Taiwan Seeks to Build Soft Power With Retooled Southbound Policy

Taiwan is seeking to boost its regional soft power by throwing its weight behind dozens of companies investing around Asia and by promoting areas such as education and tourism as it looks to reduce its economic reliance on China. (Reuters Photo/Jorge Adorno)

By : Jess Macy Yu | on 4:26 PM October 13, 2017
Category : International, Asia-Pacific

Taipei. Taiwan is seeking to boost its regional soft power by throwing its weight behind dozens of companies investing around Asia and by promoting areas such as education and tourism as it looks to reduce its economic reliance on China.

The self-ruled island is stepping up its presence in the region at a time when relations between Taipei and Beijing have nosedived since Tsai Ing-wen of the pro-independence Democratic Progressive Party won the presidential election last year.

"Taiwan must play an even more active and prominent role in order to participate in the future of the region," Tsai said at an international policy-related forum in Taipei this week.

"Redefining Taiwan's role in the region is one of my highest priorities as president."

Taiwan is targeting deeper economic and political relations with 10 countries from the Association of Southeast Asian Nations (Asean), six South Asian countries, as well as Australia and New Zealand, a move some analysts say will likely further rile Beijing.

Tensions have risen since Tsai assumed office in May 2016, with Hong Kong seizing nine Singaporean armored vehicles in November after military exercises in Taiwan. China warned foreign countries against maintaining military ties with Taiwan, which it views as a wayward province.

In addition, Panama and Sao Tome and Principe have broken diplomatic ties with Taiwan in favor of China, leaving Taiwan with just 20 countries with which it maintains formal relations.

Investment Push

Seventy well-known companies, including Cathay Life Insurance Co, Century Iron and Steel Industrial Co Ltd and Kenda Rubber Industrial Co are considering fresh or expanded investments in the region, according to an economic ministry official.

A Cathay spokesman confirmed the company is eyeing opportunities in Southeast Asia, while Century Iron and Steel plans to expand its existing investments in Myanmar, according to a spokesman.

Kenda Rubber, which has projects in Vietnam and Indonesia, is considering investments in other regional markets, particularly India, a spokesman said.

Taipei said it will provide such companies with greater consulting services and investment protection for their overseas operations and has earmarked an additional T$2.81 billion ($93 million) in its 2018 budget for the policy, 63 percent more than this year.

The policy features new initiatives, including visa-free travel for visitors from several countries, scholarships and internships for overseas students, and a plan to train 1,000 doctors in Taiwan over a four-year period.

The push has already seen some success. Taiwan exports to 18 southbound countries grew their fastest in five years, up 13.5 percent in the first half of 2017.

The number of students from southbound countries to Taiwan rose 9.7 percent in the 2016 academic year versus the previous year, while southbound tourist visits climbed 36.7 percent in the first half.

Long Road Ahead

Government officials acknowledge, however, more work needs to be done.

"The policy's goal is broad and ambitious," Minister John Deng, who oversees the policy's implementation, told Reuters. "To deepen the relationships, it's a long road."

Since its inception in 1994, the original southbound policy has been heavily focused on trade and overseas investments.

Tsai's "new" southbound policy is concentrated on several industries, particularly medical cooperation, industrial supply chains, regional agriculture, industry talent cultivation, and innovation-based industries.

The government is reviewing investment agreements with the Philippines and Vietnam, Deng said, and hopes to review agreements with all other southbound partner countries.

The Philippines and Indonesia are big markets with stronger growth potential and are the most likely destinations for Taiwanese companies to expand, said Ma Tieying, a DBS economist.

Roadblocks Ahead

Taiwan's attempts for a stronger regional presence will nevertheless face challenges, including resistance from China, which is heavily promoting its own "Belt and Road" initiative.

Taiwan's official stance is that it will work alongside China's own push into the region, but an unpublished strategy recommendation paper guided by a presidential advisor and seen by Reuters, described China's attitude toward the new southbound policy as "antagonistic."

China is likely to pressure big companies in order to influence Taiwan's cross-strait policy direction, the paper said.

China's Taiwan Affairs Office referred a question on the new southbound policy to a response it gave in May, in which it said any moves that "run counter to the rules of economic development and are only based on considerations of political aims will only harm Taiwan's economy and the interests of Taiwanese businesses."

Already, at least one Taiwan university, National Sun Yat-sen University, has faced difficulties setting up an educational centre in the Philippines. It was told by more than one Philippines university that a "Taiwan" facility on campus would not be feasible due to China's preferences, according to two people familiar with the matter.

Instead, the centre was set up in a business district in Manila.

When contacted by Reuters, National Sun Yat-sen University said it met difficulties securing office space from partner universities. In the future, it hopes to give students broader educational opportunities including ones specific to Taiwan's language and culture, according to Chih-wen Kuo, vice president for international affairs at the university.

"No matter what Taiwan does, China will think that Taiwan is acting behind the scenes to gain something politically or diplomatically," said Titus Chen, an associate professor at National Sun Yat-sen University. "Beijing will likely do its utmost to frustrate Taiwan's industrial and educational investment moves."

Reuters

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