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Published: July 27, 2006
In order to raise the competitiveness of Taiwan's industries and guide them to increase their level of domestic investment, the Panel on Enhancing Industrial Competitiveness has framed a vision of development for the nation's industries through 2015, and has reached broad consensuses on three issues that are critical to economic investment: (1) the labor market and human resources, (2) the environment for development, and (3) environmental protection, energy resources, and industries. The panelists' consensuses are summarized as follows:
1. A vision for development of business enterprises in Taiwan
In view of the trend of industries becoming globalized, knowledge-based, and high-quality, and after considering Taiwanese businesses' strengths and limitations and the nation's environmental capacity, the panelists took as their common vision the development of Taiwan into a "green value-added island."
In order to realize this vision, Taiwan should formulate global links, use globally savvy professionals, establish global brands, and create global well-being as its key strategies. Agriculture, manufacturing, and the service sector will serve as the three engines that spur economic growth. In this light, Taiwan will integrate global resources, increase local related investment, strengthen the content of business services, increase the value added to all types of products and services, and create a high-quality living environment. It is expected that by 2015, Taiwan's gross domestic product per capita will reach US$30,000, and the unemployment rate will remain below four percent.
2. Labor market and human resource considerations
To meet the challenges of an aging population and a declining birth rate, as well as the demand for human resources in a changing economy, concrete consensuses have been fleshed out concerning three imperatives: reassessing labor laws and regulations, raising the overall labor participation rate, and enhancing the quality of labor.
a) Reassessing labor regulations
(1) Provisions in the Labor Standards Act concerning labor contracts, salaries, and working hours (including part-time work) should be reviewed. Protection of nonstandard hired laborers should be strengthened.
(2) Prior to supplementing or repealing regulations, assessments should be made concerning the impact of such changes on employment, unemployment, government finances, and economic growth.
b) Increasing the overall labor participation rate
(1) The labor force participation rate of women should be increased: To that end, provisions of the Gender Equality in Employment Act should be implemented effectively; subsidies should be granted to employees who take unpaid parental leave; and employers should be helped to temporarily fill their positions so as to stabilize the employment of working mothers. Business start-up loans and consultations for women should be promoted; women should be assisted in rejoining the workforce; and the situation of lower pay for female employees should be ameliorated.
(2) The rate of employment of the middle-aged and elderly should be increased and the phenomenon of premature withdrawal from the labor market should be rectified. Barriers to employment for the middle-aged and elderly should be eliminated, systems currently in place concerning retirement be amended, and the minimum retirement age be raised.
(3) Measures should be taken to resolve the problem of labor shortfalls in various fields.
(a) The rate of employment of women, young people, and the middle-aged and elderly should be increased as a primary means of making up for labor shortfalls currently being experienced in Taiwan.
(b) An overall review of foreign labor policies should be conducted, mindful of the priority to secure employment for local laborers.
(4) An extended caregiving system should be established to meet the needs of an aging society.
c) Improving overall capabilities of the labor force
(1) Policies concerning the cultivation of qualified professionals should be revised in higher, vocational, and technical education. Regular reviews of such policies in university, vocational, and technical education should be conducted and funding increased for vocational and technical education, including vocational high schools. The system for appraising institutes of higher education should cover the schools' teaching quality, research activities, and extension programs. Mechanisms for the closure of institutes of higher education should be implemented. Adjustment mechanisms for departments and study programs should be promoted. The quality of education should be enhanced. Job placement counseling for science and technology university graduates should be strengthened.
(2) The public should be encouraged to participate in training by providing adequate incentives. Incentives that encourage individuals to fund their own training should be increased. A comprehensive review should be conducted of, and amendments made to, the Vocational Training Law, and the vocational and technical education system should be revamped. Training resources should be integrated and training programs be designed to meet the needs of businesses.
(3) Effective approaches to recruit highly skilled professionals from overseas should be developed. An environment favorable to the recruitment of such professionals should be created. In accordance with the demands of sustainable development, flexible adjustments to immigration measures should be made and issues concerning the provision of incentives and local resources explored in order to attract highly skilled professionals from overseas. Legal restrictions concerning the recruitment of such professionals should be relaxed. Incentives to attract foreign students to come to Taiwan to study or carry out research should be bolstered.
3. Improving the environment for business development
In order to promote the development of Taiwan's business sectors, it is crucial to build a business-friendly environment. The panelists reached consensuses during discussions on issues including the management and control of water resources, the reorganization of industrial areas, and the effective use of scientific research funds.
a) Water resources and water prices
Water resources available for use in Taiwan are precious and limited. Through the legalization, institutionalization, and transparency of water-resource transactions, the government can help irrigation associations diversify their agricultural operations. Also, the establishment of reasonable rates for water rights, as well as a tax on such fees, can encourage the efficient use of water resources. Given that water rates have been low for a prolonged period of time, the government should, as soon as possible, make reasonable adjustments to water rates-including the adoption of progressive rates, and varying rates according to season-in order to more accurately reflect the cost of water and conserve water.
