The Taiwan Banker

Beginning as a scholar of finance and economics, Hsu Tain-tsair served as the mayor of Tainan from 2001-2010 and as a member of the Legislative Yuan's Financial and Economic Committee. His policymaking and implementation skills are widely recognized. At age 26, Hsu delivered a presentation at the Munich International Economic Forecast Conference. Before the age of 30, he became the head of the finance department in Chinese Culture University. Later he served two terms as Tainan mayor, and successfully undertook campaigns to beautify the city and revive its many cultural assets. Under Hsu's leadership, Tainan's tourism sector was rejuvenated. Hsu also strengthened Tainan industry. In particular, during his tenure as Tainan mayor, the Southern Taiwan Innovation and Research Park grew exponentially. The park was home to just seven companies in its first seven years, yet over just three years of Hsu's mayorship, it grew fifteenfold to more than 100 companies - many of them global - and a significant number of job opportunities were created. Further, Hsu helped Tainan to achieve the lowest unemployment rate of any Taiwan city in 2006, 2007 and 2008. Thanks to Hsu's many contributions to the city, at present, Tainan can develop two key industries to spur economic growth - cultural eco-tourism and technology. Hsu's rich experience in finance and economics allowed him to play a key role in DPP think tanks. When he was in the Legislative Yuan, he focused on finance and economics and was elected to serve as the main interlocutor with the government in the Finance and Economics Committee. Hsu always received high marks for his performance in the Legislative Yuan. Hsu believes think tanks can play a crucial role in a nation's industrial development and has focused on how to strengthen the ability of think tanks to shape the direction of policy in Taiwan. Hsu remains an influential voice in shaping Taiwan's financial and economic policy. He believes Taiwan should innovate, and he practices what he preaches: He uses a tablet in his spare time to organize many financial and economic issues of importance. The Taiwan Banker recently interviewed him about how Taiwan can improve its economy. The following is a summary of the interview. People always say Taiwan lacks talent and technological skill, but I believe the opposite is true. Taiwan has a great deal of talent, but this talent is idle. The same goes for technology. The problem is a lack of integration in our industries. In fact, some of the hottest integrated digital platforms we see now in mainland China like WeChat and Alipay are based on technology developed by Taiwanese from Tainan. It's a shame that platforms like this have not been able to take root here. Taiwan needs to relax regulations There are three main reasons why talent and innovation are lacking here. First, talented people here are loath to showcase their abilities for fear that they be suppressed or copied; there is also the possibility they will be lured away by a headhunter. Thus, protection of intellectual property still needs to be strengthened in Taiwan. Second, talented workers often cannot find the right opportunities in Taiwan or fierce competition causes the most aggressive (but not necessarily the best) workers to crowd out the better (but less aggressive) ones. Third, relationships are still more important than systems in companies. This allows people who are connected to underperform, while those without the right relationships may be star performers but not receive proper recognition. This situation has not changed since the mid-20th century. If these three difficulties can be overcome, Taiwan will have a bright future. There is an old saying: One can see the future by reviewing history. Yet we are not doing this in Taiwan. On the one hand, we have insufficient data and databases. At the individual level, we are not gathering information optimally, nor do we have a sufficiently strong understanding of history. There is another useful old saying applicable to Taiwan's current situation: If you are old and you don't die, that's the same thing as being a thief. The current system requires workers to retire once they reach 65; it as if society is condemning them to death. Taiwan has many talented people. There are CEOs of top global firms. There are highly advanced technologies, the most advanced business models and innovative ability. But are we aware? If we are not aware, it is because of the wrong ideas and values. We don't know ourselves and look down on ourselves. On top of that, the current system is brittle. There is limited space for talent to develop. If Taiwan does not squarely face these problems, the situation is hopeless. With regards to the talent problem Taiwan has, I believe it can be attributed to the failure to integrate industry talent. That means there is a lack of leadership, and no clear direction for the country. Without direction, leaders are lost, yet if leaders fail to do their jobs, then there is no direction. What does it mean to be a leader? A leader is someone who influences others. They have the ability to be transformative: to change culture and habits. Yet in Taiwan's current situation, when an atmosphere of injustice prevails, people with the right values do not dare to try and influence others. Meanwhile, those people with bad intentions are omnipresent, interfering with the work of everyone else. This is how the wrong type of person becomes an influencer. Now we need to define what Taiwan’s problems are and why it is important to push for reform. Taiwan needs liberation, but that won't come from being dependent on mainland China. So then how do we do it? We need to focus on liberating ideas. If we can do that, then actions and systems will also be liberated. We need genuine deregulation: That doesn't mean laissez-faire; it means using innovation as the foundation. Manage the four shortages problems People in Taiwan say