Growth of 8.5% expected this year
Economic Affairs Minister Y. S. Sun predicted that economic growth will reach 8.5 per cent this year, compared with the real growth rate of 12.3 per cent in 1973.
Despite unprecedented monetary and economic upheaval around the world last year, the economy of Taiwan continued to grow, Sun said. But he saw some disturbing phenomena on the horizon.
Sun discussed the current economic situation and the measures the Ministry of Economic Affairs has taken to cope with it at a meeting of the Kuomintang Central Standing Committee. Sun is a member of the group.
Sun said 1973 was the best year in the last 20 years with a gross national product of NT$356,900 million (US$9,400 million) and per capita income of NT$17,800 (US$467).
The agricultural sector grew by 2.9 per cent (1.9 per cent in 1973); industries were up by 22.7 per cent; two-way trade reached US$8,276 million, up 50 per cent and with a surplus of US$690 million.
But the energy crisis and its consequences are threatening to slow the 1973 pace.
Sun said slower economic growth in countries around the world and increased competition will affect the growth of exports.
The supply of oil and essential industrial materials is not normal, Sun continued. There are indications the confrontation between countries supplying raw materials and those consuming them will worsen.
The worldwide shortage of fertilizers will not be alleviated in the short run. The food shortage will be serious for several years.
Sun said the prices have leveled off at home but seasonal fluctuations and some inflation are inevitable. He believes it is important to control inflation.
Since industries have to export 70 per cent of their production to survive, any hitch in the export trade will affect industrial growth. Especially hard hit will be small and medium industries.
Because of large purchases of oil and raw materials last year, and because of the anticipated decline in exports in the first six months this year, there will be a large trade deficit this year. Sun expects exports to pick up in the latter half of 1974.
The Republic of China must continue to seek a sufficient supply of oil, fertilizers and iron. Until the supply is assured, these materials should be conserved.
Sun suggested that prices be controlled by raising industrial and agricultural production on the one hand and discouraging consumption on the other.
The NT$2 billion farm rejuvenation program must be continued so that an ample supply of food is assured.
To secure oil resources, Sun proposed that the nation step up prospecting at sea and nuclear power plant construction.
He proposed easier credit and joint operations for small and medium industries.
Exports will do well in the second half of 1974, provided the economic situation in the United States and Japan continues to improve.
Sun said exporters have begun to get more orders from abroad. Factories that were closed have begun to open again.
Sun told a joint session of the Economic Affairs and Finance Committees of the Legislative Yuan that textile, plastic footwear, plywood, decorative lamps and canned mushroom orders were down in the first quarter this year. He said orders were few because recessions in the United States and Japan lowered purchasing power; stockpiles from last year were still abundant; and higher prices scared buyers away.
Sun said the government sanction imports of US$870 million worth of essential goods between February last year and May this year. These supplies should last five to six months.
Industrial growth down to 10.4 per cent
Industry grew by 10.4 per cent in the first four months of this year, according to statistics of the Industrial Development Bureau. This compares with 24 per cent in the January-April period of 1973.
Manufacturing had the highest growth rate in the four months this year at 11.5 per cent.
Public utilities ranked second with 6.7 per cent.
Construction showed a decline of 4 percent.
Mining declined by 1 per cent.
The national gross product will reach NT$444.4 billion this year, the Economic Planning Council of the Executive Yuan predicted. It was NT$356.9 billion last year.
EPC, the highest economic planning body in Taiwan, said the main task for this year is to stabilize the economy. It forecast an economic growth rate of 8.5 per cent this year.
Foreign trade will continue to grow, EPC said, but a deficit of NT$15.7 billion is expected because of the rise in production costs and imported raw material prices.
Both wholesale and consumer prices leveled off in April and May, the Commodity Price Stabilization Board of the Ministry of Economic Affairs reported.
Wholesale prices fen 2.57 per cent in April compared with those in March. The board said prices began to go down because:
- A large import of scrap iron created an abundant supply; some metal products manufacturers are short of cash and eager to get rid of their stocks.
- Textile yarns have been overproduced, bringing down the price of textiles and garments.
- Sawmills were short of cash and eager to sell. The price of imported timber from Southeast Asia began to decline.
- Building materials were down because of the ban on construction of structures over four stories.
Retail prices were down 1.29 per cent in April compared with those of March. Food was down because of the approaching harvest of first rice crop; dealers wanted to get rid of their stocks. Good weather promoted the fish catch and the supply of eggs was abundant.
