population aging
Global operations (outsourcing)
◎ Challenges from global trends
Taiwan˙Challenges˙Position
Emerging economic powers
Rapid growth in Brazil, Russia, India and China (BRICs)
The coming of an Asian era Knowledge
Economy
Social Fairnessand Justice
EnvironmentalSustainability
II. TAIWAN’S DEVELOPMENT STRATEGY
8
Investment environment Inadequate
infrastructure Institutional and
regulatory modernization
Sustainable development Environmental and ecol
ogical preservation Greenhouse gas emissio
ns
Financial and fiscal reforms Fiscal imbalances Financial weakness
Industrial innovation Falling profits of high-
tech industries Emigration of traditional
industries
Social security net Rapid aging of population Structural change of labor market
InternalNeeds
◎ Challenges from internal needs
9
◎ Policy Initiatives
InnovationInnovation
Healthy Taiwan
Establishing sound financial and fiscal systems
Developing a favorable investment climate
Promoting innovation- oriented industries
Extending global logistics operations
10
“SMILE”-oriented industrial positioningAdded Value
Develop knowledge-intensive services
Manufacture Assembly Logistics Brands Marketing
Innovation Design R&D Market Research
Industrial Value Chain
Help makeover of traditional industries
Manufacturing center for high value-added products
Knowledge-based economic development is the prevailing global trend.
Promoting Innovation-oriented Industry
11
◎ Raising Added Value of High-tech & Traditional Industries
2008: Trillion-dollar Industries
Hi-tech Traditional
$ $
=
Semiconductor(1.14 trillion)
Image d
isplay
Iron & steel
Mach
inery &
equip
men
t
Petrochem
icals
NT$ billion: (900) (571) (880) (715)
2004
1.001.05
1.79
1.43
1.13
0.300.510.570.610.81
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0 Sem
iconductor
Image display
Petrochem
icals
Teleco
m
Iron &
steel
NT$ trillion
Informatio
n services
Design, culture & creativity,R&D, distribution
2-Trillion 2-Star
Digital content
(226.8 bil)
Biotech(138.5 bil)
Industries
Machinery
&
equipment
Digital
hardware
Autom
obiles T
extiles
12
GoalsReal Compound Annual Growth Rate (CAGR) of Services 6.1%
CAGR of Knowledge-intensive Services 8 % (2004-2008)
1. Financial services 2. Logistics & transportation services 3. Communications & media services 4. Medical, healthcare & caregiving services5. Manpower training & dispatch, and property management services 6. Tourism, sporting & recreational services7. Cultural and creative services 8. Design services9. Information services 10. Research and development services 11. Environmental protection services 12. Engineering consulting services
◎ The Development of Taiwan’s Service Industry
12 categories of services
High value-added
High knowledge-intensity Large output value
Substantial employment effects
13
High quality manpower, innovation
ST
RA
TE
GY Knowledge-based, cultural creativity
Global logistics, international competition Convenient living, ecological sustainability
Forward looking - meeting trends, creating values
CR
ITE
RIA
Pivotal - critical to restructuring and high linkage effe
ctLandmark - significant breakthrough and inducing reg
ional developmentUrgent - immediate improvement is indispensableBalanced - regional development; central-local par
tnership
2 International arts and popular music centers3 "M" (Mobile) Taiwan4 Taiwan exposition
5 Converting railway to rapid transit 6 Third-phase freeways7 Kaohsiung Harbor intercontinental container center
8 North, middle, south mass rapid transit systems9 Wastewater treatment10 Lowland reservoirs and desalination plants
1 Top-rated universities and research centers
Efficiency
Excellence
Finesse
High-tech
Strengthen International Competitiveness
GO
AL
Vision
◎ Investment in Taiwan - The New Ten Projects Developing a Favorable Investment Climate
14
◎ Expected Economic Benefits
IntangibleIntangibleBenefitsBenefits
MeasurableMeasurable BenefitsBenefits
Enrich quality of life Enrich quality of life
Promote economic growth GDP growth up by 1.0~1.4 percentage points a year
Generate private demand Private demand up by 0.6~0.8 percentage point a year
Increase job opportunities Create 64,000 jobs a year
Expand tax collection Increase tax revenue by NT$70~150 billion in the coming 5 years
Increase the capital value of human resources
Increase the capital value of human resources
Raise the commodity value of the environment
Raise the commodity value of the environment
Create cultural valuesCreate cultural values
15
Unit: % Outstanding Debt as a Percentage of GDP Tax Central General Burden Government GovernmentJapan 15.9 (02) 140.3 (03) -UK 29.7 (02) 48.9 (00) 50.3 (02)
USA 19.6 (02) 33.2 (02) 44.8 (01)
Germany 21.5 (02) - 62.8 (02)
Singapore 13.0 (03) 111.5 (02) -Taiwan 13.6 (04) 33.7 (04) 39.0 (04)
%
13.6
18.612.712.6
32.2
33.7
29.7
14.2
17.3
23.2
39.036.6
33.5
26.3
10
15
20
25
30
35
40
1993 1995 1997 1999 2001 2003 2004 Year
Establishing sound financial and fiscal systems
Outstanding Debt of General Government
/GDP
Tax Revenues / GDP
Outstanding Debt of Central
Government /GDP
Taiwan’s Tax Burden and Outstanding Debt
Fiscal reformTo raise the tax burden to 15% within three years by broadening the tax base and simplifying the tax system
Target
16
Abolishing the exemption from personal income tax of military personnel and elementary and high school teachers.Abolishing the stamp duty, raising the business tax by
1-2%, and pushing for the adjustment of commodity tax toward a green-oriented system.
