The shopping voucher program was designed to spur domestic consumption. Some 23 million people, including ROC citizens, people holding house registration in the country, and foreign spouses who have been granted residency, are expected to each receive the vouchers worth NT$3,600 (US$109).
How to spend these vouchers, which represent a total amount of NT$83 billion, has become the hottest topic in the country ever since the Legislative Yuan greenlighted the stimulus policy last December. At a time when Taiwan's economic prospects look gloomy, "this measure represents one of the economic and financial avenues to help people in Taiwan cope with the global recession," said Premier Liu Chao-shiuan.
According to official statistics, consumer spending made up 57 percent of Taiwan's gross domestic product in 2007. By encouraging people to spend more, the government hopes to see the program increase the country's GDP by 0.64 percent in 2009.
For most people, these vouchers are real "gifts" from heaven. A poll, jointly conducted by the locally published Next Magazine and online job bank 104 Corp. last November, showed that 15.3 percent of those surveyed will definitely increase their spending because of the vouchers, while 51.2 percent may do so. In order to capitalize on this state-sponsored spending spree, businesses on the island are racking their brains for original marketing strategies and promotional campaigns to lure shoppers.
The survey also revealed that 54 percent of respondents plan to use the vouchers to buy grocery, and over 65 percent of them believe that supermarkets and hypermarkets will gain the lion's share of the voucher pie. The country's hypermarket chain Far Eastern Geant, for example, has already set up a special shopping area within its stores with deals worth NT$6,000 discounted at NT$3,600.
Consumer electronics and home appliances are also bound to benefit from the stimulus plan. "We expect these vouchers to increase our sales by 20 percent," said Shannon Hsieh, an assistant manager at TK3C, the country's largest retailer of consumer electronics.
Hotels and vacation resorts around the island are preparing for the upcoming holidays, and have designed special tours and getaway packages priced at NT$3,600 which will revitalize local tourism. "We are already fully booked for the Chinese New Year holidays," said Selina Kuo, an assistant manager of Caesar Park Kenting in Pingtung County, pointing out that the hotel will launch more promotional campaigns for voucher holders in the future.
Local governments, including Miaoli County, Changhua County, Hualien County, Taipei City and County, are also running at full steam to lure shoppers to their municipalities. Taichung City Mayor Jason Hu, for example, is offering a 165-square meter apartment as the grand prize of a sweepstake set up for those spending the vouchers in the city.
Economists have different views about the effect these vouchers may have on the economy. According to the Taiwan Institute of Economic Research, the spending of the vouchers will add at least 1.2 percent to the country's GDP in 2009 due to the expected multiplier effect, which describes how an increase in certain economic activities starts a chain reaction that generates even more activities.
However, Lu Hsin-chang, a professor at the Department of International Business at National Taiwan University, warned that some consumers might simply substitute the shopping vouchers for money they had already earmarked to purchase food and groceries and save the cash instead. Since the government had to borrow money to finance the project, the debt that it incurred today will have to be repaid in the long run.
"At a time of uncertainty, people tend to delay their spending, especially those of durable goods, thus further sending the economy spiraling down," said Kuan Chung-ming, a research fellow at Academia Sinica. "The shopping vouchers should serve as a deep discount that will induce consumption," he added.
Write to Meg Chang at meg.chang@mail.gio.gov.tw