Rents fell along with the price of nails, paint and wire. Detergent and soap prices declined.
Garments were up a little because higher wages.
The board cautioned that the economy is sensitive to changes in the world market place. It said easing of the oil squeeze would alleviate the energy crisis, and that increased production of wheat, maize and soybeans would be beneficial.
The board said Taiwan will be affected if inflation in the United States, Japan and Germany is not checked.
Trade continues to increase rapidly
Foreign trade totaled US$5,029.4 million in the first five months of this year, according to Customs statistics.
This was an increase of US$2,305.8 million, or 84.7 per cent, over the corresponding period last year.
Exports increased US$865.5 million over the same period of 1973 to US$2,350.3 million. Imports amounted to US$2,679.1 million, a gain of US$1,440.3 million.
The deficit was US$328.8 million for the five months.
The deficit in May alone was US$189.9 million from two-way trade volume of US$1,057.9 million.
Customs officials attributed the red ink to orders for raw materials placed late last year and early this year during the oil crisis.
Trade will take a turn for the better during the second half of this year, they predicted.
Exports of industrial products totaled US$2,017.4 million in the five months, representing 85.8 per cent of the total.
Processed agricultural products of US$210.8 million ac counted for 9 per cent of exports and farm produce of US$122.1 million for 5.2 per cent.
Raw materials topped the import list at US$1,776.6 million or 66.3 per cent of the total.
Capital goods stood at US$742.2 million, representing 27.7 per cent, followed by consumer goods at US$160.3 million, or 6 per cent.
Major exports included textiles, electrical machinery apparatus, plywood and furniture, metals and machinery, and fishery products.
Main imports were machine tools, electrical machinery apparatus, basic metals, chemicals, cotton and man-made fibers, crude oil, lumber and grain.
The U.S. remained the top trading partner of the Republic of China with two-way volume of US$1,486.9 million. Exports totaled US$808.3 million and imports US$678.6 million.
Japan was the second ranking trading partner, selling US$818.6 million worth of products and buying US$395.7 million worth. West Germany was third and Hongkong fourth.
Negotiated price measures terminated
Because of price decreases in the world market, the government announced the lifting of negotiated price measures.
The Ministry of Economic Affairs announced the lifting of negotiated prices on such commodities as textiles, toothpaste, iron bars, soap, detergents, toilet paper and cement.
The government also ended subsidies for soybean imports and the equilibrium price system.
The price of soybeans was down close to the equilibrium price of US$278 per metric ton. Wheat dropped from an all-time high of over US$220 a ton to US$150.
The ban on cement and timber exports was lifted.
State enterprises plan big investment
Investment in the 13 state enterprises in fiscal 1975 will amount to NT$45.08 billion, Hsieh Jen-wei, deputy director of the Directorate General of Budgets, Accounts and Statistics, said.
Sixty-one per cent of the total will go into power development and oil prospecting.
In 1976, Taiwan's first nuclear power plant will start generating electricity and the second oil refinery complex will be completed, Hsieh said.
He said state enterprises will stockpile raw materials and capital equipment worth NT$1,436 million during the year.
State enterprises will pay taxes amounting to NT$919 million, up by 88.72 per cent compared with the 1974 fiscal year, Hsieh said.
For fiscal 1975, state enterprises will have:
- Pre-tax earnings of NT$8.7 per NT$l00 of business volume.
- Investment return of 15.91 per cent.
- Central Government stock dividends of NT$3,476 million, a drop of 33.7 per cent.
Loans for small, medium enterprises
The Central Bank of China decided to make NT$1,500 million available to commercial banks as loans to small and medium enterprises.
The Central Bank will charge 14 per cent per annum and commercial banks will levy interest of 15 per cent. Commercial banks will provide 15 per cent of loans from their own resources.
Loan will be repaid in six months. Enterprises may apply for loans directly without going through the Small and Medium Enterprise Service Center.
The Small and Medium Enterprise Association has defined small and medium enterprises as manufacturing industries, reprocessing industries, handicraft makers and service industries with capital of NT$20 million or less.
Also included are garment makers, shoemakers, electrical appliance makers, toy makers and furniture and plastics makers that employ fewer than 500 machinery makers, metal, porcelain, musical instrument, paper container and food processing industries that employ fewer than 400; and other industries with a work force of fewer than 300.
