Taiwan experts and local officials expect a cross-Strait economic pact likely to be reached soon to redistribute resources and restructure the economy across the Taiwan Strait.

The Economic Cooperation Framework Agreement, or ECFA, will send the signal that economic relations across the Strait will steadily develop, Bih Jane Liu, vice president of Chung-hua Institution for Economic Research, a think tank in Taiwan, said at a seminar here Tuesday.

"This signal is very important for investors so they can design a long-term development strategy across the Strait," Liu said.

The two sides finished the third round of ECFA experts' meeting in Beijing last weekend. Both sides hope to sign the pact in June.

The ECFA is intended to normalize mainland-Taiwan economic ties and bring the two economies closer.

Through the ECFA, companies will be able to rearrange their resources on both sides of the Strait so both Taiwan and the mainland can play to their full advantages, Liu said.

"In fact, it will give both sides a good chance to restructure their economies. They both strongly depend on exports and labor-intensive industries, which face some challenges now."

For Taiwan, it can act as a cushion for foreign investors before they enter the mainland market, she said.

"I don't think the ECFA will greatly shake up the Taiwanese economy in the short term. Only some industries included in the early harvest program will change," she said.

The early harvest program, part of the ECFA, is the list of products and services to first enjoy duty reductions and market liberalization.

Liang Kuo-shin, deputy head of the island's economic affairs department, said at the seminar the ECFA might help other countries and regions "rediscover" Taiwan's economic and geographic advantages.

The local authorities have worked to promote the services sector, new energy industries, tourism, and high-tech and cultural businesses.

With management and technical talent, the island can attract more companies to set up their regional headquarters and research centers, Liang said.

In the past few years, the mainland and Taiwan have adopted direct shipping and air services, reducing logistics costs. They also signed memos on financial cooperation to remove some barriers in banking, securities and the insurance businesses.

In the past two decades, many Taiwan companies have invested in the mainland but most of them made products for developed markets.

As the mainland's economy develops and people's income increases, Taiwan businesses will benefit from the huge market, said Chiang Pin-kung, chairman of the Straits Exchange Foundation (SEF), at the seminar.

"Now is the critical moment for Taiwan business to restructure themselves," he added.

Go to Forum >>0 Comments