Taiwan's President Tsai Ing-wen stressed the future cooperative plans with the South and Southeast Asian countries in a speech right after she won a second term in January despite criticism that her New Southbound Policy (NSP) lacks clear goals and the scale is relatively small in terms of trade.

In her victory speech, Ms Tsai from the Democratic Progressive Party (DPP) known for its pro-independence stance failed to mention about the island’s economic relations with China, which runs counter to Kuomintang (KMT) candidate Han Kuo-yu’s pro-China policy of “sells goods, welcome people”.

Ms Tsai said Taiwan is a member of the Indo-Pacific region and will continue to participate and cooperate in advancing the wellbeing of the region, including the promotion of the NSP.

Taiwan will be willing to assist in all aspects of education, culture, health care, science and technology, she said. The moves followed Tsai’s NSP launched in 2016 to re-diversify Taiwan’s trade portfolio from China by fostering cooperation with 10 ASEAN countries, six countries in South Asia and Australia and New Zealand.

“Tsai Ing-wen should promote the New Southbound Policy after re-elected, but it raises the question of whether she can achieve the goals for the policy in the future,” Tsai Hung-jeng, a professor of social studies at the National Sun Yat-sen University, said before the election. Professor Tsai is also the director of the Center of Southeast Asian studies of the university.

Everything related to Southeast Asia would be called NSP projects. Hence, it was hard to determine whether those projects could reach the ultimate purpose of the policy, said professor Tsai. "Every department worked on those projects, but the ends of policy were changed frequently, which is equivalent to no goal for the policy."

Southbound policy from past to now

The NSP, which covers 18 countries, is a renewed push by the DPP government to lower Taiwan’s dependency on China who accounted for more than 30 per cent of the island’s total trade in the first 10 months of 2019.

The predecessor of the NSP called the Southern Policy was a foreign and economic policy implemented in the 1990s to promote the transfer of overseas investments by Taiwanese to Southeast Asia. However, it gradually failed as China strengthened its Economic Reform and Open Up policy, creating a cluster effect which attracted investors from Taiwan.

Today's NSP is not just about developing economic ties but focusing more on humanities, said Johnny Lin at a press conference. Photo: Randy Lin

Johnny Lin, 42, a spokesperson of the DPP, said the significant difference between the New Southbound Policy and the former one is that the development of trade relationships is only part of the plan. The NSP would not only focus on developing the economic side because that would be hard to maintain a long-term and stable cooperative relationship with these countries.

People’s integration is also important. “Foreign language is an essential bridge for communicating with the outside world so that we view education as an important part of the policy,” Mr Lin said. “A large number of Vietnamese brides married to Taiwanese decades ago, and we encourage their offspring to learn the native language of their mothers.”

Early fruits from the NSP

Helped by the NSP, the number of travellers from the 18 countries to Taiwan rose about one-quarter to more than 2.5 million in 2019 from about 2 million in 2016. Besides, the gap between the number of tourists visiting Taiwan between China and the NSP countries has become smaller year by year.

The value of trade between Taiwan and the NSP countries rose about 22 per cent from US$96.01 billion in 2016 to US$116.7 billion in 2018, according to the Bureau of Foreign Trade. Total trade of these countries accounted for about 18 per cent of the island’s total import and export value in the first 10 months of 2019.

Lai Wei-hsin, the president of Asia Taiwanese Chambers of Commerce, who has been doing business with Indonesia for many years, said that Taiwanese companies did not have enough understanding of the Southeast-Asia region at the beginning. However, after the implementation of the NSP, plenty of labours and tourists from Southeast-Asian countries visited Taiwan. Taiwanese companies also launched more projects and investments to Southeast-Asia countries.

"The culture exchanges between Taiwan and other cooperating countries have greatly improved compared to the past, which was beneficial for economic development," Mr Lai added.

The future development of the NSP and the execution of the policy will be vital to Taiwan as it seeks to lessen China’s influence on the island and cope with the ongoing US-China trade war.

China market remains vital

Kaohsiung mayor Han Kuo-yu has been unenthusiastic about deploying large-scale resources to expand ties with Southeast Asian countries, having criticized many times that these efforts have not brought mutual benefits to Taiwan.

“It’s unreasonable for DPP not to focus on maintaining the Chinese market but to develop Southeast Asian markets,” said Qiang Qiang Gun, a pro-Han Kuo-yu YouTuber in Kaohsiung. “Government investment should prioritize the country closest to it, and China is the best target which has the same culture and language as us,” he said.

NSP has ambiguous goals?

Professor Tsai Hung-jeng said many Taiwanese businessmen had left China to Southeast Asian countries since 2010 and the Tsai government should beef up the promotion of the New Southbound Policy.

Taiwan’s investment to China hit a record of US$14.38 billion in 2010 while it fell more than 40 per cent to a low of US$8.5 billion in 2018, data from the Investment Commission of the Ministry of Economic Affairs (MOEAIC) showed. The investment slipped further to US$3.7 billion in the first 10 months of 2019 due to the continued impact of the U.S.-China trade war.

It is difficult to determine whether Taiwan's Economic Policy towards Southeast Asia is successful at this stage because its goal is ambiguous, professor Tsai said. Taiwan’s overall export to the 18 New Southbound countries declined 7.37 per cent, and imports eased 0.26 per cent, from January to November in 2019.

However, Mr Lai did not agree that the goals for the policy were confused and said that the goals for NSP were clear which focused on ‘people-oriented approach and aiming to foster bilateral exchange and mutual resources sharing’ between Taiwan and 18 New Southbound countries.

Next step of Taiwan’s economy

Further, Mr Lai believes that the relationship in economics and trades between China and Taiwan will not be intensified after Tsai continues in office. “People may think that if the relationship of trade between China and Taiwan worsen, it may damage the development of Taiwan’s economy. The argument does not make sense from my point of view.”

He explained that Taiwan’s economy did not depend on China business only. There was less business between China and Taiwan, while Taiwan had closer business cooperation with the United States. Thus, the development of Taiwan’s economy will not be determined only by the relations between China and Taiwan.