Eyeing China-ASEAN FTA, Taiwan businesses hope to leverage ECFA, boost trade with SE Asian markets

With the signing of the Economic Cooperation Framework Agreement (ECFA), Taiwanese businesses are hoping for better access to southeast Asian markets.

"Once the ECFA comes into effect, the mainland will be a platform for Taiwanese exports to ASEAN markets," said Kristy Tsun-Tzu Hsu, associate research fellow at Chung-Hua Institution for Economic Research. "This will not only create room for Taiwan enterprises, but also enable Taiwan industry to shift traditional businesses to Southeast Asian countries."

The members of the Association of Southeast Asian Nations, or ASEAN, are major export markets for Taiwan, and their markets are growing quickly, Hsu said.

"The China-ASEAN Free Trade Area has led to a boom in the logistics and tourism businesses. Taiwanese companies have much marketing and management experience in these businesses. There will be a lot of things to do."

The mainland and ASEAN are important markets for Taiwan's export-focused economy. Exports to the two markets account for 65 percent of the island's total exports.

But due to the lack of an economic agreement with the mainland, Taiwan has been unable to join in the region's economic integration process, weakening its competitiveness.

On Jan. 1 this year, the China-ASEAN Free Trade Area took effect, lowering the tariff on a majority of exports and imports between the two sides to near zero. At this time, Taiwanese businesses grew concerned they were being left out.

Mainland-based Taiwanese enterprises entitled to enjoy the tariff cuts in the China-ASEAN Free Trade Area will pay tariffs on goods bought from Taiwan until the ECFA takes effect. This is adding to their costs.

"The ECFA has brought us hope," said Roscher Lin, chairman of Taiwan's Association of Small and Medium Enterprises.

The ECFA agreement reached on June 29 means the mainland and Taiwan will "gradually reduce and remove trade and investment barriers and create a fair environment" for each other.

The agreement also had a list of products and services for the "early harvest program." Tariffs on these goods and services will be reduced to zero within two years of implementation.

Taiwanese companies' costs, especially small companies, will be greatly reduced as tariffs are dropped, Lin said.

"Our competitiveness in the mainland and ASEAN markets will be restored," he said.

To expand into the ASEAN market, Taiwanese businesses are looking for new gateways. One of these gateways is southwest China's Guangxi Zhuang Autonomous Region, which neighbors manufacturing-hub Guangdong.

Taiwanese businessman You Miao-sheng invested in a flower farm in Nanning, Guangxi's regional capital, last October. Before that, he grew flowers in Guangdong for over a decade.

"It takes three days to get fresh flowers to Vietnam from Guangdong. But only one day from Nanning," he said. "Guangxi also has better environment."

"Guangxi is going to be a new investment destination for Taiwanese companies," said Rock Hsu, chairman of Kinpo Electronics Inc.

A delegation from Guangxi ended a five-day visit in Taiwan on Monday. During the visit, 70 investment contracts and 56 trade deals were signed. The trade and investment agreements were worth 2.23 billion U.S. dollars.

Guangxi is a good geographic location for the Taiwanese companies hoping to boost trade with Southeast Asia. But it also has good transportation links with ASEAN nations - highways, railways and flights.

Businesses in Guangxi can enjoy its lower labor and land costs, with the central government granting the region populated with ethnic minority groups preferential treatment, Hsu added.

In the past few years, Guangxi has attracted some big Taiwan companies, including LiteOn, Taiwan's leading LED producer; Taiwan Cement, a major cement-maker; and Uni-President Enterprises Corporation, Taiwan's leading retailing and food company.

Some 1,319 Taiwanese companies have invested 2.76 billion U.S. dollars in Guangxi.

"We would like to provide better service and improve the investment environment to attract more Taiwanese companies. Let's share the opportunities provided by the China-ASEAN Free Trade Area," said secretary of the Guangxi Autonomous Regional Committee of the Communist Party of China Guo Shengkun, who headed the delegation's visit to the island.
(Source:xinhua)