New Southbound Policy brings Taiwan closer to Asia Pacific

Venkat Raman

While the Republic of China (Taiwan) continues to register impressive strides in economic growth and social development, its anxiety to promote its cherished ambition of obtaining ‘Free Taiwan’ status through diplomatic recognition with the rest of the world remains strong.

From a political standpoint, the country of 23.57 million people boasts of a robust democracy, a populist government and a flourishing private sector.

Impressive progress

The country’s overseas trade value was placed at US$ 576.51 billion as at the end of 2017, of which exports constituted US$ 259.26 billion. With foreign exchange reserves remaining healthy at US$ 457.12 billion and Per Capita GNP (GNI) at US$ 24.984, the economy grew by 2.89% in 2017, although forecast for the current year is at a lower rate of 2.48%.

Journalists visiting Taiwan are always amused by the resilience of the government and people, for, since the past almost 70 years, fight for recognition as an ‘Independent Nation’ has remained strong. Taiwan rejects the so-called, ‘One China Policy,’ which most countries across the Continents endorse, and has over the years engaged in trade, cultural and social ties to promote itself as a legal entity.

Promoting Asia Pacific

Diplomacy has been paying dividends for this small but important country in East Asia. Over the years, Taiwan has undertaken several initiatives to promote bilateral relations.

The latest among them is the ‘New Southbound Policy,’ which aims to work closely with 18 countries in the Asia Pacific region comprising Australia, Bangladesh, Bhutan, Brunei, Cambodia, India, Indonesia, Laos, Malaysia, Myanmar, Nepal, New Zealand, Pakistan, Philippines, Singapore, Sri Lanka, Thailand and Vietnam. Arguably, Taiwan has closer ties with ASEAN (Association of South East Nations) countries to promote ties with its immediate neighbours.

Known as the ‘Signature Foreign Policy’ of President Tsai Ing-wen since she formed her government two years ago, the strategy is to make Taiwan less dependent on Mainland China and to improve cooperation with other countries.

China’s Trade dominance

Trade figures provided to Indian Newslink by the Ministry of Foreign Affairs in Taipei showed the dominance of Mainland China in bilateral trade.

The two-way, Cross-Strait trade in 2017 was US$ 181.7 billion, accounting for an increase of 30.8% over the previous year, showed heavy reliance on that country for exports.

Taiwanese exports to Mainland China were valued at US$ 130.2 billion, accounting for 41% of total trade between the countries, while imports were at US$ 51.5 billion (19.9%).

Taiwan’s investment has also been heavily placed in Mainland China, amounting to US$ 97.7 billion over the nine-year period from 2009 to 2017, constituting 62% of total outbound investment from this country.

Reaching out to others

The New Southbound Policy (NSP) is the cornerstone of President Tsai’s foreign policy, which aims to maintain the status quo of Cross-Strait relations and strengthen relations with the United States and Japan. But in a departure from the policies of her predecessor Ma Ying-jeou, Tsai asserted that the primary goal of the NSP is to “bid farewell to our past overreliance on a single market.”

The Taipei based Chung-Hua Institution of Economic Research, (CIER) an independent thinktank, has identified areas of cooperation to foster Taiwan’s ties with NSP countries.

These include Bilateral (Trade, Investment, Talent Exchange, Tourism and Culture), engagement with large enterprises, government assistance, mitigating the ‘risk of concentration on China,’ manufacturing and services and a friendly immigration policy.

CIER Research Fellow and Vice-President Dr Jiann-Chyuan Wang said that the goal is to “Access and actively cultivate the ASEAN market and build and external economy to support the economy of Taiwan.”

He said that the top 10 countries of ASEAN, accounting for 600 million people, is the largest market after China and India.

“ASEAN’s growing economy and expanding middle class, with about 300 million people in 2015, is fast becoming a major market place,” Dr Jiann said.

Business Sector transformation

Taiwan’s National Development Council has said that the NSP will help with the transformation of Taiwan’s business sector.

“Since the current government came to power in May 2016, it has been promoting the New Southbound Policy which pushes closer ties with the nations of South and Southeast Asia, as well as with Australia and New Zealand.”

According to the Office of Trade Negotiations (Executive Yuan), the Taiwanese government proposes to enhance its efforts and resources to foster its NSP.

Five Flagship Programmes

“Taking partner countries’ needs and Taiwan’s interests into account, the Policy is now focusing on the planning and implementation of five flagship programmes, and three prospective areas. The aim is to bring positive benefits to New Southbound Policy partner countries and Taiwan in the shortest possible time.

The Executive Yuan aims to allocate US$ 235 billion to the implementation of the New Southbound Policy in 2018, demonstrating the government’s resolve.

“To maximise the policy’s effectiveness going forward, the government will consolidate its resources and put them to optimal use,” it said.

Venkat Raman visited Taiwan recently as a Guest of the Government of Republic of China.

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