Taiwan ports seek revival through free-trade zones

Taiwan's ports, once among the world's busiest before they were eclipsed by the mainland economy, can no longer compete on shipping volumes but hope to use their status as free-trade zones to entice rivals from across the strait to cooperate rather than compete. The island's biggest port, in the southern city of Kaohsiung, ranked world No 3 in 1995 but had slipped to 13th in the World Shipping Council rankings for 2012. Northern port Keelung is in similar dire straits as it lacks the land or deep water needed to expand. These ports were the star performers in the 1990s, piggybacking a rapidly industrialising Asia, including Taiwan, at a time when the mainland was yet to take off as an economic powerhouse. Rapid gains for Taiwan's ports were unlikely today, the island's Transport Minister Yeh Kuang-shih told the South China Morning Post. But he added that the evolution of the island's five ports into free-trade zones raised trade value and that Beijing now wanted to set up similar zones operated by both sides. Taiwan's legislators are also weighing laws to create free economic zones at seven ports, allowing service-sector businesses such as hospitals and universities to get tax breaks. The island is increasingly looking to free-trade initiatives as ways to stimulate the US$500 billion economy that now finds itself cramped by faster-growing exporters such as mainland China, South Korea and Southeast Asia. "Mainland Chinese ports are bigger because China is the world's factory," Yeh said. "It's not easy now for our rankings to rise and we don't think that's the most important thing. "Value is more important than quantity. If we can sustain the No 13 ranking, that's good enough." The value of trade in the 11-year-old free-trade zones rose to NT$668.94 billion (HK$169.5 billion) from NT$143.57 billion in 2009, government statistics show. Yeh expects the current momentum of 30 to 40 per cent annual growth to continue over the next few years. Seventy-four companies operate in the five port-linked trade zones and an additional 36 work from a zone linked to the Taoyuan International Airport. Most are in manufacturing and include foreign companies such as the London Metal Exchange, which distributes seven minerals from Kaohsiung. Kaohsiung's shipping volume is rising; it reached 9.9 million teu teu last year. Foreign firms pay no import taxes or income tax at the free-trade zones. They can also hire low-wage foreign migrant workers for up to 40 per cent of staff, compared with 15 per cent off site. The island's transport officials were talking informally with eager counterparts in Shanghai and Xiamen, a port city just across the strait, to cooperate on free trade through seaports, Yeh said. Such cooperation would allow companies in Taiwan's free-trade zones to run tax-free factories on both sides and operate more efficiently with a primary factory on the mainland and a final assembly line in Taiwan, he said. "Xiamen and Kaohsiung are both free-trade zones, so can we cooperate? That way we could create a win-win situation," Yeh said. "Our zones are tiny. They have a lot of land. Their land could be used to grow ours." Lack of land in Taiwan cramps expansion of port services inland. The mainland, a potential source of shipping traffic as Taiwan's top trading partner, currently bars its companies from sending goods through Taiwan. Over the past decade, mainland ports such as Shanghai, Qingdao and Tianjin have expanded in step with the country's rapid economic growth. Seven of the world's top 10 ports are on the mainland. Shanghai is now aggressively promoting a 29 sq km free-trade zone it launched last year. Much of Taiwan's manufacturing has moved to the mainland, reducing the relevance of the island's ports. "China keeps opening the gate and is also testing or implementing free-trade zone policies in key ports," said Han Ning, a deputy China country manager at maritime research company Drewry. "If China moves steadily in this direction, there's little chance for Taiwan to leverage a free-trade zone policy to obtain extra traffic from mainland China. The free-trade zone plan can't help Taiwan compete with mainland ports." But the ports in Shanghai and Xiamen were keener than Taiwan's to set up cooperation deals, Yeh said, adding that similar standards should be maintained on both sides. Taiwan's free economic zones might also attract mainland firms that sold to Taiwanese consumers or needed the island's skilled engineers, he said. To entice corporations from the mainland, Taiwan must allow offshore investors more market access to make the most of its free-trade regime, analysts say. "The plan of setting up free zones to promote the services industry is a good policy in the right direction," said Ma Tieying, an economist with DBS in Singapore. "Of course, the success of these zones still largely depends on the government's determination to deregulate investment rules and liberalise market access."

Taiwan ports seek revival through free-trade zones

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The island's ports, among the busiest before the mainland boom, seek revival through tie-ups with rivals across strait

The island's ports, among the busiest before the mainland boom, seek revival through tie-ups with rivals across strait