Taiwan needs to be prepared to face a challenging year in 2019. That’s one of several key messages from AmCham Taipei’s recently released Business Climate Survey.
Notably fewer of our member executives – about 45% compared to 55% a year ago — expressed confidence in the economic outlook for the coming 12 months.
Significantly, however, the business leaders surveyed are far more optimistic about the prospects this year for revenue growth in their own businesses. That figure was a high 80%, the same as last year, according to the survey, featured in this issue of our magazine.
Why the difference? Essentially, the main reasons for the lower expectations for Taiwan’s economic performance in 2019 appear to be external factors beyond the companies’ control. These include the impact of the current U.S.-China trade conflict, the “America First” economic policy of the Trump administration, and Beijing’s increasing pressure on Taiwan.
But when it comes to the outlook for their own business, the executives tend to have a deep-seated understanding of the specific problems they are likely to be confronting and strategies for how to manage them. A prime example comes in the reply to the survey question that asked what the main source of opportunities for business growth will be for the respondent’s company in the year to come. A resounding 43.6% answered “Product or Service Innovation.”
For all enterprises in this market, whether domestic or foreign-invested, devising new and innovative business solutions is sure to be one of the most effective ways to navigate the uncertain economic environment ahead.
That approach to business also dovetails nicely with the Taiwan government’s economy strategy of promoting the “5+2 Innovative Industries”: high-tech (including artificial intelligence, the internet of things, and blockchain), biomedicine, green energy, smart machinery, and national defense/aerospace. In the AmCham survey, nearly 54% of the respondents agreed that the “5+2” plan would benefit Taiwan’s economic development and about 42% said the plan would influence their company’s decision on future business expansion in Taiwan.
A second noteworthy message from the Business Climate Survey is that progress is being achieved in areas of major concern to AmCham companies. The change may be slower than desired, but the progress being achieved is nevertheless encouraging. Regarding both the composition of future energy supply and the labor-policy treatment of professional employees, for example, companies see a welcome trend of greater flexibility.
They are also more satisfied than previously with the process for establishing new laws and regulations, as well as the consistency of implementing the regulations after their enactment. Over 70% of those surveyed credited the government’s National Development Council with providing effective assistance to AmCham committees in facilitating progress in the Chamber’s White Paper issues.
With a resolute emphasis on innovation and continued determined efforts to tackle chronic obstacles to meeting its economic potential, Taiwan should be able to confirm another of the Business Climate Survey’s findings. Looking ahead on a three-year timeframe, a majority of respondents are bullish about Taiwan’s economic prospects. They seem convinced that doing the right things now will reap dividends down the road.