Uni Strategic : Case for free trade between two dragons

MR WING Tan and his colleagues at Universal Network Intelligence (UNI Strategic) smelt a business opportunity in Taiwan earlier this year.

First of all, warming ties and trade liberalisation between China and Taiwan had led to the signing of the Economic Cooperation Framework Agreement (Ecfa), similar to a free trade agreement (FTA), in June this year.

In addition, the Kuomintang government of President Ma Ying-jeou, who came to power two years ago, seemed outward-looking, unlike the previous government of the pro-independence Democratic Progressive Party (DPP).

The conditions were right for a large- scale event involving a prominent former world leader. And UNI Strategic – which organises corporate workshops and conferences, among other things – jumped right in.

‘People have forgotten about Taiwan for some time; everyone is talking about going to China,’ noted Mr Tan, 37, explaining why UNI Strategic chose Taiwan for its very first large-scale public event.

Moreover, Taiwanese, isolated in the eight years under DPP rule, ‘want recognition from other parts of the world’, he said. There is a ready market for events that feature high-profile former world leaders as speakers.

After two months of hard work, UNI Strategic clinched a contract for former US president Bill Clinton to speak in Taipei on global warming and social inequality. The event last month was a success, pulling in more than 2,000 people.

Along the way, UNI Strategic received help from Taiwan’s Ministry of Foreign Affairs, which contacted the company of its own volition after learning about the event. It kept in close touch with UNI Strategic and provided helpful information, such as who to approach for sponsorship.

If the Taiwanese have taken a keen interest in UNI Strategic’s project, it is because the conferences and exhibitions sector is targeted for growth under the government’s new economic development plan.

This is a sector that is not well developed in Taiwan, but which is thriving in Singapore. Mr Peter Kuo, president of Edison Travel Service, said: ‘Taiwan began to develop Mice (meetings, incentives, conventions and exhibitions) only in the last few years, whereas Singapore has had this sector for many years.’

In the years since the emergence of the four so-called ‘Asian dragons’ – Taiwan, South Korea, Hong Kong and Singapore – in the 1980s, there has been a divergence in economic activities of the ‘fab four’.

Taiwan and South Korea have continued to build strong manufacturing sectors, particularly in electronics, while Hong Kong and Singapore have moved on to grow their services sector, particularly financial services.

In the case of Singapore and Taiwan, even in the electronics sector, there is little overlap, noted Taipei-based Standard Chartered Bank economist Tony Phoo. The Taiwanese make components, printed circuit boards and notebooks, while Singapore produces peripherals such as printers and disk drives. There is an overlap in wafer fabrication, but Singapore is not in the same league as Taiwan, he said.

Now, Taiwan is on the verge of embarking on a restructuring, taking advantage of its growing links with the huge hinterland of China. This restructuring will likely bring Taiwan closer to the Singapore structure.

Taipei has identified six ‘rising industries’ – namely, biotechnology, travel and tourism, green energy, medical care, high-end agriculture, and cultural and creative enterprises. It also aims to develop four emerging ‘intelligent’ industries: cloud computing, invention and patent commercialisation, intelligent green buildings and smart electric vehicles.

Plus, it is targeting 10 key services for development: financial services, education, Asia-Pacific Chinese e-commerce, WiMax, urban renewal, cuisine internationalisation, Mice, digital content, international logistics, and international and cross-strait medicine, including medical tourism. There is even talk of building a casino on Jinmen island, about 6km from the Chinese port city of Xiamen.

If some of the above sound familiar to Singaporeans, it is because these are areas that Singapore has been developing or intends to develop.

Last month, a Taiwanese team led by Council of Economic Planning and Development chairman Christina Liu came to Singapore to attract investment in 10 flagship projects, in areas like biotechnology, medical tourism, cultural and creative industry, digital content, cloud computing and infrastructure building, including the development of an ‘aerotropolis’ in Taoyuan, where the international airport is located. The Taiwanese also tried to interest Singapore investors in three regional plans, including the development of a bilingual boarding school.

One of the selling points that the Taiwanese are promoting is that the island will be a good springboard for Singapore companies wanting to enter the Chinese market. Officials of the Ministry of Economic Affairs, in an interview with The Straits Times, noted that Taiwan had sales networks in China that Singapore investors could tap.

Mr Phoo supports this idea. Taiwan, he says, could provide a good base for Singapore firms to test their products and services to see whether they can succeed in China.

