An affluent population, growing trading might, and massive financial resources have made Taiwan an attractive market and investor to court. The island's vibrant economy has demonstrated the ability to fuel dynamic growth not only within its own boundaries, but also in Southeast Asia. It is the largest investor in Malaysia, the second largest in Thailand, and one of the top-ranked investors in Indonesia and the Philippines. Taiwan's two-way trade with these countries and Singapore in 1990 amounted to US$9.8 billion, up from the $8.6 billion registered in 1989.
And as Australia and New Zealand continue to look to its Asian neighbors in expanding its markets, Taiwan has demonstrated that it can become a viable and important investor and trading partner. It is recognized as such in the Asia-Pacific ─ despite the absence of diplomatic ties with most of the countries in the region.
"Nineteen ninety was a bumper year for Australia-Taiwan relations," says Robert J. O'Donovan, representative of the Australian Commerce and Industry Office in Taipei (ACIO). Located at the Taipei World Trade Center, the ACIO represents Australian commercial interests in Taiwan, and promotes commercial as well as non-commercial ties between Taiwan and Australia. A look at the trade figures last year explains O'Donovan's enthusiasm. Australia is now Taiwan's fourth largest supplier of imports behind the U.S., Japan, and Germany. It is also Taiwan's largest supplier of aluminum, iron ore, beef, wool, milk powder/cream, and barley; and the second largest supplier of coal and zinc. Stronger economic ties and the shifting attitude of the Australian government toward Taiwan promise good prospects for the future.
A statement by Foreign Minister Senator Gareth Evans in November 1990 reiterated Australia's commitment to a "pragmatic and responsible approach" to the management of its relations with Taiwan. The Australian government has officially announced several steps to "provide even more active support " for developing commercial relations. Among them were enlarging the ACIO, expediting visa procedures, and establishing a direct air link between Australia and Taiwan.
The ACIO was established ten years ago, and has since grown remarkably, specially in the last three years. It began as an office of two, but now has five Australian staff, and more than a dozen local staff. The office provides information services and trade assistance, and issues visas. Beginning March 1991, it became possible to acquire visas to Australia within two working days instead of the previous seven working days with, in O'Donovan's words, "a minimum of fuss and delay."
Trade promotion is the ACIO's major function. It is helping Australian companies attracted to the lucrative opportunities in the Taiwan market to promote their products and technologies. For example, Australian food and beverage companies participated in the Taipei International Food Industry Show held at the World Trade Center in March 1990. A wide range of Australian products were on display, including processed food, beef, lamb, seafood, and fresh fruit. A well-known department store also held an "Australia Week" in January 1991 to boost the image of Australian products among Taiwan consumers. "We are creating a friendly image," says O'Donovan.
During the 1980s, Taiwan maintained a high level of capital surplus, but did not cultivate more productive investments. O'Donovan believes that Australia is in a position to offer potential investors a place where they can see a profit able return on their investments. "In vestment opportunities in the resources and manufacturing sectors are growing," he says.
Bill Bruce ─ The major challenge Is "getting a bigger share of this market."
Taiwan businessmen are being receptive to the overtures. Last year, a group attended the sixth annual conference of the Australia-Taiwan Trade Association held in Perth, Australia. The gathering provided the opportunity to canvass investment prospects in a range of areas including minerals, food products, and niche high-tech industries. After the conference, a group of senior Taiwan industrialists traveled to the East Coast where they were briefed by Prime Minister Bob Hawke and a number of other government officials on Australia's investment climate. The delegation was headed by Jeffrey Koo, president of the China Trust Group, one of Taiwan's biggest conglomerates.
The ACIO also wants to attract business immigration to Australia, and has set up a program that includes a range of subjects, from English to identifying in vestment opportunities. Official statistics show that Taiwan was the biggest source of business immigrants in 1990, when more than 2,000 people from Taiwan moved to Australia to set up residence. Also, over 30,000 Taiwan tourists visited last year.
