40% of last year’s White Paper issues rated as resolved or making good progress.

Special to Topics Online

AmCham Taipei’s 2018 Taiwan White Paper, released June 6 with a news conference followed by a membership luncheon at the Regent Taipei, highlighted the unprecedented progress achieved over the past year in resolving issues raised by the Chamber’s various committees.

AmCham Chairman Albert Chang stressed the dramatic contrast with the situation a year ago, when the Chamber disclosed that not a single one of the 80 issues contained in the 2016 White Paper had been resolved. In response, the Taiwan government and AmCham resolved to work more closely together to ensure a better outcome in the year ahead. The results were impressive. Of the 83 issues raised in 2017, the committees rated 11 as solved – the highest total since the Chamber started tracking these results in 2004.

Another 21 issues were rated as “showing good progress.” Chang noted that the two categories of “resolved” and “showing good progress” together accounted for nearly 40% of the total number of issues, about double the average percentage over the previous 13 years. “This is the highest success rate we’ve ever had,” Chang said at the news conference. “Now it’s time to build on that momentum to ensure even better results going forward.”

Chang credited the Taiwan government’s National Development Council (NDC) – and especially the personal efforts of Minister Chen Mei-ling – with helping turn around the situation from a year ago. He noted that Chen had familiarized herself with each one of the AmCham issues and presided over a half-day meeting attended by representatives from the Chamber committees and government agencies.

At the luncheon, the Minister accepted the White Paper on behalf of the government and thanked AmCham for its “longstanding support of the government’s effort in the liberalization and internationalization of the Taiwan economy and for your making valuable suggestions that have made an important contribution to the improvement of Taiwan’s business environment.”

She stressed the Tsai administration’s attention to regulatory reform and cited several of the accomplishments of the past year that were also on AmCham’s list of major achievements to celebrate. One was passage by the Legislative Yuan of amendments to the Pharmaceutical Affairs Act to create a Patent Linkage system to prevent patent-infringing drugs from reaching the market. It was considered to be milestone legislation that not only affects the pharmaceutical industry but also burnishes Taiwan’s overall reputation for protection of intellectual property rights.

Chen also mentioned amendments made to the Labor Standards Act to provide more flexibility for business operations (in areas such as calculation of overtime and annual leave) while taking care of the rights of employees. She added that NDC has acted on the recommendation from AmCham and other foreign chambers that “supervisory, administrative positions or professionals with a certain salary level” be exempted from provisions of the labor law restricting working hours and requiring the keeping of a time sheet. Chen reported that the NDC on May 2 had sent a proposal to the Ministry of Labor to loosen the regulation and that “hopefully the long-awaited change will soon come.” AmCham had argued that to encourage innovation and for interaction with the global economy, knowledge workers require considerable freedom to set their own hours.

The Minister also responded positively to several longstanding White Paper issues. One is the suggestion from the Asset Management Committee that participants in the national labor pension program be allowed to choose from a range of risk-reward options for investment. Currently all participants are on the same standard, which limits the opportunity for return on investment. Chen said the government has decided to phase in the member-choice scheme, “starting with the young generation.”

She also discussed the status of the chiropractic profession, which is the oldest unresolved issue in the annual White Paper. Unlike nearly all other major countries in the world, Taiwan does not accord legal recognition to chiropractic. “We are now taking an open-minded approach to look into the issue, and working on finding a win-win solution for chiropractic doctors and people who need their services,” Chen said.

Broad-based suggestions

Besides the detailed 76 recommendations raised by the various Chamber committees, AmCham made some additional suggestions on how to improve the investment climate in view of the increasingly challenges Taiwan is facing in the international arena:

• Ensure that the innovative spirit is thoroughly embraced through the bureaucracy. The country’s top leadership has committed itself to promoting innovation, but the same openness to new approaches is not always found at the mid and working levels of government. The key performance indicators (KPI) for every government ministry and agency should include their progress in introducing innovative measures to fulfill the vision of the national leaders.
• Introduce more flexibility for professional and managerial personnel under the labor law. As mentioned above, the NDC has sent a proposal to the Ministry of Labor to move in this direction.
• Provide absolute assurance to investors that Taiwan will continue to have a sufficient, stable, and cost–competitive electrical power supply. The government plans to phase out nuclear power by 2025 while expanding wind and solar resources to account for 20% of the power mix. Since that will be a major challenge, industry hopes the authorities will share the detailed planning for reaching the target.
• Welcome private equity investment. Taiwan has been attracting much less foreign direct investment than neighboring countries, but appears to have closed itself off from a major source of investment in the region: PE. If the perceived disfavor for PE is a misunderstanding, some current test cases are a chance to correct it.
• Continue efforts to ensure the transparency and soundness of Taiwan’s rules–making process.

Extension of the notice and comment period two years ago from 14 to 60 days was an important step forward. Now it is vital to minimize the allowed exceptions to the stipulation and to avoid unique-to-Taiwan regulations.

A separate section of the White Paper, Messages to Washington, gives suggestions to the U.S. government. The 2018 recommendations are:

• Hold TIFA Council talks with Taiwan on a regular basis. These negotiations under the Trade and Investment Framework Agreement between Taiwan and the United States have usually been held annually, but there was no session in 2017 and it is not expected to occur in 2018. The TIFA process is a crucial means for the American government to show its support for the interests of U.S. businesses operating in Taiwan.
• Explore ways to deepen the economic relationship with Taiwan. Taiwan deserves attention as the 11^th largest trading partner of the United States and one of its closest friends in the Indo-Pacific, despite the lack of formal diplomatic ties. Bilateral trade, investment, or tax agreements could be considered.
• Arrange more high–level government visits in both directions. Only one U.S. cabinet-level official has visited Taiwan in the past 18 years. The Taiwan Travel Act recently passed by Congress should facilitate such visits, which can be instrumental in furthering the bilateral relationship.