we have four big voids here: a shortage of water, electricity and labor, as well as uncertainty limiting the space for industry to develop. As Taiwan has caused many people to lose their jobs, it is a country that really wastes resources. People keep saying we have a labor shortage but many talented candidates are unemployed. In this type of scenario, we need to reflect on what went wrong from both the standpoint of companies and the overall environment. We often hear in Taiwan about water and electricity shortages, the two main obstacles to companies investing here. Taiwan has abundant natural resources and rainfall per capita puts us among the nations with the richest water resources globally. Taiwan is surrounded on four sides by oceans; there are powerful tides; there is heat coming from the ground, but we don't know how to capitalize on the opportunities provided by these natural resources. Contrast us with Israel, a country that lies in the middle of a desert but which has channeled its limited resources to create an oasis. There is too much waste in Taiwan in all industries. The key to solving the waste problem is strong management. When the Soviet Union collapsed, management guru Peter Clark said the Soviet Union disintegrated because of management - not capital - problems. Yet management philosophy derives from culture and national conditions. That is why Taiwanese who were punctual during their time studying in the U.S. return here and are tardy; the local culture has a negative effect on them. As for upgrading human resource quality, I recommend to make it a habit of reading all the time. Read in your free time; read on your mobile device, read whenever. Find information that's useful for you that can be reused in the future. Create economic cooperation overseas The government is now actively pushing the New Southbound Policy. Many people think this is the alternative to focusing on the US and European markets. Yet that is not the case. Taiwan isn't going south because it cannot go west. The New Southbound Policy represents a new economic strategy designed to help Taiwan overcome the bottleneck of overdependence on China (focusing on the China market is a dated way of thinking) and the challenge of the red supply chain - China's attempts to dominate the global consumer electronics sector by building a complete supply chain based in the PRC. The New Southbound Policy is a new model for international economic cooperation and can help companies tap opportunities in new markets, but only if the policy is implemented wisely. The government and companies must cast a wide net, not simply focus on one or two countries or industries. Moreover, companies must develop the right strategies for the respective markets they enter. There are many countries in South and Southeast Asia that offer good opportunities for Taiwan. We should not continue to limit ourselves to China. Singapore's experience is instructive for Taiwan. The Singapore government does not tell the companies what they have to do; it lets them decide themselves. The government's job is to provide sufficient information and infrastructure. The Japanese government uses a similar approach. For instance, when the Japanese firm Ramian entered Taiwan, the Japanese government invested in the central kitchen to help the company develop the proper facilities in Taiwan.Taiwan needs to take a realistic approach to its economic development. Many countries in the world want closer ties with Taiwan and this is strength for our outbound development. This arises from the situation that many of those countries also have a tense relationship with China. Still, Taiwan has its work cut out for it in South and Southeast Asia. Taiwanese businessmen face political issues in some of these countries. The only way to resolve this is by building substantive relationships with locals, and thus building mutual trust. Only then can Taiwanese businesses make money in these markets. Find new value in time-tested methods When criticizing the political situation in Taiwan, we should criticize the issues and not the people. And we should take the big picture into consideration when we criticize. In recent months, it seems almost everyone has some advice for the president and premier about how they can do their jobs better. And if they don't follow that advice, then they must be wrong, say their critics. This is a problem. Taiwan's long-term economic decline reflects problems with industrial structure, competitiveness of local industries, and worker productivity. All of this comes back to the problem of low wages. If we do not sort out the low wage issue, Taiwan will face a grim day of reckoning. When Chiang Ching-kuo was president, the Taiwan economy grew a little under 9% annually. That figure fell to a little below 7% during Li Teng-hui's presidency, less than 5% during Chen Shui-bian's presidency and below 3% when Ma Ying-jeou was president. Can Taiwan afford to let growth slip further? Taiwan has experienced tougher times than what we face today. National defense once accounted more than 50% of the overall central government budget. Inflation was bad here in the past too. Yet we overcame these obstacles. I suggest we look back on our past successes to reinvent ourselves, so that we can loosen regulations and reinvigorate the economy. We need to adapt to changing circumstances to survive. In 2007, I was invited to Singapore as an observer. They developed a 10-year plan (2007-2017) that actually was completed in 2017 thanks to deregulation and innovation. Although the Binhai Plan ended up costing NT$500 billion, well over its original NT$200 billion budget, the result was outstanding. The Singapore River now doubles as a reservoir. Now both Singapore and Taiwan want to develop smart cities. I hope this time Taiwan can take advantage of logistics, cash flow and digital information to do what's necessary to reinvigorate the economy. (organized by Cai Mei-chuan)