Few countries possess the vitality of Taiwan. Hard-working, vigorous, with all types of opinion and all types of action, brimming with tension and innovation, Taiwan is what I often call a "hyperactive society." Yet, we must avoid hyperactivity's rash behavior and restlessness. We must not only have structure and bold and forward-looking thinkers, but we must also have a proper mechanism for "extracting" and forming policy. Presently, our country's economic policy-making mechanism is in confusion. It is difficult to even announce a policy, much less enact it. This is one of the hidden woes of our economic development.

Recently there has been much controversy about Taiwan companies building 8-inch wafer plants on the mainland. In reality the Taiwan information industry has always been more than competitive, so we should avoid letting Taiwan companies panic, causing a rush to the mainland. Many manufacturers, no matter whether they make shoes, hats, bicycles, notebook computers, etcetera, have remained in Taiwan and are still doing well.

Regarding notebook computers, if foreign companies wish to penetrate the China market they will want Taiwan companies to establish factories on the mainland. However, the mainland market is just one of many. When approaching other markets, "Made in Taiwan" is a better selling point than "Made in China."

An example would be Japanese companies that procure notebook computers and sell to the Japanese market. These companies have two options: one is to ship directly from the mainland to Japan; the other is to assemble half the computer on the mainland, ship it to Taiwan to finish assembly, and then ship it to Japan. Since planning and management systems for shipping from Taiwan have existed for several decades, the Taiwan-to-Japan route is more efficient than the mainland-to-Japan route.

This is especially true for notebook computers. If Taiwan and mainland China establish direct links, shipping costs from Shanghai to Taipei would be less expensive than shipping costs from Kaohsiung to Taipei. A computer could make several trips across the strait before final assembly. For example, a notebook's LCD screen, which accounts for a large portion of the computer's cost, can be produced in Taiwan and attached during final assembly.

The problem is if the "three links" does not come about, then all transportation must continue to be rerouted. When considering rerouting costs, more companies will move directly to the mainland. The result is Taiwan will lose more than it gains.

Of course, Taiwan's resources are limited. I approve of manufacturers moving upstream to higher value-added IC design and software. This will require changing many of our basic concepts. It's like a school that refuses to spend for an expensive building, spending the money saved to hire better teachers. The government must get its priorities straight; it shouldn't continue to encourage manufacturing. For example, it's fine to encourage upgrading from 8-inch wafers to 12-inch wafers, but there's no need to increase the overall output of wafers.

In the recent six-year national development plan proposed by Premier Yu Shyi-kun, I was glad to see that two requirements the Institute for Information Industry proposed were adopted: "e-Taiwan" and "digital content." As software gets more attention, more resources are committed to it. This is worth encouraging.

As Taiwan develops information software, there will definitely be bottlenecks. Simply speaking, in the past when Taiwan started manufacturing, there was a lot of technology and equipment that we could import, and many examples to study and teachers to learn from. But looking at countries strong in software in the world today there is really only one model-the United States.

Under these circumstances, we not only want to spend the necessary money to hire software experts, but we must also remake our society from top to bottom. This is because software is not just a question of whether your English skills are good or not, it is more a question of cultural thinking. When writing software you must consider your users' background and habits, and how to meet their needs. Already this belongs to the field of the humanities.

To develop a software industry, the humanities and innovation are both important. I believe that Sony of Japan is a good example. Sony shifted from manufacturing hardware to producing digital content in the record and movie industries and has succeeded with much acclaim.

Software can also hitch a ride on Taiwan's "e-systems" bandwagon. As Taiwan companies set up factories around the world, they must set up global business systems. Purchasing a foreign software package is a shortcut, but it involves use on many levels and will require a Chinese interface. It will require professional consulting companies to implement, by first understanding a company's culture and requirements, and then measuring and fitting the most useful software to the enterprise.

Presently, the need for domestic industries to implement "e-systems" has already emerged, and the government is encouraging industries to automate and develop electronic systems. Altogether there are three foreign companies and 18 domestic companies that have joined the special "e-systems" task force. Hopefully this will help companies smoothly implement "e-systems" and Taiwan will genuinely be able to become Technology Island.