Economic Development Advisory Committee an Economic Cure-all?

President Chen Shui-bian first floated the idea of an Economic Development Advisory Committee (EDAC) in May, on the eve of the first anniversary of his inauguration. He hoped to find a way out of the current economic and political impasse by bringing together industrialists, academics and representatives of political parties. To distinguish the proposed conference from the recent succession of similar ones-the National Economics Conference, the National Knowledge-Economy Conference and the National Financial Conference-it has been given a higher priority and a broader mandate. Public expectations of the EDAC are also higher.

Three priorities and four directions

President Chen will chair the August meeting of the EDAC, and there will be five vice chairmen. After much wrangling, it has been agreed that these will be Premier Chang Chun-hsiung, legislative speaker Wang Jin-pyng, Formosa Plastics chairman Y.C. Wang, Straits Exchange Foundation chairman Koo Chen-fu and KMT vice-chairman Vincent Siew. The conference itself will focus on "three priorities"-Taiwan, the economy and investment-and "four directions"-generating new business, attracting foreign investment, reviving the economy and creating jobs.

Most of the EDAC's 120 advisors have already been chosen. They will include the ten or so cabinet ministers, and representatives from the business community. The electronics industry will be heavily represented: the chairmen of Taiwan's two semiconductor giants, TSMC's Morris Chang and UMC's Robert Tsao, will be in attendance, as will Acer chairman Stan Shih and Quanta Computers chairman Barry Lam. Advisors from traditional manufacturing include Continental Engineering chairman Nita Ing and Namchow Chemical Industrial chairman Alfred Chen. Representatives of Taiwan's SMEs, meanwhile, include Maywufa chairman Lee Cheng-chia and San Sun Hat and Cap chairman Dai Sheng-tung. While the limited number of seats on the committee resulted in a number of equally well respected persons being unable to participate, the public response to those selected-virtually all of whom are experts in their fields-has been broadly positive.

The conference is slated to cover five topics, with a different vice-chairman moderating each. Wang Jin-pyng will chair the discussions on unemployment; Chang Chun-hsiung, those on the deteriorating investment climate; Koo Chen-fu, cross-strait trade; "business god" Y.C. Wang, Taiwan's competitiveness; and Vincent Siew, Taiwan's financial troubles.

"Absolutely" and "absolutely not"

While all five issues are of equal importance, the issue most on people's minds is cross-strait relations. The rapid expansion of China's economy over the last few years has been a powerful lure to Taiwanese industry, and local businesses have flocked to China. This situation is widely held to be responsible for the problems of capital flight, sluggish domestic investment, the hollowing out of Taiwan's manufacturing base and rising unemployment.

Unfortunately, there is virtually no consensus on a strategy to deal with this development. Those who focus on political factors and national security believe Taiwan should continue the "no haste, be patient" policy. In the interests of security and maintaining control over Taiwan's economic destiny, people in this camp argue that critical industries should be prevented from "sneaking off" to China. On the other side are those who put economic development first. This faction marches to the tune of "global competition," and believes the government should ease restrictions on investment in China to allow Taiwanese firms to make more efficient use of their resources. Maneuvering by both sides-one advocating direct links with China as a necessity and proposing to allow mainland investment in Taiwan, and the other insisting on no direct links and no inbound Chinese investment-has resulted in stalemate.

But cross-strait trade remains very important to Taiwan, so important that some people are referring to the EDAC's cross-strait group as the "SWAT Team." Leaders of all Taiwan's political parties acknowledge that if the EDAC can reach a consensus on trade with China, on national identity and on the direction of Taiwan's development, it will have done much to resolve the current economic woes. In the interests of developing a comprehensive solution, the EDAC preparatory committee also specifically stated that if necessary, EDAC advisors could to travel to China in the EDAC's name to gather information and gauge public sentiment. The EDAC's conclusions on the issue of cross-strait trade, and its ability to get its recommendations implemented, will be good indicators of the efficacy of the upcoming meetings.

Among the most contentious issues to be addressed are revisions to regulations on working hours and pensions; policy on foreign workers; a reduction in business taxes; elimination of the equities transaction tax; and government intervention in the stock and foreign-exchange markets. There is some hope that the upcoming gathering of Taiwan's movers and shakers will finally lay to rest these issues, all of which have been on the table for some time.

Full implementation

To boost public confidence in the EDAC as the conference approaches, President Chen recently promised "three resolutions and one implementation," stating that the government would implement solutions to the "three priorities" and promote cooperation between the ruling and opposition parties. He further stated that the government was going into the conference with an open mind, and that everything was negotiable. More importantly, to dispel widespread fears that the conference will produce hot air but no action, Chen called on the cabinet and the legislature to implement the EDAC's recommendations without modification or delay.

Given the tight schedule of the EDAC conference, people also question the requirement that only recommendations passed unopposed will be adopted. Given the differing ideologies and political affiliations of the 120 advisors, many wonder whether anything at all will be agreed upon. How serious a blow to public confidence would it be if, after everyone had their say, the conference ended without any recommendations?

In the final analysis, however, the EDAC is only an advisory committee assembled on an ad-hoc basis to address a short-term economic crisis. It will dissolve after the August 24-26 conference with no responsibility to see its recommendations implemented, or oversight over whatever comes after. But as many economic leaders have stated, today's crisis is largely a crisis of confidence. If ruling and opposition parties are willing to come to the table and genuinely negotiate, if they discuss the issues in a rational manner and create a cordial atmosphere, they will not disappoint the nation's hopes.