Figure 1: Taiwanese president Tsai Ing-wen speaking at the CNFI 70th Anniversary celebrations;
Source: Presidential Office

On Nov. 9 Taiwanese president Tsai Ing-wen and Taiwanese premier Lin Chuan both gave speeches at the 70th anniversary celebration of the Chinese National Federation of Industries (CNFI). This was significant given the widespread protests against the new government by labor groups over reforms to the amount of holiday that workers get each year. The ruling Democratic Progressive Party (DPP) was often associated with the working classes and social protest movements while in opposition, however, now they are in power they are increasingly throwing their weight behind industry heads in an attempt to make their economic policies work. This has not made them many friends among their working class voter base and as Tsai Ing-wen entered the building she was charged by a protester, although the attack was blocked by her security detail. Below are the words of both the premier and the president at the celebration.

Premier Lin Chuan: When a country takes the path of modernization in its development, it has to do so on the basis of having undergone a process of high industrialization. In the past Taiwan has shown great achievements in industrialization, which laid the foundation for the current economic success. Looking back on the development of Taiwan’s industries, especially during the 60s, the 70s and the 80s, as the country’s industries have grown, it has pushed our economy to a peak stage.
We can then see that in the process of each country’s industrial development, as industry and the manufacturing industry sees rapid growth, development of trade and the service industry follows.

After the 90s, Taiwan also saw this pattern, with growth in services, and a growth in their contribution to economic development overall.

Does this mean that in the process of each country’s economic development that when they get to a point where they can’t go any further, there is less of a role to play for industry? Actually, my own view is that this is not the case. We can see from recent changes that actually industry is still extremely important for Taiwan.

I’d like to say that although the development of Taiwan’s service sector and trade occupies an ever greater percentage of the entire GDP, and it is higher than industry… than the manufacturing industry, in terms of relative competition, many service sector or trade activities are less competitive on the international stage, particularly in terms of investment and in our financial market, where we’re still quite behind more advanced countries. So the service and trade sectors in Taiwan still have a way to go. But in comparison, in the past, Taiwan’s industrial achievements still allow us an economic advantage on the world stage. In other words, Taiwan can’t just abandon the comparative advantage – the achievements of our industrial development -- we already have in the process of development. And reciprocally, our hard work can push industry forward, and make it better, which can support our country’s long-term economic development. Except for these comparative advantages, you can also see that in the past certain events have happened which has led to the drying up of job opportunities. This is one of the reasons for the continuing or even worsening wealth gap. So, making industry capable of growth to trigger an increase in the number of people employed is another challenge we have to tackle.

So we can see that actually, the US, in recent years, has been struggling to restore its industries. We can see that even in the process of internationalization, just as we need to protect our agricultural industry, we need industry and manufacturing that will provide jobs. From this perspective, in the process of globalization, a big challenge for the government is how to ensure that we continue to remain competitive in industry.

There is also a third important factor. And that is that we have to respect our country’s industrial development. This means that in the process of globalization, we’ll come across technological revolutions. These technological revolutions are continuously changing the modes of production. Recently there’s been the Industry 4.0 revolution, which reminds us of the different industrial revolutions which have changed the modes of production of previous eras. This Industry 4.0 is aimed at combining internet and smart technology with traditional technologies. There are a lot of business opportunities and production models that come along with this, including smart transportation networks and smart programs, as well as the Internet of Things etc. The industrial revolution that has resulted from this has brought far-reaching changes to industry. This is a future opportunity for us. So looking at today’s theme, ‘Industry Rise Up to Create A New State of Play’, this is clearly pushing for a new face of Taiwanese industry. This is what I was referring to earlier. We hope that our industries will work with government to ensure that we can create a new environment for future industries to serve as a growth engine for Taiwan’s economy. To answer this challenge, government departments will have to do some work in certain areas, in particular to address demands on water and electricity resources, manpower issues and land issues which a lot of you pay close attention to. Although all countries face these kinds of problems, this is a responsibility that the government must bear and we will try our best to resolve these issues in response to industry heads. Water and electricity resources, land and a labor force are all quite basic. How can we help businesses to move forward? How can we use innovation to invigorate industry? We also hope to see new industries arise, as well as new policies, including those aimed at increasing our market size. We hope in the future, Taiwanese industries won’t just establish themselves in China, but will also make long term plans to expand into Southeast Asia. Our New Southbound Policy we hope to see closer and more diverse connections to Southeast Asia and Southern Asia. And more important still is how Taiwan goes about attracting investment and talent. We need to reflect on many of our laws and regulations and to loosen several restrictions. One of these was our recent draft amendments to The Electricity Act, aimed at loosening regulations. We’ll also follow this up with a series of moves to loosen regulations, including making it easier for high-level foreign talent to work in Taiwan, to resolve certain problems they often encounter. We’ll also think about how to make it easier for those in industry to run their businesses and to engage in more communication. It’s only if we can get the economy back to the level of success seen in the past that we can make moves to reallocate wealth to the general public, to resolve many of the controversies currently dogging our society, including the issue of concerns over the loosening of restrictions on food imports from areas affected by the Fukushima nuclear disaster in Japan and labor issues. I hope to use communication to reach consensus with industry and to work towards common goals together.

