Taiwan’s SMEs continue to prosper

Taiwan is striving to increase its competitiveness by relaxing current restrictions and attracting more foreign investment, establishing less complicated business regulations, and developing value-added service sectors, like healthcare, and cultural tourism. Although Taiwan’s competitiveness ranking has declined, its small to medium-sized companies have continued to do well.

In a speech on Taiwan’s competitiveness on October 13th in Taiwan, John R. Wells, the president of the Lausanne-based International Institute for Management Development (IMD), pointed out Taiwan’s strengths and weaknesses. As a result of the global financial crisis, the economic performance of many nations has fallen sharply. Taiwan has suffered particularly badly because of its export-oriented economy. In the IMD’s Competitiveness Yearbook 2009 released in May, Taiwan was ranked 23rd out of the 57 nations surveyed, dropping from 13th place in 2008.

Under closer examination, the small to medium-sized businesses in Taiwan did far better than large corporations. In the report, Taiwan ranked 14th in the efficiency of small to medium-sized businesses, better than Japan’s 36th. Taiwan ranked 7th in entrepreneurship and 11th in market reaction resilience, a stress test of how quickly economies rebound.

Wells said business health is the key to building a nation’s competitiveness. Even with the advantages of low taxes, complete infrastructure and innovation capability, Taiwan’s attraction to foreign investment fell far behind China, Hong Kong and Japan because Taiwan’s laws are too complicated and restrictive.

With its unique culture and fine craftsmanship, Taiwan can surely attract visitors from all over the world, he observed. “Taiwan can learn from Spain’s experiences in developing its tourism industry,” he said.

Echoing Wells’ points, Taiwan Institute of Economic Research president David Hong said that Taiwan’s economic growth in the past have relied on manufacturing. Although Taiwan still needs its manufacturing industries, it needs to grow its service sector.

Even though Taiwan’s ranking fell in IMD’s report, international news media like Dow Jones News Service, AFP, Bloomberg News Services, Japan Economic News, The Wall Street Journal Asia, and Singapore’s Straits Times, have all reported on Taiwan’s economic recovery. Furthermore, domestic indictors compiled by Taiwan's Council for Economic Planning and Development (CEPD) in the last three months indicate a sustainable improvement around the corner. Optimism about the anticipated economic outlook is buoyant.