free economic pilot zones ecct premium event august 23, 2013 chung-ming kuan council for economic...

Free Economic Pilot Zones

ECCT Premium EventAugust 23, 2013

Chung-Ming KuanCouncil for Economic Planning and Development

2 / 20 CEPDFree Economic Pilot Zones

Outline

Introduction Ideas and Goals Strategies and Targeted Industries Implementation Concluding Remarks Digression: Cross-Strait Services

Trade Agreement


Introduction

Taiwan’s economy in recent years Slower economic growth Weaker domestic demand: Consumption,

investment More export competition, worse terms of trade Declining real wage

What has gone wrong? Investment and trade barriers Business conditions Government efficiency


Introduction

While there is no room for a large-scale fiscal stimulus plan, how can we restore Taiwan’s economic momentum?

Free Economic Pilot Zones (FEPZs) for furthering Taiwan’s economic liberalization Why does Taiwan still need special zones? FEPZs are different from the conventional

“Export Processing Zones” or “Science Parks” FEPZs may be real or virtual


Ideas and Goals


Ideas and Goals

Key ideas Liberalization: De-regulation, Market Opening Internationalization: International alignment Forward looking: Industries with new business

models Goals

Removing Investment and trade barriers Refining business conditions Improving government efficiency


Ultimate Goal

FEPZs as trial areas, before there is consensus about de-regulation and market opening To demonstrate the usefulness of economic

liberalization and internationalization From restrictive to general From small-scale to large-scale

Ultimate goal: Toward a free economy/trade island


Strategies and Targeted Industries


Strategies

Promoting the free movement of people, goods, and money

Market opening and international alignmentTax incentivesConvenient acquisition of landA supportive and friendly operating

environment


Targeted Industries (1/3)

Intelligent Logistics To promote faster and freer goods flows and

increase the value-added of goods with top logistics services, enabled by innovative customs administration and information clouds

International Medical Services To provide foreign patients with health checks,

cosmetic medicine and serious illness treatment, and to promote alliances with other industries, such as tourism



Value-Added Agriculture To develop agriculture by utilizing Taiwan’s

agricultural technology to innovate for higher value, to extend the whole value chain, and to market the MIT brand

Business Cooperation Taking advantage of FEPZs to promote cross-

country cooperation through acquisition of key technologies, intellectual property (IP) or funds



Financial services: Wealth and asset management Under a grading (grade-based approval) system,

only qualified financial institutions are allowed to sell products which are not currently approved and to provide different services. This is what we mean by “virtual” zones

More service industries to come


Implementation


A Summary

0 Restriction1 Service window2 Phases3 Ideas4 Targets (4+N)5 Strategies6 Benefits


Private investment to increase by NT$20 billion in 2014

GDP to increase by NT$30 billion in 2014Creating 13,000 new jobs in 2014FTZs to see trade value multiplying and

surpassing NT$1 trillion in 2015New business modelsPreparing us for joining TPP and RCEP talks

Potential Benefits


“Real” Locations

Phase I 7 FTZs & 1 agri-

biotech park Extending FTZs by

“on-site shop, off-site factory” (shop in front, factory behind)

* Proposal for inclusion submitted to the EY for approval.

Taipei Port FTZ

Pingtung Agricultural Biotechnology Park

Anping Harbor*

Kaohsiung Port FTZ

Keelung Port FTZ

Taoyuan Airport FTZ

Su’ao Port FTZTaichung Port

FTZ


Concluding Remarks

FEPZs to prepare us for further economic liberalization and internationalization

FEPZs include but are not limited to 7 FTZs; more service industries will be included in “virtual” FEPZs in the future.

We welcome new ideas and proposals that can be applied to FEPZs.


Cross-Strait Services Trade Agreement


Mainland China’s Opening80 items of WTO+ commitment

Less restrictions on Taiwanese investment: Sole ownership and higher shareholding are allowed

Greater business scope for Taiwanese service providers, including increased activities and enlarged geographic coverage of services

More relaxed administration for easier business operation: Minimum stay requirement is abolished and the time for content examination is shortened


Mainland China’s Opening

Foreign businesses with a substantive presence in Taiwan, after operating and paying taxes for 3 or 5 consecutive years (the latter for the financial and construction industries), will be able to enter the mainland as Taiwanese companies

Taiwan’s opening: only 64 items of commitment; more than 2/3 are greater than or equal to Taiwan’s WTO commitments. None of these surpass what foreign businesses enjoyed in Taiwan

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