Bernardo M. Villegas
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Taiwan Model (Part 1)

           By the most happy coincidence, I had planned a road show in Taipei—in cooperation with China Trust Banking Corporation (CTBC)—during the time that Taiwan was holding its January 16, 2016 election at which opposition leader Tsai Ing-wen won a historic landslide victory.  I actually was a witness of the way the Taiwanese went to the polls in the most peaceful and orderly manner because I accompanied a friend to vote in the school district to which he belonged.  I can attest to the fact that, despite their abundant use of paper in the voting process, the results were out in less than 24 hours.  This is a message to our own COMELEC that it is not a matter of computerization but rather of efficient organization.  I was edified to witness a country that not long ago was under authoritarian rule emerge into one of the stronger democracies in East Asia.  The first lady President of Taiwan reminded me of our own Cory Aquino, a shy and guarded person in her private life, who has evolved into a strong and determined leader deeply committed to Taiwan’s separate identity.  As a feature article in the Financial Times (January 23-24, 2016) reported, Ms. Tsai is one of the first women to be elected leader of an Asian state without coming from a dynasty.  She is also the first woman officially to govern a Chinese speaking nation since Empress Wu Zetian in the eighth century.

          As I told the close to 80 Taiwanese business people who attended the road show organized by a private group of business people from the Philippines, our timing could not have been better.  The Taiwanese elected a president who want Taiwanese to look South without in any way decoupling from mainland China which will continue to be attractive to their investors because of the huge domestic market their neighbor to the north has and will increasingly have.  As a new Taiwanese President is installed, the newly inaugurated ASEAN Economic Community will begin its work in process of introducing a freer flow of goods, services, capital, investment and people.  As some Taiwanese disinvest from China (as the Japanese, Koreans, and other foreign investors are doing), ASEAN countries are putting up Welcome signs. Taiwan has abundant surplus capital that can be very profitably invested in businesses that will cater to the close to 650 consumers of the ten countries that constitute the AEC.  It is axiomatic that the Philippines is the first stop.  I told the Taiwanese investors that we can be their gateway to the whole AEC.  I did not have to do much convincing because the sponsor of the road show—CBTC—is already very active in Philippine banking and has plans for more expansion. 

          I have been traveling to Taiwan for the last thirty years and have seen the dramatic transformation of a poor country into a First World economy.   What impressed me most in this last visit are the first class infrastructures that they were able to put up in record time:  an underground metro in Taipei that functions with clock-like precision; bullet trains connecting the major cities; nuclear plants that provide cheap and reliable supply of electricity and other infrastructures that we are still dreaming of when we talk about our Private Public Partnership (PPP) projects.  I saw how Taiwan in the first decades of its development efforts gave the highest priority to agricultural productivity of small farms through a very successful agrarian reform program supported by the most thorough going infrastructure building effort (farm-to-market roads, irrigation systems, post-harvest facilities, research and development, etc.).  Their Government also had the common sense (which our Government did not have) of exempting the sugar sector from fragmentation since it is a no brainer to realize that economies of scale are needed in sugar farming (which do not apply to rice and other commodities).  That is why before they plunged headlong into industrialization, they had the foundation of an efficient agricultural sector.  Then they went through the usual “East Asian Tiger” formula for industrial development:  first labor-intensive, export-oriented industries like garments, shoes, toys, etc.; then the capital-intensive industries such as steel, ship building, chemicals and cement; and finally the high-technology industries like computers and biotech.  They also established some very high-quality tertiary educational institutions together with word class research institutes.  With these well thought out strategic moves, Taiwan was one of the few economies in the last century to escape the middle-income trap (together with South Korea). 

          Now that the Philippines is poised to  grow from its slumber of decades of mediocre growth to middle income territory in the next ten years or so, there are  many lessons that Taiwan can teach us especially if they invest capital and transfer technology in a massive way in  our country.  Let us just remember that Taiwan was the Number One investor in China during the heyday of 10 to 12 percent GDP growth.  We have much to gain from Taiwanese technology in agribusiness, construction and infrastructure, heavy industries, electronics, renewable energy like solar and wind and food manufacturing.  Already the Taiwan International Ports Corp. (TIPC) is actively looking for investment opportunities at the Subic Bay Freeport Zone, together with other Taiwanese companies that have been planning to relocate to the Philippines as their country’s ports are already overcrowded. In fact, there is the Taiwanese-managed Subic Bay Gateway Park which already hosts some 80 direct locators and 60 sub-lessees, among them Taiwanese firms Wistron Corp., Taian Electric Co. Ltd., Taiwan Hitachi, and Ton Lung Metal Industry Co.  Although Subic is the most logical first location site that Taiwanese investors will consider, if they are looking for another export base to service the whole ASEAN market, Taiwanese firms targeting the Philippine market of 102 million consumers will be wise to consider alternative ports in Batangas City, Iloilo City and Cagayan de Oro City—identified in a study of the U.S. A.I.D. as the next international port cities to decongest Metro Manila.

          I told those who attended the road show that my favorite sector to offer to the Taiwanese is high-value agribusiness which can take off if the next Administration is able to redesign our failed Comprehensive Agrarian Reform Program (CARP) into an agricultural productivity program patterned after the Taiwanese model.  In fact, there is already a high-technology seed company in the Philippines that is a joint venture with one of the largest seed companies of Taiwan (Known You Seed) with a local Filipino Chinese entrepreneur by the name of Arsenio Barcelona from Escalante, Negros Occidental.  The name of the Philippine joint venture company is Harbest and has been successfully transferring Taiwanese technology to small farmers in the growing of such high-value crops as honey dew melon, sweet papaya, water melon, eggplants, lettuce, cabbage and other fruits and vegetables that are increasingly in demand by the growing middle class families.  Taiwanese technology in irrigation, post-harvest, storage, and transport can be almost immediately made productive in the small farming sector of the Philippines because of similar climate and soil conditions.  (To be continued)