Taiwan Business TOPICS by AmCham Taipei

DU HR por ST Sec t on RY tor the FO CU S

THE AMERICAN CHAMBER OF COMMERCE IN TAIPEI

Taiwan Business

Topics

The See-Sawing Economy 起起伏伏的經濟

TAIWAN BUSINESS TOPICS November 2013 | Vol. 43 | Issue 11 中華郵政北台字第號執照登記為雜誌交寄 5000 11_2013_Cover.indd 1

NT$150

November 2013 | Vol. 43 | Issue 11 www.amcham.com.tw

2013/11/5 5:24:32 PM

advertorial

a Message from the international research-based Pharmaceutical Manufacturers association (irPMa)

Some Positive Developments under the Second-Generation Healthcare Program

he Second Generation National Health Insurance Law, which took effect at the beginning of this year, was welcomed by virtually all stakeholders as helping to ensure the long-term financial sustainability of Taiwan’s widely admired national healthcare system. It also aimed to provide a more transparent and predictable mechanism for setting drug reimbursement pricing, for example calling for the establishment of a two-year pilot Drug Expenditure Target system. Under DET, an annual target will be agreed upon in line with the overall growth rate set for healthcare spending, and industry will take responsibility for making up any differential if the target is surpassed. Devising the implementation regulations for what inevitably was a complicated piece of legislation presented a number of difficulties, however. When the Department of Health, now reorganized as the Ministry of Health and Welfare (MOHW), issued draft regulations for public consideration earlier this year, international manufacturers of research-based pharmaceuticals had serious concerns about several of the provisions. Industry representatives viewed those proposed regulations as having the potential to severely stifle the market in Taiwan for original drugs, including new and innovative products. Fortunately, most of the problem sections of the draft regulations have now been revised to bring them more in line with general international practice. IRPMA would like to express its appreciation to government officials from the various relevant departments who made an effort to take industry’s feedback into consideration and showed flexibility and openmindedness in modifying the regulations. Some of the most salient changes involved implementation of Article 46 of the new law, which mandated an adjustment in reimbursement prices as drugs go off-patent. The initial draft regulation stipulated a steep 30% price cut when the patent expires, and proposed that the mechanism be applied not only to future cases but even to drugs that went off-patent during the past five years. After discussion, the health authorities agreed that enforcing a new law retroactively would be contrary to established norms in international jurisprudence, and that the automatic 30% price decrease should be replaced by a more reasonable adjustment based on comparisons with the prices for similar products both internationally and domestically. A key factor in that decision was the already very low prices of pharmaceuticals in Taiwan compared with benchmark countries, and the possibility that manufacturers would be forced to withdraw products from the Taiwan market if prices underwent further drastic reductions. 4

In addition, for products that have long been off-patent, the health authorities agreed to extend the time span – from the previously proposed 10 years to 15 – before generics of proven quality would be eligible for the same reimbursement level as the original drug. Further, the mechanism for implementing DET was defined in a way that would assure a reasonable annual growth rate and would place a cap on the scope of price cuts imposed when drug expenditures exceed the DET target. Despite the positive progress on many fronts, IRPMA urges the health authorities to make improvements in another aspect of the second-generation NHI program. The revised law also created a new Pharmaceutical Benefits Reimbursement Scheme (PBRS) committee, whose 23 members include representatives from government agencies, hospital associations, and consumer and patient groups, to set reimbursement levels for new healthcare products. But the large size of the committee and the lack of professional healthcare experience of some of the members have substantially slowed down the decisionmaking process. It currently takes an average of two years for a drug to receive a reimbursement price. Moreover, due to the concerns by the hospitals that the acceptance of innovative new drugs will create additional expenditures on pharmaceuticals, with consequently less budget available to the hospitals, the dominant position on PBRS of the hospital sector (it holds 13 of the seats) has lowered the approval rate and reimbursement prices that the committee has been offering for new drugs. The number of new drugs receiving a reimbursement price so far this year has dropped by more than 50% from a year ago. Although the PBRS committee convenes monthly, its meetings alternate between considering pharmaceutical and medical-device issues. To accelerate the decision-making process, we recommend that meetings on drug reimbursement be held on a monthly schedule and that ways be found to speed up internal communications within the committee. We also urge the health authorities to ensure that PBRS does not adopt a posture that unduly blocks the access of Taiwan’s patients and physicians to the latest innovative treatments. IRPMA looks forward to continued cooperation with the Taiwan health authorities to pursue our mutual interest in maintaining a sound and effective healthcare system. We all seek an environment that will meet the long-term medical needs of the Taiwan public, while assuring favorable conditions for expanded investment by the international pharmaceutical industry in this market.

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來自中華民國開發性製藥研究協會的消息

advertorial

二代健保的正向發展

對

於今年初上路的健保法修正案（又稱二代健保），相關各方大都表示歡迎，認為新法有助於確保台灣廣獲好評的健保制度能有永續性的財務

根基。二代健保的另一項宗旨在於提供一個更透明、更可預測的藥物給付價格設定機制，例如試辦為期兩年的「藥費支出目標制」（Drug Expenditure Target system）。在此制度下，年度支出目標設定將與整體醫療健保支出的成長目標一致；支出超出上限的部分，要由製藥產業藉調整藥價來吸收。然而要為原本就相當複雜的全民健保法制定施行細則，存在許多挑戰。衛生署（目前已改組為衛生福利部）今年初公布法條執行辦法修正草案以徵詢各方意見時，跨國性原開發藥廠對於當中多項條款深表疑慮。業界代表認為，這些修正條文恐怕會嚴重阻礙原廠藥在台灣的市場，包括具有創新性的新藥品。

儘管有多方面的正向發展，I R P M A 呼籲衛生當局應就二代健保制度的其他層面進行改善。全民健保法修正

值得慶幸的是，修正草案中引發藥廠關切的條款目前大

案規定設立「藥物給付項目及支付標準共同擬訂會議」

多已修正，以使其規定更符合一般國際慣例。中華民國開

（PBRS ），分別由政府部會官員、醫院協會、消費者與

發性製藥研究協會（IRPMA）要感謝台灣政府相關部會官

病患團體代表等23位人士擔位委員，為新上市的醫療產品

員，願意傾聽業界的意見，並於修正法案時展現出彈性和

訂定給付標準。然由於人數眾多，加以部份成員缺乏專業

開放的態度。

醫療背景，使得決策程序的效率大幅降低。目前平均需耗

修正最重要的部分包括施行健保法第46條的內容，

時兩年才能為一項藥品訂出給付價格。

該條文規定藥品在專利期滿後，應調降藥品給付價格。

此外，由於各醫院憂心接受新藥意味額外的藥費支出，

原修正草案規定，專利期滿後調整幅度高達30%，而且

將導致可用預算減少，PBRS 當中具有主導優勢的醫院代

不僅適用於尚未到期的專利藥品，也適用於在過去五年

表（佔有13席）運作下，會議已逐步刪減新藥核准比率及

內專利期滿的藥品。經多方討論後，主管機關同意追溯

給付價格。今年以來，獲得給付定價的新藥數量較前一年

適用新法不符合國際規範，自動調降30%的規定也不合

驟減五成以上。

理，應該參考國內外相似藥品價格，採行更合理的價格

PBRS 會議雖然是每月定期召開，但藥品與醫療器材兩

調整措施。主管機關做成這個決定的關鍵因素在於，相

者是隔月輪流排上議程。為加速決策過程，本協會建議會

較於對照國家，台灣的藥價已屬相當低廉；若再進一步

議每月討論藥品給付議題，並設法提升會議成員之間的內

大幅調降藥價，藥廠可能會在台灣市場停售相關藥品。

部溝通效率。此外，本會也籲請衛生當局應確保PBRS運

此外，針對逾專利期已久的藥品，衛生當局也同意延長

作順暢，勿從本位主義出發，過度阻礙台灣病患與醫師取

專利的有效期 –– 從之前提案的10年延長為15年––之

得創新療法的機會。

後品質通過認證的學名藥才能享有與原廠藥相同的給付標

中華民國開發性製藥研究協會期望與台灣衛生當局持續

準。此外，「藥費支出目標制」的細節也做了修正，讓藥

合作，一同努力使台灣醫療體系更加健全而有效率。我們

價每年有合理的上調空間，並且在藥費支出超出目標值

希望台灣的醫療環境能夠滿足民眾長期的藥品需求；並維

時，為藥價調降的幅度設定上限。

持有利的投資條件，吸引國際性藥廠在台擴大投資。

想了解更多資訊，請透過以下方式與我們聯絡：中華民國開發性製藥研究協會

For more information, please contact: International Research-based Pharmaceutical Manufacturers Association (IRPMA) 台北市南京東路五段188號9樓之八

9F-8, 188 Nanjing E. Rd., Sec. 5, Taipei 10571, Taiwan Tel: +886-2-2767-5661Fax: +886-2-2746-8575 www.irpmn.org.tw

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CONTENTS NEWS AND VIEWS

8 Editorial NOvE mb Er 2 0 1 3 vOlumE 43, N umbE r 11 一○ 二年十一月號

Accelerate Preparations for TPP

促使台灣早日做好加入TPP的準備

5 Taiwan Briefs Publisher

發行人

Andrea Wu

吳王小珍

Editor-in-Chief

總編輯

Don Shapiro

沙蕩美術主任 /

Art Director/ Production Coordinator

Taiwan at Plateau in Doing Business Survey; Scrutinizing Taiwan’s Hopes for TPP Entry

經商環境排名台灣高檔鈍化；探討台灣加入TPP 之可能性

後製統籌

Katia Chen

陳國梅

Translation

翻譯

Yichun Chen, Frank Lin, Sonia Tsai 陳宜君, 林怡平, 蔡函岑

American Chamber of Commerce in Taipei 129 MinSheng East Road, Section 3, 7F, Suite 706, Taipei 10596, Taiwan P.O. Box 17-277, Taipei, 10419 Taiwan Tel: 2718-8226 Fax: 2718-8182 e-mail: amcham@amcham.com.tw website: http://www.amcham.com.tw 名稱：台北市美國商會工商雜誌發行所：台北市美國商會臺北市10596民生東路三段129號七樓706室電話：2718-8226 傳真：2718-8182 Taiwan Business TOPICS is a publication of the American Chamber of Commerce in Taipei, ROC. Contents are independent of and do not necessarily reflect the views of the Officers, Board of Governors, Supervisors or members. © Copyright 2013 by the American Chamber of Commerce in Taipei, ROC. All rights reserved. Permission to reprint original material must be requested in writing from AmCham. Production done in-house, Printing by Farn Mei Printing Co., Ltd. 登記字號：台誌第一零九六九號印刷所：帆美印刷股份有限公司經銷商：台灣英文雜誌社台北市108台北市萬華區長沙街二段66號發行日期：中華民國一○二年十一月中華郵政北台字第5000號執照登記為雜誌交寄 ISSN 1818-1961

Acting Chairman/ Thomas Fann Vice Chairmen/ Bill Wiseman / William J. Farrell Treasurer: Sean Chao Secretary: Fupei Wang 2012-2013 Governors: Richard Chang, Sean Chao, Michael Chu, Louis Ruggiere, Revital Golan, Scott Meikle, Lee Wood, Ken Wu. 2013-2014 Governors: Thomas Fann, William Farrell, Ajit Nayak, Neal Stovicek, Stephen Tan, Fupei Wang, Bill Wiseman. 2013 Supervisors: Susan Chang, Cosmas Lu, Gordon Stewart, Carl Wegner, Julie Yang. COMMITTEES: Agro-Chemical/ Melody Wang; Asset Management/ Christine Jih; Banking/ Victor Kuan; Capital Markets/ Jane Hwang, C.P. Liu, Shirley Tsai; Chemical Manufacturers/ John Tsai; CSR/ Lume Liao, Fupei Wang; Customs & International Trade/ Stephen Tan; Education & Training/ Robert Lin, William Zyzo; Greater China Business/ Helen Chou; Human Resources/ Richard Lin, Seraphim Mar; Infrastructure/ L.C. Chen, Paul Lee; Insurance/ Dan Ting, Lee Wood; Intellectual Property & Licensing/ Jason Chen, Peter Dernbach, Jeffrey Harris, Vincent Shih; Manufacturing/ Thomas Fan, Hans Huang; Marketing & Distribution/ Wei Hsiang, Gordon Stewart; Medical Devices/ Susan Chang, Tse-Mau Ng, Dan Silver; Pharmaceutical/ David Lin, Jun Hong Park; Private Equity/ William Bryson; Public Health/ Jeffrey Chen, Dennis Lin; Real Estate/ Tony Chao; Retail/ Prudence Jang, Douglas Klein, Ajit Nayak; Sustainable Development/ Kenny Jeng, Kernel Wang; Tax/ Cheli Liaw, Jenny Lin, Josephine Peng; Technology/ Revital Golan, Scott Meikle, Jeanne Wang; Telecommunications & Media/ Thomas Ee, Joanne Tsai, Ken Wu; Transportation/ Michael Chu; Travel & Tourism/ Anita Chen, Pauline Leung.

By Jane Rickards

13 Issues

COVER SECTION

17 The See-Sawing Economy

起起伏伏的經濟 By Jane Rickards

20 How will Recent Political Struggles Affect the Economy? 22 Bucking Up Foreign Investment MARKET TRENDS

28 Agricultural Applications – a Promising New Outlet for Taiwan’s LEDs Lighting for growing food indoors in plant factories is expected to be a rapidly growing industry in the coming years. By Jens Kastner

TAIWAN BUSINESS

31 Can 3D Printing Live Up to the Hype? In certain niche industries, Taiwan should benefit from being able to custom-manufacture small quantities of high-margin products. By Timothy Ferry

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n ov em b er 2 0 1 3 • volu m e 4 3 n u m be r 1 1

photo : courtesy of adecco

InDuSTrY

CuS

A Report on the HR Sector

It's All About People 36 The Millennium Generation Meets Taiwan’s Job Market Today’s new recruits strike some as spoiled and perhaps a bit quirky, but they can be more creative and daring than their elders. By Alan Patterson

38 HR Executives Taking on Expanded Roles in Many

Enterprises

As business challenges grow more complicated, companies often look to the department for more strategic support. By Philip Liu

AMCHAM EVENT

46 2013 American Ball: “Hooray for Hollywood!”

40 CHRMA: Cradle of HR Managers By Philip Liu

42 Sourcing Strong Leadership Talent in Taiwan Today Seven suggestions to MNCs for ways to find good candidates for executive positions. By Chris Traub

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2013/11/7 1:14:41 PM

Accelerate Preparations for TPP

rom President Ma Ying-jeou on down, high-level Taiwan government officials have expressed the desire to see Taiwan’s eventual participation in the Trans-Pacific Partnership (TPP), the regional trade grouping currently being formed through negotiations among 12 countries, including such major economies as the United States, Japan, Canada, Australia, and Mexico. For a country as dependent on international trade as Taiwan, membership in TPP would unquestionably offer substantial benefits – and exclusion could bring some severe handicaps, reducing Taiwan’s attractiveness as a location for investment and contributor to global supply chains. Until the current participants complete their negotiations, it won’t be feasible for additional countries to formally apply for second-round consideration. But some of Taiwan’s well-wishers internationally have been urging the Ma government to starting doing more at this stage – domestically and abroad – to help pave the way for Taiwan’s eventual candidacy. For example, a recently published paper by former American Institute in Taiwan chairman Richard Bush, whose positions at the prestigious Washington D.C.-based Brookings Institution includes the Chen-Fu and Cecilia Yen Koo Chair in Taiwan Studies, proposes a sixstep approach that Taiwan could take to boost its chances for TPP entry when the time comes. One of the key elements that Bush cites is the need to forge a broad political consensus within Taiwan society on why TPP membership is vital to Taiwan’s long-term economic competitiveness. Another is the need to demonstrate Taiwan’s strong commitment to the high standards of trade liberalization that TPP is expected to represent, so as to restore Taiwan’s credibility as a reliable trading partner with the United States and the other TPP negotiating parties.

A government task force led personally by Premier Jiang Yi-huah reportedly has begun exploring the likely economic reforms that Taiwan would have to undertake to meet the anticipated TPP requirements. AmCham urges the government to treat this exercise with the utmost urgency. Until even a few months ago, it seemed likely that the current TPP negotiations could take years to be concluded. In particular, many observers viewed the late addition of Japan to the talks just half a year ago as a momentous development, but one that could well cause a major delay in completing the process. When the 2013 AmCham Doorknock delegation was in Washington in September, the group was struck by the determination of U.S. officials to see the pact finalized quickly – if not by the end of 2013, then fairly early in 2014. The Taiwan authorities may have less time than they previously expected to make the internal and external preparations to launch Taiwan’s bid for a place in TPP in the second tranche. AmCham reiterates the appeal made in the 2013 Taiwan White Paper for President Ma to mobilize a national campaign to promote support for TPP entry both within the general public and in the government bureaucracy. With Taiwan’s future competitiveness and prosperity on the line, the Chamber further suggests that the President appoint a prominent and influential individual, whether from the public or private sector, to spearhead the drive for TPP readiness. Former Vice President Vincent Siew or TSMC Chairman Morris Chang, for example, would be highly suitable choices for that role. Whoever is chosen, AmCham pledges its support to help ensure that Taiwan can take its place among the TPP economies committed to the highest standards of free trade.