Indeed, UNI Strategic, which started an office in Taipei in August with a wholly Taiwanese staff of nine, is hoping that Taiwan would provide it with the experience for entry into the Chinese market. ‘The tastes of Chinese and Taiwanese are similar because of their (similar) culture, so what works in Taiwan should also work in China,’ reasoned Mr Tan, who is managing director and founder of UNI Strategic.

Other Singapore companies making forays into Taiwan include United Envirotech, which recently listed on the Taiwan Stock Exchange in order to raise funds that would help it enter the local water treatment and recycling market. There are two waste-water treatment projects in Taoyuan worth US$500 million (S$660 million) involving Singapore companies.

For all these business opportunities, however, Taiwan’s new economic development is likely to bring it into closer competition with Singapore.

Already, Japanese as well as European and American investors are looking to see how they can leverage on Ecfa to further develop their businesses in China, noted Mr Ong Choo Kiat, the Singaporean president of Taiwan shipping line U-Ming Marine Transport Corporation. He said this would have an effect on Singapore.

While agreeing that there would be competition between Singapore and Taiwan, Mr Phoo said it would not be a zero-sum game, for the pie is growing for Asia as a whole. Singapore would be hard to match in financial services while Taiwan had an edge in the technology sector.

So how useful would an FTA between Singapore and Taiwan, now under negotiation, be?

There is little to be gained in terms of bilateral trade, particularly for the Taiwanese, as Singapore already is tariff- free. Indeed, some Taiwanese see the FTA as mainly of political significance. it would show that Mr Ma’s cross-strait policy is correct, for it can pave the way for other FTAs between Taiwan and its neighbours.

Mr Chang Chia-sheng, 56, a Taiwanese businessman who has lived in Singapore for 32 years, thought that a Taiwan- Singapore FTA would make Singapore even more attractive to Taiwanese investors. Some Taiwanese businessmen use Singapore as regional headquarters for their businesses in South-east Asia. This is also where they place their families because of Singapore’s safe and stable environment and its bilingual education system, he noted.

For Singapore, the FTA would open up a market of 23 million people in one of the richer economies in the region.

Also, given that the two economies had developed slightly differently before now, there are complementarities – what Mr Phoo called ‘soft synergies’ – that could be developed. For example, noted Deputy Economic Affairs Minister Lin Sheng-chung, Singapore had strong foundations in logistics and other services and Taiwan could learn from the Singapore experience. He said there was room for the two sides to cooperate in petrochemicals.

With their different regional experiences – Taiwan stronger in China and Singapore in South and South-east Asia – there are synergies to be had in the form of alliances between Singapore and Taiwan companies for entry into third markets in these respective regions.

Mr Lin pointed out: ‘If we want to develop the Indian, Indonesian and Malaysian markets, there is potential for cooperation with Singapore because it has entered these markets earlier.’

He added that even in China, there were possibilities for cooperation, giving as example Singapore’s development of industrial parks and commercial centres in the country.

Most of all, an FTA between the two potential rivals would help create win- win situations that could mitigate the competition.

Firms cash in on Taiwan’s popularity

TAIPEI: Mr Bill Clinton paid a visit to Taiwan over the weekend, but it was not on government business. A Singapore company organised the trip.

Universal Network Intelligence (UNI) brought in the former US president to give a lecture on global warming and social inequality.

The Singapore events and conference organiser is one of a growing number of foreign companies that are cashing in on a resurgence in Taiwan’s popularity over the past two years that has been driven by a dramatic improvement in Taipei’s relations with China.

In fact, 20 companies from Singapore, China, Hong Kong and elsewhere have made secondary listings on the Taiwan stock exchange since last year, raising NT$40 billion (S$1.7 billion) in capital.

Fifteen companies, led by Microsoft and HP, have applied to set up research and development centres in Taiwan this year. That is the most since a government scheme to attract such investments began in 2002.

Singapore’s UNI is a good example of the kind of success businesses are enjoying here. Its CEO and founder, Mr Roger Tie, said the eight-year-old firm had a turnover of $12 million last year and expects $15 million this year.

Firms cash in on Taiwan’s popularity; Dramatic improvement in ties with China helps to woo foreign investors

TAIPEI: Mr Bill Clinton paid a visit to Taiwan over the weekend, but it was not on government business. A Singapore company organised the trip.

Universal Network Intelligence (UNI) brought in the former US president to give a lecture on global warming and social inequality.

