By Taiwan News
The Chinese stocks plummet last week, which sent shockwaves through markets in New York to Taiwan, is a sharp reminder that the world needs to be ready every time China takes a sneeze. As the world’s second-largest economy, its main stock markets slumped 11 percent, the worst performance since the depths of the global financial crisis in 2007, according to a report by Reuters.
Taiwan’s export, which is closely chained to China’s economy, also captured the heat as its TAIEX index nosedived more than 500 points. Confidence was already shaken earlier as China devalued its currency on August 11, making Taiwanese exports relatively more expensive.
While President Ma Ying-jeou continues to push his rapprochement with China – including the island’s economy with ECFA (Economic Cooperation Framework Agreement), one can only imagine what it would be like if we would continue to rely on China’s economic grip.
But Ma’s days are numbered – his eight-year term will end with the January 16 election – and so may be his vision, as Taiwan prepares for another approach, one fuelled by a rising distinct identity. The island should find a new desire to pursue a separate path, including its economy.
Taiwan’s “go south” policy, launched in 1994 during Lee Teng-hui’s era to foster economic linkages between the island and Southeast Asia, is again enjoying a revival, as rising costs and slowing economic growth on the mainland have persuaded Taiwan firms to look again at Southeast Asia as an investment destination.
But Taiwan should not stop there because the sun is now beaming light on Africa, a new dime of hope where economists believe will be the growth continent for the 21st century. According to the World Trade Organization (WTO), prospects for economic growth are greater in developing and low-income countries, thus creating an environment of opportunity for Africa.
A land mass of more than 30 million square kilometers, the continent is made up of 54 countries, and each nation is as varied with its own unique culture and identity. In 2014, the trade governing body published a report that said six of the world’s ten fastest growing economies over the past decade were in sub-Saharan Africa (SSA), noting that countries in the Economic Community of West African States (ECOWAS) are also fast catching up with the rest of the region.
But, however rosy or picturesque Africa may seem to the average Taiwanese on paper, the majority of them are not easily convinced, let alone local businesses, who are two-bit unfamiliar with the growth potential of Africa other than the United States, Europe and Asia.
Although tarnished by the image of unceasing political instability, poverty and economy turmoil, not all of the 54 countries are mired by such disarray. In general, the continent has made remarkable progress in the area of stability and governance.
African countries offer vast opportunities for business, and the combined population of 200 million people provides a potentially lucrative market for Taiwan’s commerce. However, Taiwan’s trade and investment relationship with Africa is minute when compared with other regions in the world.
It’s about time to think outside the box, take a decisive action, as did the South Koreans, Japanese and Chinese (to a least extent as it is exploiting more on natural resources) in Africa. Taiwan businesses could concentrate on several viable regions for investments, such as Senegal, Ghana, Equatorial Guinea, Gabon, Cameroon, and among several others in North Africa. They could replicate their successes in those regions as they did in Cambodia, Myanmar and Vietnam.
Not all of the African nations can be viewed as backwaters, as some are even more advanced in terms of infrastructure than their counterparts in Southeast Asia – especially in the countries where Taiwan businesses are investing in.
According to the Taiwan External Trade Development Council (TAITRA), the island’s exports to Africa totaled US$2.93 billion during the first seven months this year, up 10.1 percent from the same period a year ago.
Taiwan could do more than just export by investing in the continent’s traditional industries, such as textiles, plastics machinery, auto and motorcycle parts, and so forth.
In a recent report published by Plastics News (PN.com), CEO of Tainan-based Fong Kee International Machinery (FKI) Charles Wei believes that in the next five years, many multinational corporations will move into Africa.
As international cosmetics manufacturers are starting to invest in the region, it creates needs in their supply chains for FKI equipment, as demand is also rising for blow molding machines for larger containers such as jerry cans for fuel, he said in the report.
Where there is a will, there is a way out of any stalemate. In short, Taiwan businesses should start looking beyond China as any variation in its economy would have a spillover effect on the island’s economic stability and development.
Solely relying on China’s market and cross-strait economic integration is not the solution to Taiwan’s economy. If Taiwan continues this trend of leaning toward China for an “economic fix,” its economic doom is predictable. It is time for Taiwan to find its next economic niche and march on its own path again.