Economic Minister K.S. Chang called on industrialists to redouble their efforts to overcome difficulties and boost exports.
To remain competitive in the world market, Chang said, Taiwan must conserve and develop energy.
Taiwan economic development is in the initial stage, he said, and this means energy consumption will continue to grow. To conserve energy, he added, industrialists must restructure their plants.
He urged increased efforts to enlarge and diversify markets in order to enlarge exports.
Industrial products will remain the backbone of exports, Chang said. He urged industrialists to establish their products in the international marketplace while trying to lower production costs so as to enhance competitiveness.
Research and development will play an increasingly important role in Taiwan industry, Minister Chang said, and lead to improved products.
The new Economic Research Institute will provide a common ground where government and industry can thresh out their problems, the minister said.
A non-profit organization, the institute has recruited scholars and experts to carry out economic research on the situation at home, on the Chinese mainland and internationally.
Defining the institute's position as "objective, independent and impartial," Chang said funding will total NT$1 billion (about US$27.8 million), of which NT$900 million (about US$25 million) will come from the government and the remaining NT$100 million (about US$2.8 million) from the private sector.
The facility will meet urgent needs of industry and make suggestions to government, Chang added.
The government will encourage research and development in energy and fiber industries, following guidelines provided by Japan and South Korea, Chang declared. "We have to carry out research and development work on our own, because not many countries are willing to sell their technologies to us," he said.
"We should undertake R&D work on technologies or products being developed by other industrialized countries," he added.
He noted the success of R&D in developing semi-conductors.
Economic growth set at 7.5 per cent
The Council for Economic Planning and Development has targeted economic growth of 7.5 per cent and inflation of 9.5 per cent for 1981.
The gross national product is expected to grow by 7.8 per cent and the population by 1.86 per cent.
The CEPD report projects a small trade deficit.
Growth rates include agriculture, 3 per cent; industry, 8.5 per cent; and services, 10 per cent.
Trade will near US$50 billion mark
Trade volume is expected to reach US$48.5 billion in 1981 for a 23.2 percent increase over 1980, according to the Board of Foreign Trade.
Exports are estimated at US$24.19 billion and imports at US$24.32 billion for a deficit of US$130 million.
BOFT attributed the expected deficit to sluggish international trade, especially in Europe, as a result of rising oil prices.
U.S. takes note of ROC competition
As a result of its new technology-intensive industries, the Republic of China could become a tough competitor for the United States in some sophisticated product lines.
According to a report by the economic section of the American Institute in Taiwan, ROC technology-intensive industries will also affect the composition of imports from the United States.
If the United States wants to increase exports to Taiwan, high technology products will find the most promising markets, the report said.
The report noted that Republic of China has slightly relaxed restrictions on American banking operations. Lending limits for U.S. branches have been raised to 7 per cent of a foreign bank's net worth or NT$100 million (about US$2.8 million), whichever is larger. U.S. banks have suggested other changes.
The report also said:
— The U.S. economic relationship with Taiwan will continue to grow. Despite ROC trade diversification, the United States will remain Taiwan's No.1 market and is approaching Japan as Taiwan's NO.1 supplier of imports.
— Foreign investments are needed to help build Taiwan's infrastructure, including power plants, railways and port facilities. Investment IS also needed for the development of major industries, including truck manufacturing, petrochemicals, electrical and non-electrical machinery, computers and sophisticated electronic products. With its good credit, Taiwan will have no difficulty raising the necessary funds. The ROC debt service ratio (interest and principal payments over exports) was only 6.3 per cent in 1979.
New Taiwan dollar won't be devalued
There will be no devaluation of the New Taiwan dollar to boost foreign trade, said H.K. Shao, director general of the Board of Foreign Trade.
He told a meeting of 45 representatives from 37 countries that "we are paying particular attention to price stability. Promotion of exports will not be sought through devaluation."