Manufacturers planning to buy U.S. machinery for plant expansion may apply to the Bank of Taiwan for loans. These will be made available in cooperation with the U.S. Export-Import Bank.
A spokesman for the Bank of Taiwan said priority will be given to small and medium enterprises.
Loans may amount to 80 per cent of the cost with a minimum of US$50,000 and maximum of US$500,000.
Repayment will be in from four to five years at interest of 10.5 per cent.
Machinery bought with the loans must be transported in U.S. ships.
The government may consider lowering bank rates on a selective basis, but this is no time for a sweeping cut in interest rates, Finance Minister K. T. Li said.
Li said the government has lowered interest rates on export loans.
Savings interest was raised to 15 per cent last January 27. After that deposits rose to NT$11,861 million, up 11.33 per cent.
Contracts signed for rail electrification
The Taiwan Railway Administration and a Swedish consortium signed a US$15 million loan agreement to purchase part of the equipment for a railway electrification project.
The loan will be jointly provided by the Handels Bank and the Enekilda Bank, both of Sweden, for purchase of signal equipment from Ericsson of Sweden. TRA will put up the remaining 20 per cent.
The loan carries interest of 9 percent and is to be repaid in 16 semiannual installments over a period of eight years starting from the sixth month after arrival of the equipment.
This was the second loan agreement TRA signed with a foreign consortium in connection with rail electrification. A loan agreement for US$155 million was signed with Lazard Brothers & Co. of England, and American Express International Banking Corporation. The money will be used to purchase power substations, remote control equipment and communications equipment from the General Electric Co. of England.
TRA will buy US$110 million worth of tracks and locomotives from General Electric of the United States. The U.S. Export Import Bank will provide 90 per cent of the cost.
Another U.S. bank opening Taipei branch
United California Bank has received a banking license from the Ministry of Finance to open a branch at 97 Nanking East Road, Section 2, Taipei. UCB has had a Representative Office here since October 1973.
UCB is the 15th largest bank in the United States and has 254 branches in California. It is part of Western Bancorporation, the biggest bank holding company in the United States, with assets of nearly US$18 billion.
George C. Straghalis, vice president, has been appointed manager of the Taipei Branch, assisted by Donald G. Moore, UCB's Taipei representative for the past eight months, and James F. Mar tin, operations manager.
Straghalis, with more than 13 years experience in international banking, comes to Taipei from Tokyo.
UCB is the seventh American bank in Taipei. The others are the First National City Bank of New York, Bank of American, American Express, Chase-Manhattan Bank, Continental Bank of Illinois and Irving Trust Company.
Farmers using more machinery
More than 40 per cent of the farming population uses machinery, the Taiwan Provincial Department of Agriculture and Forestry reported.
Farm mechanization has helped ameliorate the shortage of agricultural manpower.
There are 38,496 power tillers, 610 large tractors, 1,478 rice-seedling planters, 686 rice-harvesters and 317 husking machines.
The provincial administration has set up a special loan fund of NT$830 million to spur mechanization. Farmers have borrowed NT$373,890,000 in 18 months.
The interest rate was raised from 7 to 9 per cent last March. Payments may be spread over a period of up to seven years.
Mechanization has been going slowly because farms are small. To prevent further fragmentation of plots, authorities are considering limitation of farmland inheritance to one person.
Mergers and joint operations have been encouraged.
Higher goals set for farm output
The Taiwan Provincial Government is planning to produce NT$6.9 billion worth of crops other than rice this year.
Targets include:
- Sweet potatoes, 3,618,000 tons worth NT$3,618 million.
- Peanuts, 132,000 tons worth NT$1,584 million.
- Soybeans, 89,600 tons worth NT$940 million.
- Maize, 158,400 tons worth NT$712 million.
- Sorghum, 25,000 tons worth NT$120 million.
TPG is working on a four-year plan (1975-1978) to increase production of these crops by 400 per cent.
Plans call for more fertilizer, better seed, expansion of acreage, financial assistance and mechanization.
Taiwan will produce 2,500,000 tons of rice this year.
Taiwan 1st in canned asparagus, mushrooms
Taiwan is first among countries exporting canned asparagus and mushrooms, according to the Plant Industry Division of the Joint Commission on Rural Reconstruction.
Exports of carnned asparagus are expected to reach US$100 million this year.