The Singapore events and conference organiser is one of a growing number of foreign companies that are cashing in on a resurgence in Taiwan’s popularity over the past two years that has been driven by a dramatic improvement in Taipei’s relations with China.

In fact, 20 companies from Singapore, China, Hong Kong and elsewhere have made secondary listings on the Taiwan stock exchange since last year, raising NT$40 billion (S $1.7 billion) in capital.

Fifteen companies, led by Microsoft and HP, have applied to set up research and development centres in Taiwan this year. That is the most since a government scheme to attract such investments began in 2002.

Singapore’s UNI is a good example of the kind of success businesses are enjoying here. Its CEO and founder, Mr Roger Tie, said the eight-year-old firm had a turnover of $12 million last year and expects $15 million this year.

UNI spent two months working to clinch the Clinton engagement, going through the US State Department and the former president’s own office.

Mr Tie said he hoped the widely reported event – Mr Clinton’s sixth trip to Taiwan in 31 years – would help raise UNI’s profile in Taiwan, where it has just opened an office, and perhaps in mainland China too. Its hard work paid off in a 19-hour visit by the former US president on Sunday.

‘We hope to organise more high-profile events in Taiwan, including one involving Minister Mentor Lee Kuan Yew because so many people here – officials, businessmen – have urged us to do it,’ Mr Tie said. He said preparations were in progress, but declined to give more details.

Taipei, meanwhile, is basking in the renewed foreign interest, and has built new air links with Tokyo and Seoul.

Recently, the European Parliament also voted overwhelmingly to grant Taiwanese visa-free travel in 28 European nations, even though none of them recognises Taiwan as a sovereign country.

That is a far cry from Taiwan’s years of international isolation under the administration of pro-independence president Chen Shui-bian, who ruled from 2000 to 2008, before Mr Ma Ying-jeou took power and engineered a detente with Beijing.

Take the influx of foreign entrants to the stock exchange.

Before 2009, only four foreign companies issued Taiwan Depository Receipts (TDR), which are certificates that confer a number of shares in a non- Taiwan-based company.

Now, the likes of Yangzijiang Shipbuilding, China’s largest privately owned ship builder which is listed in Singapore, and United Envirotech, a Singapore water treatment company, have all jumped on the TDR bandwagon.

Chinese companies that are not listed on the mainland are allowed to offer TDRs.

At the launch of Yangzijiang’s TDR in September, company executive chairman Ren Yuanlin was quoted as saying that the listing would help the company build recognition in Taiwan’s shipping market and enhance cooperation between the shipbuilding industries in China and Taiwan.

Next Wednesday, the Taiwan exchange will welcome its latest and biggest TDR player so far this year, Hong Kong-listed Digital China Holdings. The largest integrated IT service provider in the Greater China region expects to raise NT$7.85 billion.

Taiwan’s technology sector is also enjoying a boom. Belgian microelectronics company IMEC, for example, is setting up its first R&D centre outside of Europe in Taiwan.

An official with the Economic Affairs Ministry’s Department of Industrial Technology told The Straits Times that this year’s rash of new R&D centres are probably a by-product of the cross-strait free trade deal signed in June. There are now a total of 46 facilities.

The official, who declined to be named, said: ‘Since then, many companies Taiwan had previously wooed have expressed interest in establishing an R&D presence here, citing the improvement in cross-strait relations.’

For more information, visit www.unistrategic.com

Ex-US president praises Taiwan’s economic recovery

Former U.S. President Bill Clinton said he is amazed by Taiwan’s rapid recovery from the Great Recession and lauded the country for its role as a leading chip-maker.

In the face of challenges from other rising countries in the same field such as Vietnam, Taiwan should invest more in R&D to ensure its leading position, Clinton said. He made the remarks Nov. 14 at a speaking engagement in Taipei City.

Identifying biotechnology and nanotechnology as promising industries in the coming years, Clinton called for Taiwan to channel more investment toward these fields.

Taiwan should also join other developed countries in changing local consumption patterns as a key step in tackling social inequality across the world, Clinton said, adding that citizens must contribute more to solving the issues of disparity.

The world is becoming increasingly interdependent and this fact is impossible to ignore. No one is able to stop the globe turning, he said.

On the issue of cross-strait relations, Clinton holds a positive view of recent developments and sees disputes between Taipei and Beijing as being easier to solve than those in the Middle East. Taiwan is capable of choosing its own way during negotiations, he said.(JSM)

For more information, visit www.unistrategic.com OR www.focustaiwan.tw