Mediocre Performance of Tsai Administration's Economic Policies
Economic Daily News Editorial, January 16, 2023
In 2016, then president-elect Tsai Ing-wen, accompanied by her core aides Lin Chuan, Ho Mei-yueh and Kung Ming-hsin, visited companies representing major industries between her election in January and inauguration in May. Accordingly, the new government proposed initial five pillar industries, including intelligent machinery, Asia Silicon Valley, green energy, biomedicine, national defense, and aerospace and subsequently added new agriculture and the circular economy, forming the so-called “5+2 Major Innovative Industries” plan.
It's the right time, after seven years, to examine the performance and effectiveness of these driving policies to Taiwan’s economy that were trumpeted at the time.
Biomedicine can be evaluated as a comparatively successful industry among the 5+2 innovative industries plan. To encourage the industry, the Tsai administration amended the “Act for the Development of Biotech and Pharmaceutical Industry” in 2021, extending its applicability for an additional ten years and also adding more favorable incentives for the industry. As a result, Taiwan biotech industry had experienced a boom in new startups.
Benefiting from the widespread global pandemic, the biotechnology and medical industry saw a surge in the stock market, with many companies scoring increased investment, finance capital and stock dividends. However, after the hype died down, investors have become disenchanted with the fact that only a limited number of companies are equipped with competitiveness in the international market. Moreover, the failure of the Medigen COVID-19 vaccine to get approval internationally made it clear that the biotech and medical industry, just as the semiconductor industry, requires a long-term cultivation and development process, at least three or four decades.
Green energy is somehow utopian and aligns with international trend of carbon reduction. Like biomedicine, it has high technological barriers, difficult to overcome in a short period of time. As a second option, the government sought to introduce foreign advanced enterprises for joint ventures and established the Shalun Green Energy Science City in Tainan to attract more investments. However, with all the efforts over seven years and investments of almost one trillion TWD, Taiwan's green energy national team still lacks international competitiveness and key technologies remain in the hands of foreign companies. The so-called joint ventures with foreign companies are just a form of camouflage, and the Shalun Green Energy Science City only consists of several buildings, with little to show in terms of research and development programs if compared to international standards.
In terms of core programming for machine tools and Industry 4.0, the progress of smart machinery industry can be described as “walking on a treadmill”. The "Asia Silicon Valley" initiative, led by Minister Kung Ming-hsin of the National, has yet to deliver concrete results compared to what Singapore and Shenzhen have achieved.
Harking back to almost ten years ago, ex-Chairman Tsay Ching-yen of the Industrial Technology Research Institute (ITRI) had strongly advocated Hsinchu as the best incubator for developing Asia's Silicon Valley because it governs Hsinchu Science Park, two top universities, ITRI, and Hsinchu Biomedical Science Park geographically. Unfortunately, the Tsai administration, succumbed to political maneuvering, chose Taoyuan instead. Seven years have passed, why not ask the people in Taoyuan, do they feel the existence of Silicon Valley?
As for the defense industry, the original scheme of three goals are advanced training aircraft, indigenous defense submarine, and information security. Although the advanced training aircraft has already completed its test flight, the other two are still lagging behind. In the case of indigenous defense submarine production, Taiwan can only build hulls while core technologies such as silent propellers, deep-sea sonar, and weapon systems ultimately need to be introduced from abroad.
With a view to strengthening national information security, the Tsai administration raised the level of military information security units to the Information, Communications and Electronic Force Command directly under the Ministry of National Defense and inaugurated the Ministry of Digital Affairs under the Executive Yuan last year. With the continuous cyberattacks of government portal websites from Chinese cyber warriors, it is crystal clear that there is still plenty of room for progress in Taiwan's information security capabilities.
Compared to the previous five innovative industries, the progress of the new agriculture is even more disappointing. Due to the Chinese import bans on various agricultural and aquatic goods, Taiwanese citizens and students are forced to consume more giant groupers, pineapples and sugar apples. In addition, Taiwan agriculture continues to suffer from damages caused by natural disasters. The Council of Agriculture, Executive Yuan, needs to clarify to farmers in Taiwan on progress of the new agriculture goals, including agricultural mechanization, smart agriculture and technological breed improvement.
On the contrary, we have witnessed significant advancements in the AquaPolis Program under the “30 by 30” food security goal launched by the Singapore government and the floating farm project and plants factory in the Netherlands, which manifest Taiwan's slow progress in its agricultural sector and inevitably disgrace people in Taiwan.
In implementing circular economy, private enterprises in Taiwan are facing a predicament due to fallacious energy and environmental protection policies, while constant shortage of electricity and water constitutes a nightmare for them.
In fact, media coverages on the 5+2 innovative industries have already faded away because of lack of momentum. We would like to remind all politicians that feasibility studies and cost-benefit assessments based on opinions or consensus of all parties concerned are prerequisites before devising policies and ensuring their success. High-profile policies driven by election consideration are doomed to fail. And pragmatism is key for further advancing Taiwan’s economy as it cannot sustain endless political tortures.