Taiwan Economy: $4.41 Billion Economic Stimulus Package Passed

Taipei, 13 Apr. A $4.41 billion economic stimulus plan was passed late last week to help Taiwan pull through the economic crisis. The plan is part of a larger $14.69 billion package that will last four years.

“We hope to create some 190,000 to 220,000 new jobs and to contribute a 0.68% increase to the gross domestic product with the budget,” President Ma Ying-jeou said at a press conference.

Taipei, 13 Apr. A $4.41 billion economic stimulus plan was passed late last week to help Taiwan pull through the economic crisis. The plan is part of a larger $14.69 billion package that will last four years.

“We hope to create some 190,000 to 220,000 new jobs and to contribute a 0.68% increase to the gross domestic product with the budget,” President Ma Ying-jeou said at a press conference.

Taiwan slipped into recession in the fourth quarter of 2008 with a disastrous 8.36% contraction. In 2009 it is expected to shrink 2.97%.

Taiwan has an export-driven economy, and lack of foreign demand for its products, mostly semiconductors, electronics, textiles, plastics, chemicals, and auto parts, has resulted in widespread business closures and retrenchments. Taiwan’s unemployment rate is at 5.75%, the highest it has been in decades.

This is particularly difficult for a nation that is used to a relatively high standard of living and per capita GDP. Taiwan is Asia’s sixth-largest economy. This new plan is expected to cut unemployment to less than 4.5% before the end of 2009.

In previous efforts to revive the slowing economy, Taiwan attempted to spark domestic spending by handing out coupons equal to just over US $100 to each of the 22.7 million citizens.

President Ma Ying-jeou was elected in March 2008, on promises of reviving the struggling economy, in its first recession since 2001.

“Ma promised an annual growth of 6% per year,” EconomyWatch correspondent Hector Sim said. “This may be a bit ambitious, but it got him elected, and this package is a step in the right direction. It is remarkable considering the multi-party support it has been given.”

Lu Shiow-Yen, from the ruling Kuomintang party said, “The bill was passed because this would help the island’s economy. This will help create jobs, improve Taiwan’s domestic economy, and also boost the island’s international competitiveness.”

Ma passed a previous economic stimulus package in September 2008. At the time, the government was preparing for a slowdown but the severity of it was vastly underestimated.

Ma has made efforts to improve ties with mainland China, and the economic repercussions are being felt. The nation’s increased exposure to China via new, more open policy means Taiwan is more economically susceptible than before.

The larger package covers areas such as education, infrastructure maintenance, construction, urban renewal, and more. Only the first year of the plan has been approved; the budgets for each subsequent year will be reviewed on an annual basis.

Vladimir Gonzales, EconomyWatch.com