Challenges to Taiwan’s SOUTHBOUND strategy

Taipei’s decision represents the first tangible measure to promote contact between people of the two countries after a long period of inertia. The previous government under former president Ma Ying-jeou was reluctant to grant such a privilege even though the plan had been on the table for quite some time. However, the new government is wasting no time in strengthening ties with Thailand and the rest of Southeast Asia.

Taipei hopes that increased contact with all Asean members will eventually translate into stronger policies that encompass the whole gamut of its “Southbound Strategy”.

The new policy is very much in line with the objectives of the Asean Community, focusing on people-centred activities and programmes, be they economic, social or cultural. For decades, Taiwan has been searching for appropriate approaches that could capture the dynamic and potential of Asean economic integration. After all, Taiwan has long been a major source of foreign direct investment for Asean, especially Thailand, Indonesia and Vietnam.  

Taiwan used to be a popular destination for Thai tourists and workers during the boom years of the 1990s and 2000s. Thailand was among the top-three largest Asean points of origin for tourists visiting Taiwan last year, numbering 70,000. But after Japan granted visa-free entry to Thai tourists three years ago, many have headed northbound with a near-record high of 1 million visitors last year.

Furthermore, Thailand has been a haven for Taiwanese investment, from large to medium-small enterprises throughout the past four decades. Currently, at least 5,000 Taiwanese companies of all shapes and sizes are operating in Thailand. However, of late, many are quietly moving their operations to Vietnam and Indonesia.

Given the current economic situation in Taiwan, Thai visitors and other visa-exempted Asean members would not only bring in much needed foreign earnings but also potential changes in the political landscape of Taiwan-Thailand, as well as Taiwan-Asean relations.

Since the 1990s Taiwan has tried to improve ties with Asean but failed due to Beijing’s “One China Policy” as well as Taipei’s inconsistency in engaging Asean. Taipei’s longstanding proposal to become a sectoral dialogue partner has been ignored. Wide-ranging recommendations from think-tanks for enhanced partnership have been largely overlooked.

This time around it is different. Taipei has recently established a high-level task force known as the New Southbound Office under the purview of President Tsai, comprising ministerial-level officials from various concerned government agencies. The office, headed by former foreign minister James Huang, has a clear objective to increase Taiwan’s presence and competitive edge in the region through innovation and green-oriented technology.

Despite its plentiful untapped potential, Taiwan’s relations with the Asean members are at best uneven, depending on the latter’s capacity as well creativity to engage the island without raising eyebrows in Beijing, which considers it a renegade province.

Be that as it may, some of them have been able to strengthen economic and cultural ties with Taiwan. Singapore, for instance, has proven to be the grouping’s most versatile in handling the One China Policy. Last year, the island republic hosted an historic meeting between Chinese leader Xi Jinping and Taiwanese leader Ma.

Furthermore, Singapore has creatively enhanced economic ties with Taiwan with a free-trade agreement, known as the “Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership”. It does not matter what the unusual title implies – as long as it allows both sides to trade freely. The Philippines, Indonesia and Thailand are closely studying the Singapore model.

Obviously, Singapore has enjoyed diplomatic privileges in embracing the two Chinas, mainly due to the stable cross-straits relations throughout the past decade. It remains to be seen how the current Taiwanese government can maintain the same level of stability and activity with China. So far, both sides have shown restraint and a desire not to rock the boat as each tries to cope with domestic challenges.

Under the Southbound pathway, Taiwan will fully utilise its knowledge and skills in promoting small and medium size enterprises (SMEs) and all green-related technology and investment in Asean. Nearly 90 per cent of the grouping’s new investment has been in the SMEs area. Last year, Asean made it clear that the SMEs were the driver of economic growth.

From now on, it is imperative for Taiwan to increase engagement with Asean on non-economic matters, especially those related to young people. Providing training, scholarship and career development would further enhance relationships between Taiwan and Asean. With rising China, the overall influence of Taiwan is also augmented in the region.

In addition, there are well over two million Southeast Asian workers who used to live and work in Taiwan, not to mention nearly 200,000 women, mainly from Vietnam, the Philippines and Thai, married to local men. These diaspora and other connections are powerful diplomatic instruments, if properly utilised, to further strengthen and translate into new areas of cooperation between Taiwan and Asean.

Following six-years of high tension with China over the South China Sea disputes, currently Asean and China are mending fences following the award by the Permanent Court of Arbitration recently. Both China and Taiwan condemned the decision. Now, Asean and China are preparing for their 25th commemorative summit in early September in Vientiane.

It is still early to tell how Taiwan’s new determination will play out in Asean, especially the implications for overall Asean-China relations. But one trend is inevitable – the Asean-Taiwan friendship is moving to a new period – no longer static or rigid, as it was 

previously.