Taiwan election results are a message to the DPP that mixing politics and business as usual won’t work

  • Ross Darrell Feingold says the DPP’s loss of municipal seats highlights public disapproval of political factions’ continuing influence in state-controlled firms
  • This was particularly evident in ousted farm produce marketing cooperative chief Han Kuo-yu’s surprise win in the Kaohsiung mayoral election
PUBLISHED : Tuesday, 27 November, 2018, 3:53pm
UPDATED : Tuesday, 27 November, 2018, 7:49pm

Despite easily winning control of the executive and legislative branches of government in Taiwan’s national election, in January 2016, the Democratic Progressive Party’s (DPP) poor results in local elections last Saturday – it won only six of the 22 municipal leader positions, versus 13 in 2014 – indicate voter support for President Tsai Ing-wen, and the party she chaired until her resignation immediately after the election, has quickly dissipated.

Tsai’s popularity has consistently fallen since she took office in May 2016 and, in recent months, support for her premier, William Lai Ching-te, a previously popular mayor of Tainan, has dropped as well.

Post-election analysis has been quick to blame Taiwan’s sluggish gross domestic product growth, mainland election interference, or Kuomintang candidates who outperformed expectations. While all these may be factors, the underlying reasons for popular discontent with the DPP are more nuanced.

As elsewhere in Asia, Taiwan’s government retains a significant ownership role in the economy. State-owned enterprises operate in sectors such as electricity and water utilities, oil imports and fuel distribution, and financial services.

In sectors such as transport and financial services, state-controlled companies, those in which the central government has less than a 50 per cent stake but in reality controls the appointment of directors and management, further expand the government’s economic influence. These companies have hundreds of thousands of employees and tens of billions of US dollars in annual revenues. Taiwan’s cities and counties similarly control for-profit businesses.

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After the DPP won local elections in 2014 and took control of the government in 2016, management positions and directorships changed hands, as is usually the case when political party control changes. The DPP is historically known for the influence its factions have on career development, candidate selection and appointments to government positions, including those at state-owned or state-controlled enterprises.

Fairly or not, voters came to perceive the DPP and the New Tide Faction as focused on power rather than livelihood issues

Despite a DPP ban on factions implemented in 2006 amid corruption scandals involving then president Chen Shui-bian, they continue to exist in formats such as think tanks, and retain their influence. Tsai maintains good relations across the DPP’s factions but, during her term, one faction in particular, the New Tide Faction, has received the largest allotment of politically appointed government and industry positions.

The selection and performance of political appointees are the subject of rapid and detailed scrutiny in Taiwan’s many media outlets. Fairly or not, voters came to perceive the DPP and the New Tide Faction as focused on power rather than livelihood issues. In less than two years, due to poor performance or other reasons, many appointees have had to be removed, though they are often replaced by people selected for political credentials as much as professional ones.

Taiwan election lost on local issues, not relations with mainland

The Kuomintang capitalised on these developments by introducing legislation to increase oversight over state-controlled enterprises and associating local office candidates with appointees who are the targets of criticism.

The surprising victory of the Kuomintang’s Han Kuo-yu in the Kaohsiung mayor election is an example. Previously the successful general manager of an agriculture marketing cooperative in Taipei City, in which the central and local government hold shares, Han was ousted by central government intervention and replaced by the daughter of a prominent supporter of Tsai Ing-wen.

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Widespread criticism of the new appointee’s credentials and performance, especially given the co-operative’s role in the sales and distribution chain for Taiwan-grown agricultural products, caused a change in support from this sector in central and southern Taiwan. The government also proved unable to solve the twin problems of falling prices and reduced mainland orders, due to the cross-strait political stalemate, for agricultural products.

Blue-collar workers across Taiwan also had reason to switch support. Among its legislative priorities in 2016, the DPP revised the labour law to limit the amount of overtime employees are allowed to work within a given time frame. Following a roll-out of these changes, rife with unclear explanations and the realisation by blue-collar workers that their pay would fall, a second round of changes to the labour law attempted to make amends, but the damage was already done among this voting bloc.

As for economic issues, an industrial upgrading policy at the central government level was hard to translate into persuasive economic data or talking points. Tourism industry stakeholders, who had previously served mainland visitors, were unable to replace the lost revenue when visitor numbers fell from 2016, notwithstanding government efforts to encourage tourism from Southeast Asian countries. This proved to be another anti-DPP voter bloc.

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When it comes to the mainland factor, despite statements at election rallies by DPP politicians and post-election observations by pro-DPP commentators, claims that the mainland had a nefarious influence on the election have yet to be proven with evidence that it prompted changes in voter behaviour. Amid global concerns about whether the mainland influences elections, it will be interesting to see if the allegations can be supported by prosecutions in Taiwan for violations of applicable election and other laws.

For Tsai, attention in the near term will be on changes to her cabinet, although she is already on her second premier and the cabinet has seen multiple reorganisations during her tenure. She must also decide in the spring whether to seek the DPP nomination to run for president. Personnel decisions and presidential politics are certain to be accompanied by a significant amount of DPP infighting and will detract from policymaking.

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For the Kuomintang, the election result shows that it remains relevant – despite losing presidential elections in 2000, 2004 and 2016 – and that predictions of its demise have yet again proved premature. Han Kuo-yu’s willingness to endorse the 1992 Consensus might also indicate that voters in Taiwan may yet prefer to again elect politicians, regardless of party affiliation, who seek to maintain the status quo with the mainland. The economy and the mainland factor in presidential politics will certainly dominate Taiwan’s politics until the January 2020 elections.

Ross Darrell Feingold is a Taipei-based political analyst who advises multinational corporations on political risk in Asia