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United Daily News: Rescue Taiwan's economy

2013/05/29 11:11:39

Premier Jiang Yi-huah announced a package of 13 economic stimulus measures on Tuesday in the hope of securing 3 percent GDP growth this year.

The move came just a few days after the Directorate General of Budget, Accounting and Statistics lowered its 2013 growth projection to 2.4 percent, down from the previous forecast of 3.59 percent.

In order to revitalize the economy, the government has promoted numerous short-term and long-term measures, including the "Economic Power-Up Plan" that was introduced with much fanfare last September.

Despite the many steps taken, however, nothing has seemed to work. The latest package focuses on expanding consumer spending, boosting domestic investment, encouraging innovation and new business start-ups, and revising the capital gains tax on stock sales. The content is not at all inspiring because it did not go beyond the existing policy framework.

Moreover, the government is planning to invest a mere NT$3.24 billion over five years in the new package. How can we expect it to rescue Taiwan's weak economy?

In fact, the key to ensuring the success of economic policies lies in changing people's expectations and lifting their confidence and morale so that they are willing to invest and consume.

The government's top priority should be to eliminate uncertainties haunting the economy rather than promoting more stimulus plans. Those uncertainties include finalizing reforms to the stock gains tax and pension programs, making a decision on whether to adjust electricity rates, and helping businesses deal more confidently with the devaluation of the Japanese yen.

Also, there is a need for the government to integrate, review and reorganize existing stimulus plans to demonstrate its leadership and execution ability. Only by doing so can the government change its image of being "incompetent" and rebuild people's confidence in the economy. (Editorial abstract -- May 29, 2013)

(By Y.F. Low)