President Chiang Ching-kuo instructed responsible government departments to encourage investment and exports so as to stimulate economic development.
President Chiang took note of declining export competitiveness at a time of world wide economic stagnation, growing protectionism, large wage increases and spiraling inflation.
"It is imperative for us to encourage investments and exports to counter unfavorable factors," the President said.
"We must enforce economic austerity and conserve energy to maintain steady economic growth."
President Chiang asked the Ministry of Economic Affairs to adopt "prompt and severe" measures to eliminate false labeling of exports.
"International confidence in the products of the Republic of China should be won on our own merits," President Chiang said.
Growth of 7.9% seen for 10 years
Yu Kuo-hwa, chairman of the Council for Economic Planning and Development, made these economic forecasts for the next 10 years:
- Average annual economic growth rate of 7.9 percent from 1980 to 1989 with a doubling of the gross national product. Per capita is expected to reach US$6,000 by 1989.
- Inflation of less than 6 percent annually.
- Export growth of 12.4 percent annually. Exports are targeted at US$101.4 billion and imports at US$101.2 billion in 1989.
- Population growth of 1.2 percent in 1989, down from 2 percent in 1979. The 1989 population is estimated at 20.3 million. The employed population is expected to increase by 2.5 percent annually with unemployment of less than 1.3 percent in 1989.
Increased productivity and more efficient use of energy are the top priorities in economic planning, Yu said.
High energy costs handicap economy
Rising energy costs have made the Republic of China less competitive in export of labor intensive products and increased the urgency of upgrading skill-intensive industries, said K.T. Li, minister without portfolio.
Addressing the opening session of the Third Meeting of the Board of Advisers for Science and Technology, Li reviewed difficulties facing Free China.
He reported that in the last decade, the price of imported crude oil and petroleum products rose from about 1 percent of the gross national product in 1970 to almost 12 percent in 1980.
The resulting inflation pushed the wholesale price index to 13.8 percent in 1979 from 3.5 percent in the previous year and to 21.5 percent last year.
Inflation has led to a decline in labor productivity after years of gains.
Economic growth dropped from 13.85 percent in 1978 to 8.08 percent in 1979 and 6.66 percent in 1980.
Li said the 1980 performance was "quite respectable" compared with other nations. "In part, it reflected the increasing capital-intensiveness of our economy and the greater difficulty of generating investment funds in a highly inflationary environment," he said.
As the government goes from a position of net capital supplier to net borrower, the Republic of China must improve procedures for analyzing needs and establishing priorities, he continued.
Minister Li said the government must restructure the 10-year economic development plan and especially the energy supply blueprint.
Real gain of 6.8% forecast for FY82
The economy will grow by 8 percent in fiscal year 1982 beginning July 1, Chung Shih-yi, director general of the Office of Budget, Accounting & Statistics, predicted. Real growth will be 6.8 percent.
To combat economic slow down, the government has launched 12 construction projects and sought to raise domestic consumption. The economic growth rate was 6.66 percent in FY1980 and is expected to record an advance of 6.65 percent in FY1981.
Supply and demand will increase by 18.06 percent in FY1982, Chung said, compared with an expected 22.61 percent in FY1981.
Chung predicted per capita income of NT$91,813 (US$2,551) in FY1982, an increase of 13.24 percent over FY1981.
Europe challenges U.S. in the ROC
The U.S. grip on the Republic of China's foreign business interests is being challenged by European nations, now confident they can work in "two Chinas."
Although the U.S. position as Taiwan's No. 1 trade partner remains secure, American businessmen concede they no longer enjoy a virtual guarantee on large-scale projects and major purchases by Taiwan.
They trace the European challenge to Washington's recognition of Peiping in 1979.
During the 1960s and early 1970s Peiping frowned on nations which sought strong trade relations with Taiwan. Now business is less connected with politics.
"The United States simply showed you can work on both sides of the street - the mainland and Taiwan," said Robert Parker, former president of the American Chamber of Commerce.
"Before, the Europeans left Taiwan to the Americans because they were scared of upsetting Peiping if they came here for a lot of business," said Parker.
"Now they're coming in fast. The competition has gotten tougher."
The reassurance given by the U.S. example has coincided with ROC efforts to diversify trade.
Free Chinese authorities have sought to enlarge markets to off set tougher price competition from Asian neighbors, rising trade protectionism and a huge oil import bill.
