Free China and South Vietnam will continue to cooperate economically in their joint struggle against Communism. At the same time, Taiwan traders have been warned that they must respond to international competition for the Vietnam market.
These were developments at the fifth Sino-Vietnamese Economic Cooperation Conference in Taipei.
Free China agreed to provide more specialists and technicians to help Vietnam accelerate economic development. Specifically mentioned was the need to increase Vietnamese rice production, increase transportation and communication services between the two countries, step up the supply of free Chinese commodities to meet Vietnam's emergency procurement requirements and boost Chinese purchase of Vietnam goods.
A joint communique issued at the end of the eight-day annual meeting said the conferees "were confident that as a result of the frank and thorough discussions, the economic cooperation between the two nations will be further enhanced in line with the common efforts to improve the living standards of their people and to strengthen their positions in the fight against Communist subversion and aggression."
South Vietnam sent to Taipei a 15-member delegation headed by Troung Thai Ton, minister for national economy. Ton said "a solid foundation has been laid for economic cooperation between our two countries since the cooperation programs started seven years ago". He said the Republic of Vietnam, now engaged in a war against Communist aggression, has few products for export. "So it is our hope that the Republic of China will dispatch more experts to our country to help us establish a sound economic foundation on which we may achieve a balance in foreign trade," he said.
Ton's deputies were Luong The Sieu, minister for communications and transport, and Tran Thiem Khien, ambassador to the Republic of China.
A 15-member Chinese delegation was headed by Economic Affairs Minister K. T. Li. Communications Vice Minister Walter Fei was deputy chief delegate.
South Vietnam was Taiwan's third best customer last year after Japan and the United States. Sales to the embattled Southeast Asian country were nearly US$100 million, up 11.2 % from 1966's US$89 million and more than double the 1965 sales of US$44.5 million.
The South Vietnamese have sought to buy as much as possible from their Asian friends and supporters, including the Republic of China. Volume of trade with Taiwan would be even higher were it not for the U.S. aid requirement that some procurements be from American suppliers. Taiwan sales of structural steels to South Vietnam were down sharply last year after rising to nearly US$40 million in 1966. U.S. suppliers now get the business.
This is where the warning comes in. Many Taiwan traders still seem to entertain the idea that Vietnam is a sure market because of the protective umbrella once given free China by U.S. aid administrators. Shao Hsueh-kun, economic counselor of the Chinese Embassy in Saigon, urged Taiwan industrial and trade leaders to improve quality and service so as to compete more effectively for the Vietnam market.
Shao has been stationed in Saigon for nearly four years. He said Vietnam's U.S. aid-financed imports had dropped from 88% of total imports in 1959 to 46% last year. The U.S. policy of "buy American goods with American money" will become firmer, Shao said, because of Washington's moves to check the U.S. dollar drain.
The Saigon government's foreign exchange holdings have been increasing steadily because of the spending of American military and civilian personnel. In June of 1966, the Vietnam government began to permit unlimited use of government exchange for imports. Free China took the move as a welcome sign but that was premature. Not all Taiwan goods can compete with those from industrially advanced countries. Vietnamese traders last year used only about US$27 million of government exchange to buy commodities from Taiwan. This was about 5% of Vietnam's imports of more than US$500 million.
Shao believes Vietnam's imports from Taiwan will exceed the US$100 million mark this year - quite an advance from 1960's US$3 million - but warns that free China will have to lower prices and improve product quality.
These specific measures were agreed upon at the Sino-Vietnamese Economic Cooperation Conference:
- To send 62 Chinese agricultural experts to Vietnam, raising to 147 the number working there.
- To send power technicians to help Saigon build new lines in Da Queo.
- Help of the Taiwan Railway Administration in building railway bridges to replace those destroyed by the Viet Congo
- To improve Taipei-Saigon telephone service.
- To continue efforts to establish a joint shipping company. Three Chinese shipping companies, including the China Merchants Steam Navigation Company, are negotiating with Vietnamese authorities for the opening of direct sea service.
- The Saigon government will be asked to give priority consideration to Taiwan as a supplier of paper and, if feasible, to sign long-range purchase contracts. Vietnam bought 27,085 tons of Taiwan paper in 1966, 45% of the island's exports that year, but only 17,382 tons in 1967. The latter figure included orders placed in 1966. The drop followed Saigon's switch from U.S. aid purchases to imports with government exchange.
Kaohsiung export zone exceeds goals
Officials of the Kaohsiung Export Processing Zone in southern Taiwan say all goals were surpassed by the end of last year.
KEPZ, which combines the advantages of an industrial estate with those of a free port, was opened in December of 1966. The target was 120 plants in a 69-hectare area by 1970, capitalization of US$18 million, employment for 15,000 workers and annual exports of US$72 million.
Last year alone, the zone approved 60 investments involving nearly US$11 million and proposing to employ 15,000 in production of US$47.27 million worth of goods annually. These figures raised totals to 109 investments, US$17.91 million worth of capital, 25,000 employees and proposed exports of US$77.72 million.
