Remarks by Douglas H. Paal Director, American Institute in Taiwan to 2003 Amcham Hsieh Nien Fan February 20, 2003
Mr. President, Madame Vice President, Mayor Ma, Governors of the American Chamber of Commerce, ladies and gentlemen.
It is a great pleasure and honor for me to join you this evening, and I wish to express my deepest thanks to the American Chamber of Commerce for this invitation.
I appreciate the kind words just spoken by President Chen. The people of Taiwan and the U.S. do indeed have a special friendship, and our common interests and ties will serve us well as we seek increased prosperity for ourselves in the years ahead.
II. Happy New Year
On behalf of the American Institute in Taiwan, let me wish all of you "Good Fortune" in the Year of the Ram. "Good Fortune" is what this Hsieh Nien Fan is all about.
Although there is much instability and weakness in the world economy, I believe that the year ahead holds significant potential for Taiwan.
III. Thank You for War on Terrorism Support
I would like to take a moment to thank you, President Chen, and the people of Taiwan, for your support in the global war on terrorism. Taiwan has committed itself to abiding by all relevant UN resolutions and conventions, and is taking measures that will frustrate terrorists' access to the island. Taiwan has also committed to tightening its export control regime to ensure that sensitive dual-use technologies do not fall into the wrong hands. And Taiwan has stepped forward to provide humanitarian assistance to Afghanistan. For all of this, and for your ongoing support, thank you.
IV. The Rise of Taiwan As An Economic Powerhouse
Let me now focus on Taiwan's "Good Fortune" and prosperity. When it comes to Taiwan's economy, the people on this island, through their entrepreneurial culture, technical prowess, and commitment to excellence, have the tools at hand not only to maintain Taiwan's current prosperity, but to expand it.
Just look at how far Taiwan has come over the past two decades. During that time, per capita GNP has grown nearly 500%. A hi-tech industry has sprung up, placing Taiwan companies in the top rung of semiconductor manufacturers. The majority of the world's notebook computers are made by Taiwan's firms, an industry that did not exist 15 years ago. Taiwan is the world's third largest holder of foreign currency reserves, America's eighth largest trading partner, and the world's sixteenth largest economy. And Taiwan has accomplished all this with few natural resources and a relatively small domestic market.
V. Achievement Brings New Challenge
But in life, and with success, your competitors get bigger, heavier, more clever, and more capable. Years ago, Taiwan merely had to manufacture things cheaply and well in order to increase its prosperity. Today the bar is much higher: Taiwan is fighting daily to maintain its competitive advantage; the island's companies are working to cultivate and maintain highly complex commercial ties with a global reach they will need if they are to win business; and the legal and financial systems of the island is striving to match, and even exceed, the offerings of their rivals elsewhere.
It is clear that Taiwan's leaders are well aware that Taiwan is competing in a new arena. And there are many good initiatives on the drawing board. For example, Premier Yu has emphasized broadening the scope of Taiwan's competitive advantage in his "Challenge 2008 National Development Strategy." His thinking demonstrates a commitment to staying three steps ahead of the competition, and this holds great promise.
VI. Attracting Foreign Investment
President Chen, in his New Year's Day Message last month, set a goal of providing a better life for the people and emphasized the need to revive the economy and undertake comprehensive reforms. I am sure that the AmCham joins AIT in standing ready to offer whatever assistance we can to help realize them. One area worth particular emphasis is encouraging foreign direct investment. Making Taiwan more accessible and attractive to international firms creates jobs, attracts new technologies, and brings to the island new information about global markets and competitors.
We at AIT and our friends at the American Chamber of Commerce know first-hand that the world's investors remain at Taiwan's door. We receive inquiries daily from companies who are investigating the investment environment here. But these firms often have questions, and their concerns are often tied to issues that Taiwan has pledged to resolve as part of its WTO commitments.
The concerns of foreign investors are also nicely summed up in the American Chamber's annual "White Paper." AmCham's prescriptions for reform, such as greater flexibility in labor markets and increased attention to IPR enforcement, among others, lay the groundwork for Taiwan to address investor concerns. President Chen has said he reads the White Paper every year after its publication -- and this is reflected in many of the proposals now working their way through the government. Thank you, President Chen, for your attentiveness and responsiveness to the concerns of the international business community. And thank you to the other high-level officials who have participated in AmCham's CEO Roundtable to foster an exchange of views between Taiwan's government and the foreign business community.
VII. Protection of Intellectual Property Rights
One significant investor concern is the protection of intellectual property rights. Taiwan is transforming itself into a knowledge-based economy. That means that future prosperity will primarily come from those, including those Taiwanese entrepreneurs, who do the thinking; Taiwan must protect the rights of these people in order to bring "Good Fortune" to everyone.
IP protection is now our number one bilateral trade issue. Ensuring IP protection is the linchpin for Taiwan's economy as it becomes increasingly oriented to high-value, knowledge-based industries such as biotechnology, digital content production, flat-panel displays, and information appliances. Taiwan's well-established hi-tech expertise coupled with strong IP protection will make for a formidable force. One area of urgent importance is revision of the Copyright Law according to international standards. This will lead to protection of tomorrow's Internet-based creativity. I also encourage Taiwan to continue to close down the factories making illegal pre-recorded CD's and DVD's. The fact that such extensive pirate activities have so large an economic impact diminishes Taiwan's international investment reputation.
VIII. Financial Sector Reform
Taiwan has already demonstrated the political will necessary to face down one very important economic challenge: it has taken significant steps to tackle the high rate of non-performing loans. The LY has passed a series of helpful financial laws over the last two years. Banks can now merge. And they can reach out to other financial enterprises like securities and insurance firms to form financial holding companies, a potential source of profitability to a banking sector that has struggled to make money.
It is no surprise to me that these positive steps have given confidence to the international business community. Taiwan deserves credit for how far it has come in financial reform. Yet, there is room for even more action, and it should be comprehensive and sustained.
IX. WTO Accession Issues
Taiwan's accession to the World Trade Organization, which was actively and resolutely supported by the United States over many years, subsumes many crucial tasks which are underway. These include the privatization of State-Owned Enterprises, the creation of a transparent and fair regulatory regime in areas such as telecommunications and the financial services sectors, increased transparency and improved terms and conditions for public procurement. Continued efforts in these areas and in all aspects of WTO compliance will only strengthen the confidence of international investors.
X. The Benchmark for Taiwan's Competitive Position
Taiwan's accomplishments have propelled it into a club whose members are the world's most competitive economies. Several of Taiwan's neighbors have had similar success. And they, too, are looking to accelerate economic liberalization, revamp their financial markets, take on their non-performing loan problems, and tackle IPR infringers. For some the results have already come in -- an increase in foreign direct investment. In this globalized Internet-driven world of ours, the best intentions can be quickly overtaken by those who are faster at seizing opportunities.
Taiwan has set some lofty goals. AIT stands ready to continue to be a friendly partner, as when we discuss improving IPR, a steadfast supporter, as when we aid Taiwan's WTO accession, and a reliable collaborator as we continue to work with our business community represented in the AmCham to explore new opportunities, relationships, and partnerships with Taiwan's cutting edge business community.
We look forward to being partners with, and supporters of, Taiwan in its quest to complete its unfinished agenda of reform and liberalization. We not only wish the people of Taiwan prosperity, we hope to work with them to ensure that prosperity.
Thank you, and please accept the warmest wishes for health, happiness, and good fortune for you all in this new year.