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“THE bottom is not falling out of Taiwan’s economy,” wrote HSBC economist Donna Kwok in a research note to clients late last month. In her view, Taiwan need not worry too much about weaker economic growth. After all, the economic downturn was essentially the result of the decline in global trade. In other words, as international trade revives, Taiwan’s economy will bounce back.

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JUST when it seemed Taiwan’s economy could hardly get worse, it did. After five straight months of decline, exports tumbled yet again last month, defying predictions that the fall would bottom out.

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DOES Taiwan have a debt problem? In normal times, the question would not even be asked. After all, Taiwan has a debt to gross domestic product (GDP) ratio well below troubled Western nations such as Greece, Italy and the United States. But these are not normal times, either globally or domestically.

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“I AM pro-Japanese, not anti-Japanese,” Taiwan President Ma Ying-jeou declared earlier this month. The occasion was the unveiling of a memorial garden dedicated to a Japanese engineer credited with the construction of a canal and reservoir in southern Taiwan during the Japanese colonial period.

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WITH municipal elections due at the end of the year, politicians in Taiwan’s ruling Kuomintang (KMT) are becoming increasingly nervous about supporting unpopular measures. Indeed, the KMT has been on the defensive since August last year, when a tardy response to Typhoon Morakot prompted widespread criticism and forced an increasingly unpopular President Ma Ying-jeou to replace his premier and other ministers.

Key Political Risks

Taiwan's main problem is its trade dependent economy. With an export to GDP ratio of 74 per cent, it is one of the most vulnerable in Asia to further downturn in global trade.

The government seems helpless in the face of continued economic decline.. An economic stimulus package has been heavily criticised, and a series of policy flip-flops over power and fuel prices has done nothing to improve its image.

In recent months the finance minister has resigned over a controversial capital gains tax, and the cabinet secretary-general was arrested over allegations of bribery. 


  • Results of free trade talks with Singapore and New Zealand.
  • Outcome of Taiwan's efforts to join the Trans-Pacific Strategic Economic Partnership Agreement.
  • Evidence that Taiwan electronics firms are stepping up expenditure on research and development.
  • Moves to liberalise regulations on mergers and acquisitions in ways that may help Taiwanese firms adjust to new economic realities.
  • Continuing selling of Taiwan stocks by foreigners. Foreigners own a large proportion of local stocks, and a major selloff could put pressure on the island's foreign reserves at a time when exports are falling.

About Me

My name is Dr Bruce Gale and I am a senior writer with the Singapore Straits Times. I studied at  LaTrobe University (BA Hons) in Melbourne and later at the Centre for Southeast Asian Studies at Monash University (MA). My PhD thesis, which focussed on Malaysian political economy, was completed at the Malaysian National University (Universiti Kebangsaan Malaysia) in 1987.

From 1988 to 2003 I was Singapore Regional Manager for the Hong Kong based Political and Economic Risk Consultancy (PERC). 

I have written several books and articles on Southeast Asian affairs, including Political Risk and International Business: Case Studies in Southeast Asia (Pelanduk Publications, 2007). Books on language include Mastering Indonesian: a guide to reading Indonesian language newspapers (Pelanduk Publications, 2008)

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