促使台灣早日做好加入TPP的準備

自

Taiwan Studies）的首屆講座。

馬英九總統以降的台灣政府高層官員都表示，希望台灣最終能加入跨太平洋夥伴協議（TPP）這是最近由

行政院長江宜樺親自領導的政府專案小組，據傳已開始研

十二國透過談判成立的區域性貿易集團，包括美、

議台灣所須採取的可能經濟改革，以達到TPP預料會提出的要

日、加、澳、墨等主要經濟體在內。對於像台灣這樣仰賴國際

求。台北市美國商會敦促台灣政府，將此事列為最迫切需要處

貿易的國家來說，加入TPP無疑會帶來很多好處――被排拒在

理的對象。即使是到數個月前，跡象似乎都還顯示，既有TPP

外則會導致一些嚴重的不利後果，讓台灣作為投資地點和全球

成員國的談判可能需要數年才能結束。尤其日本遲至半年前才

供應鏈貢獻者的吸引力降低。

加入談判，許多觀察家將之視為重大發展――但也可能對完成

在TPP既有成員國完成協商前，其它國家若想正式申請成

談判造成重大延誤。

為第二輪談判的候選者，恐怕行不通。不過台灣的一些國際

本商會的2013年敲門之旅（Doorknock）代表團九月訪問

支持者都敦促馬政府，現在就開始採取更多行動（不論是

華府時，非常高興得悉美國官員決心要讓協議迅速敲定――如

在國內或國外），為台灣最終取得候選資格鋪路。例如前美

果無法在2013年底達成，那麼就會在2014年初。台灣當局可

國在台協會（AIT）理事主席卜睿哲（Richard Bush）最

能無法擁有像過去所預期的那麼多時間進行對內或對外的準

近發表報告，提議台灣可採取六步驟方法，在時機來臨時

備，推動台灣爭取加入TPP第二輪談判。

提高加入TPP的機會。他提出的關鍵步驟之一，是必須在台

本商會重申在《2013年台灣白皮書》中的呼籲，懇請馬總

灣社會內部，達成加入TPP是台灣長期經濟競爭力命脈的廣

統發動全國性運動，對一般民眾和政府官僚內部宣導支持加入

泛政治共識。另一個則是必須證明，台灣堅決致力於高標準

TPP。鑒於台灣未來的競爭力和繁榮都瀕臨險境，本商會進一

的貿易自由化（預料會以TPP為代表），以恢復台灣的可信

步建議，馬總統指派一位深具影響力的重要人士（不論是來自

度，成為美國和其它TPP談判成員國的可靠貿易夥伴。卜睿

公部門或民間），領導做好加入TPP的準備。例如，前副總統

哲不僅在夙負盛名的華府智庫布魯金斯研究所（Brookings

蕭萬長或台積電董事長張忠謀，都是高度適合擔任此角色的人

I n s t i t u t i o n）擔任的職務並也擔任包括辜振甫暨辜嚴倬雲

選。不論由誰獲選，本商會都矢言支持，幫助確保台灣躋身

台灣研究講座（Chen-Fu and Cecilia Yen Koo Chair in

TPP經濟體之列，堅決落實自由貿易的最高標準。

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— jane ri ckards —

CROSS-STRAIT

economic indicaTors

CHina PUsHes fOr POLitiCaL taLKs Beijing in early October reminded Taiwan that it expects the warming cross-Strait economic relations to lead to talks on political matters, implying a route to eventual unification. In a conversation with Taiwan’s former vice president Vincent Siew on the sidelines of the APEC summit in Bali, Indonesia (which Siew attended as President Ma Ying-jeou’s representative), Chinese President Xi Jinping made his strongest statement on the unification issue to date. “The longstanding political division between the two sides will have to eventually be resolved step-bystep and cannot be passed along from generation to generation,” the official Xinhua news agency paraphrased Xi as saying. President Ma has adopted a policy of increasing economic ties with China while seeking to put politics on the backburner, knowing that any talk of unification would be extremely sensitive and divisive within Taiwan. But Xi’s remarks indicate that China is not willing to let the issue slide indefinitely. Taiwan sTock exchange index & value

Unit: US$ billion Current Account Balance (2013 Q2) Foreign Trade Balance (Sept) Foreign Trade Balance (Jan-Sept) New Export Orders (Sept) Foreign Exchange Reserves (end Sept) Unemployment (Sept) Discount Rate (Oct) Economic Growth Rate 2013 (Q2)p Annual Change in Industrial Output (Sept)p Annual Change in Industrial Output (Jan-Sept)p Annual Change in Consumer Price Index (Sept) Annual Change in Consumer Price Index (Jan-Sept) note: p=preliminary

MnD CaUtiOns On CHina’s MiLitarY bUiLDUP The Ministry of National Defense (MND) has warned that China is building military capabilities that may enable it to successfully invade Taiwan by 2020. In its 2013 National Defense Report, the Ministry said China was developing technologies aimed at preventing the United States from coming to Taiwan’s aid in the event of an attack. It noted that China is enhancing its ability to make long-range precision strikes and deny access to the region to ships coming to Taiwan’s defense. China’s military spending has more than doubled since 2006.

THE RED LINE SHOWS CHANGES IN TURNOVER AND THE SHADED AREA CHANGES IN THE TAIEX INDEX.

8500

135

8250

120

8000

105

7750

7500

7250

7000

6750

6500

6250

October data source: twse

Unit: nt$ billion

DOMESTIC Ma-wanG sPat stiLL DraGGinG On The political infighting between President Ma Ying-jeou and Legislative Yuan Speaker and ruling party heavyweight Wang Jin-pyng continued in October with no resolution in sight. In his capacity as chairman of the Kuomintang (KMT), Ma in early September sought to expel Wang from

13.80 2.3 24.7 38.42 413

Year Earlier 10.90 4.10 20.0 37.66 397

4.24% 1.875% 2.49% 1.06% 0.47% 0.83% 0.88%

4.32% 1.875% -0.12% 2.44% -1.51% 2.95% 1.84%

sources: moea, dG bas, cbc, boFt

the party, which would mean the loss of his legislative seat and the speakership. The expulsion attempt was based on alleged evidence obtained from wiretapping that Wang tried to influence the then justice minister to quash prosecutors’ attempts to appeal a lower court’s acquittal of prominent opposition lawmaker Ker Chien-ming in an embezzlement case. Wang, who is highly popular among lawmakers, then successfully obtained a court injunction enabling him to hold onto his seat while he contests his expulsion. Ma suffered a further setback in late September when the KMT lost an appeal in the High Court against the injunction. In a possible olive branch to Wang, the KMT said the party would not take the appeal on to the Supreme Court. Friction between the executive and legislative branches reached a new low at the end of September when prosecutors announced that in their pursuit of Ker they had inadvertently wiretapped the Legislative Yuan switchboard. Ma was also widely criticized for having apparently intervened in a legal matter, abusing the independence of the judiciary.

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DOUBLE TEN SIT-IN - Demonstrators supporting the no-confidence vote against Premier Jiang Yi-huah's government are blocked by police from getting too close to National Day ceremonies. photo : ap/ wally santana

DPP’s nO-COnfiDenCe MOtiOn faiLs tO Pass Premier Jiang Yi-huah in mid-October survived a no-confidence motion brought by the opposition Democratic Progressive Party (DPP), which had accused him of violating the constitution by supporting Ma’s efforts to oust Wang from the legislature. Forty-five lawmakers voted in favor of the motion, falling short of the 57 needed for it to pass. As the DPP has only 40 seats in the 113-seat legislature compared with the KMT’s 65, the result was expected. Following the vote, the DPP agreed to allow Jiang to deliver his policy report to the legislature, after blocking him from taking the podium for a month. After the no-confidence vote, business leaders urged the ruling and opposition parties to stop squabbling and instead focus on passing laws to help boost the economy. General Chamber of Commerce chairman

Lawrence Chang warned that if the opposition party adopts policies just for the sake of opposing the ruling party, it would sap Taiwan’s competitiveness. Kenneth Lo, chairman of the Taipei-based Chinese National Association of Industry and Commerce, expressed similar impatience with the political impasse. In a related development, the Prosecutors Evaluation Committee was investigating whether State Prosecutor-General Huang Shyh-ming and two prosecutors, who had been found guilty by a Ministry of Justice panel of misconduct in their oversight of the wiretapping, should be disciplined. The three were accused of carelessness that led them to “unintentionally” bug the legislature.

natiOnaL DaY MarreD bY PrOtests For the first time since Ma was elected in 2008, large-scale protests

took place during Taiwan’s October 10 National Day celebrations. An estimated 10,000 demonstrators – many of them students or young workers – converged on downtown Taipei, where police kept them away from the area where Ma was delivering his national address. In the early morning, several demonstrators climbed onto the Legislative Yuan building in an attempt to replace the R.O.C. flag with a banner calling on Ma to step down from the presidency. The protesters also denounced the crossStrait trade-in-services pact that is currently blocked in the legislature and the KMT’s support for construction of the fourth nuclear plant. In his address, Ma – whose popularity had sunk to 9% according to a recent survey – defended liberalized trade and closer economic ties with China. He also chatted comfortably with Wang Jin-pyng during the ceremonies, fueling local media speculation about the

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photo : wikipedia

CaMPbeLL UrGes taiwan tO PUrsUe tPP aMbitiOns

fOrMer neXt eMPLOYee an internet sensatiOn

Urging Taiwan to diversify its markets to avoid over-concentration on China, former U.S. Assistant Secretary of State for East Asian and Pacific Affairs Kurt Campbell said that the Trans-Pacific Partnership (TPP) free-trade bloc currently under negotiation potentially opens a “huge window of opportunity” for Taiwan. But he cautioned that Taiwan will need to show political determination if it wishes to join the TPP, and

Marina Shifrin, a native of Chicago, became a global sensation after a video she posted on YouTube announcing she was quitting Taipei’s Next Media Animation went viral, obtaining 16.5 million hits as of press time. In the video, entitled “An Interpretive Dance for My Boss Set to Kanye West’s Gone,” Shifrin, a University of Missouri journalism graduate,

Taiwan's JanuarY To sePTemBer Trade Figures (Year on Year comParison)

HK/China

Japan

ASEAN

TOTAL

2012

2013

2012

2013

21.9 20.4

Europe

2012

2013

2012

2013

Imports

202 226.6

2013

203.8 223.7

2012 U.S.

43.1

2013

24.1

41.3

2012

24.1

32.4 14.3

China raised objections in midOctober to a move by the European Parliament to build closer trade ties between Taiwan and the European Union. The parliamentary body had approved a resolution urging the European Commission to begin bilateral talks with Taiwan for an agreement on investment protection and market access. China, which claims sovereignty over Taiwan, said it opposes the development of any official ties between the two sides. Chinese Foreign Ministry spokeswoman Hua Chunying added that Beijing does not object to nongovernmental contact between the European Union and Taiwan. “We hope that the E.U. side could bear in mind the overall interests of China-E.U. relations, earnestly honor its commitment to the one-China principle, deal with Taiwan-related issues with prudence, and refrain from having any official contact of signing any official agreement with Taiwan,” Hua said. The E.U. is Taiwan’s fourth-larg-

that the effort will need the backing of all major domestic political parties. Speaking at a luncheon in Taipei, Campbell, one of the architects of the Obama administration’s policy “pivot” to Asia, noted that while Taiwan’s economic relations with China have been successful, “diversification is in your strategic interest.” He also encouraged Taiwan to inject greater ambition and creativity in its relationship with the United States. Campbell added that the U.S.-Taiwan unofficial relationship is now the strongest it has been in decades, and that the resumption this past March of Taiwan-U.S. trade talks under the Trade and Investment Framework Agreement (TIFA) is reason for optimism about future prospects for the relationship.

21 21.4

beiJinG ObJeCts tO taiwan-eU ties

est trade partner, and Taiwan is the E.U.’s seventh-largest trade partner in Asia. Taiwan hopes an investment agreement would pave the way for a comprehensive economic cooperation agreement in the future.

I N T E R N AT I O N A L

Taiwan’s newest addition to the panda family, a cub born July 6 to female giant panda Tuan Tuan and her mate Yuan Yuan, is slowly learning to walk and is waving her arms, the Taipei Zoo said in October. Yuan Zai now weighs slightly more than 6 kilograms, compared with just 183.4 grams when she was born, and has started teething. The parents were presented to Taiwan from China as a goodwill gift in 2008 as the Ma administration sought to lower crossStrait tensions.

18.8 24.2

babY PanDa sLOwLY Learns MOtOr sKiLLs

89.2

current state of their relationship.

32.7

17.9 24.7

87.7

32.4

Exports

Unit: US$BN Source: BOFT

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is seen boogying around the Next Media Animation newsroom as subtitles spell out her job complaints. “For almost two years I’ve sacrificed my relationships, time and energy for this job. And my boss only cares about quantity and how many views each video gets,” one subtitle says. Another says “So I thought I’d make a video of my own… Oh, and to let my boss know I quit.” The reason for the video’s popularity is probably because it fulfills disgruntled workers’ fantasies. Shifrin was then scooped up by Queen Latifah, who offered her a job when Shifrin appeared on her talk show (it was not clear whether Shifrin accepted). For its part, Next Media Animation cheekily responded with a parody video in which happylooking employees are seen dancing to the same Kanye West song. The NMA YouTube video, which has subtitles such as “We want to wish Marina well and let everyone know that we are hiring” obtained 4.2 million hits.

BUSINESS CitiGrOUP fineD fOr LeaKinG aPPLe researCH Citigroup will pay a US$30 million fine to the state of Massachusetts after one of its Taiwan-based analysts improperly sent confidential research on an Apple supplier to leading clients among hedge funds and institutional investors, including SAC Capital, Citadel, and GLG Partners, Reuters reported. According to Massachusett’s Secretary of the Commonwealth William Galvin, Citigroup analyst Kevin Chang emailed unpublished research about Hon Hai Precision Industry Co., a major supplier of Apple Inc. iphones, to selected clients. The research included lower order forecasts for Apple’s

I QUIT - Marina Shifrin dances away from her job, in the process claiming her 15 minutes of fame.

iphones in the first quarter of 2013, which would have a detrimental effect on Apple. SAC, Citadel and mutual fund firm T. Rowe Price all sold Apple stock after receiving the information, Galvin’s office said. The fine is one of the biggest that state securities regulators have ever collected. Chang was dismissed from Citi.

HtC LaUnCHes sMartPHOne finGerPrint teCHnOLOGY Taiwanese smartphone maker HTC in mid-October unveiled a new handset with fingerprint sensor technology, joining Apple in featuring this security technology. The new HTC One Max, a larger version of the popular HTC One phone, has a fingerprint identification sensor similar to that on Apple’s new iPhone 5S. It is an optional way to unlock a phone without using a four-digit password, but unlike Apple’s version, the Max can be programmed to automatically start different applications according to which finger is scanned. With a 5.9-inch full high-definition screen, the Max is HTC’s last major product for the year and comes after it recently posted its first quarterly loss amid fierce competition from Samsung and Apple.

taiwan anD CHina PLan eQUitY eXCHanGe Center China and Taiwan plan to set up a cross-Strait equity exchange center in the mainland’s southeastern

Fujian Province, Bloomberg reported, citing SinoPac’s Chief Financial Officer Michael Chang. The center may be funded by 10 institutions including China’s state-owned Xiamen Jinyuan Investment Group and a unit of Taiwan Sinopac Financial Holdings. Other potential funders of the equityexchange center include Xiamen Rural Commercial Bank, Guosen Securities Co., and Citic Securities Co., according to a report by China National Radio. The plan, which is aimed at helping early-stage or small companies raise funds, still needs to be approved by Taiwan’s Financial Supervisory Commission (FSC).

fUbOn Life tO inVest HeaViLY OVerseas Fubon Life Insurance plans to buy as much as US$3 billion in foreign real estate after rules on insurance companies’ real estate investments were eased in April, Bloomberg said in a report based on an interview with Howard Lin, Fubon Life’s vice chairman. Lin said Fubon Life expects to buy US$2 billion to US$3 billion worth of property over the next four to five years. The FSC in April allowed insurers seeking stable returns to invest in real estate abroad, after limiting their purchases domestically to rein in commercial property prices. Insurance companies accounted for about 40% of commercial property transactions on the island last year.

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Issues

Taiwan at Plateau in Doing Business Survey After rising steadily in rank in recent years, Taiwan remains in 16th place in the latest report.

he annual Doing Business report issued by the World Bank is one of the key benchmarks the Taiwan government refers in monitoring the economy’s competitiveness against other countries. As pointed out in an article in Taiwan Business TOPICS’ September 2013 issue of, Doing Business tends to be more concrete and transparent in its methodology than such other leading international surveys as those conducted by Business Environment Risk Intelligence (BERI), the Institute for Management Development (IMD), and the World Economic Forum (WEF). In addition, unlike the macroeconomic focus of the other surveys, Doing Business examines the direct impact on companies of 10 specific areas of business regulation. In the newly released Doing Business 2014, the 11th year in which the exercise has been conducted, Taiwan (or “Taiwan, China” as the World Bank insists on calling this country) ranked 16th out of the 189 economies covered – the same ranking it held last year when 185 economies were measured. Although 16th place is still a respectable position, it appears that after steadily climbing up the ladder in recent years (Taiwan stood way down in 61st place in Doing Business 2009), Taiwan has reached a plateau from which it is difficult to surge further ahead. In fact, in a number of individual categories, Taiwan slipped a rung or two from last year’s rankings – not because conditions here had deteriorated, but because other countries had progressed faster in those areas. In this region, the Philippines was recognized for having made significant strides. In addition, it will be a challenge to surpass the countries that score better than Taiwan on the survey. At the top of the list are Singapore and Hong Kong, perennially the number 1 and 2 performers respectively, followed by New Zealand, the United States, Denmark, Malaysia, Korea, Georgia, Norway, the United Kingdom, Australia, Finland, Iceland, Sweden, and Ireland. (China ranked in 96th place.) The Central News Agency quoted unnamed officials at the Council for Economic Planning and Development (CEPD) as saying the latest report shows that Taiwan has failed to make significant continued progress in reforming its regulatory regime to make the business environment more attractive to private investors. Unlike past years, this edition of Doing Business did not find any pertinent business reforms adopted in Taiwan in the past year. Last year, it cited two such reforms. One was to strengthen investor protection by increasing disclosure requirements for related-party transactions and tightening the liability regime for company directors in cases where such transactions are abusive. The other was to ease the process of applying for construction permits by introducing a risk-based, self-regulatory inspection system and improving

經商環境排名台灣高檔鈍化台灣近年在世界銀行經商環境評比中，排名雖持續上升，但在最新報告中仍維持第16名不變。

這

是世界銀行每年發佈經商環境評比報告中，對於分析台灣政府監控經濟與其他國家的競爭力時重要的參考指標之一。如同2013年9月號工商雜誌中一篇文章所指出，與其他如商業環境風險評估公司（BERI）、管理發展學院（IMF）和世界經濟論壇（WEF）等機構進行的國際性評比，世銀經商環境評比的方法更為具體而透明。此外，經商環境評比與其他評比最大的不同，在於他們著重檢視10個特定領域商業法規對企業的直接影響。這項經商環境調查已進行11年，在剛公布的 2014年報告中，台灣（或是世界銀行所稱的「中國台灣」）在189個接受調查的經濟體中排名第 16，與去年名次相同，當時有185個經濟體接受評比。儘管第16名仍然是個不錯的名次，但也顯示（2009年還排名61的）近年台灣名次持續爬升後，已到達難以再大步邁進的高原區。事實上，在一些個別項目，台灣的排名還比去年滑落了一或兩名，只因其他國家在那些領域進步比較快。以亞太地區來說，菲律賓的進步最多。台灣想要超越這項評比排名將會是個挑戰。新加坡和香港維持長期以來地位，仍分居這項排行榜的冠亞軍，接下來依序是紐西蘭、美國、丹麥、馬來西亞、韓國、喬治亞、挪威、英國、澳洲、芬蘭、冰島、瑞典和愛爾蘭（中國排名第 96）。中央通訊社引述經建會官員的談話說，這份最新的報告顯示，台灣在改革法規制度方面未能持續有重大進展，無法創造更吸引外國投資人的商業環境。

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Issues operational features of the “one-stop shop” for building permits. “Dealing with Construction Permits,” along with “Starting a Business,” were the two categories in which Taiwan was seen as making the most progress over the years. The category in which Taiwan scored the worst this year (ranking no. 84) was “Enforcing Contracts.” The survey found, for example, that it takes a total of 45 procedures – compared with a regional average of 37 and only 21 in Singapore – for a company to resolve a standardized commercial dispute through the courts. The next weakest category (with a ranking of no. 73) was “Getting Credit,” which assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions. Taiwan scored below the regional average in terms of the strength of legal rights, and it lacks a system for collecting and sharing credit information through a public credit registry. Also needing improvement was “Paying Taxes” (no. 58), measuring “the taxes and mandatory contributions that a mediumsize company must pay in a given year, as well as the administrative burden of paying taxes and contributions.” The total tax rate in Taiwan was about the same as the regional average, but the amount of time required here to complete all tax filings, at 221 man-hours, exceeded the average of 208 hours among the 25 economies in East Asia and the Pacific. Doing Business acknowledges the limitations of its methodology. For example, it does not take such important factors into account as an “economy’s proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders and getting electricity), the security of property from theft or looting, the transparency of government procurement, macroeconomic conditions, or the underlying strength of institutions.” It emphasizes that its data is designed to help identify the source and extent of obstacles to doing business to aid policymakers in carrying out regulatory reform. The economies ranking highest on the ease of doing business, the report notes, are not those with no regulation, since regulations “that protect consumers, shareholders, and the public without overburdening firms help create an environment where the private sector can thrive.” Rather, the top-ranking economies are those “whose governments have managed to create a regulatory system that facilitates interactions in the marketplace and protects important public interests without unnecessarily hindering the development of the private sector.” —– By Don Shapiro

Scrutinizing Taiwan’s Hopes for TPP Entry A Stanford University conference examines the chances for joining the regional trade body.