The result in 1980 was US$5 billion in bilateral trade between the ROC and West European nations. The figure was enough to surpass Taipei's long-standing No. 2 trade partner, Japan.
Five banks representing Britain, France, West Germany and the Netherlands opened Taipei branches in 1980. Some 17 European offices are unofficially promoting commercial ties.
Even Eastern Europe has entered the picture with trade and freighters calling at ROC ports.
"Looking at what is developing here and the current slow progress of foreign firms on the Chinese mainland, you would think the Americans and Europeans had shifted their battleground for Chinese goods to here," said one observer.
State enterprises show overall profit
Eight state-owned enterprises under the Ministry of Economic Affairs registered combined earnings of NT$19.3 billion (about US$0.54 billion) between July 1, 1980, and March 31, 1981, the Commission of National Corporations reported.
K.L. Chin, executive director, said six other companies - Taiwan Aluminum Corporation, Taiwan Metal Mining Corporation, China Shipbuilding Corporation, Taiwan Machinery Manufacturing Corporation, Taiwan Alkali Company and Chung-Tai Chemical Industries Corporation - suffered losses of NT$1.7 billion (about US$47 million) in the nine-month period.
After deducting the losses of these firms, Chin said all 14 state enterprises showed combined earnings of NT$17.6 billion (about US$0.49 billion) for the nine-month period.
He predicted earnings will rise to about NT$20 billion (about US$0.56) by the end of June, which is more than the targeted amount of NT$12.9 billion (about US$0.36 billion).
Chin said Taiwan Aluminum incurred a loss because of the dumping of American aluminum products in the local market.
The company also had to face higher production costs because of 40 percent increase in power rates. It has run up a bill of about NT$1 billion (about US$28 million) with the Taiwan Power Company.
Taiwan Aluminum decided to repay its debt by selling its products to Taipower.
Taiwan Metal Mining incurred losses because of a huge loan to build a new plant.
China Shipbuilding suffered losses because it had to bear the burden of heavy interest rates for loans to construct its shipyard and other facilities.
Taiwan Machinery invested a large amount for a plant. Meanwhile, its business dropped because of the recession and foreign competition.
Taiwan Alkali suffered a sales slump, while Chung-Tai had to sell its products to downstream factories at low prices.
Most state enterprises produce raw materials vital to processing industries or belong to businesses which have monopolistic features. Such enterprises are not suitable for private ownership, Economic Affairs Minister Chang Kwang-shih said.
Minister Chang said profit-making is not of first concern for most state enterprises.
First quarter trade in the red
The trade deficit in the first quarter of this year widened to US$483.3 million in two-way volume of US$10,255.9 million, according to the statistics released by the Directorate General of Budget, Accounting and Statistics.
There was a surplus of US$25.9 million for the same period last year.
Exports in the first quarter totaled US$4,886.3 million, up US$382 million or 8.5 percent. Imports amounted to US$5,369.6 million, up US$891.2 million or 19.9 percent over the same period last year.
In March alone, Taiwan had a US$260.2 million deficit in trade volume of US$3,901 million. Exports were US$1,820.4 million and imports US$2,080.6 million.
On the export side, industrial products headed the list with sales of US$4,480.4 million, 91.7 percent of the total export; followed by processed farm products, US$295.7 million or 6 percent, and farm products, US$110.2 million or 2.3 percent.
On the import side, raw materials led the list with imports amounting to US$3,631.3 million, accounting for 67.6 percent; followed by capital goods, US$1,409.5 million or 26.3 percent; and consumer goods, US$328.8 million, 6.1 percent.
The United States was the leading trading partner with volume of US$2,831.2 million. Taiwan had a surplus of US$325.4 million, down from US$452 million in the same period last year.
Japan was the second largest partner. Two-way trade was US$1,997.3 million. The deficit rose to US$922.3 million from last year's US$678.7 million.
The Republic of China may run up a deficit of US$4 billion against Japan, said H.K. Shao, director general of the Board of Foreign Trade.
"We will be forced to impose more restrictions on Japanese goods if our trading partner does not try its best to buy products from us," he said.
This year BOFT's trade target is US$48.5 billion with a deficit of US$130 million.
Africans buying more from ROC
Trade with African countries grew 69 percent last year, reflecting the government's success in diversifying foreign markets.
Trade with Africa totaled US$1,415 million in 1980, 69 percent more than in 1979, with a favorable balance of US$445 million.
Exports to Africa were US$930 million, up 67 percent, and imports at US$485 million, up 73 percent.