Education exchanges between Australia and Taiwan are growing steadily. Australia welcomes students pursuing undergraduate and post-graduate degrees. According to O'Donovan, new developments on the education front in 1990 included the establishment of an Australian Education Center in Taipei to provide information and counselling to students interested in study opportunities in Australia. In August 1991, the ACIO will hold its first Australian Education Exhibition at the National Central Library in Taipei. Its goal is to stimulate cooperation between Australian and Taiwan universities, and raise Australia's profile as a destination for overseas study.
A significant step in the development of Australia-Taiwan relations is the conclusion of a commercial aviation agreement for direct air links between Taipei and Sydney. The agreement was signed by O'Donovan and Lin Shui-chi, director of the East Asian and Pacific Affairs Department, Ministry of Foreign Affairs, on March 25, 1991. The announcement was welcome news for the trade, travel, and tourism industries since direct flights are expected to contribute substantially to an increase in business and exchange.
According to O'Donovan, details of the direct flights will be worked out by the second half of the year. Both Taiwan and Australia have formed new companies to fly the routes. Australia's national airline, Qantas, has set up a subsidiary, Australia Asia Airlines, while the ROC's official carrier, China Air Lines, has established Sky Rider Airlines, a joint venture with the China Trust Group.
A separate agreement provided for the renaming of Taiwan's representative trade offices in Melbourne and in Sydney to "Taipei Economic and Cultural Office." They had been operating previously under the name, "Far East Trade Office." A new main office will also be set up in Canberra.
O'Donovan says that the next major challenge for ACIO is to "gain more direct access to the Taiwan market for Australian beef, Wheat, and fresh fruit; and to overcome the current limitations and disadvantages such as higher tax and a low quota for beef."
In fact, beef is a sensitive subject in Australia-Taiwan trade talks. To protect local beef suppliers, Taiwan set the 1991 quota for Australian beef at 12,000 tons, while imposing a US$1.10 tax per kilo on special cuts. This tax is higher than the US$0.74 tax charged per kilo for beef from the United States and New Zealand. The quota also fell short of Australia's expectations of 16,000 tons.
According to O'Donovan, Taiwan is the largest beneficiary of the 5 percent tariff preference Australia extends to all developing countries. Australia also supports Taiwan in its efforts to join GATT and participate in the Asia-Pacific Economic Corporation. In return, it hopes to receive freer access to the Taiwan market. "Fair access for Australian agricultural exports would benefit Australian producers and Taiwan consumers," O'Donovan says.
On the smoother side of the relation ship, trade has been growing at a rapid pace, and has forced the ACIO to expand its office to cope with the increasing complexities in trade relations. Taiwan is currently Australia's fifth largest trade partner. The total trade volume in 1990 between the two countries in creased to reach $4 billion. Australia exports items such as minerals, wool products, and foodstuffs to Taiwan, and imports electronics, chemical products, and clothing from Taiwan. O'Donovan sums up the relationship: "In general, it is a healthy one, and trade has grown remarkably in the past decade. The challenge for the ACIO in its second decade is to keep trade growing while broadening the base of the relationship through increased two-way investment, tourism, educational and people-to-people ties."
Bill Bruce, director of the New Zealand Commerce and Indus try Office (NZCIO) recalls his arrival in Taipei in 1987: "With a map in one hand, my suitcase in another, I looked around and asked myself what I should do next." A former trade official, Bruce had been assigned to Taipei to establish a trade office because New Zealand did not have diplomatic relations with the ROC. With the help of a Chinese interpreter, who is still part of the NZCIO staff, he soon found a small 30-square-meter office. Today, the NZCIO is located at the Taipei World Trade Center, has a staff of twelve, and covers a space of 300 square meters. And there is a lot to do next.
In recent years, people in Taiwan have been looking at New Zealand as a potential place to direct their huge savings. As Bruce recalls, about three years ago, the office began having difficulty in handling the increasing number of applications for emigration to New Zealand. It was also not an easy process to get visas. The New Zealand government decided to expand the office and speed up the visa process. Now it takes only two to three days, a great improvement over the three-week wait of the past. Ac cording to Bruce, the office receives 250 visa applications every day.