不同於近幾年，最新版經商環境報告中僅提起台灣在去年提出兩項改革：一是增加關係人交易的揭露規定，以及加強當出現這類濫權交易時公司董事所需負的的賠償責任制度，以強化對投資人的保護。二是簡化申請建築許可的程序，作法包括採行以風險為依據的自我監管檢查制度，以及改善申請建築許可「單一窗口」的作業流程。總結來說，這些年來，台灣在「申請建築許可」以及「開辦企業」兩個項目中進步最多。而今年表現最差的項目是「執行契約」（排名 84）。例如，這次調查發現，以同樣的商業糾紛為例，在台灣，企業要透過法院解決得經過45項程序，而亞太區其他國家平均僅需37項程序，新加坡更只要21項程序。另一個最弱的項目是「取得信貸」（排名73），這個項目是評估分享信用資訊的狀況，以及關於安全交易借貸雙方的法定權利。就法定權利的強度而言，台灣的表現低於地區平均水準，而且也欠缺透過公共信用報告機構蒐集和分享信用資訊的制度。台灣也需要改善的項目是「繳納稅款」（排名 58），此項目衡量「一家中型公司在某一年必須支付的稅款與強制提繳款項，以及支付這些稅金與款項的行政負擔」。台灣的總體稅率大約和地區平均水準相當，但是在台灣欲完成所有報稅程序需221工時，超過東亞和太平洋地區25個經濟體平均208個工時的水準。世銀經商環境評比報告承認，這項調查的方法受到一些限制。例如並未考量重要因素如「經濟體接近大型市場的程度、（關於跨境貿易和電力取得以外的）基礎建設服務、財產免於遭到竊盜或劫掠的安全保障、政府採購的透明程度、總體經濟狀況或體制的根本力量」。這項報告強調提供資料的目的，是要協助確認經商所遭遇障礙的根源何在，以及嚴重程度如何，以利決策官員推動法規改革。報告指出，經商容易度名列前茅的經濟體，並非毫無法規限制，因為有些法規「能夠保護消費者、股東和大眾，又不致讓企業負擔過重，有助創造讓民間部門能夠繁榮的環境」。更確切的說，前幾名經濟體的「政府設法創立一套規範體系，既能促進市場的互動，以及保護重要的公共利益，又不會不必要地妨礙民間部門的發展」。 — 撰文／沙蕩

two-day conference last month sponsored by Stanford University’s Center on Democracy, Development, and the Rule of Law underscored the importance for Taiwan’s future economic development of the island economy gaining entry into the nascent Trans-Pacific Partnership (TPP) free trade grouping. At the same time, presentations at the conference also pointed out some of the daunting hurdles potentially standing in the way of Taiwan’s membership, including a fragmented decision-making process and bureaucratic inertia domestically, in addition to

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Issues 探討台灣加入TPP 之可能性台灣加入跨太平洋夥伴協定（TPP）前景研討會，史丹佛大學主辦

The panelists included participants from the United States, Taiwan, Korea, Japan, New Zealand, and Singapore.

possible complications should China exert pressure on existing TPP members. The Taiwan participants in the conference consisted of a number of eminent scholars, including two former ministers of the Council for Economic Planning and Development (CEPD), an ex-CEPD deputy minister, and a former deputy secretary-general of the National Security Council. Other speakers were scholars and trade specialists from the United States, as well as Japan, Korea, New Zealand, and Singapore. This writer was also among the panelists. Presentations by the economists from Taiwan stressed how the reforms needed to satisfy TPP requirements would help Taiwan overcome the current constraints on its continued smooth economic development, while exclusion from the regional economic integration represented by TPP would mean – in the words of National Taiwan University professor Chen Tain-jy (one of the former CEPD chiefs) – that “the cost would be unbearable.” Chen and other participants said trade and investment opportunities would be diverted away from Taiwan if it remains outside the TPP. At the same time, reports by several of Taiwan’s leading political scientists emphasized the difficult political environment in Taiwan for considering trade liberalization. They cited the government’s inability to foster broad policy consensus, given the atmosphere of widespread public cynicism, lack of party discipline in the Legislative Yuan, the proliferation of vocal single-issue interest groups, and a ferocious media. Further, several of the non-Taiwanese speakers suggested that China’s assent will be a necessary pre-condition for Taiwan to be considered for TPP membership. It was noted that Beijing recently seems to have shifted from viewing TPP as a plot to isolate China, and instead may be interested in putting forward its own candidacy. The prospect of simultaneous entry by Taiwan and China (and perhaps Hong Kong) would ease the political barriers facing Taiwan’s participation, but might hold up Taiwan’s entry for many years – as happened before with the World Trade Organization – waiting for a less prepared China to complete its negotiations. In all, the conference played a useful role in crystallizing some of the key issues that Taiwan’s pursuit of TPP membership is likely to bring to the fore. — By Don Shapiro

史

丹佛大學民主發展暨法治中心上個月這場兩天的研討會，突顯出台灣參與跨太平洋夥伴協定（TPP）這個新興自由貿易聯盟對於台灣未來經濟發展的重要性。但在同時，研討會中發表的報告也點出台灣在申請加入TPP過程中可能面臨的重大障礙，包括決策過程缺乏一致性，官僚系統被動消極的態度。此外，中國若是向TPP現有的會員國施壓，台灣的入會之路也可能會複雜化。台灣的與會代表包括多位著名學者，其中有兩位前任經建會主委、一位前經建會副主委和一位前國安會副秘書長。這場研討會並邀請來自美國、日本、南韓、紐西蘭及新加坡的學者與貿易專家參與。本文作者也是專題討論的與談人之一。與會的台灣經濟學者報告時強調，為加入TPP 而必須採取的改革措施，將有助於排除當前限制台灣經濟穩健發展的因素，但如果台灣無法參與 TPP所代表的區域經濟整合過程，目前在台灣大學擔任教授的前經建會主委陳添枝說，「將會造成難以補償的後果」。陳添枝和其他與會學者均表示，台灣如果被排除在TPP之外，貿易與投資的機會將會流失。同時，與會的台灣政治學者報告時則強調，台灣的政治環境不利於貿易自由化的討論。他們指出，台灣社會普遍抱持懷疑批判的態度，政黨紀律無法在立法院運作，為單一議題大聲抗爭的利益團體氾濫，加上媒體的亂象，都使得政府無法為政策營造廣泛的共識。來自台灣以外國家的學者則在會中表示，中國點頭同意將是台灣取得TPP 門票的先決條件。學者們指出，北京當局原先將TPP視為孤立中國的陰謀，但近來似乎已改變立場，而且可能有興趣申請加入。台灣與中國（可能還有香港）如果同時入會，將可緩解台灣參與TPP的政治阻力；然而，從台灣當年申請加入世界貿易組織（WTO）的經驗來看，台灣恐怕得等上許多年，直到準備較不充分的中國完成談判程序，才能順利入會。整體而言，這次會議有助於讓外界瞭解台灣在申請加入TPP過程中可能出現的幾個關鍵問題。

— 撰文/ 沙蕩

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A g r i c u lt u r e

The See-Sawing Economy 起起伏伏的經濟 BY JANE RICKARDS

撰文 / 李可珍

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G The growth in tourism, led by Chinese visitors, has been one of the bright spots in the economy this year. photo : cna

With the international economy still tottering along the road to full recovery, it has been hard for Taiwan, with its high reliance on exports, to gain sustained economic momentum. Positive signals one month are often followed by indications of weakening the next. The outlook for 2014 will inevitably depend heavily on whether an upswing will take firm hold in the global economy, boosting both exports and domestic investment to expand production capacity. 國際經濟邁向全面復甦的步履仍然蹣跚，高度仰賴出口的台灣難以獲得持久的經濟動能。常常是某個月出現正面信號，下個月卻呈現轉弱跡象。展望2014年，無可避免得取決於國際經濟的回升趨勢能否站穩，推升出口和國內投資，以擴展生產能力。

描

述執政黨內部權力鬥爭和立院法案塞車的醒目報紙標題，如今在台灣已是司空見慣，談話節目的名嘴痛批，在馬政府允諾和中國簽署突破性商業協定會為台灣帶來繁榮的五年後，許多平民百姓的生活並未改善。這樣的氛圍並不容易鼓舞民眾產生信心。但因此缺乏信心是情有可原嗎？還是我們只需要多一點時間理清頭緒？巴克萊（Barclays）銀行董事兼資深區域經濟學家梁偉豪，是抱持樂觀看法的人士之一。他是巴克萊的研究總監，也曾在新加坡貿易工商部擔任經濟規劃師。他表示：「許多人對這地方抱持懷疑態度，而且越靠近檢視，懷疑就越深。」「必須識破謠言，才能找出重要的潛藏趨勢。」他表示，這些潛藏的趨勢之一，就是國際經濟出現週期性向上趨勢，將有助於台灣的科技出口。第二個趨勢就是和中國持續進行的經濟整合，他認為這在未來數年還會為台灣帶來更多好處。不過台灣經濟研究院景氣預測中心主任孫明德抱持相反看法，表示台灣的出口不夠多元化，而且面臨南韓的激烈競爭，以及陷入僵局的政府。他說：「我對台灣經濟非常悲觀。」 18

laring newspaper headlines describing power struggles within the rulingparty and a gridlocked legislature have now become regular features in Taiwan, as have talk show commentaries decrying how the lot of ordinary people is failing to improve after five years of government promises that groundbreaking business agreements with China would spur prosperity. This atmosphere does not easily inspire confidence. But is this lack of confidence justified? Or do we just need a little more time to sort things out? Among the optimists is economist Leong Wai Ho, director of research with Barclays and formerly an economic planner with the Singaporean Ministry of Trade and Industry. “There is a lot of skepticism about this place, and the closer you are, the more deep-seated the skepticism,” Leong says. “You have to look through the noise to seek out the key underlying trends.” One of those trends, he says, is a cyclical upswing in the international economy, which will help Taiwan’s tech exports. A second one is the continuing economic integration with China, which he sees as bringing more dividends in the years ahead. But at the other end of the spectrum is Gordon Sun, director of the macroeconomic forecasting center of the Taiwan Institute of Economic Research (TIER), who points to Taiwan’s weaknesses in export diversification,

不論事實是什麼，經濟學家普遍贊同，全球經濟正開始溫和復甦，倚賴出口的台灣最後應能獲益，不過過程可能是漸進而行。針對台灣經濟成長的預測，今年大多落在百分之二點多的範圍，明年則是百分之三點多。預測較低迷的是台灣本地智庫中華經濟研究院，預估今年經濟成長率為2.01%，明年則是3.21%；預測值較高的是渣打銀行（S t a n d a r d Chartered Bank），推估今年有3%的成長，2014年則有4.3%。台灣的經濟成長無可避免和世界經濟掛勾，尤其是和西方對台灣電子商品（例如行動裝置）的需求程度有關。巴克萊推估台灣和全球成長的關聯度為 73.6%，為亞洲第二，僅次於新加坡的74.4%。渣打銀行在最近發布的報告中表示，西方國家的潛在政策錯誤是全球復甦的主要風險。巴克萊指出，上月美國政府關門16天對國家經濟造成的衝擊程度，以及白宮和共和黨國會議員是否會再度為了調高國債上限而爭執不休，目前仍無法確定，不過美國的成長率預測會從今年的1.3%增至明年的 2.3%。台灣金融研訓院院長鄭貞茂表示，美國最近的紛擾「可能危害投資人和消費者信心」，也許會

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tough competition from Korea, and deadlocked government. “I am very pessimistic about Taiwan’s economy,” he states. Whatever the truth, economists generally agree that the world economy is starting a moderate recovery, which in turn should eventually benefit export-dependent Taiwan, although the process could be gradual. Most forecasts for the island’s GDP growth are in the range of two-something percent for this year and three-something next year. At the low end, the Chung-hua Institution for Economic Research (CIER), a local think tank, is projecting this year’s economic growth at 2.01% and next year’s at 3.21%, while at the high end, Standard Chartered Bank puts this year’s growth at 3% and 2014 at 4.3%. Taiwan’s economic growth is inextricably linked to that of the world economy, especially the degree of Western demand for Taiwanese electronic goods, such as mobile devices. Barclay’s puts Taiwan’s co-relation to global growth at 73.6%, the second highest in Asia next to Singapore’s 74.4%. In a recent report, Standard Chartered says that potential policy mistakes in Western countries are the main risks to global recovery. America’s growth rate is forecast to improve from 1.3% this

year to 2.3% next year, notes Barclays, although questions still remain as to how much the U.S. economy will suffer from last month’s 16-day government shutdown and whether the White House and Congressional Republicans will again be at loggerheads over raising the U.S. debt ceiling. Cheng Cheng-mount, president of the Taiwan Academy of Banking and Finance (TABF), says the recent turmoil “could jeopardize investor and consumer confidence” in the United States, possibly slowing recovery. Another factor expected to affect the U.S. and world economies will be the Federal Reserve’s decision on the tapering of quantitative easing, the unconventional monetary policy adopted by the Fed during the global financial crisis of buying financial assets in specified amounts from commercial banks and other financial institutions to increase the U.S monetary base. No timeline has been set for such tapering, nor for an anticipated hike in U.S. interest rates, but once the policy shifts, Taiwan and other emerging markets could experience in outflow of “hot money” as investors seek higher returns in the U.S. market. After around two years of protracted recession, the Eurozone is also slowly stabilizing and even showing signs of

導致復甦變慢。另一個預料會影響美國和世界經濟的因素，就是美國聯邦準備理事會（Federal Reserve）對量化寬鬆退場方式的決策。量化寬鬆是聯準會在全球金融海嘯期間採取的非傳統貨幣政策，以具體指定的總金額向商業銀行和其它金融機構購買金融資產，以增加美國的貨幣基數。聯準會並未設定量化寬鬆退場或預定升息的時間表，不過一旦政策出現改變，台灣和其它新興市場可能面臨「熱錢」流出，因為投資人在美國市場尋求獲得更高的報酬。在經歷約兩年的長期衰退後，歐元地區也慢慢恢復穩定，甚至出現復甦跡象。巴克萊預測，歐元區今年會先收縮0.3%，接著在2014年出現2.3%的正成長。瑞銀投資研究（UBS Investment Research）指出，歐元區反彈對台灣來說是好消息，因為歐債危機是台灣2012 年出口下滑的主因。不過歐洲經濟仍然烏雲罩頂。例如渣打銀行指出，希臘可能需要再次尋求紓困或債務減記，會導致歐洲央行（European Central Bank），甚至還有北歐國家納稅人蒙受損失。中國（和香港合計購買台灣40%的出口品）今年上半年表現不如預期，讓大部份經濟學家大吃一驚。巴

recovery. Barclays expects the Euro area to contract by 0.3% this year before showing positive growth of 2.3% in 2014. This rebound would be good news for Taiwan, UBS Investment Research notes, as Europe’s economic woes were the main reason for Taiwan’s export downturn in 2012. But the region’s economy remains under a cloud. For example, Standard Chartered notes that Greece may need another bailout or debt writedown, which could cause the European Central Bank and ultimately taxpayers in northern European countries to incur losses. And China, which along with Hong Kong receives around 40% of Taiwan’s exports, gave most economists a bad surprise in the first half of this year by failing to perform as well as expected. Barclays is now predicting 7.6% growth this year, slightly higher than a Chinese government target of 7.5%, which would be the mainland’s slowest growth in 23 years. Barclays is further forecasting Chinese GDP growth of 7.1% next year. Although Standard Chartered considers that Chinese growth rates of over 7% should be a boon for the rest of the world, TABF’s Cheng says that assessment does not apply to Taiwan. While Chinese GDP figures of over 7% are a

克萊現在預估中國今年會有7.6%的成長，比中國政府設定的7.5%目標（中國23年來成長速度最慢的一次）高出0.1個百分點。巴克萊還進一步預測，中國明年的經濟成長為7.1%。渣打銀行認為中國超過7%的成長率應可嘉惠世界其它地區，不過金融研訓院長鄭貞茂表示此一看法並不適用於台灣。他指出，中國超過的7%經濟成長是一個「亮麗數字」，但台灣若要增加出口，就需要比中國更強勁的表現。在中國的政策制定者尋求促進內需消費、降低對出口的倚賴，以及讓過度投資降溫的同時，這個國家正在進行結構改革。

走走停停的出口台灣今年上半年的出口不如預期，部分是受到中國成長趨緩的影響。甚至更令人費解的是，今年的出口表現時好時壞，這個月增加，下個月就減少。例如一月的出口訂單大增，較去年同期成長18%，接下來五個月卻意外重挫至負成長。接著七、八月出口訂單總值略微增加，九月又出現更扎實的2%成長。實際出口值也出現類似的起伏模式――三月增加

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HoW WIll RECENT PolITICAl STRugglES AffECT THE ECoNomY?

hen President Ma Ying-jeou accused the legislative speaker, Wang Jin-pyng, a senior member of the ruling Kuomintang, of perverting the course of justice, it set off a media firestorm. Ma in early September alleged that Wang had asked the former justice minister to prevent prosecutors from appealing a lower court’s acquittal of an opposition politician in an embezzlement case. Ma then ordered Wang’s expulsion from the KMT but Wang later won a legal battle to temporarily retain his party membership and position as legislative speaker while he contests his expulsion. As a result, Ma’s policies delivered to the legislature for passage will now be handled by a man he has declared unfit for office and who most likely harbors animosity towards him. The scandal broadened after it emerged that prosecutors had wiretapped the Legislative Yuan switchboard, and the opposition Democratic Progressive Party unsuccessfully launched a no-confidence motion in Premier Jiang Yi-huah, also refusing to allow him to deliver his opening address to the legislature for a month. Ma has since been dogged by slogan-shouting protesters, and the legislature for the most part is gridlocked. Since Ma and Wang have been rivals for party leadership from as far back as 2005, the public tends to view the episode as one of the rare and juicy instances when a KMT power struggle is played out in public. It all makes for a compelling political soap opera, but what will be the implications for the economy? Perhaps negligible if the legislative impasse continues for only a short while, said one economist who asked not to be named owing to the political sensitivities. But he adds that if the legislature is still gridlocked by next spring, it could seriously damage Taiwan’s economic prospects into 2015 and 2016. The 2014 central government budget approved by the Executive Yuan in late August still has not been passed by the Legislative Yuan. Gordon Sun, director of the Taiwan Institute of Economic Research macroeconomic forecasting center, says that if it fails to pass, government spending will be severely reduced, with negative fallout for the private sector, particularly for private construction companies who would normally be bidding on government infrastructure projects. An Executive Yuan official said that a vote on the budget has been postponed until January owing to the political conflict, but that government operations were not expected to be affected. Other key bills related to economic development that are currently stuck in the legislature include one to expand the operations of the new Free Economic Pilot Zones, and another to approve the cross-Strait trade in services agreement inked in June. China watchers fear the delay in approving the services pact could cause Beijing to lose trust in

For a month, Premier Jiang Yi-huah was blocked from delivering his administrative report to the legislature. photo : cna

Taiwan. It might also lead other countries to question whether Taiwan is really committed to signing free trade agreements, adversely impacting Taiwan’s ability to move forward with more FTAs. Some economists, however, see the situation as not very different from executive-legislative branch conflicts that have occurred in other countries, such as the recent dispute in the United States between the Obama administration and the Republican-controlled House of Representatives that caused a partial government shutdown for over two weeks. But they still worry that Taiwan’s recent political struggles could cause business and consumers to lose confidence. TIER’s Sun mentions the possibility that taishang planning to move manufacturing operations out of China may decide against returning to invest in Taiwan because of the uncertainty and instead go to Southeast Asia or elsewhere. Cheng Cheng-mount, president of the Taiwan Academy of Banking and Finance, notes that the Legislative Yuan has long been a weak element in Taiwan’s policy execution. “If you look at the functioning of the legislature in the past decade, it’s not really working,” Cheng says. A major reason for the inefficiency is that all political parties are given equal weight, regardless of the number of seats they control, in the inter-party caucus negotiations that determine the fate of many pieces of legislation. Consequently the Kuomintang (KMT), which has a sizeable majority of 65 lawmakers in the 113-seat parliament, often still lacks the clout to pass bills. Cheng adds that government-backed measures often get watered down or even reversed in the legislature, as happened when lawmakers rolled back provisions in the capital gains tax that was first imposed last year. “The Legislative Yuan is like a long-term illness,” he concludes.

