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2012 Presidential Election

Ma Re-elected, Faces Huge Challenges


Ma Re-elected, Faces Huge Challenges


Stability trumped change in Taiwan's presidential election, but President Ma Ying-jeou will need to push in four key areas to be successful over the next four years.



Ma Re-elected, Faces Huge Challenges

By Rebecca Lin, Ting-Feng Wu
From CommonWealth Magazine (vol. 489 )

"This is a victory for Taiwan's people," declared President Ma Ying-jeou after winning re-election against Tsai Ing-wen of the Democratic Progressive Party (DPP) by nearly 800,000 votes, or 6 percentage points, on Jan. 14.

If 2011 was the "year of protest" around the world, 2012 will be "global election year." Beginning with Taiwan, voters in 58 countries representing nearly half of the globe's population will be deciding their political futures, and many leaders still feeling the fury of their peoples will be treading on thin ice.

Aside from an uncertain global political landscape, traditional economic powers remain in the doldrums. Europe and the United States both are burdened by mountains of debt, and Standard & Poor's on Jan. 14 compounded concerns when it downgraded its credit ratings for nine eurozone countries. The world's major emerging market – China – will undergo political transition in 2012, and a "crisis of "unification" may erupt on the Korean Peninsula.

Add to the equation conflicting economic forecasts and an environment of uncertainty, and it's not hard to understand why "stability" got the upper hand on "change" in Taiwan's presidential election.

To veteran campaign strategists, Ma Ying-jeou's emphasis on clean government and first lady Chow Mei-ching's disciplined style, limiting herself to saying little more than "thank yous" while stumping for votes, may have seemed insipid and rigid, but their approaches catered to the electorate's craving for stability.

Cross-strait Stability

The desire for stability was especially pronounced in relations between Taiwan and China, at least within the private sector.

On election eve, HTC Corp. chairwoman Cher Wang made an impassioned plea that reflected what many business people were thinking.

"To entrepreneurs, a peaceful and stable society is a prerequisite for innovation," Wang said, and she described Ma's first four years in office as "enabling companies to develop peacefully and sustainably." Lauding the peaceful cross-strait relationship, Wang said the administration was "worth supporting."

Many others in the private sector, including "Taishang" – Taiwanese businesspeople who work in China – felt the same way. According to National Immigration Agency figures, an estimated 200,000 to 300,000 of these Taishang returned to Taiwan to vote in the week preceding Election Day. On Jan. 13, a record 51,000 people streamed through Taiwan Taoyuan International Airport, which normally averages 20,000 inbound travelers a day.

Even the New York Times ran a feature on the Taishang's potential influence on the election. But some of those coming back to vote were not necessarily behind Ma and his Kuomintang (KMT) party.

Forty-three year-old Mr. Lin returned from Changchun to participate in Tsai's campaign rally in Taichung.

"A few partners and I opened a restaurant there. I returned home to vote. I'm a native of Pingdong, but I especially came to Taichung for the rally. I've left my suitcases at a nearby hotel," said Lin laughing.

"But we're not part of one of those big Taiwanese business groups in China that people keep talking about," he stresses to a reporter. "We are not affiliated with them. We bought our plane tickets on our own."

So why did he go to Changchun to do business? Lin says competition in Taiwan was too intense, and the cost of opening a restaurant had risen,making it easier to do well in China.

He supported Tsai because "we still need the backing of the Taiwanese people. Do you realize that over there (in China), when we run into a local who asks us which party we support, if you say you're behind the Kuomintang, that's OK. But if you support the DPP, you don't dare say anything."

Although there's money to be made in Changchun, Lin said he wanted to cast his vote for "freedom from fear."

As for President Ma, who rode the "stability" card to re-election, he was often branded during his first term an "incompetent" leader. Though he could have promoted reform of the government's five main branches, Ma opted for a more hands-off approach based on his reading of Taiwan's Constitution, where most executive powers are given to the premier – who is appointed by the president and heads the Cabinet – rather than the president himself. Ma's restraint delayed steps toward progress in Taiwan.

The question now is whether Ma, in his second and final term, will feel less constrained and pursue a historical legacy of reform by actively supporting necessary change in the Executive, Legislative, Judicial, Examination and Control yuans.?

That is just one crucial challenge facing the re-elected president in his second term. There are four others.

Key Challenge No. 1: Income Inequality

"If the theme of the 2008 election was anti-corruption, then in 2012, it's basic livelihood issues," Liu Chin-hsin, a chemical engineering professor at National Taiwan University of Science and Technology, told Reuters.

In an environment of high unemployment, high housing prices and low salaries, a key mission of Taiwan's leader over the next four years will be to narrow the rich-poor divide and create jobs.

Although many Taishang insist that trade with China represents Taiwan's economic lifeline, the tangible benefits of the ECFA have already begun to wane. Also, even though Taiwan received 1.6 million Chinese visitors in 2011, the vast majority booked low-priced tour packages with designated travel agents in China, limiting the economic benefits to Taiwan.

