Taiwan jumped from 61 to 46 as detailed by a report in last year’s third quarter by the China Times covering the World Bank’s Doing Business 2010 document. This was not done by spendthrift policies of land grants at below market prices but through eliminating bureaucracy and truly streamlining procedures, rather than the cosmetic “reforms of reforms” of government agencies. One of the main reasons for the improved World Bank ranking has to do with Taiwan’s national legislature passing, more than a year ago, an amendment to the Company Act, which eliminated all minimum capital requirements. As a result, Taiwan moved up 90 places, in the category “starting a business”, from 119 last year to 29 this year. Too many businesses need all the cash at their disposal for paying their start-up costs, such as expensive registration of patents, websites, offices, and so on, and for other tangible and intangible assets on which the company’s foundation are based, rather than on the cash stashed in bank deposits as “capital” dead wood.

Taiwan’s Company Act amendment also reduced the time it takes to set up a new company. According to an official of Taiwan’s Council for Economic Development, the required time will be shortened to roughly three weeks, after the amendment to “Rules of the Business Registration Act” is passed. The second main reason for the improvement in the World Bank ranking system has to do with reforms of the much-criticised tax system carried out last year. The reforms allow companies to pay their value-added taxes using both e-filling and e-payment methods.

Taiwan was also ranked 12th among the 132 countries surveyed by the World Economic Forum in its Global Competitiveness Report 2009-2010. Taiwan’s ranking was up five notches from the previous year, a sure sign of prudent government spending and economy promoting measures. South Korea, one of Taiwan’s main competitors, dropped six places to No 19, in spite of the fact that a competitiveness enhancement committee was set up. This goes to show that a country’s fortunes can be influenced both by domestic policies as well as through international developments, over which no government has absolute control. The results of the ranking are rather subjective since roughly 70 per cent of the WEF’s report is based on information gathered from questionnaires. There might be various factors that might influence over- or under-reporting depending on the particular nation’s overt or covert aims, such as Communist China’s attempt to keep its currency artificially low against the dollar!

After the KMT Nationalist Party was elected after being in opposition for a number of years, it pushed for deregulation and allowed mainland enterprises to invest in Taiwan. These actions probably helped to place Taiwan at No 29 from No 64 in the previous year, in the category called “business impact of rules on foreign direct investments”.

In the “soundness of banks” category, Taiwan improved 23 places to end up at No 94. Despite the improvement, the new ranking still puts Taiwan in the latter half of all countries. In the “government debts” category, Taiwan fell from 61 to 79 in the WEF report. Taiwan also dropped in the “government surplus and deficit” category to No 57. Since these two indexes are based on the ratio of government debt to domestic gross product, the decline in rankings to the same position as mid-level nations has been perceived as a worrisome sign by an island nation which has been blessed with forward looking and prudent democratic elected administrators in contrast to some other much larger nations which still keep their populace in thrall.

J. Bonett Balzan

SLIEMA