S.E.A.View

Taiwan's 2016 elections and relations with Asean

This Saturday, Taiwan's elections will kick off the 2016 electoral calendar in Asia. As Ms Tsai Ing-wen and her Democratic Progressive Party (DPP) will very likely defeat Mr Eric Chu and the ruling Kuomintang (KMT) in both the presidential and legislative races, it is worth analysing the implications for the region, particularly South-east Asia, if Ms Tsai secures Taiwan's presidency.

At a DPP diplomatic reception last September, Ms Tsai laid out her foreign policy strategy, focusing on South-east Asia.

She announced that "a future DPP administration will pursue a 'New Southbound Policy' in the years ahead", aiming to strengthen Taiwan's economic and cultural ties with Asean countries and India.

Ms Tsai's "New Southbound Policy" originates from former president Lee Teng-hui's "Go South" policy, formally launched in late 1993 when Taiwan's currency was strong and overseas investment was lucrative.

Worried about the risks inherent in increasing Taiwan's economic interdependence with China,

Mr Lee encouraged Taiwanese companies to expand foreign investment in South-east Asia.


Campaign posters and banners displayed in public areas ahead of the presidential election in Taipei. Taiwan will hold its presidential election on Saturday.  - PHOTO: EUROPEAN PRESSPHOTO AGENCY

Mr Lee's attempt initially saw Taiwan's commercial ties with Asean expand significantly.

From 1993 to 1996, Taiwan's total approved investment in Asean was valued at over US$15 billion. During the same four-year period, China attracted relatively less approved investment from Taiwan - around US$6.5 billion in total.

However, due primarily to the rise of China's economy and the impact of the 1997 Asian financial crisis, Taiwan's overseas investment started shifting from Asean to China in the late 1990s.

Between 1997 and 2000, Taiwan's investments in China grew to US$10.23 billion, surpassing its steadily decreasing US$10.2 billion of investments in Asean. This trend continued and the gap widened under both former president Chen Shui-bian and current President Ma Ying-jeou.

In 2001, Mr Chen relaxed the rules for investments in China, and Mr Ma proactively expanded cross-strait economic ties after 2008.

OVER-RELIANCE ON CHINA

From January 1991 to May 2008, about 56 per cent (US$69 billion) of Taiwanese accumulated overseas investment went to China. Under Mr Ma's presidency, this percentage climbed to 61 per cent (US$153 billion) from January 1991 through October last year. These figures illustrate why there are growing concerns among voters regarding Taiwan's perceived over-reliance on Chinese markets.

In a similar vein, China has become Taiwan's largest export destination since 2002. In 2007, 41 per cent of Taiwan's total exports went to China (including Hong Kong). From January to November last year, that number dropped to 39 per cent. This development is often cited by Mr Ma as an argument against criticisms that his policies have made Taiwan more dependent on China's economy.

The fact is, Taiwan has put more eggs into its Asean export basket over the past seven years. Exports to Asean accounted for 14.7 per cent of its total exports in 2007. As of November last year, that figure went up to 18.3 per cent, with Singapore the destination for one-third of its exports to Asean (6.2 per cent). Asean is currently Taiwan's second largest trading partner after China, and before the United States, Japan and South Korea.

Should Ms Tsai gain power this year, she must strive to embed Taiwan more deeply in Asean - the world's most vibrant economic region. It is urgent to facilitate more trade and investment collaboration between Taiwan and Asean now, while Taiwan still remains the third largest foreign investor in Thailand, and fourth in Malaysia and Vietnam.

The Asean Economic Community, officially launched two weeks ago, is expected to further economic integration in the region over and above the Regional Comprehensive Economic Partnership and the Trans-Pacific Partnership. Although Ms Tsai also said "trade and investment will form just one component of a diverse and multi-faceted partnership", she will need to prioritise this component and promote Taiwan's economic links with Asean.

CROSS-STRAIT TIES AND ASEAN

Since 2008, the Ma administration has conducted foreign policy under the banner of "viable diplomacy" - an approach of warming ties with China while expanding Taiwan's role in the international arena. In Asean,

Mr Ma's tangible achievements include signing a free trade agreement with Singapore, adding Malaysia and Indonesia to the visa-waiver programme already authorised by Singapore, and establishing semi-official trade (TAITRA) and development (TaiwanICDF) offices in Myanmar.

Mr Ma also travelled to Singapore for the first time since he assumed the presidency, to pay respects to the late Minister Mentor Lee Kuan Yew when Mr Lee died in March last year, and he met Prime Minister Lee Hsien Loong after the historic Ma-Xi meeting in November last year. Mr Ma owes these diplomatic breakthroughs to peaceful cross-strait relations grounded in the "1992 consensus" - a tacit understanding that both Beijing and Taipei can insist on the "one-China" principle, but agree to disagree on its definition.

It is in Asean's interests to see stable cross-strait relations, as it would allow Asean countries to cooperate with Taiwan with lower risks of antagonising China. This is why Ms Tsai, who currently has no intention of using the term "1992 consensus", must come up with a feasible formula that can serve the dual purpose of maintaining the status quo in the Taiwan Strait and strengthening economic and political ties with South-east Asia.

On the cultural front, Taiwan should continue to foster its people-to-people connectivity with Asean by improving the rights of immigrants and migrant workers, and further promoting tourism. Last year, about 13 per cent of Taiwan's record-breaking 10 million foreign visitors were from South-east Asia, while 41 per cent were from Mainland China. Among Asean members, the island waives visa requirements only for tourists from Singapore and Malaysia. Taiwan should follow in the footsteps of Japan and South Korea and consider granting visa-free access to travellers from Thailand, Brunei and Indonesia.

In the end, any policy that facilitates people-to-people exchanges will promote mutual understanding between Asean and Taiwan - a necessary step for Taiwan to effectively "go south" and join the regional integration.


•The writer is a research associate at the Centre on Asia and Globalisation, Lee Kuan Yew School of Public Policy, National University of Singapore.


•S.E.A. View is a weekly column on South-east Asian issues.

A version of this article appeared in the print edition of The Straits Times on January 14, 2016, with the headline 'Taiwan's 2016 elections and relations with Asean'. Print Edition | Subscribe