Western African countries are the Republic of China's main partners with Nigeria heading the list.
Nigeria imported US$323 million worth of goods from Taiwan in 1980, up 174 percent from 1979, and exported US$126 million worth of products to Taiwan. The Nigerians purchased textiles, electrical and machinery equipment, and plastic products from Taiwan and sold crude oil.
Labels safeguard ROC's reputation
Goods exported to Hongkong and Macao should carry a label reading "Made in Taiwan, R.O.C. (Republic of China)" the Board of Foreign Trade ruled. The R.O.C. shouldn't be omitted.
Goods destined to countries with which the nation maintains official diplomatic ties and the United States should carry the label, "Made in Taiwan, R.O.C." in English, or the same in Chinese.
The label on goods to be shipped to countries with which the nation has no diplomatic relations may omit the R.O.C.
"Made in Taiwan" may be omitted on goods destined for East European countries or for areas which boycott Taiwan-made goods.
The insistence on adding "R.O.C." on the label of goods destined for Hongkong and Macao is intended to prevent the goods from winding up on the Chinese mainland and being re-shipped as made in the "People's Republic of China."
Exception may be made if it is known beforehand that the goods are to be transshipped from Hongkong or Macao to East European countries or areas that boycott Taiwan-made goods.
In this case, the transshipment must be so specified in the letter of credit. In case the transaction is not by letter of credit, the local exporter must submit proof within a certain period that the goods were unloaded at destinations in Eastern Europe or areas that boycott Taiwan-made goods.
Investments near US$3 billion level
Foreign investments in Taiwan amounted to US$2,718,403,000 in the last 28 years, the Investment Commission of the Ministry of Economic Affairs said.
Foreign investors, including those from the United States, Japan and European countries, pound in US$1,753,716,000. Overseas Chinese, mostly from Hongkong, Southeast Asia, the United States and Europe, brought in US$964,687,000 during the 1953-1980 period.
The 1953 totals were US$1,654,000 from overseas Chinese investors and US$2,041,000 from foreigners.
Foreign and overseas Chinese businessmen made their investments in 2,737 cases, including such fields as agriculture and forestry, fishery, animal husbandry, mining, foods and beverages, textiles, garments, footwear, lumber and bamboo products, pulp and paper products, leather and fur products, plastic and rubber products, chemicals, nonmetallic minerals, basic metals and metal products, machinery equipment and instruments, electrical machinery and apparatus, construction, trade, banking, insurance, transportation and other services and industries.
Vice Economic Minister William Wei said the Republic of China will attract more foreign and overseas Chinese investment this year. He estimates volume of US$500 million, up from last year's record US$465,964,000.
He attributed the expected growth to the revised investment law, political, economic and social stability, reasonable wages and the abundant supply of skilled workers.
The commission reported that in 1979, exports of foreign and overseas Chinese firms totaled NT$164,215 billion (about US$4,561 billion), about 28.35 percent of total exports.
After deducting the cost of raw materials and components, foreign companies earned US$2.165 billion in 1979. In the same year, the gross national product contribution of these companies was worth NT$100.93 billion (about US$2.81 billion) or 8.67 percent of the total GNP.
Foreign companies employed 356,786 workers in 1979, representing 5.55 percent of total employment. Of these, 346,027 were employed in the manufacturing sector, accounting for 16.47 percent of those employed in manufacturing.
Foreign and overseas Chinese companies paid NT$4.72 billion (about US$0.13 billion) in business income taxes, 21.16 percent of the total in 1979.
Tanker built at home for CPC
A giant tanker was launched at the Kaohsiung shipyard of the China Shipbuilding Corporation. T.W. Wu, president of CSBC, and T.H. Lee, president of Chinese Petroleum Corporation, presided.
The tanker of 210,000-DWT is the first CSBC has built for CPC. It will be delivered in September.
Mrs. Lee christened the ship Chang Yun.
Measuring 317 meters long, 54 meters wide and with a main engine made by the Taiwan Machinery Manufacturing Corporation, the tanker will have a cruising speed of 15.7 knots.
CPC will use the vessel to carry crude oil from the Middle East to Taiwan.
Nuclear transfer to be expedited
A newly established subsidiary of Westinghouse Electric Corporation of the U.S. will promote transfer of nuclear power technology.
Speaking at the opening of Westinghouse Nuclear Taiwan, N.D. Woodson, general manager and president of Westinghouse Nuclear International, said the subsidiary will help the Taiwan Power Company localize nuclear technology.
