Taiwan economy advances in 2005

This article was written by Kristy Hsu and published by the Taiwan Journal on September 23, 2005. According to this article, Taiwan's economy is moving on a healthy track, thanks to ongoing domestic economic reforms and to favorable international economic environment.

In 2004, Taiwan's economic growth rate was 5.7 percent. This is a significant improvement from the rate of 3.3 percent in 2003.

Meanwhile, Taiwan continues to be one of the top four foreign investors in China, Malaysia, Vietnam and Cambodia. In 2004, Taiwanese businessmen invested a total of US$3.95 billion in foreign countries.

In the 2005 World Competitiveness Yearbook issued by the Switzerland-based IMD, Taiwan was ranked 11th for overall competitiveness, an improvement from the 12th spot in 2004. The only two Asian economies ranked higher than Taiwan were Hong Kong and Singapore. Moreover, in the category of economic performance, Taiwan was ranked 18th, a big improvement from the 24th spot in 2004.

More significantly, according to the 2004-2005 Global Competitiveness Report issued by the World Economic Forum, Taiwan's growth competitiveness has improved steadily in recent years, with its global ranking improving to the 4th, from the 7th in 2001. Taiwan's ranking of digital access and network readiness has also improved significantly over the past several years.

Taiwan became a member of the World Trade Organization (WTO) in 2002. The nation has also been an active participant in the Asia Pacific Economic Cooperation (APEC) Forum. The Taiwan-Panama Free-Trade Agreements were implemented in 2004, with other Latin American countries keen to pursue similar agreements with Taiwan. Tariff rates for more than 5000 imported products were amended, helping the average nominal tariff rate in Taiwan to fall from 8.2 percent in 2001 to 5.67 percent in 2005.

Finally, the achievements of Taiwan's economic reform in recent years include the creation of a regulatory environment with grater transparency and efficiency, especially in the services sector, and the legitimization of financial holding companies in the financial sector. The next step will be to improve the overall competitiveness of Taiwan's financial sector by encouraging consolidation among financial institutions and attracting foreign investors with advanced management techniques.

However, the challenges faced by Taiwan include increasing competition from developing countries, the nation's relatively high unemployment rate, its weakening ability to maintain a healthy trade surplus, and its difficulty in establishing or promoting brand names.