Taiwan 2016 Election: What Hong Kong Businesses Need to Know

Transcription

1 Taiwan 2016 Election: What Hong Kong Businesses Need to Know Presented by Ross Darrell Feingold to the Hong Kong General Chamber of Commerce 20 November 2015

2 Known Knowns, Known Unknowns, Unknown Unknowns Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones. 2

3 Known Knowns Average annual growth rate in bilateral trade between Hong Kong and Taiwan from 2010 to 2014 was 7%. Total trade increased by 12% in In 2014, Taiwan was Hong Kong's fourth largest trading partner, third largest market for domestic exports, fifth largest market for re-exports, and second largest source of imports. Hong Kong was Taiwan's fourth largest trading partner, second largest export market and 28th largest source of imports in Average annual growth rate of indirect trade between the mainland and Taiwan through Hong Kong was 8.0% during Indirect trade increased by 8.9% in In 2014, HK$292.3 billion (US$37.7 billion) worth of trade between the mainland and Taiwan was routed through Hong Kong, representing 19.0% of the total trade between the mainland and Taiwan. Taiwan has limited attraction as a destination for investment by Hong Kong companies. 3

4 Known Knowns November 2014 local elections: DPP, independents win big 2012 Presidential Election 2014 Local Elections 4

5 Known Knowns Local & presidential election correlation: 2012 vs & 2010 Local Elections 2012 Presidential 2009, 2010 City Mayor & County Executive Ma-Wu Tsai-Su KMT DPP Votes % Votes % KMT-DPP Votes % Votes % KMT-DPP 6,891, ,093, % 5,463, ,755, % Taipei City 928, , , , New Taipei 1,245, ,007, ,115, ,004, Keelung 128, , , , Taoyuan 639, , , , Hsinchu County 190, , , , Hsinchu City 134, , , , Miaoli 206, , , , Taichung 792, , , , Changhua 369, , , , Nantou 158, , , , Yunlin 159, , , , Chiayi County 120, , , , Chiayi City 69, , , , Tainan 435, , , , Kaohsiung 730, , , , Pingtung 211, , , , Yilan 115, , , , Hualien 118, , , Taitung 72, , , , Penghu 22, , , , Kinmen 34, , , Lienchiang 4, , Source: Central Election Commission, National Policy Foundation 5

6 Known Knowns Local & presidential election correlation: 2012 vs Local Elections 2012 Presidential 2014 City Mayor & County Executive Ma-Wu Tsai-Su KMT DPP Votes % Votes % KMT-DPP Votes % Votes % KMT-DPP 6,891, ,093, % 5,194, ,843, % Taipei City 928, , , , New Taipei 1,245, ,007, , , Keelung 128, , , , Taoyuan 639, , , , Hsinchu County 190, , , , Hsinchu City 134, , , , Miaoli 206, , , , Taichung 792, , , , Changhua 369, , , , Nantou 158, , , , Yunlin 159, , , , Chiayi County 120, , , , Chiayi City 69, , , , Tainan 435, , , , Kaohsiung 730, , , , Pingtung 211, , , , Yilan 115, , , , Hualien 118, , , Taitung 72, , , , Penghu 22, , , , Kinmen 34, , , Lienchiang 4, , Source: Central Election Commission, National Policy Foundation 6

7 Known Knowns Tsai Ing-wen continues to lead in public opinion polls Tsai s current control of the party apparatus is firm More focus now on Legislative Yuan majority Publicly the US is not taking sides Tsai s visit to the US in June 2015 was largely a non-event Avoided the problems of her September 2011 visit Public anger at politicians performance Competence in government and policy making Economy Cross-straits attitudes, agreements 2014 Sunflower Movement Legislative Yuan election victory is crucial to both parties Third party candidates impact will be limited Speaker Wang Jyn-ping continues to play a unique role KMT infighting after election, but it will survive 7

8 DPP Known Unknowns Mainland policy Services agreement, trade in goods agreement, tourists, flights, name issues, AIIB Visa free entry for Taiwan travelers to mainland 1992 Consensus, Status Quo Economic policy Tax, labor laws, trade agreements (TPP, RCEP) Focus on disadvantaged, but to what advantage Deregulation & unilateral initiatives Education policy Curriculum other than history Constitutional reforms Parliamentary system Tsai running mate & team Weak running mate performance in 2012; Chen Chien-jen known for SARS work No shadow cabinet Weak DPP governance team from 2000 to

9 KMT Known Unknowns Late change in candidate, can Chu be competitive? Grassroots party headquarters relations still sour Mainland policy One China, Too Many Interpretations Economic policy Tax Trade agreements (TPP, RCEP) Deregulation & unilateral initiatives Education policy Constitutional reforms Chu has also spoken favorably for a parliamentary system Loyal opposition Past experience indicates legislative gridlock Is there a next generation 9

10 Unknown Unknowns Reliability of polls Candidate scandals United States Level of interest remains to be seen, does it really have a preference TPP support Weapons sales Regional stakeholders Japan factor / Tsai Ing-wen Japan trip in October Asean South China Seas Local corporates Tsai is meeting business leaders, but policy concerns unresolved Multinational corporates who do business in Taiwan Foreign institutional investors Legislative Yuan election 10

11 Key Political Figures Ma Ying-jeou Tsai Ing-wen Eric Chu Wang Jin-pyng Civil Society Leaders Chen Shui-bian 11

12 Known Unknowns Long transition from election to taking office Is Taiwan open or closed for business Do battles against corporates continue Repeated pattern of foreign/mainland/hong Kong takeovers that are rejected or permanently delayed Multinational company exits in several sectors in favor of local operators Infrastructure project delays (Aerotropolis, integrated resorts, nuclear plant) Tourism sector growth may slow Luxury hotel, malls, F&B may be saturated Mainland may slow tourist arrivals External economic factors Global economy / falling exports Trade agreements proceed without Taiwan Hong Kong Taiwan relations under a DPP government Friend or foe Cooperation between Hong Kong & Taiwan civil society groups 12

13 Known Unknowns Mainland response to election and impact of Ma-Xi Summit Structure for future meetings difficult for Tsai to accept Public opinion in Taiwan mixed Word games, incentives (AIIB, international space), wait-and-see Winners & Losers Tsai/DPP, Ma, USA, Philippines, Taiwan voters, Hong Kong, Taiwan corporates Worst case post-election scenarios 13