Trade ties up as Taipei looks ‘south’
SINCE Tsai Ing-wen became Taiwan president in May last year, Taipei’s ties with mainland China have strained due to her insistence that Taiwan is not an integral part of China.
Beijing has made known it cannot tolerate rhetoric that challenges its uncompromising “One China” policy.
Amid the simmering tension between Beijing and Taipei, as well as rising international isolation of Taiwan due to China’s rise, Malaysia has unexpectedly become one of the beneficiaries in trade and investments.
Investments from Taiwan into Malaysia had declined in recent years on the back of China’s emergence. But developments this year are uplifting for Kuala Lumpur, with bilateral trade and tourism data recording substantial growth in the first half of this year.
Taiwan’s economy has been relying heavily on China, with China being its top trading partner and main anchor for outbound Taiwanese investments.
Last year, cross-Straits trade totalled US$179.6bil (RM752.9bil), more than double that of Taiwan’s trade with its close ally United States at US$84.9bil (RM355.9bil).
In the name of economic diversification, Tsai revived the island’s southward pivot last September, calling it the New Southbound Policy (NSP).
She intended to move Taiwan’s focus to South-East Asia, South Asia and Australasia – with Malaysia as one of the countries given priority.
While the NSP looks economic in nature, it is seen by analysts as a partial veil to strengthen ties with these countries.
Although Asean nations adhere to the “One China” policy, they have maintained trade and economic ties with Taiwan.
The four main ways to achieving NSP objectives are via economic cooperation, talent exchange, resources sharing and regional connectivity.
Out of the 18 countries included in this pivot, Malaysia is among the six given special focus, along with the Philippines, Vietnam, Thailand, Indonesia and India.
The rest are other Asean countries, Bangladesh, Bhutan, Nepal, Pakistan, Sri Lanka, Australia and New Zealand.
“Geographically, Malaysia is strategically located in the centre of South-East Asia. Most importantly, Malaysia can be a springboard for us to venture into the vast global Muslim market,” James Chang Chi-ping, the representative of the Taipei Economic and Cultural Office in Malaysia tells Sunday Star.
The Muslim factor
Malaysia has gained international recognition for its halal certification issued by the Malaysian Islamic Development Department (Jakim).
Taiwan, with its estimated 100,000 local Muslim residents and 400,000 foreign Muslims, is eager to tap into the huge global market of 1.8 billion Muslims.
“We want to strengthen our cooperation in the halal industry. Through Malaysia, we can access Asean countries and the global Muslim population,” he says.
It aims to have more Muslim-friendly facilities within its shores and learn the know-how of producing halal goods and services, he says.
Plans are afoot to attract more Muslim tourists to the island.
“The whole of Taiwan has 103 restaurants and hotels with halal certificates issued by Jakim; 45 of which are in the capital city of Taipei,” Chang says.
In April last year, state-owned Taiwan External Trade Development Council set up a halal industry promotion centre.
“With 2017 being the ‘year of action’ of NSP, we will allocate more resources to build a friendly environment for Muslims.”
Close economic link
Economic cooperation between Taiwan and Malaysia has been very close since the early 1990s, which saw the influx of Taipei industries and the outward push of the strong Taiwanese currency.
Taiwan investments in the early 1990s, mainly in the steel and manufacturing sectors, had helped lift Malaysia from is economic recession.
“We used to be Malaysia’s largest investor in the 1990s when we encouraged Taiwanese businesses to invest here.
“Today, we have more than 1,700 Taiwanese entrepreneurs here, including 22 listed companies, with a cumulative investment of US$12.3bil (RM51.6bil) as at end of last year,” Chang says.
Bilateral trade totalled US$14bil (RM59bil) last year.
Taiwan is Malaysia’s fourth investment partner and eighth largest trading partner.
On Malaysia’s part, it is Taiwan’s eighth largest trading partner and second largest trading partner in Asean, after Singapore.
“For the first half of 2017, bilateral trade recorded was US$8.2bil (RM34.4bil), a year-on-year increase of 25%. We foresee this year’s total will be higher than last year’s, which is a fruitful result for us.”
Taiwan’s investment in Malaysia this year will see a marked increase as Hotayi Electronics (M) Sdn Bhd has reinvested RM1bil to expand its plant in Penang to create 1,000 jobs.
Taiwan is no stranger to Malaysians, especially the Chinese community.
Chinese Malaysians love its pop culture and literary scene. They like to visit this island for its mouthwatering food and beautiful landscape.
Last year, Taiwan welcomed 474,420 Malaysians, an increase of nearly 10% and the highest among Asean countries.
In the first half of this year, 256,703 Malaysians travelled to Taiwan – a year-on-year increase of 19.2%.
“From 68 flights a week when I first arrived here in October 2015, we now have 130 flights a week by five airlines serving the Taiwan- Malaysia route,” Chang says.
There are 16,051 Malaysian students in Taiwan this year, topping the list of foreign students there. And over 60,000 Malaysian students have completed their studies there.
Malaysians are taking up undergraduate programmes, master’s and doctorate degrees in science and engineering, business administration, social sciences and arts.
“This year, student visa applications we processed from January to July increased by 10%,” Chang says.
Taiwan’s Education Ministry has also increased its quota of full scholarships for Malaysia from 20 to 35.
There are also other types of scholarships and fellowships reserved for Malaysians.
NSP vs Belt and Road?
As the NSP is targeting many countries under China’s Belt and Road initiative, this inevitably leads to talk that the NSP is competing with China’s huge economic-cum-diplomacy plan.
But Chang exerts that this is not the case; as the Belt and Road plan has made much headway in Malaysia and other Asean nations.
“Malaysia and Taiwan already have close bilateral ties all these years, from investment and trade to people-to-people exchange,” he explains.
“We used to have Southbound Policy, which focused on setting up factories, manufacturing and being original equipment manufacturers (OEM).”
The NSP, he says, encompasses all areas with the aim of building a comprehensive new partnership (with countries) through strengthening communication and cooperation.
“If we see suitable areas for us to establish cooperation, be it cultural, commercial, education or others, we will work on them.”