Implementation of the "proactive management, effective opening" policy regarding investment in China does not necessarily mean Taiwan is going against the trend of globalisation, but given Taiwan's unique political status, it is a necessary step, according to Vice Premier Tsai Ing-wen. Tsai made the comments at a March 27 press conference in Taipei about the new Cabinet's trade and economic policies.

After reporters seemed more interested in hearing about the administration's cross-strait plans, Tsai quipped that she would prefer to focus on issues of finance and the economy, especially since she is no longer chairwoman of the Mainland Affairs Council. Still, most members of the foreign press who were invited to the press conference pressed the vice premier on the Cabinet's plans for economic dealings with China.
Tsai explained that the administration is looking at cross-strait trade not as a political issue but one of risk management, and that the new policy serves its purpose for Taiwan's current situation. She pointed out that other nations neighbouring China, such as South Korea and Japan, are all facing similar challenges in light of China's economic rise. She explained, however, that Taiwan's situation is unique among its Asia-Pacific neighbours due to its political relations and geographic proximity with China. "If something happens, Taiwan will be the first to benefit as well as the first to suffer," Tsai said.

Tsai said she agrees that such a policy does not solve the cross-strait deadlock but that she believes it is crucial for Taiwan to develop the capacities to effectively respond to any problems that may arise in relation to China before any further opening can take place.
The Executive Yuan announced March 22 a series of measures aimed at putting the trade and investment policy, announced by President Chen Shui-bian in his New Year's Day speech, into practice.

"What we proposed is just a framework, a direction," Tsai said of the recently announced measures, adding that there can still be alternatives. She explained that implementing these measures does not signal a tightening of government policies but simply strengthens existing supervisory regulations.

She said that due to Taiwan's international status, it has always been difficult to collaborate with other countries in building mechanisms to supervise cross-national economic activities. "If we were able to cooperate with other countries, we would be better able to manage risk," Tsai stressed. In lieu of a mutually agreed upon mechanism to supervise trade activities, Tsai said Taiwan has no choice but to resort to unilateral regulations to minimise risk. There will be more room for further opening after a comprehensive, well-planned supervisory mechanism comes into being, Tsai added.

Taiwanese companies have grown so much over the past decade that they are now fully capable of expanding to an overseas market, Tsai said, but one of the major challenges Taiwan is facing today is China's rise and how best to respond to it. She said that the relationship between Taiwan and China is one of competition as well as of co-dependence, but Taiwan's choices of business partners should also include other regions such as India, Southeast Asia or even the Middle East.

Even though today's Taiwanese investments in China are estimated to be about 71 percent of Taiwan's total foreign investments, this number will not remain static, Tsai predicted.

Many people have questioned the government's "Go South" policy, she said, but since the infrastructures of several of Taiwan's Southeast Asian neighbours have improved a great deal, and since Taiwanese companies have grown so significantly, the risk associated with investing in these Southeast Asian countries has reduced considerably.

Commenting on the BOT projects that are causing controversies in Taiwan, Tsai said that when the idea of using the build-operate-transfer model was first introduced, the government thought it was a wonderful idea, since it entails private-sector financing of public development projects. However, Tsai said, the government has failed to assess its own legal position and to ask participating corporations to assess their own financial planning and risk assessment capabilities. The result was that the government had to intervene and offer assistance. "This is why you have politics," she said.

The government's involvement in these BOT projects has made the existing problems all the more complicated, creating what Tsai described as a vicious circle. What is needed is a good assessment of what went wrong in the past, improvements to the government's legal infrastructure and an appraisal of the private company's capability of carrying out a BOT project.

At the press conference, Tsai also outlined the new Cabinet's financial goals for the next few months. As one of its short-term objectives, the Cabinet ministers will work on maintaining overall economic stability. This means they must address issues ranging from skyrocketing oil prices and price hikes on consumer products to dealing with natural disasters, Tsai said.

The new Cabinet will improve the government's financial condition, boost private-sector investment, restructure the financial industry and strengthen market supervision in preparation for further market liberalisation, the vice premier promised.

In terms of Taiwan's trade and economic relations with other countries, Tsai said it is crucial to deepen Taiwan's participation in the regional economy so as to "make Taiwan more like an Asian country." Since Asia is playing an increasingly significant role in the world economy, it is important for Taiwan to be considered a part of this entity, Tsai explained, adding that the government will devise its cross-strait economic strategies within the context of the entire Asia-Pacific region.

Furthermore, the vice premier announced that a conference would be held in June to discuss major economic issues facing Taiwan and to foster a consensus on how to solve these problems. The discussions at the conference will focus on three themes: the development of a social security system, maintenance of the country's sustainable economic competitiveness and managing Taiwan's trade relations with other countries.