President Tsai Ing-wen:President Tsai Ing-wen: In terms of foreign trade, Asian economies are all highly reliant on global trade, therefore Asian countries have a common interest in this regard. This means we have to strengthen our economic links with our neighboring countries, and to improve bilateral trade relations, as well as taking an active role in regional cooperation initiatives.

Of course, we also hope, through negotiation, to continue to strengthen US-Taiwan trade relations and to build a stable long-term and win-win relationship. There has been a long friendship between the US and Taiwan, and they have common interests and common values. On this foundation, I believe that US-Taiwan relations can deepen.

Now I want to address with everyone how we can make a breakthrough with the current difficulties facing the manufacturing industry. For a long time, the manufacturing industry has served as Taiwan's engine of development. "Made in Taiwan" once allowed us to become a "economic miracle" in the views of countries around the world. It also serves as a source of pride and collective memory for Taiwanese society and was the result of many years of hard work from industrialists in Taiwan.

The previous successes of Taiwanese industry involved a constant drive for efficiency, the lowering of costs and the pursuit of excellence in manufacturing. This led to the successful stimulation of Taiwanese exports, and created the most efficient OEM economic model in the world.

However, in the last ten years, as the global economic structure has shifted and industry chains have been adjusted, continuing with an economic model led by high efficiency and low costs, in which OEM work is contracted by Taiwanese companies, but the manufactured is done elsewhere, has led to a decrease in Taiwan's competitiveness. This has not only affected Taiwan's competitiveness in exports, but it has also led to a stagnation in economic growth, high unemployment and a reduction in salaries, to the point where it is contributing to the unjust allocation of resources.

In recent years, the morale of industry and those working in industry has been impacted to a greater or lesser extent. We hope that we can break through this bottleneck and relive the former glory of Taiwan's manufacturing industry. At this critical time, everyone hopes that the government can do its part, to give support, encouragement and provide the necessary help. I am extremely cognizant of the challenges facing manufacturing industries and the mood of those working in industry. I want to reassure everyone that the government will do its utmost to help our manufacturing industry to transform and upgrade, as well as resolving these problems and difficulties. I have a great will and determination to realize these promises for industry.

I profoundly believe that the best and most efficient industrial policy is when the government and industry work together towards a common future objective. When I took office on May 20, I emphasized that my new government would build an economic model pursuing sustainable development that incorporated the key values of "innovation, job creation and the fair allocation of resources". This is directed at the current problems facing the manufacturing industry, in the hope that innovation can transform and upgrade industry, and stimulate growth, allowing the economy to break free of stagnation, and enabling jobs and salaries to grow in unison with it, to improve the fair allocation of resources.

More concretely, the future transformation and upgrade in industry is in response to global economic trends, especially with the dawn of the digital economy and the low-carbon era. With Taiwan's hardware production and software R&D capability, including the great foundation the ICT industry has already laid down, we can lead Taiwan in strides towards its objective of "Industry 4.0".

The core of "Industry 4.0" is innovation, not only in manufacturing technology and innovative modes of production, but at the same time in innovation in the production and sales value chain and innovation in the economic model. In other words, "Industry 4.0" is a new business model that combines new technology, new energy, new production modes and new consumer models. It is the fourth industrial revolution in the sense that it combines manufacturing and service industries.

The government is actively pushing the "five plus two" [the establishment of an Asian Silicon Valley and development of green energy, national defense, biotechnology and pharmaceuticals, smart machinery and new agricultural sectors and a circular economy] industrial innovation R&D plan, in the hope that limited resources can be concentrated, to ignite the spark of innovation, to form a complete innovation ecology, which can stimulate production in all parts of Taiwanese industry. I believe, everyone sitting here has a great ability to work with the government, to accelerate the speed of the transformation of the economy, and to jointly forge "Industry 4.0".

The government is also actively pushing a plan for the expansion of investment, to boost resources for public and private bodies, to invest in innovation and the next generation of infrastructure. This will allow Taiwan industry to catch up with global trends, and could improve living standards, to raise quality of life for ordinary people.

We hope that making strides towards Industry 4.0, can bring growth for the Taiwanese economy, and bring quality job opportunities, better labor conditions, and hope and a future for the younger generation. I also hope that through this hard work, we can bring Taiwanese manufacturing to a new paradigm which those in the industry can be proud of.

This is the crucial time for Taiwan's economic transformation. Economic reform is hard, and there will be many challenges, but we must move steadfastly forward. The strength of everyone here today, is the energy which Taiwan needs to move forward. We have to work hard together for Taiwan's economy.

Author: Conor Stuart Current Post: Senior Editor, IP Observer Education: MA Taiwanese Literature, National Taiwan University BA Chinese and Spanish, Leeds University, UK Experience: Translator/Editor, Want China Times Editor, Erenlai Magazine

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