– By Jane Rickards

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“good number,” he notes, Taiwan needs stronger performance than that from China if it is to boost its exports. China is undergoing structural reform as its policymakers seek to boost domestic consumption, reduce reliance on exports, and cool excessive investment.

Stop-and-go exports Partially as a result of the Chinese slowdown, Taiwan’s exports during the first half of this year were not as high as had been anticipated. Even more perplexing, export performance this year has been taking place in fits and starts, with the volume up one month and down the next. Export orders, for example, soared in January with 18% year-onyear growth, before unexpectedly diving to negative growth figures for the next five months. The value of export orders then edged up slightly in both July and August before rising by a more solid 2% in September. Actual export value also showed a similar jagged pattern, rising 3.2% in March, then falling by 1.9% in April before heading upwards for the following four months. The most recent figures, for September, registered a surprising drop of 7% year-on-year to US$25.25 billion. In

an encouraging sign, exports to Europe rose 4.5%, though they contracted for sales to China, the United States, Japan, and ASEAN. The industrial production index, another measure of economic activity, dropped by 0.7% in August. Barclay’s Leong says that while recovery is still underway, the effect of the seesawing export figures is to leave manufacturers with a sense of uncertainty. He notes that Taiwanese exporters normally experience a boom starting in July, looking ahead to the U.S. Christmas season, but this year sales have been muted and companies are being cautious about adding to inventories. Leong blames the up-and-down export pattern largely on the domestic petrochemical and refinery sector, which has been plagued by fires and aging equipment, affecting the output of critical intermediate products. For example, in July, according to media reports, a gas leak in at the CPC Corp. closed down a unit at its 220,000-barrel-per-day Kaohsiung refinery. UBS Investment Research also downplays the 7% contraction in September exports, blaming it on the fewer working days in that holiday month. There was also a high base of comparison, given the strong shipments in September last year due to the iphone

3.2%，四月下滑1.9%，接下來四個月又向上攀升。九月的最新數據出現無預警下挫，較去年同期減少 7%，來到252.5億美元。有個令人鼓舞的跡象是對歐洲出口成長4.5%，不過對中、美、日、東南亞國協的銷售萎縮。另一個衡量經濟活動的工業生產指數，八月下滑0.7%。巴克萊的梁偉豪表示，雖然台灣仍處於復甦階段，出口數據起起伏伏的效應會讓製造業者產生不確定感。他指出，台灣出口業者通常會從七月起轉旺，為美國的耶誕購物季預做準備，不過今年的銷售疲弱，業者對於提高庫存抱持謹慎態度。梁偉豪將出口模式上下震盪的主因，歸咎於國內的石化煉油產業飽受火災意外和設備老舊所苦，影響關鍵性中間產物的產出。例如根據媒體報導，台灣中油公司每天生產22萬桶油的高雄煉油廠七月發生毒氣外洩事件，導致一處工場停爐。瑞銀投資研究也對九月出口萎縮7%一事淡化回應，認為是該月因假日造成工作天數較少所致。此外去年九月蘋果公司推出新型智慧型手機iPhone 5，帶動貨運暢旺，因此比較基期墊高。不過本土經濟學家認為，台灣出口業者未來將繼

5 launch. But local economists consider that Taiwan exporters will continue to face some major challenges going forward. Cheng notes that much of Taiwan’s past success came from its role as part of a global supply chain – accepting tech orders from U.S. buyers, performing sophisticated design and manufacturing on the island, and sending the semifinished goods to China for final assembly and shipment. It has been estimated that around half of Taiwan’s exports sent to China end up in European and U.S. markets. But now, says Cheng, an “import substitution” effect is occurring, in which Taiwan’s upstream role in the global supply chain is being taken over by sophisticated Chinese ICT manufacturers, posing “a severe challenge for Taiwan.” For example, China is now a major competitor when it comes to flat panels and solar cells, he says. In response, Cheng continues, Taiwanese companies should consider adopting a strategy of forging alliances with Chinese counterparts or else upgrade industrially to enter into direct competition with Japan and Korea. A central factor in the Taiwan economy is that small and medium-sized

續面臨一些重大挑戰。鄭貞茂指出，台灣過去的成功，有許多來自其身為全球供應鏈一份子的角色― ―接受美國買家的科技訂單，在台灣進行精密設計和製造，然後將半成品送往中國完成最後組裝和出貨。估計台灣約有一半的出口是運往中國，最後銷到歐美市場。不過鄭貞茂表示，現在正發生一種「進口替代」效應，台灣在全球供應鏈的上游角色逐漸被中國富有經驗的資通訊（I C T）製造商取代，「對台灣構成嚴峻挑戰」。例如他表示，在面板顯示器和太陽能板領域，中國如今已是主要的競爭者。他接著指出，台灣業者的因應之道，應是考慮採取和中國同業組成聯盟的策略，不然就進行產業升級，和日韓展開直接競爭。台灣經濟的一項重要因素，是中小企業在經濟價值中占了90%以上。這些企業通常難以籌到足夠資金大量投資於研發，導致台灣逐漸失去和一些國家競爭的優勢，例如南韓擁有三星（S a m s u n g）等垂直整合完整的大型財閥。台經院的孫明德指出，三星的垂直整合使其能夠製造全系列尺寸的智慧型手機，滿足各種消費者偏好，因為它可以把面板切成

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Cover story

BuCKINg uP foREIgN INvESTmENT

ncoming foreign direct investment (FDI) this year has continued the pattern of recent years that has seen Taiwan lagging behind most of its regional neighbors. During the first eight months of the year, the Investment Commission of the Ministry of Economic Affairs (MOEA) approved 2,207 foreign investment cases worth a total of US$3.15 billion. It was an increase of 23.45% from the same period a year ago in the number of projects, but a rise of only 2.4% in the value. Investment from China, which is calculated separately, involved 94 cases worth US$320 million, more than double the amount during the first eight months last year. The largest source of foreign investment, at US$947 million, was what the Investment Commission classifies as “British territories in the Caribbean Sea,” which include the Cayman Islands, a well-known offshore financial center and tax haven. China-based Taiwanese business people known as the taishang frequently utilize such offshore financial centers to circumvent both Taiwanese and Chinese restrictive regulations. Investment from Europe amounted to US$369 million and from the United States US$327 million. According to the Investment Commission, around 53% of the U.S. investment this year was in the services sector, with the rest in manufacturing, especially in electronics and related materials. The biggest single case from the United States this year was from PPG Industries Securities, a subsidiary of the industrial coatings company headquartered in Pittsburgh, earmarked for acquisition purposes. Texas Instruments also received approval for an expansion project at its Taiwan operation. Cumulative U.S. investment in Taiwan now totals US$22.29 billion through August. Investment Commission data puts Citibank Overseas Investment Corp. as the largest single American investor, at NT$40 billion (about US$1.3 billion). But Emile Chang, the Commission’s acting executive secretary, notes that the figures do not cover investment in the science parks, which is outside the Commission’s jurisdiction. Corning Display Technologies, which has large facilities in both the Central and Southern Science Parks to make glass substrate for flat panel displays, is understood to have an even larger investment. Last year, FDI approved by the commission, at US$5.56 billion, fell well below other Asian nations, including rival Korea, which attracted US$16.3 billion. AmCham’s 2013 White Paper blamed a lack of transparency and unclear guidelines in the investment approval process, especially for projects involving private equity fund investment, as partly responsible for the low level of FDI. Another factor may be Taiwan’s possible exclusion from emerging regional trade groupings such as the Trans-Pacific Partnership. Although still quite limited, investment from China has been gradually increasing since President Ma Ying-jeou’s administration opened certain industrial sectors to crossStrait investment in 2009. Total cumulative mainland investment in Taiwan now stands at US$823.8 million. Among the major cases approved this year was a US$78.4 million project by China’s Sanan Optoelectronics to take a 20% stake in Taiwanese LED chip supplier Formosa Epitaxy. In approving the deal, however, MOEA stipulated that no transfers of patents or technology to China may take place. Chang notes the interest that Chinese investors have shown in the wholesale and retail sector here. For example, the Zhangzidao Group from Dalian Province, which specializes in fishery products, invested US$3.2 million to set up an operation in Taoyuan to sell abalone and other high-quality Dalian seafood to Taiwan-based retailers such as Carrefour. – By Jane Rickards

enterprises are responsible for over 90% of the economic value. These companies usually have difficulty raising enough funds to invest heavily in research and development, and therefore tend to be followers rather than initiators of technological developments. As a result, Taiwan is losing its competitive edge against nations such as Korea, with its large and vertically-integrated chaebols such as Samsung. TIER’s Sun notes that Samsung’s vertical integration enables it to produce smartphones in a whole range of sizes to suit consumer preferences, as it can cut panels to any size required and assure rapid delivery. That is more difficult for Taiwan’s leading smartphone maker, HTC, which recently posted its first quarterly loss. “In Taiwan, HTC and the panel makers are different companies, and so can’t easily achieve the same kind of coordination,” says Sun. He adds that competition from China’s relatively lowpriced smartphone maker, Xiaomi, has also been a factor in HTC’s struggles. Cheng suggests that Taiwanese tech companies forge alliances with Japanese and Korean counterparts or invest in them to gain access to their technology. The current depreciation of the yen offers opportunities in this regard in Japan, he notes, pointing to Hon Hai Precision Industry’s move to take a 38% stake in Sharp’s LCD television plant in Sakai Japan as an example. TIER’s Sun maintains that Taiwan has become too dependent on its electronics exports, and this year its machine tools, which normally sell well in export markets, were affected by the drop in the yen. Japanese machine tools are more sophisticated and normally more expensive than the equipment available from Taiwan, but recently the change in exchange rates has made them more affordable.

Cross-Strait integration The second underlying trend cited by Leong as boosting Taiwan’s economy is increasing cross-Strait integration. Last year, around 2.58 million Chinese tourists visited Taiwan, pumping US$6.5 billion into the island’s economy, Barclays says, and this year it estimates that mainland

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visitors will top three million. This new source of business has helped to boost the tourism industry in general, with a record 7.7 million foreign visitors expected overall this year, the government says. As of August, residents from seven more Chinese cities became eligible to travel to Taiwan under the Free Independent Traveler Program rather than being restricted to tour groups, bringing the total number of cities up to 28. Due to the opening to Chinese tourists, which began in 2008, Taiwan’s previous deficit in services exports has turned into a surplus. “We are now moving from manufacturing to more of a consumption and services-driven economy,” notes Standard Chartered economist Tony Phoo. Barclay’s Leong notes that as a result of the tourism boom, the retail sector has livened up considerably over the past four years, the airline industry is showing significant growth, and hotels (such as the soon-to-open five-star Mandarin Oriental) are mushrooming across the island. The logistics industry is also gaining strength. In the past, he says, investors in the Taiwan stock market were primarily interested in technology shares, but now there is vibrant interest in non-tech stocks such as hotels and retail enterprises. The tourism boom is also driving up property

SIGN OF HARD TIMES — For the budget-conscious consumer, Far EasTone offered a special promotion of out-of-date models of devices and accessories. photo : cna

prices, mainly demand for commercial space, which affects the economy in two ways, Leong says. The direct benefit is demand for real estate services, while indirectly it spurs consumption as people feel wealthier when their property prices rise. In addition, Chinese yuan-related business has growth exponentially since

需要的各種尺寸，還能確保迅速出貨。這對最近才提報第一季虧損的台灣主要智慧型手機製造商宏達電（HTC）來說，就困難得多。孫明德表示：「在台灣，宏達電和面板製造者是不同的公司，所以無法輕易做到同樣的協調程度。」他還指出，來自中國相對低價智慧型手機製造商小米的競爭，也是宏達電陷入掙扎的原因。鄭貞茂建議台灣科技業者，和日韓同業組成聯盟，或是對他們進行投資，以取得其技術的使用權利。他以鴻海取得夏普在日本堺市液晶電視廠38% 股份的計畫為例，表示現在日圓貶值，正是行動良機。台經院的孫明德堅稱，台灣已變得過度依賴電子出口，而且通常在出口市場暢銷的台灣工具機，今年受到日圓貶值的衝擊。日本的工具機較為精密，一般說來比台灣產品昂貴，不過最近的匯率變化讓日本工具機的價格變得較親民。

兩岸整合梁偉豪舉出的第二個提振台灣經濟潛在趨勢，就

Taiwan and China set up a curren cy-clearing mechanism in late January, Barclays says. Local financial institutions are competing to attract RMB deposits and launch RMB-denominated products. Barclays calculates that the RMB deposit pool had reached 85.1 billion yuan by the end of August and is

是兩岸整合有增無減。巴克萊指出，去年約有258 萬人次的中國觀光客來台，為台灣經濟挹注65億美元，估計今年陸客將突破300萬人次。台灣政府表示，陸客這股新活水讓台灣觀光業普遍提振，預料今年共會有破紀錄的770萬人次外國訪客。截至八月止，中國增列7座城市的居民可根據陸客自由行計畫訪台，不必限於跟團旅遊，讓自由行城市總數增至 28處。由於從2008年起開放陸客觀光，台灣的服務業出口從過去的逆差轉為順差。渣打銀行首席經濟學家符銘財表示：「台灣現在正從製造導向轉為較偏向消費和服務的經濟。」巴克萊董事梁偉豪指出，由於觀光業欣欣向榮，零售產業過去四年來非常蓬勃，航空業也出現重大成長，飯店也如雨後春筍出現在台灣各地（例如即將開幕的五星級文華東方酒店）。物流業也獲得動能。他表示，過去台股投資人主要對科技股有興趣，不過現在對飯店、零售之類的非科技股也興致勃勃。梁偉豪表示，觀光業的繁榮也拉抬房地產價格，主要是因為對商用空間的需求增加，對經濟產生兩種影響。直接好處是帶動對不動產服務的需求，但也間接刺激消費，因為房

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Cover story The ups and Downs of Economic growth 10.76%

6% 4.1%

2007

0.7%

-1.8%

2008

2009

1.32%

2010

2011

2012

2.31%

2013

note: 2013 is the current government forecast source: Dgbas

likely to exceed 100 billion yuan by the end of 2013. The market is still nascent, and some economists fear that over-regulation may prevent it from taking off the way it did in Hong Kong. But Leong predicts that in future Taiwanese banks will be lending RMB at rates competitive to Hong Kong’s. “It’s all a matter of time,” he says. Other agreements concluded with China, such as the Economic Cooperation Framework Agreement (ECFA), inked in 2010, and a services and investment liberalization pact signed in June this year, have proved to be controversial locally. The Legislative Yuan has held up ratification of the services pact amid

complaints from certain industry sectors, such as hairdressing, that the agreement will enable Chinese competitors to take over the market. Gordon Sun of TIER notes that ECFA has not yet had much impact on Taiwan’s economy, as the agreement dropped tariffs on only 539 Taiwanese goods and 267 Chinese products out of the thousands of items traded across the Strait. The government is keen to further liberalize trade in nearly all goods as soon as possible. But Liu Meng-chun, director of CIER’s economic forecasting center, sees the pace of cross-Strait economic integration as slowing down because an agreement on trade in goods with China

地產價格上漲讓民眾產生更富有的感覺。此外巴克萊指出，自從台灣和中國在一月下旬建立清算機制以來，人民幣相關業務也飛速成長。本土金融機構競相吸引人民幣存款，還推出人民幣相關產品。巴克萊估算，至八月底為止，人民幣存款總額已達851億人民幣，到2013年底可能超越1000 億人民幣。這個市場仍處於新生階段，部分經濟學家擔心，過度規範可能導致台灣無法像香港那樣快速成長。不過梁偉豪預測，未來台灣的銀行會以能和香港競爭的利率進行人民幣放款業務。他說：「只不過是時間早晚而已。」台灣和中國簽訂的其它協定，包括2010年簽署的兩岸經濟合作架構協議（E C F A），還有今年六月簽訂的服貿與投資自由化協定，都已在台灣引發爭議。在某些工商產業（例如美髮業）抗議服貿協定會讓中國競爭對手接收台灣市場的聲浪下，立法院已將這項協定的批准程序延後。台經院的孫明德指出，E C F A對台灣經濟尚未產生很多衝擊，是因為在兩岸貿易的成千上萬種商品中，這項協議只取消539項台灣商品和267項中國產品的關稅。台灣政府渴望盡快讓幾乎所有商品的 24

will be even harder to conclude than the services pact, as the two sides are in direct competition in such sensitive areas as auto parts and flat panels. In contrast, some other economists expect the cross-Strait economic integration process to accelerate once the services pact is ratified. TABF’s Cheng considers that Beijing may be more flexible than before on some items – for example, automobiles. Given the rapid growth in China’s car production, PRC policymakers may no longer regard the import of relatively limited volumes of Taiwanese cars as a significant threat. “Before, they would only give concessions to automotive components, but now they may be willing to give concessions to whole-car imports from Taiwan,” says Cheng. Even if the pro-independence Democratic Progressive Party returns to power, Leong says, the cross-Strait economic integration process is unlikely to stall or be reversed as there are now too many economic dividends. China is now Taiwan’s largest trading partner, accounting (together with Hong Kong) for about 40% of Taiwan’s exports and over 16% of imports. Even in Taiwan’s South, politically a DPP stronghold, Chinese purchases of fruit and other commodi-

貿易進一步自由化。不過中華經濟研究院經濟展望中心主任劉孟俊認為，兩岸經濟整合的步調正在放慢，台灣和中國達成的一項商品貿易協議，甚至會比服貿協定更難完成簽署，因為兩岸在汽車零件、面板等敏感領域有直接競爭。相反的，另有一些經濟學家預測，一旦服貿協定批准，兩岸經濟整合過程會加速進行。金融研訓院長鄭貞茂認為，北京對某些項目（例如汽車）可能會比過去更有彈性。鑒於中國汽車製造業的快速成長，中國的政策制定者可能不再把受到相對限制數量的台灣汽車進口視為重大威脅。鄭貞茂說：「以前他們只對汽車零件讓步，不過現在他們可能願意對台灣全車進口讓步。」梁偉豪表示，即便支持台獨的民進黨重掌政權，兩岸經濟整合過程也不可能停止或逆轉，因為現在充滿太多的經濟紅利。中國如今是台灣的最大貿易夥伴，約占台灣出口的40%（和香港合併計算），進口則超過16%。他表示，即使是在民進黨政治大本營的台灣南部，由於中國採購水果和其它商品，也讓這裡普遍接受兩岸經濟活動。他說：「沒有政客想走回頭路。」

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ties has led to widespread acceptance of cross-Strait economic activity, he says. “No politician would want to roll that back,” Leong says.

