The New Southbound Policy of Taiwan

Posted on May 16, 2016, 2:54 pm
10 mins

After new president Tsai of Taiwan took the office and formed the new government, the new cabinet of Ministers the new policies also emerged. One of the most discussed one and probably one of the most important one among all others is so called “New Southbound Policy” which aims an opening strategy toward Southeast Asian countries.

Right after policy draft arose, DPP government decided to form an office responsible for implementing and developing the policy. Additionally James Huang (黃志芳) who ran the office of Ministry of Foreign Affairs as a minister for 2 years during the previous DPP government appointed as the Director of the New Southbound Policy Office. Such an appointment is a clear sign that DPP government takes it serious, expectations are high, unlike the previous Southbound Policy plans.

As you noticed from the name of the policy, this is not the first version of it but the newest one. Previously during the presidency of Lee Teng-Hui (李登輝) in 1990, the southbound policy first introduced as “go south policy” however only economic parts of the policy implemented but no significant outcomes appeared. Nevertheless in 2003 while Chen Shui-Bian administrating the presidential office; DPP government again introduced a new policy under heavy criticisms (some critics even said “it is digging its own grave”) of Chinese government.  Yet again the expectations left in the air, the policy thrown in the basket even without discussing the facts behind the failure.

At this point we can clarify some of the questions, why new government takes the policy so serious? What are the targets, challenges and the motivations of the policy? We can summarize the answers under few factors;

1. First, countries like US, China, Japan, Australia, and South Korea already elaborated their own Southeast Asia policies and started move toward the region. There is a clear trend toward the region due to dense population, high consumption, intense labor force, undeveloped market, untouched trade opportunities…Obama`s first  foreign country visit was to Myanmar after elected as President for 2nd term and he made a historic visit to Vietnam to sign bilateral agreements. China on the other hand geared up her bilateral economic plans with regional countries through APEC and free economic zones and Silk Road maritime project while speeded up the military interventions in the South China Sea. On the other hand Japan reactivated the Asian Development Bank to increase relations with ASEAN countries by funding infrastructural projects and FDIs. The list may continue few more pages; after all we can say Taiwan is even late for such a policy.

2. The most important economic rationale behind the policy is that Taiwan`s export dependency to China. Last year 40% of total exports were to shipped to China. Under such critical situation, the previous KMT government tried to pass few more agreement to ease bilateral trade with China however it sparked huge rejections from the public. Many public protests held by oppositions groups and even the Parliament building is occupied by protestors to stop further talks on agreements with China. Because the majority of Taiwan believes that such dependency does not generate an economic problem only but also a security threat. In order to avoid a vital problem, there is a consensus to open to Southeast Asian countries, which offers labor force cheap as it used to be in China and does not pose any security threat so far. India, Vietnam, Indonesia, Bangladesh are the first target countries. While China approaches with giant projects in different areas to regional countries, Taiwan offers modest and warm partnership. Taiwan presents assistance at SMO level such as knowledge transfer, technical support, fostering tourism, humanitarian aid, improving educational ties, civil society exchanges and supporting small size infrastructure projects.

3. China`s maritime expansion in the South China Sea is a huge security threat to Taiwan. Japan from East, China from North frequently irritates Taiwan in terms of fishery rights, claiming right on islands therefore Taiwan hopes to create healthy and strong ties with the emerging powers in the region. Recent developments in the region may form a new pact in the region against China and Taiwan may be a part of it. Many of the experts in Taiwan believes that India with a strong military and economy and implements policies without any fear from China could be a balancing  partner in the future.

4. Taiwan as a developed economy faces stagnancy for a long time. The stagnancy increases unemployment rate among the young adults while almost no new employments are generated. Taiwan on the edge of an economic development from manufacturing to knowledge and service economy hesitates to give up manufacturing therefore exploring new markets is vital for Taiwanese economy. As director James Huang expressed on one of this speeches; “Taiwan has 6400 enterprises in Vietnam and generates employment for 80.000 people. One of the biggest problems of these enterprises is to find managers with required qualifications. Often they appoint people from China or other countries as a temporary solution however result is always inefficient. If these enterprises, companies employ at least 1 Taiwanese manager, I believe it will create a positive effect.”  On the other hand Taiwan faces a dramatic low rate of fertility and it is getting almost impossible to recruit more students for 160 universities on island. Southeast Asian countries have a huge stock of students especially on higher educational level therefore in order to attract more students from those countries Taiwan hopes to improve ties in this field too.

5. Unlike the previous versions, The New Policy promotes direct investments from ASEAN countries to Taiwan and includes few incentive programs as well. Even though the details are not shared with public many experts believes that tourism, education and healthcare will be the primary sectors. Currently Taiwan has no free trade agreement with any ASEAN countries after the new policy there will be new developments in this field too.

After the public introduction of the new policy, everybody was curious about the reaction of PRC. Chinese government`s unpleasant stance toward DPP government is obvious anymore. The new policy is also not favored by PRC officials and criticized “being against the basic principles of economy and being far behind the realities” which is evaluated by Taiwanese experts as a soft response compare with the previous ones. On the contrary Taiwanese side believes that the new policy will bring positive effects to economic relations with China even though Chinese side keep pressuring the new DPP government asymmetrically. No matter what are expectations or motivations China’s respond will determine the future of the policy.

A policy project including many countries naturally creates number of parameters while the number of academics or experts who works in this field to analyze or institutions to promote these efforts are very less. Although we can observe the strong determination in Taiwanese academia by ASEAN, Southeast Asia research centers in universities, offering extra scholarships to regional students or redesigning curriculums by adding language and culture courses about the regional countries. Moreover business related seminars to understand business environment in the regional countries continues while the incentive programs for Taiwanese investors are about to prepare.

While world most powerful countries pushing forward to materialize their projects rapidly in region it is more obvious that the new center of gravity of our world moves toward Pacific region. However we still have no idea how all these recent developments are evaluated by Turkish government while Turkey lost its regional export markets one by one. Our regional problems once again proved that Turkey must explore new markets throughout the world and our academia, civil society organizations, business organizations must prepare itself for it.

In 2014, Academia China, which is dedicated to promote a harmonious relationship amongst continents, started building a connection between China and Turkey, providing better awareness and understanding about their geopolitical differences, eliminating prejudice along with discrimination, creating a bridge from Far East to European countries and eventually around the globe. To conclude, Academia China serves as a gateway for all nations in the world.

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