World Economy

Taiwan’s New Leader Faces Bumpy Road

Taiwan’s New Leader  Faces Bumpy Road Taiwan’s New Leader  Faces Bumpy Road

Business leaders expressed their expectations for President-elect Tsai Ing-wen to stabilize Taiwan’s politics and revitalize the economy as soon as possible.

Rock Hsu, president of Taiwan’s Chinese National Federation of Industries, said the new government led by Tsai, of the Democratic Progressive Party, “will have no honeymoon period,” given the economic and political challenges facing the country, news outlets reported.

Stock market analysts also expressed concern Sunday about the performance of the domestic stock market over the coming year, citing factors at home and abroad.

The fact that the DPP has seized a controlling majority of seats in the legislature, China’s currency yuan will be viewed as a negative lead for the local stock market.

There might be heavy selling pressure after the market opens on Monday as a result of concern among investors about Taiwan’s future relations with China, Mega Securities Co., Ltd. analyst Huang Kuo-wei said.

However, he contended that major institutional investors won’t take this political factor as the top concern when mapping out their post-election investment strategies in the Taiwanese stock market.

Looking ahead, Huang predicted that the market will be “very difficult” this year, due mainly to a sluggish economy at home and in Europe, possible fallout from US interest rate hikes and a continued exodus of funds from emerging markets.

Nevertheless, stock market expert Wu Jin-chau opined that the market will be highly volatile in 2016 because of the continuously plunging oil prices.

According to Hua Nan Securities Co. Chairman David Chu, 75% of the local bourse’s performance is influenced by the global stock market, while the remaining 25% hinges on domestic factors.

Although there are still more than four months before Tsai is sworn in on May 20, it does not mean Taiwan will stay idle during that period, he said.

Meanwhile, Taipei Computer Association President Tung Tzu-hsien said he hopes Tsai will promote policy and legal changes to revitalize Taiwan’s economy and push for tax reform to address the unequal distribution of resources in the country.

Before Tsai Ing-wen felt the thrill of victory on Saturday by becoming the first woman elected president of Taiwan, she was no stranger to the sting of defeat.

A pragmatist elected to turn around Taiwan’s economy and balance nationalist fervor with the realities of maintaining ties with mainland China, she was rejected by voters just four years ago. But it was a career-long commitment to shrewdly shaping policy, rather than stoking the passions of her constituents, that helped Tsai win the election, experts said.

 Reviving the Economy

In office, Tsai’s immediate concern will be reviving the economy. The gross domestic product contracted in the last quarter of 2015 and is estimated to have grown at just 1% last year. Her campaign emphasized innovation and improving trade ties with Southeast Asia, Japan and the United States.

“I think her priorities will mainly be domestic, mainly the economy and trying to nurture opportunities for young people,” leading Taiwan scholar Dr. Shelley Rigger said.

Some in Taiwan have questioned whether Tsai has presented a strategy that could stimulate growth.

“From the perspective of the business community, there’s a perception problem,” said Ross Darrell Feingold, a Taipei-based senior adviser at DC International Advisory, a political risk consultancy. “The DPP’s record on economic development during the eight years it held the presidency from 2000 to 2008 wasn’t much better than Ma over the past eight years.” And while managing the relationship with China might not top Tsai’s agenda, it will remain a huge task, Rigger said.

“Even if she wants to just keep things the way they are, she’ll have to work at it,” she said.