Free trade agreements Closely related to the relationship with China is the risk of Taiwan’s exclusion from the growing network of free trade arrangements in the world. In the past, China’s efforts to isolate Taiwan politically included pressure on other countries not to enter into free trade agreements with Taiwan, putting it on a weak footing compared with competitor Korea, which has FTAs with the United States, European Union, and ASEAN. But following the signing of ECFA, China appears to have acquiesced in Taiwan’s negotiating its own FTAs, at least with certain countries. Such an agreement was recently signed with New Zealand, and a similar pact has been under negotiation with Singapore. Standard Chartered’s Phoo notes that although the economic impact of these deals is negligible, the agreements may help pave the way for Taiwan’s eventual entrance into the China-backed Regional Comprehensive Economic Partnership (RCEP) and/or the U.S.-supported Trans-Pacific Partnership (TPP), where

Singapore and New Zealand are founding members. Phoo encourages Taiwan companies to respond to the Korean free-trade challenge by providing a mix of tech products to overseas customers that other suppliers cannot duplicate. He mentions recent market speculation that Apple may move away from using Samsung as a chip supplier due to their smartphone rivalry and switch its sourcing to the Taiwan Semiconductor Manufacturing Co. (TSMC), which is universally regarded as one of Taiwan’s standout industries. “As long as you provide what others can’t, you have an edge,” Phoo says. Central to the government’s liberalization plans are its program to create Free Economic Pilot Zones. Featuring industries such as logistics, high-value agriculture, and medical tourism, they are intended to demonstrate the value of free trade to the general public. If successful, the concept can be extended to other parts of Taiwan. But key legislation needed to authorize the vital second stage of the project is stuck in the Legislative Yuan amid political infighting (see the sidebar). Some critics worry that the plan goes too far in deregulation, while others, such as TIER’s Sun, say it doesn’t go far enough. “We should have totally

自由貿易協定與兩岸關係密切相關的是，台灣被摒除在不斷成長的世界自由貿易協定（F T A）網絡外的風險。過去中國設法在政治上孤立台灣，包括施壓他國不得和台灣簽署F T A，讓台灣處在弱勢的立足點，相較下，台灣的競爭對手南韓已和美國、歐盟與東協簽屬FTA。不過兩岸簽署ECFA後，中國似乎默許台灣自行從事FAT談判，至少可和某些國家洽談。台灣最近和紐西蘭簽署FTA，另外還和新加坡進行類似協定的談判。渣打銀行的符銘財指出，這些協定的經濟影響力微不足道，卻可能有助於為台灣最終加入中國所支持的區域全面經濟夥伴關係（RCEP），或美國支持的跨太平洋夥伴協議（TPP，新加坡和紐西蘭均是創始成員）鋪路。符銘財鼓勵台灣企業，以提供其它供應者無法複製的各種科技產品給海外消費者的方式，因應南韓的自貿優勢挑戰。他談到最近市場懷疑，蘋果公司可能因為和三星在智慧型手機上相互競爭，不再讓三星擔任晶片供應商，轉而向普遍被視為是台灣最

free movements of people, money, and goods,” he contends. Also related to cross-Strait relations is the future of the taishang, the estimated one million Taiwanese and their families living on the mainland, where Taiwanese enterprises have investments estimated at over US$200 billion. Now Chinese labor and other production costs are rising steeply, and regulations are becoming more onerous. Factoring in productivity, the differential in costs compared with manufacturing in Taiwan has narrowed considerably. Some companies have been relocating to Southeast Asia, but some others are moving back to Taiwan. The Taiwan government is offering incentives to encourage their return, for example allowing the better companies to use more foreign labor (up to 40% of their workforce). According to a Standard Chartered report, 37 taishang companies have pledged to invest NT$185.8 billion (US$6.2 billion), equal to more than 1% of GDP. Salaries in Taiwan have stagnated for over a decade, with average monthly earnings now amounting to NT$37,769, according to the Directorate General of Budget, Accounting and Statistics. UBS Investment Research notes that nominal wage growth has dipped to below 1%

傑出企業之一的台積電採購。符銘財說：「只要你提供他人所沒有的東西，你就具有優勢。」台灣政府自由化計畫的核心，就是打造自由經濟示範區。這些示範區以為物流、高價值農業和醫療觀光等產業為特色，打算向一般大眾證明自由貿易的價值。如果計畫成功，此一概念可擴展到台灣其它地區。不過在政治紛擾（請見補充報導）下，執行此計畫中不可或缺的第二階段所需的關鍵授權立法，還卡在立法院。部分評論者擔心此計畫在法規鬆綁上走過頭，不過台經院的孫明德等人表示還不夠。孫明德堅稱：「我們應讓人才、金錢和商品完全自由流通。」同樣和兩岸關係有關的是台商的未來。住在大陸的台商及其眷屬估計有100萬人，台灣企業在當地的投資則推估超過2000億美元。如今中國的勞力和其它生產成本急遽上升，法規則越來越繁雜。把生產力列入考量因素，在中國設廠和在台製造的成本差異已大幅縮小。部分業者開始轉移到東南亞，有些則遷回台灣。台灣政府也提供誘因鼓勵台商回流，例如允許表現較佳的企業聘僱更多外勞（最高可占其勞動力的 40%）。據渣打銀行的報告指出，37家台商企業已承

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Cover story year-on-year since September last year, but Barclay’s Leong says he is optimistic that salaries have stabilized and will soon begin an upward trend. “As soon as the services renaissance gathers momentum, tourism will be one of the drivers, and we still start to see salaries and asset prices push higher,” he says. Besides stagnating income, another economic concern has been private consumption, which has been sluggish for the last decade. It is likely to show slight improvement this year and next, but as an economic driver is expected to remain a relatively minor factor in 2014 compared to exports and private investment, which is likely to increase as export-oriented manufacturers expand their production. Phoo notes that consumer confidence last year dropped to a three-year low, but this year has been steadily improving, partially because many of the provisions of the new capital gains tax that inhibited consumption last year have since been rolled back by lawmakers. Consumers have also adjusted to the luxury tax and other measures imposed a few years ago to cool down the property market. Standard Chartered notes that residential housing sales in greater Taipei rebounded to a two-year high of 12,109 units in July, more than twice

the 5,000-some units sold in the same month in 2012. In an August report, UBS Investment Research also notes that private consumption picked up in the second quarter, increasing by 1.7%, compared with 0.3% in the first quarter, but it cautions that any improvements in consumption will be constrained by weak wage growth.

Good employment numbers U n d o u b t e d l y, t h o u g h , Ta i w a n ’s push towards a service-oriented economy has helped buoy employment, with unemployment remaining fairly steady throughout the year. For example, seasonally-adjusted unemployment figures from May through August ranged between 4.17% and 4.19%. Economists note that manufacturers continue to complain about a talent shortage, exacerbated by Taiwan’s aging society as well as by an exodus of talent to other countries in the region that offer higher salaries. Senior citizens reportedly now constitute 11% of the population, only three percentage points below the level considered by the United Nations to be an “aged society.” Regarding inflation, price levels are creeping upwards. For the first eight

諾要回台投資新台幣1858億元（62億美元），相當於台灣國內生產毛額（GDP）的1%以上。台灣的薪資已十年沒有成長，根據行政院主計總處統計，目前的平均月收入是新台幣37769元。瑞銀投資研究指出，自去年九月以來，台灣的一般薪資成長幅度已下滑至不及前一年度同期的1%。不過巴克萊董事梁偉豪表示，他樂觀認為薪資行情已經穩定，很快就會出現上升趨勢。他說：「只要服務業復甦獲得動能，觀光業立刻就會成為一股驅動力量，我們還是會開始看到薪資和資產價格推得更高。」除了毫無成長的所得，另一個經濟問題就是過去十年陷入停滯的民間消費。今明兩年可能出現略為改善的情況，不過相較於出口和民間投資，身為經濟動力之一的民間消費在2014年預料仍是相對不重要的因素，民間投資則可能增加，因為出口導向的製造業者會擴展產能。符銘財指出，去年的消費者信心跌至三年來的低點，不過今年已在穩定改善中，部分原因是去年抑制消費的新資本所得稅條款，有許多條文後來已被立法委員打回票。消費者也已適應奢侈稅等數年前為了讓房地產市場降溫而實施的措施。渣打銀行指出，大台北地區 26

months of this year, the consumer price index averaged 0.87%, but DGBAS forecasts that it will rise by 1.07% this year and 1.39% in 2014. Consumers are noticing price hikes in many products and services, including a nearly 10% jump in high-speed rail tickets. CIER’s Liu notes that given the pessimistic mood in Taiwan, the price increases are likely to have an exaggerated effect on consumer confidence. On the monetary side, the Central Bank in late September maintained discount rates at 1.875%, where they have been since June 2011, keeping liquidity fairly flush. In a statement, the bank noted that inflationary pressure was subdued and both private consumption and investment muted. The consensus among the economists interviewed for this article is that the Central Bank is watching to see when the U.S Federal Reserve moves to taper quantitative easing and raise its rates. They believe Taiwan will likely hike its own rates in tandem, or even slightly earlier as a safety buffer. “If you are synchronized to the U.S. in terms of growth, your monetary policy to a certain extent will be synchronized as well,” says Leong, who estimates that Taiwan’s next rate hike may be in September next year.

的住宅買賣已反彈至兩年來的高點，七月時有12109 間成交，是2012年同一月份出售約5000間的兩倍以上。瑞銀投資研究八月發布的報告也指出，台灣民間消費在第二季加速成長1.7%，相較下第一季僅 0.3%。不過報告也警告，任何消費改善都會受到薪資成長疲弱的抑制。

亮麗的就業數據不過毫無疑問的是，台灣推動邁向服務導向的經濟，有助於支撐就業市場，全年的失業率保持相當平穩。例如五到八月的季調後失業率在4.17%到 4.19%之間。經濟專家指出，製造業者不斷抱怨人才短缺，此問題因台灣社會老化，以及人才出走到亞洲其它提供較高薪資的國家而惡化。據報導，高齡公民現在占台灣人口的11%，僅比聯合國所認定的「高齡社會」標準低了3個百分點。至於通貨膨脹，台灣物價水準緩慢上揚。今年前八個月的消費者物價指數平均上揚0.87%，但主計總處預測，今年全年會上升1.07%，2014年則為 1.39%。消費者注意到許多產品和服務都漲價，包括

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Standard Chartered, however, sees a strong possibility that rates may be raised early next year due to the global rebound and concerns over heightening inflation. But TABF’s Cheng expects the government to try to keep interest rates low for as long as possible and will not raise them until the United States does. “If interest rates go up, the government faces an even bigger burden with its own debt,” he notes. In terms of fiscal policy, the government is considered to have little room for maneuver. The approved budget for next year, at NT$5.43 trillion, equals about 38.7% of GDP, close to the legal limit of 40.6%. As a result, says CIER’s Liu, public spending remains at very low levels. Although the 2014 budget represents but a 1.7% increase over the year before, according to a Standard Chartered report, it includes a 10% increase in public infrastructure expenditures in an effort to lift public-sector investment, especially for projects that also involve private-sector participation. Overall, the advice economists said they would give the government and lawmakers is to end political wrangling and put the economy as the first priority. “Political debate is healthy, but rather than debate for debate’s sake and for

MODEL COMPANY — The Taiwan Semiconductor Manufacturing Co. headed by Chairman Morris Chang, left, (shown here with former Vice President Vincent Siew), is universally regarded as one of Taiwan's standout enterprises. photo : cna

showmanship, what really matters for the economy are the outcomes,” says Barclay’s Leong. He notes that the media tends to spotlight economic difficulties rather than successes, which makes the job of politicians harder as they have to constantly justify decisions. He urges government leaders to be bold with big ideas and strong policy execution, rather than water down initiatives in response to criticism – as that may only bring on a second round of complaints that the

高鐵票價調漲近10%。中經院的劉孟俊指出，鑒於台灣充滿悲觀情緒，物價上漲對消費者信心可能產生放大效應。在貨幣方面，中央銀行在九月下旬將重貼現率維持在1.875%，自2011年6月以來就不曾調整，維持相當寬鬆的流動性。央行在聲明中表示，通膨壓力緩和，民間消費和投資都疲弱。本文的受訪經濟學家一致同意，台灣央行正在觀望美國聯準會的貨幣寬鬆退場和升息舉動。他們相信台灣可能會同步調升利率，或甚至稍微提早以策安全。梁偉豪表示：「台灣若要和美國同步經濟成長，貨幣政策在某種程度上也要同步。」他估計，台灣下一次升息可能是在明年九月。不過渣打銀行認為，由於全球復甦，加上擔心通膨升溫，台灣明年初升息的可能性很大。不過金融研訓院長鄭貞茂預測，政府會試圖讓低利率維持越久越好，等到美國升息後才會調升利率。他指出：「如果升息，政府在國債上會面臨甚至更大的負擔。」就財政政策而言，外界認為台灣政府沒有操縱的空間。明年度的批准預算為新台幣5.43兆元，約相當於GDP的38.7%，接近40.6%的法定上限。中經院的劉

new policies are not delivering. He cites the government’s casino policy as an example, noting that the introduction of gaming in Singapore helped to revitalize the economy there. “If you want to risk the political cost of bringing in gaming, put it right smack in the heart of Taipei,” he advises. “And make sure it is foreignled and world-class in terms of size and scope. If not, don’t do it. If you put it in Matsu, forget it – it’s going to be a lost cause.”

孟俊表示，這導致公共支出仍維持在非常低的水準。根據渣打銀行的報告，2014年度總預算案較前一年度增加1.7%，包括公共基礎建設支出增加10%，希望藉此提高公部門的投資，尤其是涉及民間也參與的計畫。整體而言，受訪經濟學家表示，他們給政府和立法委員的忠告是：停止政爭，將經濟列為第一優先要務。巴克萊的梁偉豪表示：「政治辯論是健康的，但不是為了辯論和表演而辯論，對經濟來說，真正重要的是結果。」他指出，媒體往往會凸顯經濟難題，而非成就，導致政治人物的工作難度提高，因為他們必須不斷為決策辯護。梁偉豪敦促政府領導人，要勇於堅持重大信念，並堅決執行政策，而非遭遇批評就修改計畫――做這樣的蠢事可能只會再次招致新政策並未執行的怨言。他以台灣政府的賭場政策為例，指出新加坡引入博弈，讓當地經濟恢復活力。他建議：「若想冒著付出政治代價的風險引入博弈，就要蓋在台北的心臟地區。」「就規模和範圍來說，還得確認是由外國主導，而且是世界級賭場。如果不是，就不要做。若是把賭場放在馬祖，乾脆算了吧――這注定是一場敗局。」

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market trends

Agricultural Applications – a Promising New Outlet for Taiwan’s LEDs Lighting for growing food indoors in plant factories is expected to be a rapidly growing industry in the coming years.