In addition, trade growth within greater China (Taiwan, Hong Kong and mainland China) has slowed dramatically, falling from 37 percent in 2010 to 9.1 percent in the first 11 months of last year. Chinese investment in Taiwan has also been minimal.

The perception is now that the main beneficiaries of trade with China are limited to a privileged wealthy class that has had a negative effect on Taiwan's housing and commodity prices.

A widening income gap and the rise of class consciousness and resentment to a level unprecedented in Taiwan's modern history are critical challenges the president must address in his second term.

Key Challenge No. 2: National Finances

One key to closing the income gap is reforming Taiwan's national finances. Aside from resolving wealth distribution issues, the government must quickly find a way to improve income levels, especially as demographic forces put increasing pressure on the country's finances over the next three years.

By 2015, the number of working-age people in the 15-64 age bracket as a percentage of the total population will fall below 70 percent, down from the 74 percent today, signaling the start of a long-term slide.

The changing population structure will shrink the tax base and erode economic momentum, likely plunging Taiwan's economy into a quagmire, and consigning the country to a period of lower tax revenues and low economic growth. The only trend on the rise will be an undesirable one – a growing aging population.

Taiwan's rising debt will limit the resources available for stimulative public infrastructure projects. The Ministry of Finance recently announced that as of the end of 2011, per capita debt was NT$212,000, and the central government's debt with a maturity of over a year stood at NT$4.6 trillion.

Reversing any of these trends will require reforming government finances, expanding the tax base, and designing a fairer tax system, but they will have to happen by 2014. Once the next presidential election cycle begins in earnest the following year, Ma will be a lame duck with little chance of pushing through reform initiatives.

Key Challenge No. 3: Human Resource Policies

"It used to be that I would use friendships to draw talented people back to Taiwan, but today, friendship cannot overcome reality," says Chung-ming Kuan, an Academia Sinica academician and distinguished professor with National Taiwan University's Department of Finance. The "reality" he was referring to is the "market."

Kuan cites the example of Taiwanese working in Hong Kong and Singapore. They can communicate with their families in Taiwan via Skype every day, return home conveniently, and earn multiple times what they could earn in Taiwan, leaving little incentive for them to return to their home country.

"The government can no longer use the mind-set of 20 years ago to deal with the issue of attracting talented people back (to Taiwan)," Kuan says with emotion.

But to Kuan, resolving the growing disconnect between higher education and talent cultivation is even more pressing.

He believes higher education resources are being seriously misallocated and argues that with the exception of a few major universities, other institutions should more narrowly focus their missions on preparing students for the workplace and enhancing their value-added skills.  

"If students are still not able to install a light bulb after graduating from a technical university, that's a sign of failure in our university education system," Kuan says, using an exaggerated analogy to make a point. Human resources policies must be carefully tailored to meet different goals to maximize their benefit, he contends.

Aside from issues related to the general talent pool, an equally serious problem has been the long-term neglect of cultivating government talent, which has hurt Taiwan's public sector competitiveness relative to Singapore, Hong Kong, South Korea and even China.

"But until now, President Ma has not said a word about Taiwan's human- resources policies," Kuan complains. At a time when the global fight for talent is highly competitive and has emerged as the most important cog in development policy, Taiwan's most urgent task is devising human resource strategies.

Key Challenge No. 4: Cabinet-Legislature Cooperation

Perhaps the most immediate turbulence the newly elected president will face will occur between now and his inauguration on May 20.

Chang Jung-feng, director of the First Research Division at the Chung Hua Institution for Economic Rconomic Research, says that with new revisions of the Organic Law of the Executive Yuan coming on line, the number of Cabinet-level agencies in Taiwan will be reduced from 37 to 29. Although only five agencies will be eliminated in the initial phase of the restructuring initiative, "the entire organization will inevitably feel panic," Chang says.

At the same time as the Cabinet undergoes organizational change, Taiwan's newly elected Legislature will start its first session in February, months before Ma's inauguration in May. "What's predictable is that the first half of the year will be chaos," Chang says.

Reform within the lawmaking body should also be high on the government's agenda. Over the past four years, 95 percent of the legislation under consideration was finalized through cross-party consultations in "secret meetings," with the outcome determined by internal maneuvering and political interest peddling.

Although the KMT maintained its absolute legislative majority, Ku Chung-hwa, executive director of legislative watchdog Citizen Congress Watch, believes party consultations in the lawmaking body need to be more transparent in the future to prevent "black-box maneuvering."

In addition, new legislators will need to be able to respond to the needs of society and eliminate the vested interests, factional infighting and political party obstructionism of the past. Only then will the caliber of Taiwan's legislature be improved and the body's incessant political wrangling and costly inefficiency be eliminated.

Four years is not an insignificant period of time, but it can also fly by quickly. No longer facing the pressure and constraints of seeking re-election, will President Ma be able to take on these many key challenges critical to Taiwan's development over the next four years? How he responds to them will determine his historical legacy.

Translated from the Chinese by Luke Sabatier