【Foundations of Renewed Prosperity】
May 20 marks the anniversary of the inauguration of President Tsai Ing-wen (蔡英文). In the year since taking office, the government has worked to lay the foundations for the next stage of Taiwan’s development by strengthening the social safety net and building an innovation-based economic model. This program of revitalization has received widespread recognition, with U.S. business magazine Fortune in March listing the president eighth in its rankings of the world’s top 50 leaders.
At the forefront of the government’s efforts is the Forward-looking Infrastructure Program (FIP). This NT$880 billion (US$28.4 billion) initiative is designed to stimulate domestic investment momentum, unlock Taiwan’s growth potential and address the nation’s major infrastructure needs for the next three decades.
The FIP spans green energy and digital infrastructure projects aimed at fast-tracking industrial transformation, as well as urban-rural development and water resources initiatives for improving quality of life. It further comprises railway ventures to integrate and expand Taiwan’s transportation networks.
Planned measures include building the Shalun Green Energy Science and Technology City in the southern city of Tainan, double-tracking railway lines in eastern Taiwan, and establishing up to 2,000 community-level long-term care facilities. Over the next eight years, the FIP is projected to stimulate public and private sector investment of NT$1.78 trillion (US$57.4 billion), add NT$975.9 billion (US$31.5 billion) to Taiwan’s real gross domestic product and produce up to 50,000 jobs.
By boosting national competitiveness, the FIP will give momentum to the government’s five-plus-two innovative industries initiative—a comprehensive economic revitalization program targeting the biotech and pharmaceuticals, green energy, national defense, smart machinery and the Internet of Things sectors, as well as the promotion of two core concepts: the circular economy and a new paradigm for agricultural development.
Progress in fostering industrial upgrading under this initiative is evidenced by the signing in March of an agreement to develop homegrown submarines. Under the pact inked between the Ministry of National Defense, National Chung-Shan Institute of Science and Technology and local shipbuilder CSBC Corporation, Taiwan, the nation plans to complete its first indigenous submarine within eight years and commission it within a decade.
Over the past year, considerable headway has also been made on long-overdue social welfare reforms. The government is moving forward with a restructuring of Taiwan’s public pension systems that will make them sustainable while increasing support for economically disadvantaged citizens. Plans are also in the pipeline to build 200,000 units of affordable social housing by 2024 using a public-private investment model.
Forward-thinking reforms are not only reshaping Taiwan’s domestic environment, but bolstering its interactions with nations across Southeast Asia. As noted by Fortune in its leadership rankings, Tsai has sparked a tourism boom from the region.
Between August 2016 and January 2017, Taiwan recorded 25.8 percent year-on-year growth in tourist numbers from countries covered under the New Southbound Policy. This sizable increase in people-to-people exchanges will help cement stable, mutually beneficial relations. It will also facilitate expanded interactions including the signing of bilateral investment protection agreements to grow the footprint of Taiwan businesses operating in these countries.
Although Taiwan faces obstacles in overcoming stagnation and delivering inclusive growth, the government is rising to the challenge by diversifying international exchanges and pursuing a new economic development model. Change will not come overnight, but the groundwork is being laid for Taiwan’s social renewal and economic rejuvenation.