BY JENS KASTNER

aiwanese LED makers have lately been suffering from the termination of Chinese subsidies for energy-efficient home appliances, China’s heavy subsidization of its own LED industry, and a resulting market oversupply that has driven down prices. But growth in a business sector that is still very much a niche application for LEDs could soon provide a partial answer to their difficulties. The global proliferation of “plant

factories” is increasing demand for related equipment, and LEDs – which bring the crucial advantage of enabling lighting to be adjusted according to the specific needs of a given crop – have a key role to play in that trend. Reflecting the growing demand, major international players such as Philips, Osram, and Panasonic have been entering the LED agricultural lighting market. Analysts say that if Taiwan’s LED makers were to team up with local agricultural firms and research institutes, they too would be well-positioned to get their share of the business. “Chinese firms could likely always produce LEDs more cheaply, but plant factories involve more than lighting – namely farming, marketing, and R&D on such factors as humidity, nutrition, and temperature,” says Janis Lin, a market researcher with the Taipeibased market consulting firm Topology Research Institute (TRI). “Taiwan is in a favorable position in this regard, as the well-established cooperation here between industry and academia facilitates the crafting of one-stop solutions

for plant factories.” Underscoring both the application’s potential for rapid growth and the current small size of the market, TRI forecasts that global sales of LED agricultural lighting products will more than triple next year, reaching US$35.9 million, up from a value of US$11.5 million this year. The projection foresees the figure ballooning to US$305.8 million by 2017. The concept of growing food indoors with artificial lights was first nurtured by the U.S. National Aeronautics and Space Administration (NASA), which sought to find a replacement for sunlight as a means of providing food for space missions, as well as by some northern European countries seeking to supplement the meager sunlight available during their gloomy winter months. In addition, growers of marijuana were early adopters of this novel technique, so as to help keep their illegal production more safely hidden indoors. Over the course of the last several decades, Japan has set up over 200 large-scale plant factories, partly as a

Research on the use of LED lighting for raising yields and controlling quality of the vegetable coba (茭白筍 ), the stems of Manchurian wild rice. photo : itri

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market trends

Grow lights in a plant factory equipped by Aeon Lighting Technology (ALT), which sees the orchid industry and lettuce-growing as prime business opportunities. photo : alt

strategic response to its precarious reliance on food imports from China, and partly to help assure food safety and security in general. Earlier than most others, Japanese consumers have appreciated that plants grown indoors do not need pesticides, are not exposed to contaminated soil and acid rain, and are not bound by the dictates of seasonal changes. Koreans subsequently became similarly supportive of vegetables grown in plant factories, with many supermarkets in the country now growing lettuce on the actual retail shelves. Given the grave levels of pollution in many parts of China, the mainland is now expected to follow in the footsteps of Japan and Korea, but on a much larger scale. Elsewhere in the world, the attractiveness of food factories may be boosted mainly by climate change and rising land prices. In most cases, for the growing of both fruits and vegetables, LEDs are the ideal solution for such factories, as they can provide the specific blue and red light wavelengths needed for photosynthesis. Other artificial light sources, such as high-pressure sodium lights or conventional fluorescent lights, emit the

entire wavelength spectrum from ultraviolet to infrared, which wastes energy and might even harm the plant. “Different crops at their different growth stages require different wavelengths and different intensities of light,” explains Lin. “You add a bit more blue and reduce red a bit, and you may eventually find the right wavelengths,” which then shorten the growing cycle and enhance quality. She adds that only with such research does the use of agricultural LEDs become commercially feasible, as they are still significantly more expensive than competing light sources. Hsinchu-based Epistar Corp., one of Taiwan’s largest LED chip suppliers, has been producing chips for agricultural LEDs since 2008 in cooperation with “Europe’s biggest lighting brand,” according to Chen Hsin-Kang, Project Director of Epistar’s Product Management Division. Although the company has customers for chips for agricultural applications in Europe, Japan, China, and North America, such chips still account for less than 2% of Epistar’s overall revenue, he notes. “However, this [revenue] is expected to grow markedly starting around

2015, together with the rising penetration rate for LEDs in agricultural and horticultural lighting applications,” Chen predicts. Although the technology is already available, consumers will need another year or two before being able to accept the notion of plant factory food, he says. Chen expresses confidence that customers won’t desert Epistar for Chinese competitors because Epistar’s chips’ “wall-plug efficiency” is considerably higher. While conventional fluorescent lights may turn 70% of the electricity into heat and only 30% into light (of which more light is then wasted because crops absorb some particular wavelengths only), LEDs have become ever more efficient, with Epistar’s mass-produced red and blue power chips now reaching an efficiency ratio of 50%, Chen notes. “In recent years we’ve been achieving an annual increase in efficiency of around 15% for deep red LEDs, and our R&D roadmap sees our newest chip reaching about 60% next year,” says Chen. “Of course, cost is another important issue, but only with such efficiency will the plants grow well in the first place.”

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market trends

Chen is also optimistic about Epistar’s ability to maintain its technology edge in horticultural and agricultural applications. He points to the company’s more than 2,000 patents, and its strong team of engineers and scientists, many of them with Ph.D.s, as providing a competitive advantage.

Orchids and lettuce Another Taiwanese player in the LED business with experience in both agricultural and horticultural applications is Taipei-based Aeon Lighting Technology. ALT produces a standard “grow light” with a fixed wavelength combination, but customizes the combination according to the customer’s specific needs. Although agricultural and horticultural lights’ share of ALT’s revenue is still tiny, says Jack Lin, director of ALT’s sales department, the application warrants the company’s attention because of Taiwan’s lucrative orchid industry, as well as the potential for the production of Western-style lettuce that local upmarket restaurants and hotels would otherwise have to import at relatively high cost since it is difficult to grow outdoors in Taiwan’s climate. “So far most customers for our grow lights have been end-users in Japan, with whom we have cooperated in R&D,” Lin notes. “They have many specific demands, with one client seeking to repel pests with the help of LEDs and another wanting to make his chickens lay eggs 24/7, for example.” Lin adds that the fishing industry also represents a market for ALT’s LEDs, as different marine species are attracted to different wavelengths and light intensities. Unlike Epistar, however, ALT doesn’t expect LEDs for plant factories to play a substantial role in the company’s overall business any time soon. Much more attention will continue to be paid to the firm’s core business of general and industrial lighting for a long while to come, says Lin. “It’s true that LEDs for plant factories are 50% more expensive than other ones, while the production cost is about the same,” he notes. “But the design process costs 30

Horticulture applications are expected to be a major area of diversification for Taiwan’s LED lighting companies. photo : alt

more, as it involves a lot more discussion with the end-user.” S o m e Ta i w a n e s e L E D m a k e r s have complained that they supplied equipment to local agricultural and horticultural organizations in the expectation of fruitful R&D feedback, but that collaboration never materialized. The apparent reason was reluctance among entrepreneurs in the Taiwanese farming sector to share information because of concerns about intellectual property rights protection. To help bridge such gaps between LED makers and farmers, the Hsinc h u - b a s e d I n d u s t r i a l Te c h n o l o g y Research Institute (ITRI), a government-sponsored nonprofit organization engaging in applied research and technical services, last year established the Agriculture Fisheries Livestock Alliance-LED (AFLA-LED). The membership currently includes 26 LED suppliers, LED chip makers, and farming enterprises. “The LED manufacturers do not sufficiently understand farmers’ needs, and farmers do not understand the advantages that the new technologies can bring,” says James Chu, president of AFLA-LED and division director of ITRI’s Electronics and Optoelectronics Research Laboratories. “So AFLA-LED can come in and provide an exchange and communication platform between the two. This then creates the mutual trust imperative for smooth technolog-

ical cooperation.” The ITRI-led alliance is currently undertaking several projects. One involves research into how adjustments in LED wavelengths can maximize quality and enhance plant growth in the production of greenhouse strawberries. “With LEDs, the strawberry can become whatever the consumer prefers – sweeter or sourer, harder or softer, or redder or less red,” explains Chu. “The market price rises accordingly.” Another R&D project involves asparagus production, and one on the cultivation of milk fish uses green LEDs to enable the fish to better see their food at night, so that they eat more and grow larger without being fed growth hormones. In addition, a particularly promising application is the production of herbs for Traditional Chinese Medicine (TCM). “The LEDs help us to enhance the good elements in the TCM herbs and suppress the bad ones,” says Chu. “They are also successfully used in the herbs’ drying process, making storage easier and better.” Chu says the key to success in the plant-factory equipment business is system integration. Accordingly, he notes, it may not be the actual LED maker who will make the most money in the looming era of plant factories, but rather future joint ventures among LED makers, farmers and R&D institutes that create new business models and export the resulting products.

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TAIWAN busINess

Can 3D Printing Live Up to the Hype? In certain niche industries, Taiwan should benefit from being able to custom-manufacture small quantities of high-margin products. BY TIMOTHY FERRY

D printing is taking the media by storm. Headlines scream about “firearms” 3D printed by criminals, and human organs 3D-printed from living cells, and the Economist magazine famously trumpeted the onset of the 3D-enabled “third industrial revolution” that promises to “transform the way goods are made.” On the other hand, Terry Gou, founder and CEO of the world’s largest mass producer of electronics, Hon Hai Precision Industry, dismisses 3D printing as a “gimmick” with little real commercial value. So which view of 3D printing technology is correct? Both, explains Jon Hsu, executive director of the south campus of Taiwan’s Industrial Technology Research Institute (ITRI). In terms of mass production and economies of scale, Gou’s view is correct, he says; the process is just too slow and expensive. But for producing customized, even personal objects for premium, niche markets, 3D printing is uniquely qualified. “3D printing is geared to a highly customized market,” he says, citing medical devices, aerospace, defense, and the arts as sectors in which 3D printing has particular relevance.

The United States has been at the forefront of 3D printing technology, but other nations – notably Japan, Germany, and Israel – are also building sizable stakes. Taiwan has also begun to take an interest in the potential of the technology, and under ITRI’s leadership the island is eagerly looking for ways to leverage these transformative technologies into new markets and business models. “Taiwan has a lot at stake in manufacturing,” says Stephen Su, general director of ITRI’s Industrial Economics and Knowledge Center (IEK). He acknowledges that 3D printing remains of limited utility for large-scale manufacturing at this point, but sees the potential for the technology to transform the way goods are produced over time. “In the long term, Taiwan should participate in 3D printing or even make sure it is at the leading edge,” he says. 3D printing, more technically known as Additive Manufacturing (AM), is an umbrella term that covers a wide variety of manufacturing processes usually involving malleable materials like plastics, ceramics, and metals. Traditional manufacturing processes are largely subtractive in nature,

ALT Design’s ATOM 3D printer differs from most 3D printers in being freestanding. Lawrence Lee, industrial designer and company founder, regards the machine itself as an elegant design statement. photo : tim Ferry

in that materials are removed in the formation of an object. But in AM, an object is created by adding material layer by layer onto a substrate. 3D printers are able to exactly follow a 3D computer design, allowing for precision and forms that are often impossible to create using usual production methods. Materials present something of a limitation, however, with 3D-printed guns more likely to injure the shooter than any intended target and the produc-

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tion of human organs well beyond the capability of current technology. Nevertheless, 3D printing is poised to have a tremendous impact on how – and where – products are manufactured. 3D printing is already being employed in the construction of Boeing’s 787 Dreamliner and in the creation of replacements for human bones and joints. The prestigious consulting company McKinsey forecasts that some 320 million jobs – 12% of the global workforce – are likely to be impacted by 2025, with over 20% of all production revenue derived in part from 3D printing technology. The market for 3D printing supplies and services as yet remains fairly small at an estimated US$2.2 billion for 2012, according to Wohlers Associates consultancy, but that’s a 29% gain over 2011 and the market continues to grow.

Rapid prototyping While the media hype about 3D printing began in earnest over the last two years, in fact the technology has been around for several decades. It was first patented by Chuck Hull, founder and CEO of U.S.-based 3D Systems, in 1986 under the name “stereolithography.” 3D Systems has since been joined by such major 3D-printing suppliers as Stratasys Systems and Fabrisonic in the United States and Envisiontec in Germany. 3D printing is most commonly associated with Rapid Prototyping, in which a two-dimensional sketch of a product can be quickly and efficiently rendered into a tangible object. Lawrence Lee, founder of startup ALT Design in Taipei, explains the significance of rapid prototyping to industrial designers such as himself. “When I make a product, I want to see a mock-up, see the scale of it, how it fits into your hand,” he says. Before the advent of 3D printing, it would usually be necessary to generate designs and send them off to a factory, which would then go through the costly and timeconsuming process of creating a mold to make the prototype. But with a 3D printer, designers can complete the pro32

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cess quickly and economically in their own offices. This advance “definitely shortens product development time,” observes Randy Huang from 3D Printing Technology Co., Stratasys’s industrial agent in Taiwan and Greater China (Aurora Group, also of Taiwan, was recently awarded exclusive representation in Greater China of Stratasys’s retail sales). Huang says that Stratasys’s machines are able to print designs in two different materials, one of them a support material that allows the object to take on complex forms and even moving parts. He displays objects such as miniature bicycles that have moving parts, all created from 3D printers. But if this technology has long been familiar to industry, why is it just now attracting so much press attention? One reason, says Stephen Su, is that after losing much of its industrial sector to lower-cost rivals such as China and ASEAN nations, the United States is now putting a lot of effort into developing “revolutionary types of manufacturing that will bring back some of the manufacturing activity.” President Obama’s State of the Union speech last February put the spotlight on 3D printing technology as a possible savior for America’s ailing industrial sector. He cited a U.S. government-funded 3D printing lab established in a shuttered warehouse in rust-belt Ohio as an example of efforts to ensure “that the next revolution in manufacturing is Made in America.” The United States has accounted for over 38% of global sales of AM-related products since 1988, according to Wohlers Associates. Adding to the increased interest in 3D printing is that patents are running out as the technology matures, making the processes more widely available. Further, 3D printing is meeting the wild world of the internet, where opensource communities share computer designs and know-how, and advances in materials and printing technology now mean that instead of being limited to prototypes, 3D printing can now be used to make an array of products. The top two 3D printing designs avail-

able on BitTorrent site Pirate Bay are both handguns that may or may not actually fire (the third is a 3D-printed dildo). Already crowdfunding sites such as Kickstarter in the United States and zeczec.com in Taiwan are paving the way for artisanal manufacturing industries to sprout up in everything from cameras to the arts. Lawrence Lee is taking the new 3D-printing industry meta. Instead of selling a product created by a 3D printer, he is offering a 3D printer made, in part, from 3D-printed parts. His ATOM 3D printer is based on the Delta 3D printer, a design system freely available through open-source 3D printing communities. He is being crowdfunded through zeczec, and though he only listed the project on October 4, he had already exceeded his goal of NT$1 million within days of the listing. Supporters of his project will receive their own 3D printer or 3D printer kit – a value of NT$50,000 (about US$1,500) and NT$30,000 (US$1,000) respectively – early next year, says Lee. While 3D printing machines have long been serving the purpose of rapid prototyping for big manufacturers, the area of fastest growth and greatest market potential is currently self-employed designers, artists, and hobbyists. U.S.-based MakerBot sells 3D printers targeted at hobbyists for around US$2,000, and since its debut in 2009 the company has sold over 22,000 units. MakerBot was recently acquired by Stratasys for US$403 million, a move that many consider a sign of the strength of the consumer market. Taiwanese firm Kinpo Electronics promises to enter the hobbyist-consumer market this fall with a new brand, XYZprinting, a 3D printer billed as costing only NT$15,000 (US$499). The announcement made news several months ago, but since then the company has gone quiet. ITRI’s Hsu says the company consulted with ITRI on the project, and he confirms that it has a working prototype. But he questions Kinpo’s decision to go for the low end of the market, forecasting that when Kinpo releases its 3D

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printer, larger rivals like MakerBot will likely cut their price by half to protect their market share. “We advised them that if you just cost down, there’s really no benefit,” says Hsu. Instead, he advocates stressing precision and quality. “The US$2,000 3D printers on the market actually lack resolution. If you can elevate and improve the precision, then you really have something,” he maintains.

Identifying the opportunities Taiwan’s smaller firms and startups have the chance to tap the consumer market for 3D printers, but will the technology present opportunities for the country’s large-scale manufacturers? Taiwan industry relies heavily on economies of scale and cost reduction through automation, which worked well for decades. But with overseas competition ramping up, the Taiwan government has been encouraging the development of more specialized industries that could provide higher returns. Although 3D printing may facilitate the entrance into such high-margin specialty industries, Taiwan currently barely has a footprint in many of the fields where 3D printing is particularly relevant, such as aerospace, defense, and sophisticated automotive components. Plastics might offer some opportunity, as Taiwan is already a world leader in that field due to the Formosa Plastics Group and other players, and plastics are among the materials most amenable to 3D-printing technologies. But Stephen Su says that the global plastics-manufacturing market is already saturated and there is too little differentiation among products. “Plastics is one of the key materials in 3D printing, but it’s not an area where Taiwan has a key advantage,” he notes. Instead, a convergence between Taiwan’s metal and medical device industries is expected to offer a greater advantage. ITRI’s Jon Hsu says that Taiwan has been developing its laser technology for some years, and that lasers are particularly suited for powder bed fusion processes, which are one type of AM technology. The institute

Jon S. Hsu, executive director for ITRI South, with a "friend" sporting a titanium jaw created by ITRI’s labs, highlighting the potential for 3D printing technology to create better medical prostheses. photo : t im Ferry

is equipped, for example, with “selective laser melting” (SLM) metal AM machinery from German-based EOS GmbH Electro Optical Systems, along with several “fused deposition modeling” (FDM) 3D printers from U.S. companies. In the powder bed fusion process, thermal heat in the form of a laser is applied to a bed of metal powder, fusing the powder into forms of unparalleled complexity and precision. The process should be suitable for Taiwan’s medical device industry to manufacture replacement prosthetics – joints and bones – out of lightweight metals so that they exactly replicate the human parts they are intended to replace. It would also perfectly fit the business model for 3D printing of making highly customized, high-margin products. “When you talk about the biomedical applications, you’re talking not about tons (of metal), but grams – and you’re talking not about dollars but billions of dollars,” says ITRI’s Hsu. This process is already having an

impact in the creation of dentures, allowing dentists to make better fitting dentures more quickly and easily. Hsu notes that ITRI is also developing composite materials for use in the medical device industry, overlaying titanium or similar metal structures with durable ceramics. And while the creation of actual organs remains beyond the scope of current science, 3D printing does allow for both medical training and surgical rehearsal using mock human organs made from plastics that mimic the texture and feel of human organs. Stephen Su notes that for complicated procedures, surgeons will be able to 3D print an exact replica of the organ to be operated on to allow for a highly realistic simulation. ITRI is currently involved in a number of partnerships with U.S. and European companies exploring possible applications and potential business models for 3D-printing technolo gies. “Once we can show people where the money is, more opportunities will follow,” says Hsu. ITRI is spearheading the creation of 10 different consortiums of SMEs that hopefully will enable Taiwan’s budding 3D-printing industry to thrive amidst global competition from American, Korean, and other global tech leaders. Meanwhile, Taiwan has already made advances in another kind of AM that lacks the sex-appeal of 3D printing but has the potential for more immediate impact: roll-to-roll (R2R) manufacturing. In this process, goods are manufactured on flexible substrates by printing components on them on a continuous roll. ITRI is currently working with Corning to develop flexible glass that will allow electronic components to be printed using this method, potentially revolutionizing mass production. This approach would be particularly well-suited to such technology industries as solar panels, motherboards, and touch panels – all sectors in which Taiwan has significant capacity. “This isn’t talked about as much,” says IEK’s Hsu, “but it’s an area in which we start out with a lot of advantages.”