West Germany is the main market followed by Holland, Belgium, Denmark, Switzerland, Japan, Thailand, Vietnam, United Kingdom and United States.
Coastal areas and riverbeds are suitable places for growing this vegetable.
Asparagus plants show a brief period of dormancy or almost none under the climatic conditions of Taiwan. Highest quality spears and shoots are obtained when temperatures average 18 to 250 C. Harvesting seasons are in spring and fall.
In 1972, asparagus plantings covered 15,912 hectares and production was 106,591 metric tons.
Ching-wu Shen, horticulturist of the Plant Industry Division, said the big problems in growing asparagus are high wages and a shortage of workers.
Although the number of exporting countries canned asparagus is increasing, Taiwan will not be affected if quality is improved.
Fresh asparagus is priced at NT$25 per kg on local markets. A can costs from NT$13-17, depending on the brand.
US$141 m. spent on oil in 4 months
Taiwan imported US$141.8 million worth of crude oil during the first four months of this year.
This is an increase of 158.8 per cent over the corresponding period of last year.
During the same four-month period, the Republic of China exported US$25.2 million worth of petroleum products, up by 75 per cent.
Exports included sale of oil to foreign aircraft and ships.
Most of the crude came from the Middle East. Over 80 per cent of Taiwan's crude comes from that area.
Investments nearing US$1,200 m. mark
Foreign and overseas Chinese investments totaled US$1,160.9 million from 1952 to the end of April 1974. Foreign investments accounted for US$850 million.
Investments from the United States totaled US$402.48 million, Japan US$167.95 million and Europe US$153.1 million.
Hongkong was the main source of overseas Chinese investments at US$135.06 million. Overseas Chinese in Japan invested US$22 million.
Electrical machinery apparatus enterprises attracted US$378.7 million, accounting for 32.62 per cent of the total.
Chemical industries' ranked second with US$128.47 million, or 11.07 per cent, followed by machinery industries (9.03 per cent) and metal industries (8.74 per cent).
Developed status within ROC's reach
A decade of spectacular all-out development programs gives the Republic of China a head start over other Asian developing countries in their scramble for "developed nation" status.
That is a majority consensus of Taipei's industrial and business leaders.
One top industrialist said free China is likely to become a developed nation within the next 10 years because it possesses the industrial muscle as well as technological savvy.
Teng Yu-teh, who played a leading role in giving birth to a giant Sino-American synthetic rubber venture, said: "We need all available resources at our command as well as those of our Western friends to make that the major breakthrough comes within this decade."
A former press counselor of the Chinese Embassy in Tokyo, Teng heads the Taiwan Synthetic Rubber Corp., a joint venture with B.F. Goodrich Co. of Akron, Ohio.
The US$25 million project will be in operation by the end of next year with annual production capacity of 81,000 metric tons of Styrene butadiene rubber (SBR).
Satellite companies of B.F. Goodrich participating are B.F. Goodrich Chemical Co. of the United States and B.F. Goodrich Chemical Co. Ltd. of Australia.
Another business leader with a similar evaluation of Taiwan's economic potential is Percy H. Linn, managing director of the Taipei branch of Sweden's Gadelius & Co. Ltd.
Linn said, "Taiwan is a shining example of what a developing nation can accomplish - given some positive support by the developed nations of the West."
Free China is second to Japan in terms of economic strength in this part of the world, Linn said. "In some fields, Taiwan has already caught up with Japan," he added.
Survey shows range of Taiwan's wages
Wages in the Republic of China range from NT$1,270 (about US$33) to NT$15,950 (approximately US$320) per month.
The survey revealed that cement workers are the highest paid in industry with a monthly average of NT$5,037 (US$133). The lowest paid are those in the electrical machinery apparatus industry with a monthly average of NT$2,310 (about US$61).
Female workers are paid considerably less than their male counterparts. The highest monthly average for women is NT$2,672 (US$70) in the paper and pulp industry. The lowest group (coal mining) receive average of only NT$1,488 (US$39).
The highest pay for a skilled worker is almost twice that of the highest for a non-skilled worker.
Wages for minors range from NT$900 to NT$990 a month.
The minimum wage of NT$600 was set by the government in March 1968. An increase to NT$900 is under consideration.
Wages are not the sole yard-stick of what workers actually earn. Many are assured of an adequate livelihood by fringe benefits.
Workers in most government-owned enterprises get monthly rations and receive medical care and housing benefits.