Premier Chiang Ching-kuo told economic planners that they should induce Chinese and foreign entrepreneurs to invest in local industries. The Premier had been briefed on the economic situation by the Council for Economic Planning and Development.
He told planners to push for exports and listen to the views of industry and business.
K.H. Yu, chairman of the CEPD, said industrial and agricultural growth slowed in 1976. But the Taiwan record was among the best in the world.
The money supply grew faster than it should have, he said. Because of sufficient inventories and unused production equipment, the excess of money had no untoward effect on commodity prices. The slower increase in demand helped check inflation.
To slow the increase in capital from abroad, the government halted the influx of short-term money at the end of last October, Yu said.
Economy shows 8.1 per cent growth
The economic growth rate last year was 8.1 per cent in real terms, government sources reported. The 1976 growth rate was 11.5 per cent.
The GNP amounted to NT$740,600 million (about US$19,490 million). Per capita income was US$9ll, a little above the US$898 target. Per capita income was US$805 in 1976.
The slower growth rate was attributed to smaller capital investment and reduced gains for exports of products and services.
Agricultural and industrial production registered increases despite typhoons and floods.
Commodity prices were up by 6 per cent, a bit higher than 5.3 per cent estimate but not high enough to affect economic stability.
Other figures for 1977:
- Domestic consumption, NT$388,400 million (about US$10,221 million).
- Government consumption, NT$129,200 million (about US$3,137 million).
- Domestic capital formation, NT$200,000 million (about US$5,263 million).
- Manufacturing industries, 29.53 per cent of production; agriculture, 13.39 per cent; public utilities, 12.71 per cent; housing, 6.44 per cent; commerce, 12.03 per cent; construction, 5.76 per cent; transportation and communications, 6.1 per cent; and other services, 14.04 per cent.
The economic growth target for this year has been set at 8.8 per cent in a Council for Economic Planning and Development report submitted to Premier Chiang Ching-kuo. The old Economic Planning Council had set a target of 9 per cent.
The report forecast total trade volume of US$24.2 billion, including services.
The council predicted per capita income of US$1,000 mark in 1978 with growth of 1.7 per cent in agriculture and 13.1 per cent in industry.
ROC and ROK spur cooperation
The Republics of China and Korea concluded an expanded economic cooperation agreement at their ministerial conference in Taipei.
In a joint statement, the chief delegates, Chinese Economic Minister Y.S. Sun and Korean Deputy Prime Minister Nam Duck Woo, said they believed cooperation will be enhanced.
The delegations reviewed trends in the world economy as well as their own situations.
ROC and ROK will cooperate more closely in industrial development, trade, science and technology, exploration of resources and procurement of raw materials.
They agreed to expedite the exchange of experience and information to improve small and medium-sized industries and to strengthen cooperation in developing deep-sea fishery.
Two-way trade will be stepped up and cooperative action taken in international markets to cope with the world trend towards protectionism.
Technical cooperation will be promoted among designated institutions in both countries through workshops and exchanges of information. Means will be arranged to promote the transfer of technology to small and medium-sized industries.
The 13th ministerial conference will be held at Seoul in 1978.
Chinese Petroleum plans expansion
The Chinese Petroleum Corporation will build a catalytic cracking plant, lay a l20-kilometer natural gas pipeline and drill more wells in the next four years.
Li Ta-hai, president of the state enterprise, said CPC will spend NT$3.54 billion (about US$93 million) to build the catalytic plant at Kaohsiung. Designing of the plant is under way and construction will start by the end of 1978 and be completed by 1981. Capacity will be 25,000 barrels of premium gasoline per day.
CPC signed a US$28 million loan agreement with Citibank and will sign for another US$20 million loan with Chase Manhattan.
CPC will spend another NT$1 billion (about US$26.3 million) to lay a l20-kilometer pipeline from Chuhuangkeng at Miaoli to cities and counties of northern Taiwan. Work will begin in the second half of 1978 and take three years to complete.
Consumption of natural gas in northern Taiwan has been increasing by 12 per cent annually.
Nine gas wells have been drilled at Miaoli and more are planned. As of July, CPC will be able to provide 1.2 million cubic meters of gas daily.