Electronics leads the list with 19 factories, followed by plastics with 16. Overseas Chinese investments totaled US$6.68 million, joint Chinese-foreign investment US$5,48 million, wholly foreign undertakings US$3.69 and domestic ventures US$2.06 million.
Thirty-two plants began operations last year, bringing the total to 40. The breakdown is as follows: electronics 12, handicrafts 7, garments 6, knitting 4, plastics 3, leather 2, and metals, electrical appliances, rubber, furniture, embroidery and packing 1 each.
More than 40 factories are under construction. Seventeen have installed machinery and acquired raw materials.
KEPZ's exports totaled US$7.97 million in 1967. This amount is not included in the US$669,4 million export figure for Taiwan. KEPZ contributions included:
- Electronic products: US$2.98 million, 36.23%
- Garments: US$2.92 million, 35.51%
- Metal products: US$0.65 million, 7.96%
US$5.29 million of the export volume went to the United States. Japan came next with purchases totaling US$1.31 million. Other buyers included Canada, Hongkong, Kuwait, West Germany, Holland, Sweden and New Zealand.
Imports of machinery and facilities into the zone totaled US$11.57 million last year.
A primary objective of KEPZ is to create job opportunities and introduce up-to-date knowhow. Foreign technicians working in the zone total 86. The 40 operational factories had more than 5,600 workers at the end of December, 84% of them female.
The first two stages of factory building construction have been completed with loans from banks and the Sino-American Development Fund. These buildings are being used by 56 investors. The third stage, expected to be completed in May, will provide 41,022 square meters of floor space in two rows of buildings.
In addition to public and private buses, the zone authority is operating four buses for workers. Dormitories for 4,000 single workers will be built with a US$375,000 loan from the Sino-American Fund. Funds are being raised for the construction of two-story houses for 598 families totaling about 3,000 persons.
The idea of a Taiwan export processing zone first was broached 10 years ago. A special law was passed by the Legislative Yuan early in 1965 and the KEPZ Administration was created under the Ministry of Economic Affairs to establish and manage the zone. It represents the government in all relationship with investors, thus reducing red type. The export processing zone offers these incentives to investors:
- Tax exemptions. All enterprises are exempt from import duty on machinery, equipment, raw materials and semi-finished products imported for their own use. Local purchases are classified as imports and are therefore eligible for tax rebates or exemptions. Commodity taxes are waived. A five-year corporate income tax holiday is granted for most investors.
- Repatriation of profit and capital. Profit may be repatriated without limit. After the second year, capital may be repatriated at a rate of 15% annually.
- Labor and wages. Kaohsiung has a population of more than 600,000 in the city and another 700,000 in the county. More than 90% are literate. Average monthly wages are US$15 for an unskilled woman, US$20 for an unskilled man, US$30 to US$37.50 for a skilled woman and US$37.50 to US$50 for a ski1led man.
- Power and water. Unlimited supplies are assured at rates about 60% lower than in Hongkong.
- For investors who do not require specially designed space, KEPZ has standard industrial buildings that can be purchased on terms of 30% down and the remainder in equal quarterly installments over a period of 10 years. The interest rate is 10% per year.
- Simplified procedures. Applications usually are approved or rejected within a month. Within the zone, export and import licenses are issued within 24 hours.
- Transportation and warehousing. A two-story warehouse has floor space of 6,000 square meters accommodating 12,000 metric tons of cargo. Also provided are mobile cranes, forklifts, towing tractors, trailers, trucks and pallets. The cargo capacity is 30,000 metric tons a month.
- Foreign exchange and trade control. For imports, the deposit requirement is only 20% of the foreign exchange applied for.
Second international airport opening soon
Taiwan’s second international airport will open between September and the end of the year at Kaohsiung.
Expansion of the Hsiaokang airport was started in May of last year and has been progressing smoothly. The project calls for extension of the runway from 1,700 to 2,600 meters, doubling of the apron area to 24,000 square meters and an additional taxiway. Roads to the airport are being widened. The project will cost about US$800,000.
Officials believe the airport will bring greater prosperity to the Kaohsiung area, which is already Taiwan's largest industrial center. The average Taiwan stay of foreign tourists may be extended from the present four days to a week.
The government hopes foreign airlines will stop at Kaohsiung as well as Taipei. So far the Kaohsiung airport has some 16 domestic landings and take-offs daily.
The Chinese Civil Aviation Administration wants to start working on the Taipei International Airport expansion project in March and complete these projects by 1972:
- Construction of a terminal building for 1,000 people next to the extant building, which can accommodate 3,000. The new terminal will be used exclusively for incoming passengers.
- Extension of the runway from the present 9,115 feet to 10,000 feet.
- Addition of two or three dozen for immigration and customs.
- Addition of three parking aprons to the present eight. The three new ones will be large enough for jumbo jetliners.
Cost will be about US$2.5 million. CAA Director Lai Hsun-yen said the money is available but final details are yet to be worked out with contractors.