The government's strategy of promoting water conservation and the efficient use of water resources will help slow the pace of exploitation of new water resources, reduce the impact of such development on the environment, and facilitate the sustainable use of water resources. In addition, businesses that supply water should improve their quality of services and propose further complementary measures.
b) Reforming industrial zones
The development of special industrial zones has been proceeding for more than 40 years since 1960, with 80 percent of industrial zones having a history surpassing 20 years. Most of these zones face such problems as inadequate "life conveniences" and insufficient public facilities. Only four industrial zones meet existing legal requirements of allocating 30 percent of their area for public facilities. When taking into account limited land resources and imperatives relating to environmental sustainability, it is evident that it will become increasingly difficult to establish new industrial zones. The government should be proactive in promoting the reorganization of industrial zones and bring out comprehensive complementary measures for the regeneration of old industrial zones. Before making requisitions of land for public facilities, the government should first check the condition of the land. Requisitions should be approved only if it can be demonstrated that there is no danger of pollution. If the concept of "transfer of development rights" is to be adopted as an incentive for reorganizing industrial zones, the government should first consider whether environmental conditions permit the institution of such a system.
c) Expansion and effective use of the scientific research budget
In addition to maintaining growth in budgets for scientific research, the government should pay attention to the substantive results from fund use and introduce measures for improvements. It should also strengthen cooperation between businesses and academics in the nation's innovation system by integrating research and development systems at all levels of the private sector and academia. This would accelerate the upgrading of technology in industries and make them more competitive internationally. Meanwhile, the government should identify fundamental, widely utilizable technologies that are suitable for Taiwan to develop. It should then identify the focus of the next generation of industrial development and put emphasis on those technologies deemed to promise greater benefits for manufacturers. It should also work with manufacturers to achieve more effective ways of allocating and utilizing scientific research budgets.
With regard to provisions in the Statute for Upgrading Industries that need to be changed, which the industrial sector is concerned about, as well as the issue of delaying the levying of a 10 percent business income tax on undistributed profits, the conference panelists have differing views, and decided to summarize them in a forthcoming report under the heading "Other Opinions."
4. Environmental protection, energy resources, and industries
There are four measures-the internalization of external costs, control of greenhouse gas emissions, regulation of industry in adopting the most effective technologies, and more effective utilization of science and technology-that, together, can create a "win-win-win" situation for environmental protection, energy resources, and industries.
a) Internalizing external costs
The emerging international low-carbon economy-a result of efforts to reduce greenhouse gas emissions-presents timely opportunities that should be seized. Realistic energy prices should be promoted, and an energy tax that internalizes external environmental costs should be levied. In effect, these measures would encourage energy conservation and the development of alternative energy sources. Through the working of market mechanisms, they would also promote Taiwan's business restructuring toward low energy consumption and high added-value development.
At this stage, this calls for the speedy passage of an energy tax bill that lays down a taxation principle based on the unit calorific value and carbon content of fossil fuels. Taxes should be levied in a progressive manner to reduce the impact of such taxes on domestic price indices and macro economy. Before such a law can be enforced, however, steps must be taken so that domestic energy prices reflect production costs. Subsidies and other incentives for fossil energy use should also be terminated.
b) Establishing a mechanism for controlling greenhouse gas emissions
In order to achieve desired effects, the government should introduce a greenhouse gas reduction law, draw up intra-ministerial plans, coordinate actions with the private sector, and gradually augment the nation's capability to reduce greenhouse gases. Introducing a law on greenhouse gas emission controls would allow Taiwan, in effect, to demonstrate its willingness to take part in international activities related to slowing climate change, and would declare to the world its commitment to fulfill its responsibilities as a member of the "global village." Domestically, Taiwan would thereby establish a legal framework for facilitating the reduction of greenhouse gas emissions.
c) Standardizing industries' use of the cleanest manufacturing processes and the most effective techniques
In order to enable industries to move in the right direction in terms of future overall management and control, new guidelines for investment projects should be established. Regulations should be established to require use of the cleanest manufacturing processes and environmental protection techniques in new investment projects to reduce the impact on the environment. The speed at which old industries are replaced by new ones should be stepped up, and assistance in boosting production efficiency should be offered to networks of related industries and down-stream factories to increase productivity.
d) Improving the utilization of technology
In an age of high energy prices, more efforts should be made in promoting new and renewable resources as well as low-carbon technologies, energy-saving technologies, and green production technologies so that the development of a low-carbon economic system can be developed.
(1) Promoting the development of renewable energy:
Push for the introduction of a "Renewable Energy Development Act." Advocate the use of photovoltaic power systems and biofuels. Increase budgets for research and development of renewable energy. Annually increase the proportion of energy supplied by renewable energy.
(2) Promoting energy conservation:
Revise and implement the Energy Management Act. Strengthen energy-efficiency management and adjust penalties so as to promote energy efficiency. Schools and government agencies should take the lead in energy conservation. Green construction and the energy technology service industry should be greatly expanded.
(3) Promoting the green energy industry:
Make business incentives applicable to the green energy industry. Promote the development of biofuels and photovoltaic power systems.
Some of the consensuses reached by the panelists can be implemented by the government's executive branch through budgeting and administrative measures, while others require new legislation. Enactment or revision of the aforementioned laws should be promoted in accordance with the consensuses reached at this conference.
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