CPC will install additional facilities at its Kaohsiung refinery at a cost of NT$400 million (about US$10 million) beginning in the second half of 1978.
When completed at the end of 1979, the new facilities will refine 100,000 barrels of oil daily. CPC refineries at Kaohsiung and Taoyuan have capacities of 370,000 barrels and 100,000 barrels, respectively.
Textile industry to be modernized
The Executive Yuan (cabinet) approved measures to help the textile industry modernize and upgrade quality.
The measures of the Ministry of Economic Affairs were approved by the newly established Council for Economic Planning and Development before they went to the cabinet.
Sluggish exports and rising production costs are problems confronting the industry.
Main points of the approved measures:
- The Taiwan Cotton Spinners Association may apply for bank loans totaling NT$450 million (about US$12 million) to help members modernize equipment. Some 300,000 old spindles will be retired.
- The association will be allowed to collect NT$45 from each bale of imported cotton.
- Interest on the loans will be paid from special government funds, on export promotion funds of the Board of Foreign Trade, funds of the Taiwan Textile Federation and interest on deposits of the NT$45 per bale cotton payments.
- Manufacturers will be encouraged to consolidate operations and expand production.
The minimum production volume of a cotton spinning mill is set at 100,000 spindles and that of a man-made fiber producer at 100 metric tons daily.
Merger plans worked out by the companies will be abetted by tax and other incentives.
The government may purchase stock of merged companies or ask banks to grant new loans or postpone repayment of old ones.
Establishment of a big textile trading company will be encouraged and foreign technicians hired to develop new products and designs.
Many manufacturers reacted favorably. They hope the measures will help them overcome financial difficulties and strengthen their efforts to develop new markets.
Sugar exports set 1977 record
Taiwan Sugar Corporation exported a record volume of sugar last year.
Exports reached some 650,000 metric tons for a gain of about 200,000 tons over 1976.
The 1977 sugar production of 1.06 million tons was a record.
Brisk sales resulted from growing demand in South Korea and Japan. South Korea bought 160,000 tons of Taiwan sugar and Japan imported 280,000 tons.
Despite the record volume, the corporation earned less than in 1976. Export earnings were about US$140 million, down US$10 million.
The world sugar price is now less than US$190 per ton, a drop of more than US$100 from early 1976. Sugar prices soared to a record high late in 1974, when a ton sold at US$1,440.
A spokesman attributed the drop to massive stocks of sugar in many countries. About 25 million tons are stockpiled.
Because of low prices, some Taiwan farmers will not plant cane during the 1977-78 crop year, which began in November and ends in May.
The spokesman foresaw a drastic fall in production and exports this year. His estimates put production at 760,000 tons and exports at 360,000 tons, a decline of 290,000 tons.
Domestic consumption was 360,000 tons in 1977, an increase of 30,000 tons over 1976, and is estimated at 400,000 tons this year.
South Korea, Japan and the United States are the leading importers of Taiwan sugar, which also goes to Saudi Arabia. The Saudis bought 60,000 tons of white sugar from Taiwan in 1977.
Because of the lower prices, TSC had to draw NT$1.6 billion (about US$42 million) from the Sugar Fund to make up for 1977's loss. The funds were used to enable the corporation to buy sugar from farmers at the guaranteed price of US$284 per ton. Sugar sold for less than US$190 abroad.
If the price remains unchanged this year, Taisugar will have to use about NT$2 billion (about US$52.6 million) from the fund to make up losses. The fund totals NT$8 billion (about US$210 million).
Producing countries recently set the price at around US$240 per ton, but massive stocks make such a price unrealistic.
Institute develops three new products
The Industrial Technology Research Institute at Hsinchu announced development of three new products for industrial and agricultural use.
Dr. Paul L.C. Hao, director, said the products are red mud PVC, a wood-plastic composite, and polyethylene terephthalate (PET). They can help bring down production costs of other products.
Red mud PVC is used in methane generators, soiless planting, rice bins, fish ponds, blue-green algae cultivation pools, lick-proof salt beds and buoys.