Like the Australia Commerce and Industry Office, the main function of the NZCIO is trade promotion. "We are developing trade and investment opportunities between the two countries," Bruce says. On one hand, the office assists New Zealand exporters of timber and dairy and other agricultural products to identify opportunities in the Taiwan market. On the other hand, the office also assists Taiwan exporters of various products such as electronics and plastics in looking up market possibilities in New Zealand. The NZCIO also conducts market surveys.
Dato Syed Mansor Barakbah ─ "The expansion is in response to the ROC's recent open policy."
In 1989, the New Zealand Business Council organized the ten-day Taiwan visit of representatives of ninety-six companies. The mission was led by the now deceased former prime minister of New Zealand, Sir John Martial. In 1990, seventy-five businessmen from Taiwan visited New Zealand, and according to Bruce, CETRA (the China External Trade Development Council) is organizing a mission to New Zealand this year. The NZCIO is now trying to persuade Taiwan investment in New Zealand. "We are recovering from a slight economic slowdown," Bruce says. "I am sure Taiwan businessmen will be interested in investing in New Zealand." Among the attractions he cites are lower property prices, good manpower resources, and advanced technology.
The NZCIO is also looking into establishing an education unit, and a tourism and culture unit to draw more tourists and students to New Zealand. "It is one of the most beautiful places in the world, and our educational system is as good as the U.K. 's," says Bruce. He adds that New Zealand has many first-class vacation resorts.
To add strength to its relations with Taiwan, the New Zealand government is considering direct air links with Taiwan. "The Possibility is very good," says Bruce. Initial results of the negotiations are expected in October 1991.
The future could look good, too. Last year, total exports from New Zealand to Taiwan reached NZ$265 million (US$156 million). Total imports from Taiwan was NZ$360 million (US$210 million). "The important thing from New Zealand's point of view is that New Zealand only represents 0.3 percent of Taiwan's total trade. Yet Taiwan is New Zealand's eleventh largest trading partner. There is a significant opportunity for New Zealand to develop a market here," Bruce says. The office has identified ten major areas for improvement, among them are beef, timber, environ mental protection equipment, and education promotion. Its major challenge? "Getting a bigger share of this market, " Bruce concludes.
Taiwan was by far the largest investor in Malaysia in 1990, with about $2.4 billion approved for manufacturing projects, primarily in the petrochemical industry, in the first nine months of the year. The Malaysia Friendship and Trade Center (MFTC) located on Tun Hwa North Road, one of Taipei's major commercial districts, has contributed in a big way to the speedy development in Malaysia's trade relations with Taiwan.
Established in 1979, the center operated under the office of the country's national carrier, Malaysia Airlines Systems, until 1987 when the center's trade and general affairs departments were combined and made independent. The center acquired an investment department in 1988, and a tourism department in 1989. Dato Syed Mansor Barakbah assumed the post of director in February this year. He has a staff of nine teen Malaysians and fifteen locals. "The expansion is a positive response to the ROC's recent open policy," says Barakbah.
Maintaining cordial ties with Peking is a high priority for many Southeast Asian countries. But government officials in the region have said in press interviews that the Mainland had given its assurance that it is not opposed to the countries' improving their economic links with Taiwan while maintaining diplomatic ties with Mainland China.
Recent statistics show that Southeast Asia is Taiwan's second largest trading partner after the United States. Statistics from the Ministry of Finance put the total trade amount between Taiwan and Malaysia in 1990 at $2.1 billion, double the 1987 figure. The past three years have seen a 30-percent average growth rate in trade.
"This market used to be highly protective. Now you are opening your market, and Malaysia has benefited a lot from it," says A.M. Rahman, director of the MFTC's trade department. To encourage Taiwan businessmen to invest in Malaysia, the office holds many presentations and seminars on the facilities and incentives Malaysia offers. According to Tan Chee Chai, deputy director of the investment department, the office provides various services, including investment consulting, assistance in understanding policies and regulations, coordinating survey visits, and identifying suitable partners.
This year, the MFTC plans to work with the Industry Development and investment Center in presenting Malaysia as a good place to invest. "Lower labor cost and political stability are the main advantages we will emphasize," says A.M. Rejab, director of general affairs.