Shao noted that South Korea has devalued the won several times to boost exports. He said this increased the competitiveness of Korean goods but caused excessive inflation.
"Our efforts to expand exports have been concentrated on improvement of productivity," he said.
The Republic of China "values economic ties with free nations regardless of diplomatic relationships," Shao said.
"We strive to achieve an equitable balance with trading partners. In recent years, we have accrued large deficits from trade with a number of trading partners and chalked up substantial surpluses with some others.
"While we try to increase exports to countries which sell us much more than they buy, we are also trying to buy more from countries which have consistently incurred unfavorable balances with us."
Japanese imports may be curtailed
Japanese imports may be curtailed, if the trade gap favoring that country continues to widen, trade chief H.K. Shao said.
The government has tried to increase exports to Japan but without much success. Japan has maintained many restrictive measures.
Exports to Japan are dominated by agricultural products and mature eels. These products are highly vulnerable to competition.
Japan recently restricted eel imports from Taiwan with a cancer scare. When the rumors were disproved, the Japanese government did not relax the restrictions.
When the Board of Foreign Trade banned the import of 170 agricultural and fishery products from Japan, the restrictions were removed.
Taiwan bananas formerly dominated the Japanese market. Now they face tough competition and exports have been reduced substantially as a result of restrictions of one kind or another.
Banks get power to adjust rates
New loan rates were announced by the Bankers Association of Taipei.
The ceiling is set at 16.2 per cent and the floor rate at 13.5 per cent.
The flexible bank system introduced by the Central Bank of China is intended to give more freedom to banks and help industries and businesses obtain loans.
Rates may vary from one borrower to another on a basis of credit standings.
Deposit certificates floated in Europe
More banks are raising funds in Europe for imports of capital goods.
The International Commercial Bank of China issued US$20 million worth of floating rate certificates of deposit through a London bank.
The Bank of Communications issued US$25 million worth of notes, also through London.
The First Commercial Bank of Taiwan issued US$20 million worth of FRCDs in Singapore.
Three other banks are planning to float FRCDs in London They are the Bank of Taiwan, City Bank of Taipei and Huanan Commercial Bank Ltd.
Industry promises modernized state
Economic Vice Minister Chang Hsuin-shwen said industrial development has reached a turning point at which the Republic of China can aspire to be fully modernized.
Industrial products account for nearly 90 per cent of exports, Chang told a meeting of the Legislative Yuan's economic affairs committee.
Advanced technology must be originated at home or introduced from abroad, Chang said.
The government will continue to improve the investment climate to attract more capital for industrial development, he added.
Chang said balanced development of industry and agriculture has been a major goal of government economic policy.
Oil conservation can avert rationing
The Industrial Development Bureau called on Industrialists to conserve energy sources and avoid oil rationing.
T.L. Yu, director of IDB, said the Cabinet has instructed the board, the Taiwan Power Company and the Chinese Petroleum Corporation to work out plans to make the best use of expensive oil and increase the reserve.
Sixty per cent of imported crude goes to industry. The government will restrict oil deliveries to plants that are wasting it, Yu said.
Hsu Kou-an, vice president of the Chinese Petroleum Corporation, reported oil for 1981 has been secured.
Westinghouse opens plant with Tatung
Westinghouse Electric Corporation of the United States and the Tatung Company broke ground for a multi-million-dollar joint venture service plant at the Chungli Industrial Park.
Officiating were T.S. Lin, chairman of Tatung, and C.E. Price, vice president and general manager of Westinghouse's industry service division.
Lin said he hoped Tatung will enter into other such ventures.
Price said this is his company's first direct investment in
Taiwan. "It will be beneficial to the Republic of China and help fill a technological void," he said.
The plant will begin operations in mid-1981. The two-acre facility will provide round-the-clock electrical and mechanical maintenance to a wide range of industrial customers, including those making heavy machinery.
