Kathrin Hille in Berlin and Mure Dickie in Taipei
Times; Jun 20, 2002
must competewith mainland China, itspolitical rival, for the
affections of the island's corporate investors by ensuring
ample access to low-cost land, improving tax incentives and
streamlining government, according to Lin Yi-fu, the Taiwanese
Lin's determination to slow the flow of investment across
the Taiwan Strait to the mainland reflects the government's
short-term focus on pulling the island out of its worst economic
decline in modern times. However, his willingness to attempt
to compete on basic costs with Taiwan's huge and much poorer
rival could run counter to longer-term plans to promote the
upgrading of industry while allowing low-margin business to
move operations offshore.
in his first interview with an international news organisation
since his appointment in March, Mr Lin told FT Deutschland
that his "most important" job was to improve Taiwan's
course this is an ongoing process, but there is a lot we can
do immediately, like making land cheaper, giving tax incentives
and improving government efficiency.
you really want to keep investors here it all burns down to
very simple, very realistic factors: money and flexibility.
. . The companies who leave Taiwan for the mainland say that
cheap and easily usable land is what they get there. That
means we have to get it for them here, too."
while Taiwanese businesses have long complained about complex
and inconsistently enforced land-use laws, even with reform
it is likely to prove extremely difficult to compete with
the mainland on land price.
in Shanghai's biggest high-tech industrial park say they charge
investors only for the cost of clearing land, while China
finds it much easier to relocate displaced residents than
does democratic Taiwan, where local pressure groups can have
economists are also concerned by growing pressure on the government
to widen tax breaks currently offered to high-tech industries
to traditional industries such as textiles and plastics that
many consider have little long-term future on the island.
Lin said there would be no across-the-board tax exemptions
for whole sectors, but promised tax holidays for investments
that fulfilled certain criteria such as the use of domestically
minister touted one scheme under which the government will
offer investors in industrial parks two years' free land use
and a further four at reduced rates, as well as an offer of
a five-year business tax exemption for new manufacturing investments.
policies will be difficult for a government suffering falling
tax income and fast-growing spending, and Mr Lin acknowledged
such costly encouragement to industry could be only short
term. "We cannot go on like this for ever," he said.
"There is not much room for further tax incentives."
Lin said he was hopeful the Taiwanese economy would achieve
growth of up to 3 per cent this year.