As for facilitating visa procedures, Malaysia allows a six-month multiple entry visa for Taiwan visitors. Since late 1986, the office has made it possible to get visa applications processed within one working day. In the past, it used to take four to six days. "This is part of the instruction of our government to help attract more people from Taiwan. It helps Taiwan investors and businessmen, too," Rejab says.
Tourists have been flocking to Malaysia. The office is adding three more staff to cope with the increase in tourist visa applications. Malaysia welcomed about 40,000 Taiwan visitors in 1989, and 50,000 in 1990. "There is a tremendous increase in number," says Tar mizi Ahmadun, assistant director of the Malaysia Tourist Information Center.
" Taiwan is currently the Philippines's second largest investor, its closest neighbor, and one of the country's most important trading partners," says Joaquin R. Roces, representative of the Manila Economics & Cultural Office (MECO). Founded in 1975, the Manila office was originally known as the Asian Exchange Center. It was designated by the Philippine government to represent the Philippines in the ROC, in the absence of formal diplomatic relations.
The MECO includes a consular unit and a political and cultural unit located on Chung Shan North Road, and a trade and investment office at the Taipei World Trade Center. Roces took on the position of representative in 1986. Stressing the long-existing friendship between the ROC and the Philippines, he says:
"Our two countries are closely related geographically. It is one of the main functions of our office to see our friendship continue. We cannot afford to be unfriendly with each other. If there is trouble in your country, the Philippines will worry, too. It's like a typhoon, you know."
The Philippine Trade and Investment Center (PTIC), which is under the supervision of Roces, is headed by Manuel R. Tayas. The main function of the office is to promote the export of Philippine products to Taiwan, and to draw Taiwan investment to the Philippines. "As far as investments are concerned, our focus is on textiles, electronics, houseware, gift products, toys, fashion accessories, and consumer goods; products previously exported by Taiwan to the United States," Tayas says. However, since Taiwan lost its GSP (Generalized System for Preference) status in 1988, the Philippines is now trying to persuade Taiwan manufacturers to move to the country, which is still under the GSP. "Exports to the United States from the Philippines are duty free," Tayas says. He also adds that be cause the Philippines has been suffering from a critical unemployment problem, it welcomes Taiwan investment in labor intensive industries. "This also suits Taiwan's aim to upgrade its industries," he says.
In 1989, Taiwan was the second largest investor in the Philippines, next to Japan. In 1990, Taiwan dropped to number three behind Japan and Hong Kong, but the investment volume still continues to increase. In 1988, Taiwan invested $106 million in the Philippines, while in 1990 total investments amounted to $120 million.
Although the devastating natural disasters that the Philippines has recently experienced have had discouraging effects on investments, the more serious problem that bothers the PTIC is the often negative reports on the Philippines. To counteract the bad publicity, the PTIC has embarked on an information campaign directed at Taiwan business men. "People are likely to be affected by what is in the newspapers. Our job is to present them with a true picture of the economy and life in the Philippines," Tayas says.
Since it was set up in 1986, the center has held about ten seminars for several local industry organizations, such as the textiles and automobile industry associations. This year, the center plans to coordinate with the Taiwan Importers & Exporters Association, a leading local trade association, in organizing a seminar to be held in Taipei, Tainan, and Kaohsiung. The purpose of the seminar is to encourage investment from Taiwan. "We will tell Taiwan businessmen about the incentives we can give them, and what we expect in exchange," Tayas says. He further added that the Philippine Congress might pass a law making it possible for ROC citizens to own part of the industrial real estate on which they set up their factories. That they can not at present is, as Tayas says, "the number-one complaint of Taiwan businessmen. "
In the Philippines, the current "one China" policy has come under increasing challenge lately as Taiwan continues to acquire greater economic clout. A number of Filipino businessmen and politicians alike see better prospects for economic development in recognizing the ROC. As they see it, formal government-to-government ties would enable the Philippines to win more in vestment and greater leverage in economic negotiations. In the meantime, President Corazon Aquino stressed in a report to the press late last year that the "...'one China' policy would not restrict the commercial and trade communication between the Philippines and Taiwan."