TAIPEI: Taiwan’s new president is leading a charge to boost economic ties with Southeast Asia, and away from mainland China. The reality is that the shift is already well underway.
In a case of economics moving faster than politics, foreign direct investment by Taiwanese companies into the six largest Southeast Asian economies doubled in the past five years, according to Singapore-based DBS Group Holdings Ltd. That’s even before the government began pushing its “New Southbound” initiative to target markets in the Association of Southeast Asian Nations as companies face declining returns in mainland China.
In contrast to China’s slowing economy and rising wages, Southeast Asian nations like the Philippines and Vietnam are among the fastest-growing in the world and are benefiting from a burgeoning population. There’s still plenty of room for Taiwanese FDI to expand further in the region, according to Ma Tieying, an economist at DBS in Singapore.
“China’s slowdown, rebalancing and rising wages are prompting Taiwanese firms to adjust overseas strategies,” Ma said. “Asean markets are attractive, thanks to strong growth, low-cost labor, and ongoing reforms and economic integration.”
Taiwan’s government has assigned a NT$4.2 billion ($131 million) budget to the New Southbound initiative in 2017, which includes spending on the launch of trade offices in several countries, talent exchanges, tourism and scholarships for foreign students.
Taiwanese President Tsai Ing-wen took office in May with a pledge to reduce Taiwan’s economic reliance on mainland China, which hosts factories that make iPhones for Hon Hai Precision Industry Co. and uses chips from Taiwan Semiconductor Manufacturing Co. About 40 percent of all Taiwanese exports go to China, a proportion that authorities are keen to lower.
China has pledged to retake Taiwan, by force if necessary, and opposes international recognition of the territory.