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A Report on the HR Sector

It's All About People

photo : courtesy of adecco

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The Millennium Generation Meets Taiwan’s Job Market Today’s new recruits strike some as spoiled and perhaps a bit quirky, but they can be more creative and daring than their elders. BY ALAN PATTERSON

IN THIS SURVEY • The Millennium Generation Meets Taiwan’s Job Market p36

• HR Executives Taking on Expanded Roles in Many Enterprises p39

• CHRMA: Cradle of HR Managers

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• Sourcing Strong Leadership Talent in Taiwan Today p42

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he current generation of twenty-somethings entering Ta i w a n ’s j o b m a r k e t i s bringing attitudes to the workplace that are quite unlike those of their predecessors. That attitudinal shift is partly responsible for an unusually high unemployment rate among the island’s youth, as well as challenging employers to accommodate the quirky work styles of their newest recruits, according to sources among human resources professionals. “I often hear clients saying they aren’t satisfied with the working attitude of junior employees,” says Cindy Chen, the Taipei-based Northeast Asia Head of Adecco, one of the world’s largest HR consultants. “Sometimes they’re absent without notice, or they’re just not serious about their job.” Chen uses the term “generation Y” to describe the fresh university graduates who have entered Taiwan’s job market in recent years. Although Taiwan’s generation Y doesn’t exactly fit the definition that American authors William Strauss and Neil Howe introduced in their book Generations: The History of America's Future, 1584 to 2069, there are striking similarities. Taiwan’s generation Y, some-

times also referred to as millennials, are people who were born just before the beginning of the current millennium and have grown up in a world where the internet and electronic gadgets such as notebook computers, cellphones, and handheld video games are the norm. Taiwan’s millennials are also accustomed to comfortable lives that are relatively free of hardship or deprivation, unlike earlier generations. “They come from a comfortable environment. They want to enjoy life,” says Adecco’s Chen. If the frustrations of work become onerous, “some 30-year-old kids quit their jobs and go to New Zealand to find a parttime job and pick fruit,” she says. Some young people have shocked employers with their overconfidence in terms of their own skill level or their understanding of job requirements or the complexity of the business world, says a human-resources manager at a multinational retailer who requested anonymity. “There has been a cultural shift,” she says. “The Asian mentality used to be ‘we have to be obedient,’ but now there are different multicultural influences coming into Taiwan. So the younger generation is more outspoken and individualistic. They have

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A Report on the HR Sector more confidence to challenge authority.” Young people tend to overestimate their abilities and underestimate the challenges, the manager says. “They emphasize their personal life and even make it a higher priority than their career.” Moreover, the parents of Taiwan’s millennials are different from those of the previous generation. Parents spoil their kids and object if teachers apply strict discipline. “In my generation, we were physically punished,” the HR manager says. “Parents would encourage teachers to do that.” The more independent attitude prevailing among young people today comes at a time when competitive advantages in the business world are changing rapidly and companies need to be able to respond quickly, according to HR executives. In fact, one of the reasons for the high unemployment among people in the 20-30 year-old age bracket is the rapidity with which technology is changing. “Companies have no time to groom talent,” says Adecco’s Chen. “Instead, they want to hire people who are ready for the job. There is no time for companies and employees to adapt, so turnover is high.” Many companies today face the same huge changes that have threatened the existence of once successful companies such as Kodak of the United States or even Taiwanese smartphone maker HTC, she says. “A company that is number one this year may not be number one next year,” Chen says. “Everything is about speed.” To be sure, Taiwan’s millennials are also bringing new skill sets to the workplace that in some cases may be an asset for employers. “They have a different set of strengths,” says the HR manager at the multinational retailer. “They are creative. They are more daring and innovative. They somehow think outside the box. They have more confidence in themselves. Some of them are more articulate.” Harnessing the creativity and different work styles of Taiwan’s generation Y inevitably requires more flexibility from company management. That may include changing the traditional 9-to-5 mindset in most businesses, HR specialists note. “To be fair, this is not just a one-way issue,” says Adecco’s Chen. “There is a generation gap. Management needs to understand the

value system of the Y generation. There can be more flexibility in the way a job is done. Perhaps the job can be more performance- or target-oriented instead of just focusing on the time put in.”

Change from within Today’s companies have little time to coach new recruits and instead must focus on training top-level management to adapt, the human resources executives say. “The change has to come from within,” says the manager at the multinational retail firm. “Often I have to coach managers or supervisors on their leadership style. We cannot be so naïve to think we can change this younger generation. This is something we have to adjust to ourselves in order to bridge the gap.” Still, adjusting can be difficult, if not impossible. Student job applicants at Taipei’s W Hotel this year told HR Online Manager Clara Lo that they were only willing to work for a few hours a day and not a full eight-hour work day. The increasing pursuit of enjoyment by Taiwan’s young people – which may include lengthy overseas backpacking trips – conflicts with the need for the millennials to face up to making a commitment to their careers, according to Adecco’s Chen. “People in the younger generation need to recognize some urgency in their careers,” Chen says. “They need to move up to a management level by the time they are 27 or so.” In order to reach this career goal, even the pursuit of advanced degrees at the master’s and doctorate levels should be deferred until practical work experience has been gained, she notes. The HR professionals warn that Taiwan’s younger generation is perhaps

too complacent about their careers, whereas young people in other countries in the region are showing greater career motivation. As a result, the advantages of Taiwan’s entry-level employees are shrinking compared with their counterparts in other nations, Chen says. “In China, the attitudes are quite different,” she continues. “People are more aggressive in pursuing a career. They are much better at presenting themselves.” In China, fierce competition has honed the competitive edge of the mainland millennials, other HR managers say. In contrast, members of the current generation in Taiwan are “mabao (媽寶), ‘mother’s babies’ who in some cases are so well off that they don’t need to worry about the future,” says the retail firm HR manager. “They don’t feel that they have pressure. Their parents have already given them a house. They may also have single uncles or aunties who have a house. In 20 years, maybe some of these kids can inherit three houses.” On the positive side, “Taiwanese tend to be hardworking and easy to get along with, and their ability to execute is also quite good,” says Chen. But they tend to be more conservative and more reticent. They avoid giving their opinions during a meeting, preferring to speak privately afterward. “That is a weakness,” she notes. “If they can be more outgoing and take more initiative, they will do a better job.” The problem may stem in part from the proliferation of new universities in Taiwan in recent years, making a university diploma possible for virtually anyone on the island but lowering academic standards in the process. The large number of universities, without much differentiation among them, also presents

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a problem for job recruiters, says Chen. “It’s difficult to know which schools to approach,” she observes. Some HR managers lament that today’s university graduate is at the same academic level as high school graduates were years ago, and today’s master’s degree holders are roughly equivalent to yesterday’s undergraduate degree holders. The HR manager at the multinational retailer says her company looks at graduates from top-ranked National Taiwan University and National Chengchi University for new hires, as well as from second-tier schools such as Fu Jen Catholic University and Tamkang University. Retail businesses need people who are more driven, fast-paced, and entrepreneurial than those in banking or hightech, she says. At the same time as overall academic standards are falling in Taiwan, even the best local universities are slipping in international rankings, Adecco’s Chen notes. The global ranking of National Taiwan University this year dropped eight notches to 142nd place, according to the Times Higher Education magazine, published in cooperation with Thomson Reuters. National Taiwan University is the only school in Taiwan to make the top 200 list, which this year was led by the California Institute of Technology and Harvard University of the United States as well as the University of Oxford in the U.K. Among the Chinese universities ranked, Peking University inched up from 46th to 45th on the list and Tsinghua University rose from 52nd to 50th.

Slow job market Human resources executives also note that today’s entrants to the Taiwan job market face sluggish demand. “There aren’t many opportunities for people in junior positions,” says Adecco’s Chen. “The job market in Taiwan is also related to the industries that Taiwan is good at.” Those have mainly been high-tech and manufacturing, yet those sectors recently have been somewhat slow while the smaller service sector has picked up. “We see some things happening such as in the hotel and restaurant businesses,” says Chen. “Thousands of hotels have opened in the past few years. That is the area where we have been expanding.” In the meantime, a lot of people educated for careers in high-tech may be languishing on the vine, she says. “If you have a degree in nuclear engineering in Taiwan, it’s not very likely you’ll find a job. That sort of person will need to start from zero upon finding a job, which is a waste of talent.” Universities and other academic institutions in Taiwan should work more closely with businesses to develop training programs that match students more effectively with jobs, the HR managers say. Multinational companies could offer programs to provide information to students during their third or fourth year about careers and use the opportunity to start recruiting new employees. Schools could become more like training grounds for people preparing to enter the job market, the HR executives

say. As part of that effort, the government and universities could find more ways to encourage students to study and work abroad in order to train more young people for the multinational job market. “In other countries, governments and schools are helping their kids go overseas,” says Adecco’s Chen. She cites programs in France and Singapore where the government covers the travel expenses for young people to go abroad to work for a year. Taiwan appears unlikely anytime soon to produce a famous entrepreneurs such as Apple Inc. founder Steve Jobs, who spent years backpacking in India before settling down in California to found the world’s largest tech company. Most of the large businesses in Taiwan play supporting roles as suppliers to global brands such as Apple, Samsung, and Sony, and as such remain outside the limelight while earning thinner profits than the big brand names. One implication of this industrial landscape in Taiwan is that the island’s millennials will need to become more serious about down-to-earth careers. Unless they have inheritances large enough to obviate worries about the future, at some point Taiwan’s generation Y will have to think more seriously about the practical workaday world. In the meantime, human resource executives advise the island’s employers to become more open to new work practices that help tap the creativity of Taiwan’s latest batch of twenty-somethings.

HR Executives Taking on Expanded Roles in Many Enterprises As business challenges grow more complicated, companies often look to the HR department for more strategic support. BY PHILIP LIU

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A Report on the HR Sector

n Taiwan’s increasingly sophisticated business environment, humanresources managers are undergoing a major change in their role and functions in order to help their companies cope with such new challenges as the internationalization of their operations (especially given the close business links with China), the advent of a knowledgebased economy, and the need to develop a succession plan. The emergence in many major enterprises of a chief human-resources officer (CHO) embodies the trend. The post, generally regarded as equivalent in rank to a vice president, carries the mission of formulating strategic HR plans to help companies achieve their business goals. “I have to formulate a human-res o u r c e s s t r a t e g i c p l a n e v e r y y e a r, involving organizational changes and manpower adjustments, including job capabilities, in order to help the company achieve its annual business goals,” says David Hsueh, vice president and chief human-resource manager at Pfizer Taiwan. “Meanwhile, I have to map out ways for the implementation of Pfizer’s global human-resources strategic plan in Taiwan.” Huseh notes that staffers under his supervision in the HR department focus their efforts on cultivating talent needed for the company’s development and helping business-unit chiefs handle relationships with their subordinates. They rely mainly on information systems or outside companies for traditional HR functions such as payroll and employee welfare. “Our HR staffers work alongside business-unit chiefs on a daily basis to help them tackle such problems as the retraining of less competent employees,” says Hsueh. “In case of layoffs, they have to provide professional consulting to business-unit chiefs, including possible risk and legal requirements.” Alison Tung, HR director at Microsoft Taiwan, reports that her primary task at present is to oversee changes in the salary and organizational structure, in line with a transformation in Microsoft’s business orientation. From its roots in personal-computer software, the company two years ago started to emphasize services, including cloud computing, and various hardware devices. For the HR team, the change means it needs to conduct inten-

sive training programs to enable the sales and marketing personnel to present the new services and products effectively. “We regard ourselves as partners to our business-unit managers,” says Tung. At many enterprises, a key component of the HR responsibility is to offer HR-related support for their increasingly internationalized operations. “Fubon Financial Holding aspires to become a topnotch financial institution in Asia, and we have to determine what kind of capabilities our managerial personnel need for that goal to materialize, then formulate and execute relevant talent-cultivation programs accordingly,” says Joy Tsai, the company’s vice president for HR. At mobile-phone company HTC Corp., a primary task of the HR department is to recruit and cultivate staff with a global perspective and English-language competence in order to support the company’s highly internationalized operations. An English-language test, including an interview by foreign superiors in some cases, is a major component in the recruitment of new employees. They will subsequently receive further language training, including subsidized study at outside institutions, so that they can conduct regular communication in English with HTC’s foreign staffers, either in Taiwan or outside the country. Aside from its Taiwan headquarters, HTC now has operations in North America, Europe, North Asia (mainland China), and Southern Asia. Except for North Asia, which has a Taiwanese head, all of the regions are led by local nationals. Of the company’s 20,000 employees worldwide, 3,000 are foreign nationals, and foreigners – including some at the Taiwan headquarters – account for 32% of the global managerial force.

Guiding career development To assure their enterprises’ sustainable development, HR managers must also map out and execute a well-developed succession plan. “We’ve built up a succession list consisting of staffers with high potential, and we conduct a program to cultivate them, including rotational assignments in different fields or even different countries, the so-called ‘secondment’ plan. We review and revise the list every half year,” says Pfizer’s Hsueh.

Alison Tung notes that for every managerial position at Microsoft, there is a candidate successor who will undergo a well-developed grooming program. The list of candidates and the progress of the grooming programs are reviewed by superiors at the country level every month, at the international level every quarter, and by the CEO of the global operation every half a year. For the ninth year in a row, Fubon Financial this year recruited some 23 new staffers to enter its MA (management associate) program, which aims to develop future managers for the group. The 23 were selected from among some 1,000 applicants, all with master’s degrees, after going through several rounds of tests, including an interview in English in the third round and a personality assessment to look for such traits as proclivity to take initiative, communications skills, team spirit, and ability to work under pressure. With a starting monthly pay of NT$60,000 (US$2,000), the MAs then undergo intensive training, mentoring from upper-level managers, and rotational assignments to prepare them for speedier ascension up the ladder of the company’s organizational structure. “Essentially, it is an intensive management-grooming program, under which MAs receive tutoring from managers directly,” says Joy Tsai. Meanwhile, other employees with good potential also have ample opportunity for promotion, though often at somewhat slower speed, via the company’s regular talent-cultivation program. At HTC, the HR department devises tailor-made training programs for managerial staff at different levels. Newcomers go through an on-boarding program, designed in part to instill the corporate culture. Those with three to four years of service at the company will then be assigned to courses for training people-related skills, as well as programs aimed at cultivating innovation. As part of the innovation cultivation, the company invites leading figures in various fields, including aesthetics, ergonomics, and cloud-computing, to deliver lectures and interact with HT staffers to stimulate their creative thinking and widen their perspectives. Among the guests has been Lin Hwai-min, founder of Cloud Gate Dance Theater.

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At a time when their operations are becoming increasingly knowledge-oriented, the recruitment, cultivation, and retention of personnel with special expertise are considered crucial for many enterprises. Microsoft, for example, has a worldwide “key talent program” that provides stock bonuses and fasttrack career-development opportunities to those who are selected on the basis of their outstanding performance. In addition, awards (both monetary and non-

monetary) are given out regularly to those who have handled a specific assignment with remarkable ability or whose behavior exemplifies Microsoft’s core values, such as integrity, honesty, openness, personal excellence, constructive self-criticism, continual self-improvement, and mutual respect. Every business-unit chief at Microsoft has a fixed budget, in proportion to the number of employees, for holding activities to build team spirit and boost morale.

Top performers and newcomers to the sales force, for example, get to attend the annual global salesperson meeting of 10,000-20,000 attendees, where they have the chance to better understand the company’s global business goal and marketing strategy. Microsoft also makes a special effort to cultivate female managers. Women business-unit chiefs gather regularly with their peers from other countries to share experiences and make suggestions. A

An awards ceremony of Taiwan's Chinese Human Resource Management Association. photo : chrma

CHRMA: Cradle of HR Managers

ounded 20 years ago by a group of senior HR managers, the Chinese Human Resource Management Association (CHRMA) has played an increasingly prominent role in Taiwan’s HR community, helping novices to enter the HR profession and enhancing the ability of experienced professionals to cope with new challenges, such as talent management, leadership pipeline and succession planning, the increasingly close Taiwan-China economic link, and globalization. CHRMA, for instance, regularly attracts large audiences for seminars on such topics as new trends in HR practices and China-related issues such as the mainland’s Labor Contract Law and the recruitment of cross-Strait talent. Other popular seminars address such popular

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current issues as the second-generation National Health Insurance program, the Personal Data Protection Law, and succession planning. In addition, the Association holds courses for HR professionals on seasonal issues, including young talent recruitment during the graduation season and performance evaluation and compensation administration at year-end. Such courses typically attract 30-50 attendees per session. CHRMA members can also attend free meetings on a regular basis to enable them to share their experiences with peer HR professionals. Such events normally attract 100-200 participants. In addition, the Association offers comprehensive HR training programs, which enable participants to receive certification in various HR fields if they

successfully complete the course. The subject matter includes certificates on labor laws and regulations, employee recruitment, employee training and development, payroll, performance evaluation, vocational capability, e-HR, and labormanagement relations. The programs are categorized into basic, intermediate, and advanced levels, with sessions conducted one day a week for five to six weeks. While no pre-qualification is needed for the basic program, two years of HRrelated experience is required for study at the intermediate level and three years for the advanced program. At the end of the program, students in the intermediate and advanced courses must pass an examination and give a presentation that includes a Q&A session in order to be certified. Last year, 3,000 HR practitioners received training at the Association, of which 1,000 were for certification programs. Membership in the Association is open to both individuals and corporate members, with annual dues of NT$2,000 (US$67) and NT$16,000 (US$533) respectively. Corporate member receive NT$12,000 (US$400) worth of vouchers for their personnel to attend the Association’s training courses. CHRMA was initially funded by donations, but became financially self-sustaining after launching the certification program about 16 years ago. — By Philip Liu

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A Report on the HR Sector complete welfare package, including a nursing room and child-raising allowance (NT$2,500 per month until the child reaches six years of age), along with comparatively high salaries, has helped cut the annual turnover rate at Microsoft Taiwan to 1.2%, compared with the industrial average of over 10%. As a result, the company was one of five enterprises cited this year by the Taipei city government for promoting employee well-being. In order to burnish the corporate image to facilitate talent recruitment – in what is known as “employment branding” – Fubon Financial has been actively engaged in public-benefit activities. In addition to activities sponsored by the Fubon Charity Foundation, the group also encourages staffers to suggest and carry out Corporate Social Responsibility projects. If approved, the projects may be eligible for financial support from the foundation and employees may take a “public-benefit leave of absence” to work on them. Examples have included the building of a library in Taitung, and support for the training of a baseball team for the visually impaired, which recently won the championship in an international tournament.