Decreasing the highest rate of the estate & gift tax from its current 50% to 40%.
Pushing for the implementation of an Alternative Minimum Tax aimed at achieving equality of taxation as well as industrial development.
◎Initiatives of Fiscal Reform
17
By the end of 2005, the market shares of the top three banks
to be over 10%.
By the end of 2005, the number of state-owned banks to be
reduced to 6 or less.
By the end of 2006, at least one financial institution to be run
by a foreign company or listed on an overseas market.
By the end of 2006, the current 14 financial holding companies
to be reduced by half.
Targets
◎ Launching the Second Phase of Financial Reform
Rate of NPLs in Domestic Banking Institutions
(March 2002)8.04 %
(March 2005)2.74 %
18
The Possible Types of Free Ports
Legend:
Type 1 : Within the control zone of an international airport or seaport
Type 2 : Area adjoining the control zone of an international airport or seaport
Keelung Harbor
Taichung Harbor
Taipei Harbor
Taoyuan Air Cargo Park
Kaoshiung Harbor
Extending Global Logistics Operations ◎ Free Port Locations
19
ASEAN Free Trade Area (AFTA)
ASEAN + 3 (ASEAN + China, Japan, and South Korea)ASEAN-India
(2011)
ASEAN + N
China-ASEAN Free Trade Agreement
(2010)
ASEAN-Japan
Framework for Comprehensive Economic Partnership concluded between Japan and ASEAN in 2003
ASEAN-New Zealand and Australia Closer Economic Relations (CER)
◎ Current Progress on FTAs
Economic Integration in Asia
20
FTAs under NegotiationNicaragua, Guatemala,Paraguay
FTA ConcludedPanama
Potential FTA PartnersUS, Japan, New Zealand,Singapore
◎ Taiwan’s Progress on FTAs
FTAs under StudyHonduras, El Salvador,Costa Rica,Dominican Republic
Choose our battles: A Taiwan-US FTA Support promotion of liberalization in multilateral organizations
Difficulty Faced by Taiwan in Signing FTAs: China
Taiwan’s Response:
21
2003 2004 2005Economic Performance 33 24 18Government Efficiency 20 18 19Business Efficiency 11 7 6Infrastructure 23 20 18
17
16
12
17
20
65
76
4Population less than 20 million
Total
2000 2001 2002 2003 2004 2005
11
3
Source: IMD, World Competitiveness Yearbook.
◎ IMD Global Competitiveness RankingsIII. FUTURE PROSPECTS
22
2005~20082005~2008
4.94.9 %%4.94.9 %%
US$18,000US$18,000(( 20082008 ))US$18,000US$18,000(( 20082008 ))
4.04.0 %(%( 20082008 ))4.04.0 %(%( 20082008 ))
1.41.4 %%1.41.4 %%
2005~20152005~2015
4.64.6 %%4.64.6 %%
US$27,000US$27,000 (( 20201515 ))
US$27,000US$27,000 (( 20201515 ))
4.04.0 %(%( 20152015 ))4.04.0 %(%( 20152015 ))
1.21.2 %%1.21.2 %%
TargetsTargets
Per capita GDPPer capita GDPPer capita GDPPer capita GDP
Unemployment rateUnemployment rateUnemployment rateUnemployment rate
Employment Employment increaseincreaseEmployment Employment increaseincrease
CPI increaseCPI increaseCPI increaseCPI increase
Growth of potential GDP
Economic growth
New Century Manpower Plan
◎ Macroeconomic Targets
23
Thank you