"The only way to carry out a long-term power plant program successfully is for us to come and set up a local office and adapt our technology to local industrial needs," he said.
G.R. Carroll, president of the new company, said, "We believe our permanent presence in Taiwan will provide a vehicle for assisting Taipower and the Taiwan industries involved in the nuclear technology transfer program."
He revealed that his company is bidding on the supply of two nuclear reactors for Taipower's fourth nuclear power plant near Suao.
Four Westinghouse's rivals General Electric Corporation and Combustion Engineering Corporation of the United States, Framatome of France and Krafwerk Union of West Germany—are also bidding.
Taipower improves plant safeguards
The Taiwan Power Company will appropriate NT$1.2 billion (about US$33 million) to improve the exhaust devices of its thermal power plants in Taiwan.
David S.L. Chu, Taipower president, told Provincial Assemblymen the company has installed air pollution detectors at various thermal power plants.
The exhaust system of the thermal plant at Talin in Chiayi County has been improved. Seven electrostatic dust collectors will be installed in plants at Senao, Linkou and Nanhuo.
To protect the public against radioactive particles, Taipower has strengthened security systems at nuclear power plants. It also is emulating other safeguards used abroad.
A total of 188 testing and sampling stations have been installed at the first nuclear power plant to detect radioactive particles.
Water used to cool the reactor will be controlled to protect marine organisms.
Footwear industry opposes quotas
The Taiwan Footwear Manufacturers' Association delivered a note to the U.S. representative office in Taipei, protesting against continuation of quotas on shoe imports from Taiwan.
The letter, for delivery to President Ronald Reagan, was handed to Charles Cross, director of the American Institute in Taiwan.
A footwear industry spokesman said the letter asked President Reagan to terminate the Orderly Marketing Agreement, signed in 1977 between the U.S. and Taiwan and South Korea to limit non-rubber shoe imports from the two countries to less than 40 percent of the total annual U.S. shoe imports.
The agreement expires June 30.
Reports from Washington said the U.S. International Trade Commission had asked Reagan to continue quotas on footwear imports from Taiwan but to lift them for South Korea.
About 20 footwear association members held a demonstration outside AIT offices.
Electrical machinery is top employer
The electrical machinery and apparatus industry remained Taiwan's largest employer in 1980 for the second straight year.
A survey conducted by the Directorate General of Budget, Accounting and Statistics, showed the industry has 298,143 workers, 16.5 percent of the total in manufacturing. The textile industry was second with 297,942 workers.
For 1980, production, assembly and related workers accounted for 62 percent of employment in the manufacturing sector, followed by technicians, 12.7 percent; clerical staff, 12 percent; miscellaneous workers, 7.9 percent; administration and managerial staff, 3.3 percent; and engineers, 2.1 percent.
Male workers accounted for 50.8 percent of the manufacturing payroll. In labor-intensive industries such as textiles and garments, females dominated by 70.2 percent and 85.6 percent, respectively.
Engineers, technicians and clerical staff accounted for 65.1 percent of workers in the petroleum and coal industries.
Middle East road contracts landed
The Ret-Ser Engineering Agency, a branch of the Vocational Assistance Commission for Retired Servicemen, has won two more engineering jobs in the Middle East valued at US$160,340,000.
The road construction projects are in Saudi Arabia and Jordan.
In Saudi Arabia a 70-kilometer road will be built from Al Bahah to Bilad Zaharan in 49 months at a cost of US$129,000,000.
The Jordan job project calls for widening of the two-lane road from Suwaga to Al-Hasa, a distance of about 71 kilometers. The four-lane highway will cost US$30,560,000 and take 1,000 working days.
RSEA has submitted the lowest bids totaling US$182,780,000 on three other construction jobs in Saudi Arabia and Jordan.
Engineering talent in short supply
Shortage of high-level technological personnel will pose a major bottleneck in the upgrading of the industrial structure in coming years, the Council for Economic Planning and Development said.
CEPD predicts a serious imbalance between supply and demand of engineers in the next five to 10 years.
Pirating of engineers is already under way. CEPD said engineers with master's or doctor's degrees make up only 1.4 percent of technological manpower.
The brain drain is also involved. In the last 30 years, 57,128 college graduates have gone abroad for further studies and only 6,600 have returned.
The government has drafted a "Science and Technology Development Program" to intensify scientific and technological education, recruit overseas Chinese and strengthen on-the-job vocational training for medium-level technological personnel.