Talent management At HTC’s HR department, whose formal name is the Talent Management Division, recruitment and retention are a constant challenge, as R&D personnel accounts for 50% of its whitecollar workforce. Half of the whitecollar workers have a master’s degree, and another 10-20% hold a Ph.D. Each year, the company typically recruits 1,000-1,500 people to support expansion and fill turnover. To attract quality talent, the company says it offers compensation 50-75% higher than the industry average, and even higher for those with special qualifications. “We look for someone who loves a challenge, is not afraid of getting white hair, and identifies with our corporate goal of developing a Taiwanese brand capable of competing with Samsung and Apple on the global market,” says Crystal Liu, the vice president heading the talent management division. Last year, every vacancy at HTC

photo : courtesy of adecco

attracted at least 40-50 applicants – even 100 in some cases – according to Liu. The company recruits new staff through such measures as on-campus solicitation, talent banks, and employee referral. It offered a two-month internship program, dubbed the HTC DNA program, during the summer vacation last year, when it recruited 68 college students and assigned them mainly to marketing tasks. Thanks to the satisfactory results, it expanded the program to accommodate 80 students this year (it received 3,500 applications), and plans to offer the program next year through its operations worldwide. After the internship, the company keeps in contact with the students in the hope of recruiting them to work at the company after graduation. Occasionally, HR departments are called upon to handle thorny personnel issues. In September, for example, HTC chairperson Cher Wang filed charges against its vice president/chief designer and two other design staff members for allegedly defrauding the company of NT$10 million (US$330,000) in design fees and stealing specifications of a new model in preparation for leaving the company to found a startup. “Those persons betrayed the flexibility and trust accorded by the company to our managerial staffers,” says Tsai. “In the wake of the incident, we have stepped up our ethics

education, tightened internal controls, and intensified discipline. We referred the case to the prosecutors ourselves, which was a difficult decision but underscores our intolerance of any such act.” With workers becoming ever more conscious of their interests, the maintenance of a harmonious managementlabor relationship is also a key function of HR managers in today’s Taiwan. They need to adroitly handle employee petitions, and ensure that major changes in the corporate environment, such as mergers and acquisitions, are not disruptive of company operations. When Fubon Bank merged with Taipei Bank in 2005, for instance, Fubon Financial Holding arranged for Taipei Bank to be the surviving bank in order to lessen opposition from employees of Taipei Bank, which originally came under the jurisdiction of the Taipei city government. Moreover, the two banking units continued to operate independently for quite a while after the merger so as to achieve synergies before their integration took place. Even now, many original ranking officers of Taipei Bank retain top positions at Taipei Fubon Bank, the merged entity. HR managers also play a critical role in maintaining personnel stability during corporate restructuring. Fubon Financial, for instance, from October 1 will again adopt a subsidiary-based organi-

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zation, replacing a structure based on separate business groups that was instituted in 2005. Pfizer Taiwan’s David Hsueh stresses the need for CHOs to develop the “soft” capability to oversee adjustments in an organization and manpower deployment in accordance with changes in the company’s business goal. “For instance, in line with changes in pharmaceutical payments under the second-generation health insurance program, our company has to change our business strategy – and the HR department must come up with a new HR strategic plan accordingly,” he notes. Hsueh advises HR managers to estab-

lish a relationship of mutual trust with their company’s top executives, which is critical for fulfillment of their responsibility. He also suggests that to cope with the formidable challenges they face, HR managers can benefit from frequently attending seminars or peer gatherings, such as those organized by the Chinese Human Resource Management Association (CHRMA), the foremost HR training institution in Taiwan. In response to the increasing need in this market for international HR managers, the Institute of Human Resource Management of National Sun Yat-sen University in Kaohsiung joined hands with Master Kong Holding, a leading

Taiwanese-invested firm in China, to launch a five-year “master’s program for international CHOs” in June 2011. The program is backed by an NT$160 million (US$5.3 million) fund donated by Master Kong. It annually takes in 20 students who have at least five years of working experience, and offers them a scholarship of NT$50,000 (US$1,666) a month. Half of the courses are taught in English. During their study, students take short-term intensive courses at leading universities in the United States, Europe, and China, as well as internships at multinational companies, with the Master Kong fund subsidizing their expenses.

Sourcing Strong Leadership Talent in Taiwan Today Seven suggestions to MNCs for ways to find good candidates for executive positions.

BY CHRIS TRAUB

ver the past 25 years that I’ve been involved in providing executive search services in Asia, the market in Taiwan and other countries across the region has undergone many changes – with many new industries evolving and new challenges arising in terms of both supply and demand, as well as the professional development of executives. With the slowing down of traditional markets such as North America and Europe, the emergence of hot growth markets in Asia – the “Asian Tigers” in the ’90s (of which Taiwan was a leading player), China and India in the 2000s (as Taiwan slowed down considerably),

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and more recently Southeast Asia – has provided many enterprises with extra economic “wind in their sails.” Yet the considerable economic growth of these markets – China in particular – has generally outpaced the availability of capable leadership talent available to market participants. The struggle to attract, develop, and retain strong leadership in Taiwan – especially given its critical role in the Greater China human capital talent pool – continues to this day and is unlikely to abate in the near future. Over the past two decades, Taiwan and other Asian economies have progressively opened up their industrial,

consumer, commercial, manufacturing, and services sectors. The result has been a steady stream of large- and mid-sized multinational corporations (MNCs) entering the markets, partnering and competing with local enterprises, and often ultimately building their own independent, meaningful presence in those countries. With the evolution of these sectors, the acquisition and development of leadership talent has inevitably been a key issue requiring attention. In the early stages of any new area of business (such as the beginning of the internet and social media sectors around the year 2000), it is

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A Report on the HR Sector

difficult to find local professionals with deep domain experience, which puts a premium on the ability of executives to quickly learn industry dynamics, business models, and relationships. As the sector matures, executives need to be capable of scaling the businesses and responding to increasing competition and complexity. Ultimately, with further market maturation, executives need to have the ability to continuously adapt and re-invent their organizations in order to keep them vital. When China opened up in the 1990s and 2000s, it is widely known that many multinationals sent their best Taiwanese talent to Shanghai, Beijing, and other major cities on the mainland. Many of those people have not returned, as they have taken on significant country and regional responsibilities in their companies. Of those who have come back to Taiwan, many have either joined major global Taiwanese enterprises or started their own companies. Large, locally-based internationally oriented enterprises have become much more adept than they once were at bringing in “culturally hybrid” Taiwanese executives (those with international educations and experience in leading international companies). Such companies offer these executives the opportunity to take on global executive roles and gain headquarters leadership experience, which otherwise is difficult for many Taiwanese to obtain in Western multinationals with headquarters overseas. Venture capital and private equity-backed enterprises offer similar Taiwan-based headquarters leadership opportunities, and often provide significant incentives for executives to drive the companies to success through the promise of economic participation in an eventual strategic financing event such as an IPO or acquisition. For MNCs seeking to identify and attract top talent for their Taiwan operations today, however, the drive by both public and private local companies further exacerbates the challenges they face in recruiting and retaining executive-level personnel. It raises the bar in the need for them to be both creative and persistent in their methods and approaches to accessing, securing, compensating, and retaining

scarce leadership talent. In the face of such competitive dynamics, over the years we have witnessed that MNCs operating in Taiwan have responded with a range of strategies to attract the best and brightest talent available, including: 1. Offering the prospect of career development and participation in the Greater China marketplace. Having the opportunity to maintain one’s Taiwan roots and still engage in Greater China business operations is often quite attractive to Taiwan-based executive leaders. It gives them the chance to stay close to their families, while participating in China’s growth, challenges, and excitement. Identifying temporary or longerterm career progression that might bring the executives to China, and eventually back to Taiwan (though this may be challenging to achieve), can also provide powerful incentives for candidates to join. 2. Proactively seeking to bring back Taiwanese executives who are resident in China. Many Taiwanese who are resident in Taiwan would be keen to return to Taiwan if they were able to find a role that is sufficiently professionally challenging and could provide continued career advancement. This is frequently challenging, given the relative scale and complexity found in China vs. that often found in Taiwan. It requires creativity in the development of the position requirements and responsibilities for the Taiwanbased roles. But the pool of Taiwanese professionals in MNCs in China is quite large by now, and there continues to be a strong preference for localization of leadership roles in China, which at times can marginalize the opportunity for Taiwanese competing for China-based roles. Therefore, the interest in returning to Taiwan by Taiwanese professionals residing in China is frequently quite high, particularly for what is perceived to be the right position. 3. Seeking to bring Taiwanese with previous experience in Western MNCs back from the global Taiwanese companies. A fair percentage of WesternMNC-experienced Taiwanese professional

leaders that transition into leading global Taiwan-based companies face challenges adapting to local management culture. After a time, they often would be open to returning to a Western MNC corporate cultural environment, should the right opportunity arise. The challenge for the hirer is to identify roles that could sufficiently challenge these leaders, after they have become exposed to owning global headquarters responsibility. This again comes back to the need to frame the immediate and mid-term career opportunities for such candidates in terms of how they can leverage their Taiwan experience, integrating it into a new role that they would find professionally meaningful. 4. Scanning the global marketplace beyond Greater China, for opportunities to bring Taiwanese back for domestic roles. The rise of social media-based human capital tools, such as LinkedIn, have flattened the world and opened the talent pool considerably. Just as there are Taiwanese residents in China who would be keen to return to Taiwan for the right opportunity, the same applies for those working in North America (in particular), Europe, and elsewhere in Asia. Candidates residing outside of Greater China can face disadvantages in competing for local roles in Taiwan (in terms of their depth of local relationships and context, depending upon how long they have been out of Taiwan) and complications involved in relocating back, often due to family reasons. But at the same time, they may be able to offer insights and valuable perspectives to their colleagues in Taiwan, depending upon the nature of their experience overseas. 5. Looking to peripheral but related functions and industries. Possibly candidates can be found within a company’s distribution supply chain, for example. If so, could they make the transition to a different part of the supply chain, or have they previously done so under a different set of circumstances? Perhaps they possess most, but not all, of the components that the hiring manager is seeking for the functional leadership role – a position that would represent a professional challenge as well as an advancement opportunity.

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If the candidates have the appropriate personal characteristics that lead one to believe that they can rise to the occasion, recruiting them could potentially lead to a win-win opportunity that might well engender a strong sense of loyalty. 6. Engaging leaders on an interimto-permanent basis. Is the role that a hiring manager is seeking to fill one that could potentially accommodate a leader who might presently be available on a consulting or interim basis? We have seen multiple examples of such executives who, once engaged with a company on a consulting project or interim basis become involved to the point that their priorities change and they become open to taking on a permanent role, when that previously might not have been the case. 7. Considering candidates who might be “out of the box” from the original specifications. Many executive leadership roles seek to bring in relatively younger, yet experienced leaders. Still, there are often executives in their 50s who would

like to be considered for senior leadership roles, yet due to their age are often passed over in favor of younger candidates. Such more mature candidates are often highly energetic and highly experienced, as well as motivated and grateful for the opportunity to contribute. Such executives can also be brought in with a succession plan in place, where developing and mentoring their younger successor becomes an important deliverable for which they are incentivized. The above seven points are not the only creative approaches that MNCs have taken in order to attract and retain key Taiwanese leadership, but they do represent some of the more common options that are considered when companies confront the need to attract the best possible talent to drive their businesses or functions in Taiwan. Ultimately, given the ongoing challenges and complexities of sourcing strong leadership, the onus on hiring teams is to obtain maximum clarity on the needs of the roles being filled, and then to use maximum creativity in the sourcing and

assessing the targeted candidates and in attracting them to the company and the position to be filled. With sufficient clarity, creativity, and vision regarding career and organizational development, we are confident that companies can continue to be successful in securing very strong Taiwanese leadership for their Taiwan entities, and in the process strengthen their overall Greater China leadership pool.

— Chris Traub is Chairman of the Strategic Executive Search Group (SES), a leading integrated, regional provider of executive search services.

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and-cream parfait with hazelnut crunch brownie, strawberry n a vivacious tribute to the American film industry, the coulis, and berries. theme of the 2013 American Ball, organized jointly by The dinner was accompanied by Jacob’s Creek Shiraz AmCham Taipei and the American Institute in Taiwan, Cabernet, Jacob’s Creek Chardonnay, and The Glenlivet was “Hooray for Hollywood!” Some 400 revelers packed 12-year-old Single Malt Scotch Whisky. Available at the bar the ballroom of the Grand Hyatt Taipei on October 26 to enjoy were cocktails made with Beefeater, Absolut Vodka, Malibu, an evening of fine food and drink, spirited entertainment, and Kahlua, and Dita. dancing both to live band Adoga and music spun by DJ Louis. The ball was made possible through the generosity of a Once again, the American Ball was the social event of the year number of sponsoring companies. These included Grand Prix for Taipei’s international community. Sponsor United Airlines; Wine & Liquor Sponsor Pernod Master of Ceremonies Richard Lin charmed the audience, Ricard Taiwan; Gold Sponsors HSBC Bank, Grand Hyatt and dance troupe VMJ underscored the cinematic connection, Taipei, JT Tobacco International, Standard Chartered Bank, starting with a medley of movie musical themes in which the and the Tobacco Institute Republic of China; and Silver dancers were costumed as film stars like Bruce Lee and MariSponsors Air Products, Capital Machinery, Corning Display lyn Monroe, or such characters as Captain Jack Sparrow, Cat Technologies, and McDonald’s Restaurants (Taiwan). Woman, and Cleopatra. Later the band’s lead singer took a The raffle grand prize from United Airlines was two roundturn as an Elvis Presley impersonator to perform Love Me trip business-class tickets between Taipei and San Francisco. Tender, Heartbreak Hotel, and Blue Suede Shoes. Other gift sponsors were the After a welcome drink of Macau Government Tourist Jacob’s Creek Sparkling CharOffice, 3M Taiwan, ELCA Inc. donnay Pinot Noir, the diners grand prix sponsor (Estee Lauder), Fleur de Chine, supped on a delectable fiveGrand Hyatt Taipei, the Howard course meal. The gourmet Plaza Hotel Taipei, the Landis menu, especially designed by wine & liquor sponsor Taipei, Le Meridien Taipei, the Grand Hyatt chefs, featured Novotel Taipei, Palais de Chine chicken-mushroom ragout; Hotel, Procter & Gamble, the pumpkin soup with scallop and gold sponsors Regent Taipei, Samsung Elecchive cream; lemon granite/ tronics Taiwan, Shangri-La’s Far raspberry sherbet; smoked U.S. Eastern Plaza Hotel, the Sherbeef tenderloin with roasted silver sponsors w o o d Ta i p e i , W Ta i p e i , t h e ratatouille, new potato, and Westin Taipei, and Yangmingspinach, with Merlot reducshan Tien Lai Resort & Spa. tion; and a dessert of cookies46

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Taiwan’s Remarkable Hot Springs

aiwan’s winters are far from harsh at sea level, but venture a little way into the mountains that dominate two-thirds of the island and you will experience a noticeable drop in temperature. Snow falls on Mount Jade, at 3,952 meters the highest peak in northeast Asia, as well as on several lower peaks. No wonder, then, that during these months many people – locals and tourists alike – head for the country’s hot springs. These natural spas are a result of the volcanic and tectonic actions that have shaped Taiwan’s stunning landscape. The volcanoes are long extinct, but just below the surface the island still seethes with geothermal warmth. Scalding mineral-enriched spa waters bubble to the surface at 120-plus locations in the north, east, south, and interior of the island. Luxurious hotels have been

built at some of these places, allowing hot-spring devotees to stay overnight and soak in the comfort of private suites. Other springs, by contrast, remain just as Mother Nature intended, and can only be accessed by hikers or 4WD vehicles. The island’s hot springs are amazingly varied. In terms of setting, temperature, and mineral content, each has its own personality. Those nearest Taipei tend to be acidic and sulfuric, while springs in other regions are usually carbonatic and rich in dissolved calcium, sodium, magnesium, and potassium. The water is cloudier in some places than in others. I n G u a n z i l i n g i n Ta i n a n C i t y, f o r example, fine particles of silt and mud turn the springs’ output into a rich shade of brown. Taiwan’s love affair with hot springs

is in part a result of the 50 years it was under Japanese rule. In early 1896 – less than a year after the Japanese takeover – a businessman from Osaka opened Taiwan’s very first hot-spring hotel in what is now Taipei City’s Beitou District. Long before that, however, the island’s indigenous peoples were enjoying natural hot springs in places like New Taipei City’s Wulai District. These days, Wulai is the location of several upmarket hot-springs hotels, as well as a set of much-loved and absolutely free riverside hot-springs pools. From the international tourist’s perspective, Taiwan’s hot springs have certain advantages over their Japanese counterparts. Whereas segregation by gender and nudity are standard (and required) at Japan’s famous onsen, swimsuits are worn at the majority of public hot-spring pools in Taiwan. Families can splash and relax together in these places, many of which are open-air and set against a backdrop of mountains and forests. As in Japan, each hot-spring guest is expected to wash his or her body thoroughly before getting in the water. In

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many springs, the temperature exceeds 45 degrees Celsius; so before getting fully immersed, you should gradually acclimatize your body to the temperature by scooping water and pouring it over yourself, then slowly lowering yourself in, one limb at a time. Many firsttimers are surprised when told that after indulging in a hot spring, they shouldn’t shower before dressing, but rather let their skin benefit from the trace quantities of sulfur, sodium carbonate, and other minerals in the water. One reason why Taiwan’s hardworking population adores hot springs is that so little energy is required to enjoy them. Apart from taking the occasional sip of water from a bottle or adjusting one’s towel, the typical bather hardly moves. Nevertheless, bathers usually emerge from the waters with a healthy appetite. The relationship between hot springs and good food has been compared to that between movies and popcorn, but it goes much deeper. The tradition of soaking, then partaking of a fine repast, dates back to the Japanese occupation, which is why so many hot-springs restaurants serve Japanese delicacies such as soba noodles and tonkatsu. Taipei residents are fortunate in having on their doorsteps the hotsprings mecca of Xinbeitou, where it all began back in 1896. The sheer number of soaking options there – from the ultra-luxurious to the wallet-friendly – together with the convenience of the capital’s mass rapid transit (MRT) rail system, means that on chilly winter evenings, quite a few

people go for a soothing dip on the way home from work. The Taipei Hot Springs Association (Tel: +886-2-2895-5418; www. taipeisprings.org.tw) is a good source of information about the Xinbeitou area, its hotels and restaurants. For an entirely authentic bathing experience in Xinbeitou, head to Longnai Hot Springs. It is open 6:30 a.m.-9 p.m. every day, and admission costs just NT$90 for adults and NT$50 for children, but you should bring your own towel. There are two pools – one for men, one for women – inside the colonial-era bungalow, less than 500 meters from the Xinbeitou MRT Station. To raise the international profile of the island’s geothermal attractions, the Tourism Bureau in recent years has been holding an annual Taiwan Hot Spring Fine-Cuisine Carnival. Lasting from mid-October to around the Chinese Lunar New Year (which in 2014 falls on January 31), the carnival features dozens of hot springs offering special packages that include access to bathing facilities, a top-notch dinner, and one night’s accommodation with breakfast. Details of participating businesses can be obtained from the carnival’s official website: www.taiwanhotspring. net/. Alternatively, pick up a free pamphlet from any visitor information center in Taiwan. Few places are embracing the carnival more enthusiastically than New Taipei City’s Jinshan District. This town on Taiwan’s northern coast has long been a favorite with visitors seeking sea air and soothing hot springs, yet it

remains appealingly quaint. Taiwanese author Liu Huan-yeh has a particular affection for Jinshan, writing: “I have always held that hotspring bathing should not be just a fad or a trend. Rather, it is a lesson that joins geography, the environment and life. Anyone wishing to understand this lesson should begin by witnessing the hot springs at their source. Among the hot spring areas of Taiwan, none are more sincere than Jinshan in their warm welcome to a rendezvous.” By car, Jinshan is just over an hour from Taipei. Visitors who do not wish to drive can arrive via one of Taiwan’s most scenic bus routes, number 1717. The route cuts across Yangmingshan National Park, giving passengers excellent views of the park’s peaks, silvergrass glades, and steam-spewing fumaroles. One of the most attractive and historic places in Jinshan to take a dip is The Governor-General’s Hot Spring (Tel: +886-2-2408-2628; www.warmspring.com.tw), which is open 9 a.m. to midnight every day. Built in 1939 by the Japanese colonial authorities to entertain dignitaries, its strategic location overlooking the coast led to it becoming an army post for much of the postwar period. Now fully restored, it offers hot-spring aficionados a range of pools including private rooms, outdoor pools where swimsuits are required, and gender-segregated ocean-view pools on the fourth floor where swimsuits are not worn. For additional information about visiting Taiwan, please contact the tourism hotline at 0800- 011-765, or go to the Tourism Bureau’s website (www. taiwan.net.tw).

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