New Taiwan President -- Good for Taiwan economy
March 24, 2008

Taiwan's economy will be boosted by Saturday's landslide Presidential election of Ma Ying-jeou. This confirms the people's support of the Nationalist (KMT) party, which seeks to increase economic relations with mainland China. He is open to increased diplomatic relations provided that China withdraw the 1,000 ballistic missiles currently aimed at the island. China is prepared to enforce its "one China" policy, which considers Taiwan to be part of China, a concept rejected by self-ruled, democratic Taiwan. (Source: Reuters: Taiwan's Ma wins election, March 22, 2008)

What Taiwan's Election Means for the Economy:

Taiwan is one of the world’s most prosperous countries.

• It has a trade surplus based on exports of consumer electronics to China and the U.S.
• It has a population of 22 million people, with an unemployment rate of 3.9% and less than 1% of its people living below the poverty line.
• It has a GDP per capita at $29,800, which is higher than the EU.
• Its $690 billion GDP makes it the fourth largest in Asia, after China, Japan and South Korea.
• Its economy grew 5% in 2007. (Source: CIA World Factbook, 2007 figures)

The election of Ma is more a rejection of the failures of the nationalist DPP party in the last eight years than support for re-unification with China. The DPP allowed higher unemployment and government debt, an increase in corruption and a decline in economic growth. This is despite an increase in cross-Straits business to more than $300 billion, nearly one-third of total FDI in China.

Specifically, President-elect Ma endorses 'three links' with China - air, sea and telecommunications. He also advocates opening Taiwan for Chinese tourists and journalists . (Source: Rediff News, Changing fortunes across the Taiwan Strait, March 24, 2008)

Action Steps:
As usual, investment in a good Southeast Asian mutual fund is a safer way to take advantage of Taiwan's growth than a country specific investment. This is especially important now that the U.S. economy is declining.

For more information about China, see the WorldMoneyWatch Special Report Profit from China's Growth.

For more about the rise of Southeast Asian economies, see Growth of ASEAN Economies, a Top Ten trend.

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