Around a decade ago, then-President Lee Teng-hui came up with the “Southbound Policy” to push Taiwanese businessmen to southeast Asian nations. Lee’s work would be continued by ex-President Chen Shui-bian.

Both presidents saw the policy as a way to curb the wave of westbound investment at the time, and also out of fear of Taiwan becoming too economically dependent on mainland China.

However, the two attempts are remembered by history as “failures.” Along with the rest of the world, it was inevitable that Taiwanese businesses would follow the money into China, which was buoyed by warming cross-strait relations thanks to President Ma Ying-jeou.

President Tsai Ing-wen’s “New Southbound Policy” goes against what Ma has accomplished over the past eight years, an attempt seen to “not put all of Taiwan’s eggs into the same basket,” and has raised skepticism among experts and businessmen nationwide.

After all, it is evident that welcoming cross-strait relations will considerably help a successful pivot, a sentiment shared by many nationwide. However, in such an unpredictable climate, what makes Tsai think her pivot to the Association of Southeast Asian Nations (ASEAN) will work?

Overall Environment Suitable?

CIER Taiwan WTO & RTA Center Deputy Executive Director Roy Lee told The China Post that the new Tsai administration seems to be set on rectifying mistakes made by predecessors: overemphasis on business at the expense of understanding people, culture and cultivating long-term relationships.

James Huang, the designated director of the New Southbound Policy office, reiterated Tsai’s call to carry out the new outward-oriented economic strategic plan that puts people at its core.

The five-year plan is intended to build new partnerships through pushing bilateral interaction and cooperation on human resources, industries, investments, education, culture, tourism and agriculture between Taiwan, ASEAN and South Asian nations, Huang said.

Much like Taiwanese businessmen headed into China decades ago, an exodus into ASEAN is already occurring, as investors seek lower labor and production costs in those Southeast Asian nations, Lee said, while trying to avoid the rising costs and slowing economic growth in China.

The overall political and economic environment has played a role in paving the road for the policy this time around, Lee noted, which has been doomed under Tsai’s predecessors in the past.

Labor and Education

“ASEAN countries also exhibit growth now,” relative to in the past, and Taiwan’s economy is conversely struggling. “In addition to the region’s young population, its middle-class’ purchasing power is seen as booming. The young generation is more willing to travel, and will likely set their sights on Taiwan as a tourist destination,” Lee analyzed.

From an economic and educational standpoint, National Tsing Hua University Distinguished Chair Professor and Center for Asia Policy Director William Stanton pointed out to The China Post that the young labor force, from white to blue collared workers, could provide the much needed momentum to counter Taiwan’s aging demographic. “Though, that would require the government to loosen up existing regulations,” he said.

Source: China Post