Taiwan’s Ma Seeks to Boost Exports, Green Energy, Biotechnology

Feb. 21 (Bloomberg) -- Taiwan President Ma Ying-jeou gave his government three months to draft a development plan to boost exports and local industry after the island this past week posted a record economic contraction.

“The president has called on the cabinet to come up with a strategy for both the short and long term,” presidential spokesman Wang Yu-chi said in a phone interview after Ma met with his economic advisory team today.

Ma is seeking to development key industries including tourism, medical services, green energy and biotechnology in a bid to offset Taiwan’s first recession since 2001. He also called for passage of a NT$500 billion ($14 billion) four-year special spending package aimed at stimulating the economy amid a prolonged slowdown, according to a presidential statement.

“Originally a turnaround was expected in the second or third quarter, now it will be delayed until the fourth quarter,” Ma said in a speech broadcast on local television ahead of the meeting today. “If not for the policies we’ve already enacted, the effects would be a lot worse.”

Shopping vouchers, tax cuts and bank deposit guarantees are among measures the government has taken to boost confidence and stimulate spending, while further work should be done to cut taxes and stimulate investment, he said in the statement.

“All governments have a social responsibility to lessen the blow of an economic recession,” said Tony Phoo, an economist at Standard Chartered Plc in Taipei said before the policy announcements. “It can help soften the impact, but it can’t solve it.”

China Trade

Ma, 58, returned his Kuomintang party to power nine months ago on a pledge to boost ties with China as a means to secure Taiwan’s economic future. He called today for closer trade with China and the signing of a Comprehensive Economic Cooperation Agreement with the mainland.

China and Taiwan split after the Kuomintang fled to the island in 1949 following its defeat at the hands of Mao Zedong’s Communist party in a civil war.

The statistics bureau on Feb. 18 said the economy shrank an unprecedented 8.36 percent in the fourth quarter as private investment and exports plunged. The bureau subsequently cut its forecast for 2009 gross domestic product to a decline of 2.97 percent from a November forecast for growth of 2.12 percent.

“Taiwan’s economic structure is not bad, we have much data to show this,” Ma said today. “At a time when all countries are putting forth plans, we must also be attentive and discuss which measures can be most effective.”

Taiwan’s exports, which are equivalent to approximately 65 percent of GDP, fell 20 percent in the fourth quarter and private investment slumped 32 percent. Government investment and expenditure were the only components to expand during the period.

The economic contraction prompted the Central Bank of the Republic of China (Taiwan) to reduce its interest rate by 25 basis points to a record-low 1.25 percent. That’s the seventh cut since June after the benchmark rate peaked at 3.625 percent.