Taiwan, for long, has been engaging with the world in what many in their government term ‘chequebook diplomacy’. In the recent past, however, the country which has remained in the showdows of China, has been trying to come on a level playing field that includes bringing in a game-changing agreement — Economic Co-operation Framework Agreement (ECFA) with China — which will take trade relations between the two to the next level. Taiwan is looking to use this agreement to expand its relations with other countries and provide a springboard for emerging economies like India to access the Chinese market.
In a chat with Raghuvir Badrinath, Wenchyi Ong, Representative, Taipei Economic & Cultural Center in New Delhi detailed how India and Taiwan can take forward their association.
Taiwan and India have been trying to improve trade relations with each other. The bilateral trade in 2009 was only $5 billion, around 1 per cent of Taiwan’s global trade. Now that Taiwan has signed the Economic Co-operation Framework Agreement with China, which will further increase your trade with China. In this scenario, what are the avenues available to up trade with India?
ECFA is truly historic in the sense that it was concluded between two longtime rivals for mutual benefit. With ECFA, we can expect a greater interaction on trade and investment between Taiwan and China. As our President Ma Ying-Jiou stated, the agreement will also make Taiwan a “springboard” for foreign investment into mainland China. It is a prelude to similar trade deals between Taiwan and other Asian nations. For India, ECFA may be perceived as an opportunity to do more business with China through Taiwan.
Taiwan has been following India’s growth story closely and with a keen interest. After decades of little contact, our two countries set up representative offices in each other’s capital in 1995. Since then, our relations have grown steadily. To enhance ties, Taiwan and India have signed aviation and investment agreements. We are also in the process of negotiating a double taxation avoidance agreement. All these will lead to more robust ties between India and Taiwan.
Our two-way trade reached $5 billion in 2009, which was 1/10 of China’s trade with India, or 1/3 of South Korea’s. This figure suggests, however, there is room for growth in view of Taiwan’s $73 billion trade with the South East Asian countries and $109 billion with mainland China alone last year. Because of the increasing contact between our sides, I am sure Taiwan’s trade volume with India will grow on a double-digit basis in the coming years and hopefully to double by 2016.
India has emerged as a major software exporter and Taiwan is aggressive in hi-tech manufacturing. What is the scope of cooperation between the two countries?
India has a huge domestic market for electronics and ICT products, but for some reason, India is giving away a large chunk of it to foreign brands. Taiwan is a world leader in manufacturing capability and has success stories in China and most South East Asian countries. I am promoting a win-win strategy for India and Taiwan where Indian household names like HCL, Videocon or Micromax, to form joint-ventures with Taiwanese manufacturers in India. By doing so, we will be able to increase employment on a large scale, make quality products at a lower price, reclaim the home market for Indian hands. Last, but not the least, Indian consumers will be the beneficiaries because they will be able to enjoy quality Indian products at a more affordable price. I like to tell my Indian friends that with deft hands given by Gods to make fine jewellery, you should be able to do just as well in hardware manufacturing. And the combination of Indian and Taiwanese will create dramatic synergy.
What steps do you think India should take to improve bilateral relations with Taiwan without of course offending China, a major trade partner for India?
Presently, we take turns in holding annual secretary-level consultative meetings on both commerce and science. There are indications that suggest a willingness of the two governments to enhance ties. In recent months, we are pleased with the increasing number of important visitors from India to Taiwan, including an additional secretary of IT ministry, retired senior foreign and military officers and even India’s former President Abdul Kalam in December 2010. Exchanges of this order will certainly help.
On the multilateral front, Taiwan has adopted a pragmatic approach to engaging in world affairs through meaningful participation in global organizations such as the World Health Organization (WHO) and the International Civil Aviation Organization (ICAO), and activities under the United Nations Framework Convention on Climate Change (UNFCCC). Such efforts have received the support of major players such as the United States, Australia and the European Union. We sincerely hope India will likewise lend its support to our participation in global forums.
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Taiwan has been increasing its investments in India slowly and a majority has been in small and medium sector. When will large investments take shape and what are the policies you look forward to from India for it? There are a few major names from Taiwan, like Acer, HTC Asus who are expanding in Inda. What is stopping more companies from Taiwan focussing on India?
India’s economic think tank, ICRIER, will co-host a conference with its Taiwanese counterpart on January 17 and January 18 to address the issue. This is happening because both sides are realising the importance of academic involvement in fostering better trade and investment relationship. I hope that a strategy for closer economic interaction will be developed to guide our two business sectors. Indeed, Taiwan has become China’s single largest foreign investor, pouring in more than $200 billion over the past 20 years. This heavy dependence on the Chinese market has made it necessary for Taiwan to diversify. The first destination for diversification was the ASEAN countries. Over the years, total investment has topped $70 billion. Taiwan is now the single largest FDI in Vietnam and the 2nd largest in Indonesia. I think it is high time we considered India as the next destination.
So far, the aggregate investment from Taiwan amounts to about $1 billion, which is only 1 per cent of Taiwan’s total outbound investment. The potential is simply tremendous. Just come to think of it. if Taiwanese companies which have had heavy presence in China divert only 1 per cent from China, for instance, that would mean $3 bn, or Rs13,000 crore in India.
Some Indian states such as Tamil Nadu, Gujarat, AP and Maharashtra have been proactive in making serious efforts to attract Taiwanese investments. I would like to see the momentum continue to grow. In the meantime, I have witnessed an increasing interest from Taiwan too. In 2010 alone, we have helped arrange the visit of over 40 delegations. Areas include informatics, food processing, special fabric, machine tools, auto parts.