Tsai shifts focus to Asean but will the new policy work?

Taiwan’s economy has been too reliant on China under former president Ma Ying-jeou’s administration. In view of the uncertainty in cross-strait relations, new President Tsai Ing-wen has decided to shift the focus to Asean.
As Taiwan prepares to embrace Tsai, the nation’s first female president who took office yesterday, many have been expecting a rosier outlook in years to come.
However, both local and international rating agencies have been forecasting a bleak economic outlook for the nation’s economy despite the change of administration.
Only last month, Standard & Poor’s Ratings Services (S&P), a US-based ratings agency, lowered its forecast for Taiwan’s economic growth for 2016 to 1.8 per cent, citing the impact of China’s slowing economy.
Taiwan’s Directorate-General of Budget, Accounting and Statistics in February also cut its 2016 growth forecast for Taiwan’s gross domestic product (GDP) from 2.32 per cent to 1.47 per cent, citing a sluggish global economy.
These discouraging predictions are largely due to a slowdown in China’s economy, the world’s second largest, which has impacted economic conditions across the entire Asia Pacific region.
Due to Taiwan’s growing dependence on the Chinese market for exports, a slowing Chinese economy is expected to affect Taiwan’s outbound sales, scholars argued.
As a responsive measure to make sure Taiwan will not become overly dependent on China, the new Democratic Progressive Party (DPP) government under Tsai has decided to shift its focus to countries in the Association of Southeast Asian Nations (Asean).
The DPP has seen great potential economically in Asean but the outgoing Kuomintang (KMT) government has failed to capitalise on this potential over the past eight years.
During her visit to the Ministry of Foreign Affairs headquarters in Taipei on April 29 for a closed-door briefing on the country’s foreign affairs, Tsai stressed that establishing closer ties with countries in Southeast Asia and India will be her top diplomatic priority after she assumes office.

An extension of domestic market
As a concrete move to emphasise their focus on the “New Southbound Policy, the DPP announced on May 12 plans to form a “New Southbound Policy Office”. Tsai appointed James Huang, a former foreign minister, to head the office.
During a seminar on the new policy held in Taipei this Tuesday, Huang said the new DPP administration thinks Asean, with a population of 650 million young people, should be the main target for Taiwan instead. “The new policy will be the country’s latest economic strategic plan that sees Asean countries as an extension of Taiwan’s domestic market,” Huang said.
Contrary to an old version of “go south” policy that Taiwan adopted in the 1990s during former president Lee Teng-hui’s administration, Huang said the new policy sees “people at its core”.
The DPP government would be pushing bilateral interaction and cooperation of human resources, industries, investments, education, culture, tourism and agriculture between Taiwan and Asean nations to build a new partnership with them, Huang said.
Economically, Taiwan will offer assistance funds and loans to help Asean countries build their infrastructure. The incoming government will also help Taiwanese businesses in Asean to build exclusive Taiwanese business industrial parks, he added.
Huang said Taiwan is already late compared to other countries that have been active in the region for years.
“If we don’t seize the opportunity in the next five years, we’ll be left with no advantages at all,” he stressed.
The DPP’s latest policy, though based in good intentions to prevent Taiwan from leaning too heavily on China as the KMT has been widely criticised for doing during its past eight years of rule, could face obstacles ahead.
Huang Kwei-bo, an associate professor at National Chengchi University’s Department of Diplomacy and secretary-general of the Taipei-based Association of Foreign Relations, told The China Post that that the DPP’s latest policy is aimed at not letting Taiwan “put all its eggs in one basket.”
“But whether the latest policy will succeed or not is largely dependent on cordial cross-strait relations,” he noted.
“Of course, we hope the new policy to work but if the incoming government fails to maintain stable cross-strait ties, it will be highly unlikely for the policy to run smoothly,” he added.
Huang said if the DPP government deliberately ignores mainland China on the world stage, they will cause Taiwan-China relations to deteriorate, and “the losses of the new southbound policy will outweighs the gain”.
Outgoing Foreign Minister David Lin issued the same warning.
During an interview with The China Post and Apple Daily in April, the veteran diplomat, who accumulated four decades of experience during both KMT and DPP administrations, said Taiwan’s trade relations with China cannot be easily replicated.
“Where can you find a market to replace mainland China?” Lin said.
While Tsai wants to pivot to markets in Southeast Asia, China remains an important economic partner to Taiwan and one of the world’s largest economies, Lin added.
Lin also noted that the outgoing KMT government has been doing its best to improve Taiwan’s relations with Asean countries over the past eight years.
One thing remains important as pointed out by Lin; the incoming DPP government has to do its best to stabilise cross-strait relations.
“Only peaceful cross-strait relations can ensure stability in the nation’s relations with other countries,” he added.