Reasons why regulations on businesses should be eased

Taiwan’s President Tsai Ing-wen recently said during a Central Standing Committee meeting of the Democratic Progressive Party (DPP) that the country’s gross domestic product (GDP) per capital is expected to surpass that of South Korea for the first time since 2003.

Taiwan’s companies played a leading role in the recent achievement. TSMC, the country’s leading company, has led the economy with a majority of market share - 70 percent - in the non-memory foundry market. TSMC’s corporate value surpassed Samsung Electronics’ since November 2019. In addition to TSMC, Taiwan is also home to leading semiconductor, equipment and component companies, including UMC MediaTek. Semiconductor accounted for 37 percent of the country’s export and 17 percent of its GDP last year.

Taiwan was once called a supplier to China. It lost a competitive edge in manufacturing to China and many companies fled to China after a pro-China government came to power. Since her inauguration in 2016, President Tsai Ing-wen has been helping businesses flourish again, saying that private businesses are the main drivers of job creation. She attracted businesses back to the country by introducing a comprehensive support package that included financial, tax, water, electricity, and personnel benefits. In order to maintain “super gap” in the field of semiconductor, which is a national strategic industry, Taiwanese universities recruited new students majoring in semiconductor twice a year and adjusted school’s vacation periods to nurture semiconductor talent all year round. During the drought season in May last year, the country persuaded farmers to use the water for farming for chip plants.

On the other hand, South Korean companies are finding it hard to resolve manpower shortage. The so-called “Special Act on Semiconductors” was passed in January this year, but it did not include the most important part, which is expanding the number of students at semiconductor department. Semiconductor companies asked for a relaxation of the 52-hour workweek if injecting fresh manpower is not possible, but the request was rejected. Tax credits for investment have also been reduced. There was nothing “special” about the act.

The same can be said of future industries that are bound by various regulations. According to one statistics, the total market capitalization of the six leading Korean companies representing the country’s three new industries such as online platform, bio/health, and fintech is less than one-third of Tencent’s. Taiwan has already shown how to boost country’s potential growth rate and create jobs. It is to help companies do business by easing regulations and nurturing talent in the high-tech industry. Hopes are high for a change of policy direction by the Yoon Suk-yeol administration.