Taiwan Streams Investment to Southeast Asia

Taiwan Streams Investment to Southeast Asia

 

JAKARTA, KOMPAS — (8/9/2021) ASEAN countries do not have free trade agreements with Taiwan. The majority of ASEAN members also follow the One China principle. However, this does not stop the growth of direct investment and mutualistic economic cooperation between ASEAN and Taiwan. This came to the fore in a discussion titled “Increasing Taiwanese Investment in ASEAN”, which was held online by The Habibie Center, Tuesday (7/9/2021). In the forum it was emphasized that the value that determines Taiwan’s cooperation with ASEAN is flexibility in investment as well as quality and productivity improvements.

“Taiwan is not part of the Regional Comprehensive Economic Partnership (RCEP) with Southeast Asia. However, Taiwan has a Southbond policy or related to countries in the southern hemisphere to improve regional or bilateral relations with each related country.” said Kristy Tsun-tzu Hsu, Director of the Taiwan-ASEAN Study Center at the Chung-Hua Institute for Economic Studies, Taiwan. 

She explained that, from a market perspective, the United States (US) and the European Union (EU) still rank first and second in Taiwan’s investment destination. However, Southeast Asia with its large area and large population is increasingly being eyed and in demand by Taiwanese businessmen. This can be seen from the increasing flow of capital from Taiwan to Southeast Asia.

Based on data from the Taiwanese government, in the 2002-2015 period, Taiwan’s investment in China reached 60 percent. However, since 2016, the number has decreased to 50 percent. In fact, as of the first semester of 2021, Taiwan’s capital in China is only 25 percent.

Many of these investment funds have been diverted to Southeast Asia. In 2019, Taiwan’s investment in ASEAN was 47 percent of Taiwan’s total overseas investment and production. In ASEAN, as much as 40 percent of capital is invested in Vietnam, followed by Malaysia, the Philippines and Indonesia.

“ASEAN is also Taiwan’s export triangle to the European Union. For example, Taiwan and the EU are developing high-quality textile production made by factories in Vietnam and Indonesia. After that, it will be sent to the EU.” said Hsu.

In terms of investment, continued Hsu, Taiwan is not only looking for markets and places of production. Taiwan is also eyeing countries that can guarantee quality and sustainable production capacity, and build a stable global supply chain. Currently, Vietnam is the number one country in ASEAN that can do it.

“The Vietnamese government is in the process of moving towards a technology, industrial, and green economy country. This is in line with the principles of environmental sustainability adopted by Taiwan, the US and the EU. Moreover, developed countries are targeting to reduce carbon emissions by half by 2030 and become completely carbon-free by 2050.” said Hsu.

Another aspect to consider in Taiwan’s investment is the improvement of digital technology, automation, quality of human resources, and flexibility for foreign investors. In developing these aspects, Hsu emphasized that Taiwan is enthusiastic about helping the process.

Economics Lecturer at Universitas  Indonesia, Fithra Faisal Hastiadi, said that Indonesia must have the courage to loosen economic protection. Various ways can be sought so that local industries can continue to develop along with the flow of capital from outside to inside the country.

Indonesia’s biggest challenge, Fitra added, is stagnant productivity. Meanwhile, production costs, including labor costs, continue to rise.

Regarding the political situation in China, Taiwan, South Korea, and Japan, Fithra believes it will not have much effect on Indonesia’s economic growth, including the China-US trade war.

Meanwhile, Director of Promotion for Development of the Ministry of Investment, Ricky Kusmayadi, revealed that Taiwan is ranked 15th for foreign investors in Indonesia. China, the US, Japan, and the EU are still at the top.

Until 2020, Taiwan’s realized investment in Indonesia has reached 612 million US dollars. One of the projects that the government says can be offered to Taiwan is the Batang Integrated Industrial Estate in Central Java, which has an area of ​​up to 4,300 hectares. (DNE)

 

Source: Kompas Daily. Edition: Wednesday, September 8, 2021. Rubrik Internasional. Page 4.

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