The China Industrial Service Company Ltd. will become part of the Westinghouse network of more than 100 maintenance and engineering service centers around the world.
Price said with Taiwan's use of advanced industrial equipment, the need for such a plant will continue to grow.
Unemployment rate among world's lowest
The jobless rate is well controlled at under 1.5 per cent, an outstanding performance, said Lien Chan, chairman of the National Youth Commission.
Lien said only Norway and Denmark in North Europe are able to match the Taiwan record.
Unemployment has been ranging from 0.98 per cent to 1.35 per cent.
Manpower for jobs at the bottom of the employment ladder is in short supply.
Machinery industry to grow at 18% rate
The machinery Industry is expected to grow at an average annual rate of 18 per cent in the next five years, according to the Council for Economic Planning and Development.
The CEPD said half of the machinery industry's equipment will be automated within 10 years and the number of small factories will decrease.
Output is expected to reach 45 per cent of the production value of manufacturing industry.
CEPD said the machinery industry will need more technical personnel. On-the-job training and short-term training programs are planned.
Investment law revision drafted
Draft of a statute to stimulate investment and economic growth over the next decade was approved by the Cabinet and sent to the Legislative Yuan
The law will encourage overseas exploration of natural resources and save energy at home.
Highlights:
— Productive enterprises which enjoy tax incentives will be required to provide funding for research and development.
— The Executive Yuan could grant productive enterprises tax credits of up to 15 per cent of equipment costs.
— Productive enterprises modernizing equipment could cut the depreciation period by half.
Ethylene output continues to grow
Taiwan is Asia's No. 2 supplier of ethylene with annual production of 690,000 tons after Japan's 6,067,000 tons.
Japan is second in the world, far behind U S. production of 16,792,000 tons.
Other major Asian suppliers are India (215,000 tons) and South Korea (155,000 tons). They are 21st and 24th in the world.
The Republic of China is 12th behind the United States, Japan, West Germany, The Netherlands, France, Britain, Canada, Italy, Spain, Brazil and Puerto Rico.
When the Chinese Petroleum Corporation's fourth naphtha cracker becomes operational in the near future, Taiwan's production will reach 1 million tons.
Ethylene is a basic petrochemical raw material for downstream manufacturers, including those making plastics, synthetic fibers and synthetic rubber.
World's production totals 46,319,210 tons annually.
Facilities planned to handle coal
The government is setting aside large amounts of capital for the construction of harbor facilities to unload coal imports.
The Ministries of Communications and Economic Affairs are entrusting the Taiwan Power Company With drafting plans and funding the NT$30 billion (about US$833 million) required.
Facilities are planned at Suao, Shengao, central Taiwan, Hsinta and Talin.
The Talin project will be completed by early 1982, Shengao harbor by April of 1982, Hsinta and Suao by January of 1984 and central Taiwan by August of 1988.
Pending completion of these facilities, Taipower will unload coal at Keelung, Suao, Kaohsiung and Taichung.
Coal consumption is expected to reach 28.81 million metric tons by 1989.
Long-term contracts for coal have been signed with the United States, Australia, Canada and South Africa.
The government also attaches importance to coal exploitation at home.
Explorations of seams under the seabed off Patoutze near Keelung in northern Taiwan are under way.
Deposits also have been found between the Central Range and the western plain.
Technical projects under way in Africa
The Republic of China will help South Africa, Swaziland and Malawi develop small and medium enterprises. Taiwan manufacturers of textiles, electronics, machinery and motors are encouraged to make investments in these countries.
William Wei, vice minister of economic affairs, said the Taipower Company will undertake a power generation project in Malawi. The government will extend US$5 million in loans. The Sampo Electronics Company is planning a Malawi assembly plant.
Technicians have been sent to Swaziland to help establish garment and electronic plants, Wei said. Swaziland will increase exports of coal to Taiwan.
In Lesotho, Chinese experts are training management personnel and helping set up light industrial plants.