Asian cooperation leads to economic recovery in Taiwan

July 31, 2016

By GlobalPost WriterRajeshni Naidu-Ghelani, CNBC

Taiwan’s president Ma Ying-jeou was reelected in January and is confident about Taiwan’s growing economy.
Andrew Wong

Taiwan, like Asia's other export-reliant economies, has been hit hard by the global economic slowdown, but the country's President Ma Ying-jeou tells CNBC that Taiwan is now on the road to recovery, helped by a broadening of the country's trade and investment partnerships.

Ma Ying-jeou, re-elected for a second term in January, said the island is involved in negotiations with Singapore and New Zealand to finalize economic cooperation agreements (ECA) after signing a bilateral investment deal with Japan in September last year.

"Although we have achieved some results, we are not satisfied. We hope to complete ECAs with New Zealand and Singapore in the near future," Ma told CNBC's Martin Soong. "Japan has made the largest number of investments in Taiwan this year."

Deterioration in exports, mainly electronics demand, from Taiwan's biggest trading partners China and the U.S. respectively has led to a slump in the country's industrial sector. Exports account for 70 percent of Taiwan's GDP.

Ma said he does see some "light at the end of the tunnel" for Taiwan's economy, which grew 0.98 percent in the third quarter, compared to last year.

"Our economy is on the road to recovery albeit at a very slow pace. The various indicators have begun to signal positive growth and there is no reason for pessimism," Ma said. "Although we cannot be too optimistic, the economic upturn should be obvious."

Tepid demand in the end-of-year shopping season which traditionally bodes well for Taiwan's tech firms helped exports rise 0.9 percent in November, compared to a year ago. A pick up in exports to China of 3.7 percent year-on-year led the way, but exports to the U.S. fell nearly 6 percent, while exports to Europe declined 6.7 percent in the same period.

Long Road

Ma said Taiwan is stepping up efforts to liberalize trade, which could help its weak export market.

"The road is long. We can only create favorable conditions step by step," Ma said. "We must be more open and liberalized without harboring too strong a sentiment of protectionism."

Ma said he hoped that Taiwan firms operating in mainland China returned home to invest.

"Some firms that invested in mainland China deal in labor-intensive work; these will choose Southeast Asia as an investment destination because Taiwan's labor costs are higher," Ma said.

In August, Taiwanese firm Foxconn, a major Apple supplier, announced that it would invest up to $10 billion in Indonesia to tap one of the cheapest labor forces in Asia.