The government has decided that Taipei should have another airport - possibly bigger than the existing one - in the next few years. The advice of foreign experts will be sought in the choice of location and the design. The Ministry of Communications and the Council for International Economic Cooperation and Development already are working on plans. Chinese Air Force planes are conducting aerial surveys of possible sites.
Trade mission visits Middle East
A 14-man Chinese trade mission flew to the Middle East recently for a four-week market-expansion tour of Iran, Saudi Arabia, Kuwait, Jordan and Lebanon.
This is the first such free Chinese visit. Heading the group is Chen Po-lien, general manager of the Fu Shing Manufacturing and Lumber Co. Ltd. The other 13 also are from private enterprises.
Taiwan has been trading with Iran, Saudi Arabia and Kuwait and hopes to increase exports. The mission is hopeful of opening markets in Jordan and Lebanon.
Iran used to buy large quantities of food from Taiwan but now is buying more from Russia and East European nations. Taiwan stretch nylon, however, has dominated the Iranian market for the last two or three years. The Japanese are competing with the free Chinese for wool yarn sales to Iran. Other exports from Taiwan include electric fans, paper, veneer, glass, sewing machines, steel pipes and aluminum ingots. Taiwan is buying very little in return. These figures for exports to Iran were released by the government (Unit: US$):
| Item | 1964 | 1965 | 1966 |
| Food | 17,534,096 | 2,920,579 | 535,540 |
| Wool Yarn | 2,143,894 | 2,084,443 | 2,348,383 |
| Stretch Nylon | 1,584,142 | 1,645,838 | 2,182,797 |
| Others | 872,098 | 938,907 | 1,056,761 |
| Total | 22,134,230 | 7,589,567 | 6,122,481 |
Saudi Arabia in its calendar year 1386 (April 21, 1966, to April 20, 1967) imported 2,246,573,000 riyals (US$499,238,430) worth of commodities, up 9.14% from the previous year's US$457,422,000. Main sources of supply were the United States (22.16%). Britain (8.17%), Italy (7.85%), Japan (6.71%), West Germany (6.11%), Lebanon (5.95%) and Holland (4.66%). The Republic of China exported US$622,000 worth of sugar, canned fruit juice, pipe joints, plastics, tea, cotton fabrics, veneer, bamboo products and electrical appliances to Saudi Arabia in 1964. This increased 25% to US$781,000 in 1966 but the amount still was a fraction of 1% of the Saudi Arabian market.
Taiwan exports to Kuwait have been on an even smaller scale.
Australian trade officials in Taiwan
Two Australian trade officials visited Taiwan recently. Reports from the Central Trust of China representative in Sydney said Australia was granting preferential tariff rates for 52 categories of Taiwan products and according tax-free privilege to 37 others, retroactive to January 1.
The two officials were Sir Alan Westerman, secretary of the Department of Trade and Industry, and Alan T. Carmody, comptroller-general, Department of Customs and Excise. They met with Chinese economic and trade officials and visited the recently opened Australian Trade Commissioner's Office in Taipei.
Trade between the two countries has increased five times in five years to reach more than US$25 million a year. The balance favors Australia by 4 to 1. Main imports from Australia are wool, wheat, dairy products, steel, metals and coal. Taiwan sells textiles, plywood, chemicals, handicrafts, plastics and cement.
Austria's preferential tariff rates for commodities from developing countries range from 5 to 27.5% compared with the normal 25 to 65%. The 52 categories include candies, soap, travel gadgets, baseball gloves and balls, cotton piece-goods, tableware, glass-fiber products, razor blades, file cabinets, paint sprayers, washing machines, broilers, bottling machines, machine tools, electric fans, wooden, bamboo and rattan chairs, sports equipment, fishing tackle and tobacco pipes.
Among the 37 categories that can be imported into Australia tax-free are cement, urea, ammonium sulfate, rubber belts, leather, wooden bowls and plates for table use, fishing floats, paper board, newsprint, silk threat, cotton thread for sewing, fish nets, scissors and knives, home sewing machines, cash registers, calculating machines, false teeth, brass band instrument and hand-woven cotton fabrics.
Consumption shows sharp increases
The Taiwan Provincial Government has released these 1960-67 comparisons of per capita consumption:
- Daily calorie intake increased from 2,390 to 2,455.
- Daily protein consumption rose from 57 grams to 62 grams.
- Annual use of textile materials increased from 5.9 pounds to 7.3 pounds.
- Annual requirement of construction materials rose from 70 to 98 bricks, from 103 to 156 kilograms of cement, 27 to 36 square feet of glass and from 19 to 22 kilograms of steel bars.
- Annual use of household electricity rose from 55 kwh to 101 kwh.
- The number of bicycles was 110 for every 1,000 persons in 1960. This had risen to 177 last year. The number of motorcycles rose from 4 to 20 and that of automobiles from 2 to 5.
- In 1960 Taiwan didn't have television. There were 8.3 TV sets for every 1,000 people in 1966 and nearly twice that many at the end of 1967.