The red mud composite is made from waste aluminum usually thrown into the sea. It is resistant to ultra violet light, acid and alkali, stands up in any weather and is unbreakable.
Products made from the red mud composite last at least eight years compared with a maximum of three years for those made of ordinary PVC.
The institute has applied for patent rights in the United States, West Germany, France, Japan, Australia, Canada and Indonesia.
Orders have been received from more than 10 countries for the red mud plastic methane generators.
The wood-plastic composite is a cheap material for use in the wood processing industry. Finished products are as good as those made from the best wood and more durable. They include furniture and baseball bats.
PET can replace PVC, PE (polyethylene) and PS (polystyrene) in electronics equipment and building materials. It is made from nylon waste and is cheap and durable.
Researchers spent more than 10 years developing the three products.
Steel mill built in 50 months
The first stage of the integrated steel mill at Kaohsiung was completed in 50 months.
The mill is one of the Ten Major Construction Projects in the Republic of China. Planning and design were started in October of 1973 and construction in September of 1974. The lighting of the blast furnace took place last June 27.
Cost of the first stage was NT$36.9 billion (about US$971 million). Of the 10 projects, only the North-South Freeway is costing more.
Twenty-one plants have been built in the initial stage, including coke and linter plants, blast furnace, oxygen steel production facilities, continuous casters for billets and slabs, plate and rod and bar mills, and processing and warehousing facilities.
The mill will produce 1.35 million metric tons of steel products, including pig iron and steel ingots, plates, wires and rods.
Steel will be supplied for ship building, vehicles, machinery and construction. There will be a surplus for export.
Work on the second stage will begin in June and be completed by 1981 at a cost of NT$1.6 billion (about US$1,358 million). Capacity will be raised to 3.2 million tons. A third stage will increase capacity to 6 million tons.
The China Steel Corporation will invest in downstream operations to make full use of its production.
China Steel will hold 26 per cent of the shares in a structural steel plant to be capitalized at about NT$200 million (about US$5.3 million).
Ret-Ser Engineering Agency, Central Investment Corporation, China Trade & Development Corporation and another company will share the rest.
The plant will have annual capacity of 18,000 metric tons of structural steel and be completed in a year.
Trading company rules announced
The Ministry of Economic Affairs has announced new rules for export and trading companies.
Major points:
- Enterprises seeking export status must have minimum paid up capital of NT$500,000 (about US$13,158).
- Enterprises already granted export status do business of at least US$50,000 annually.
- Trading companies must have minimum paid-up capital of NT$2 million (about US$52,632) with exports of over US$200,000 in the year before making application.
The regulations spell out unacceptable business practices.
Trading companies may be denied import or export permits or lose their licenses for irregularities.
Guidelines were laid down for helping companies attain "big trading company" status.
Minimum capital is NT$200 million (about US$5.3 million). The company must be the export agent of manufacturers with combined annual exports of more than US$20 million or have an export record of over US$10 million in the year before application.
The company will be required to have three overseas branches within a year after big company status is accorded.
H.K. Shao, director general of the Board of Foreign Trade, said BOFT and the Central Bank of China will screen big company applications. He said some inquiries have been received.
Shao said the government hopes the big trading companies will be able to handle a wide range of products instead of specializing by goods or countries.
The government will help the big trading companies increase exports. Mergers of companies now specializing will be considered.
Ford Lio Ho reports on growth
The Ford Lio Ho Motor Company Ltd. has sold more than 40,000 vehicles - Cortina L, Gl, Granada, Escort, Fiera and station wagons - since the company was established five years ago, Raymond C.F. Chen, president of the company, reported.
The fifth anniversary of Ford Lio Ho was celebrated at the Pincheng Community Auditorium at Chungli near the plant. More than 1,500 members of the Ford Lio Ho family and guests took part. Movie and TV stars performed and a U.S. crew from Universal Studios made a film.
Chen told of the past performance and plans of the company and thanked employees for their contributions.
Chen said Ford Lio Ho has established a good reputation be cause of insistence on quality control and good design.
Production and sales have increased rapidly. In the first year, only 3,912 cars were sold.