Chen explains Rong Bang fund at ROC-Central America summit

President Chen Shui-bian provided details about a special fund of roughly US$250 million designed to cement diplomatic ties with countries that are allied with the Republic of China (ROC) by giving Taiwanese businessmen an economic incentive to invest in certain industries in those countries. The president made the announcement Sept. 22 in Guatemala, one of the five nations on Chen's 10-day tour of Central America and the Caribbean.

Vice Premier Wu Rong-i said the new investment project, called the Rong Bang Project, was designed for co-prosperity and will be used to help finance Taiwanese investors cooperating with their local counterparts. He said it will simplify procedures for Taiwanese investors who want to establish local offices and provide incentives for Taiwanese businessmen to invest in countries that share diplomatic recognition with the ROC.

Wu said the project was a win-win economic strategy for Taiwan and its diplomatic allies in the Central American region. "The project will help Taiwan companies establish footholds in Central America to serve as a springboard for tapping into the vast North American market while assisting our Central American allies in developing their economies and creating jobs," Wu explained.

The fund will draw approximately US$150 million from the Executive Yuan's Development Fund, which focuses on upgrading industrial infrastructure, and US$75 million from the International Cooperation and Development Fund, which was established to independently oversee and implement Taiwan's foreign assistance and cooperation programs.

The handsome amount promised in the fund and the lack of details regarding utilization drew criticism from opposition parties and stirred up controversy back home since word of the special fund was released ahead of schedule. Chen denied allegations that the new project is a veiled attempt at practicing dollar diplomacy. He said that even though China has been seen dangling money as bait to win over some of Taiwan's allies, "Taiwan must never engage in a spending competition with China." Instead of resorting to dollar diplomacy, Chen said Taiwan should seek to strengthen trade and economic cooperation with these countries by investing in niche industries and value-added projects. He explained that the Rong Bang Project is aimed at helping diplomatic allies in the region increase investment and upgrade industrial structure, improving on the practice of dollar diplomacy used in the past.

Executive Yuan Secretary-General Cho Jung-tai provided further explanation that this new project is "funding for the government to get more deeply involved in the process." It is different from previous trade and economic cooperation funds in that the government will take a more aggressive approach to persuading state-run and private enterprises to seek strategic alliances globally, Cho said, and that the new fund is a transparent, multilateral and bilateral mechanism involving many cooperative projects in 12 countries that are allies of the ROC.

Cho went on to say that the president's original plan was to announce the project at a Sept. 26 summit Chen was scheduled to attend, but the news had been leaked to the media, resulting in a myriad of false accusations and misleading reports.

Chen attended the Fifth Summit of the Republic of China and Central America in Managua, Nicaragua Sept. 26, when he officially announced the launch of the fund. "The Rong Bang Project is not a strategy to give the summit additional splendor. We have to make them understand that doing business with China would strongly impact their own economic development," he said. Further details of the project were provided by Wu later in the summit.

During his three-day visit to Nicaragua, Chen was awarded the "Ruben Dario" award, the highest honor Nicaragua offers foreign dignitaries. He also signed a joint statement on Nicaragua's interest in signing a free-trade agreement (FTA) with Taiwan in the near future.

Chen's first stop in Central America was Guatemala, where he signed an FTA with Guatemalan President Oscar Berger Perdomo at a Sept. 22 ceremony in Guatemala City.

According to the agreement, Taiwan is to provide tariff-free entry for agricultural products from Guatemala. Chen said he hopes that Taiwan can become an important gateway through which Guatemala can export its products to Asia.

Chen also expressed hope that the FTA would enable Taiwan and Guatemala to jointly develop their North American markets. Six ROC allies in Central America and the Caribbean, including Guatemala, signed an FTA with the United States in early August, and Taiwan's new FTA with Guatemala is expected to help Taiwanese products gain indirect tariff-free access to the U.S. market.

Two other agreements regarding sea transportation and airfreight were signed. Minister of Transportation and Communications Lin Ling-san said that Taiwanese airlines would share their experience operating international flights with Guatemala, none of whose airlines is accepted by the United States.

Going into effect next January, the FTA with Guatemala is Taiwan's second such agreement with a diplomatic ally.

After signing the FTA in Guatemala, Chen visited the Dominican Republic Sept. 23, where he signed a joint communique with his Dominican Republic counterpart, President Leonel Fernandez Reyna. The document reaffirmed bilateral friendship and solidarity between the two countries. The two heads of state agreed that their respective countries should begin consultation on a free-trade pact to further strengthen economic and trade ties.

En route to Central America, Chen made two stopovers in the United States, in Alaska and Florida. His transit stop in Alaska was extended to a 14-hour stay due to Hurricane Rita, which was approaching Florida. Chen used the extra time to meet with Gov. Frank Murkowski to talk about energy cooperation and explore trade opportunities.

Chen arrived in Miami Sept. 21 where he was presented with a human rights award from Congress via teleconference by Tom Lantos, co-chairman of the U.S. Congressional Human Rights Caucus. After attending a luncheon hosted by U.S. officials, Chen met privately with former U.S. Deputy Secretary of State Richard Armitage and former Deputy Assistant Secretary of State for East Asian and Pacific Affairs Randall Schriver.

Later that day, Chen held another teleconference with members of the Congressional Taiwan Caucus, who congratulated him on the human rights award, extended invitations to visit their constituencies, and expressed the hope that one day Chen could visit Washington--a city that is currently out-of-bounds to ROC leaders so as not to offend China.