Mislabeled product #4501: reads “baking powder” in English, and “American Rising Powder” in Chinese, but it is actually yeast. If you can’t find yeast, shake the baking powder and listen for the kitsch-kitsch of yeast.

How’s our economy? Listening to the Blues, you’d think we were in economic free fall. Asia Media hosts an article from Singapore smugly noting how Taiwanese compare themselves to Singapore:

Economists quoted by the United Daily News said that Taiwan’s presidential candidates could take a leaf out of Singapore’s book.

The main opposition Kuomintang nominee Ma Ying-jeou is leading Mr Frank Hsieh of the ruling Democratic Progressive Party, according to polls.

National Cheng Kung University professor Hsieh Wen-jen lauded Singapore’s ‘brilliant’ moves, scrapping estate duty and giving out $380 million worth of personal income tax rebates.

By making these changes at the same time, it could deflect criticism that the abolition of estate duty benefited only the rich, Prof Hsieh told the United Daily News.

The bonanza Budget triggered soul-searching among Taiwanese.

‘Looking at Singapore, I can’t help but think about ourselves… Why is it that they can do it, but we can’t?’ a Taiwanese reader wrote in the United Daily News.

Taiwan’s economic officials said that Singapore’s ‘company style’ of governance and handing out of dividends could work only in small countries.

But some observers blame the Taiwanese government’s pre-occupation with politics at the expense of economics. Last year, Taiwan posted a budget deficit of more than NT$100 billion (S$4.5 billion).

Observe first that the Singapore piece cites a the strongly pro-KMT United Daily News (UDN) as the source of the story, without mentioning that paper’s well-known biases. Comparisons of KMT one-party rule with Singapore have been made by high-ranking KMT officials — and “stories” like this further the comparison. Their purpose is entirely justificatory. I’ll ask, as I always do — if the KMT really believes that the economy sucks, where’s the economic stimulus package? Owning the legislature, they can pass one any time.

Economic indicators in Taiwan are actually pretty good. GDP growth hit 5.7% in 2007, up from 5.46% forecasted:

Exports to ASEAN countries were up 41 percent last year, while demand from the Middle East and India also saw significant increases, Hsu said. Total exports to ASEAN countries plus Vietnam, India and the Middle East accounted for 17.7 percent of total exports last year, surpassing exports to the US at 13 percent and Europe at 10.8 percent.

In addition, the US$15.3 billion (US$483 million) net inflow last year from the triangle trade — a common practice among China-based Taiwanese businesses that are operating via Hong Kong — is expected to continue bolstering exports, Hsu said.

Domestic demand, however, was weak as private investments shrank 2.4 percent and private consumption rose by just 2.15 percent.

The last paragraph points to a serious bifurcation in Taiwan’s economy that is driving discontent here in Taiwan. In Taiwan’s economy technology and exports are doing well — we’re now the number 2 exporter to China, for example. Yet the local domestic economy is facing income stagnation and rising living costs. That has many sources — the rise of China sucking up work for cheap labor, Taiwanese factories moving to China, the increasing formalization of the economy — and of course, the KMT’s decision to starve local infrastructure spending to reduce local incomes so they can attack the DPP. Hence, the two economies: while the export economy booms and the current account surplus hit record levels, local business closings also hit record levels. In the old days the two economies interpenetrated — households had individuals with small export businesses and also engaged in public construction. But then the small export economy moved to China….. Yet a commenter on one of my posts wrote an excellent description of the reality of our economy:

Ironically, Hsinchu Taiwan is probably the only large cluster of technology companies that has been able to challenge Silicon Valley and successfully. The reason you don’t really feel it is because Silicon Valley moved on to other things (like web startups) while Hsinchu became home to basically the entire world’s semiconductor manufacturing stack outside of CPUs. How long has Singapore and China been talking about taking over the semiconductor industry from Taiwan? 10-20 years? No one outside of Taiwan has been able to be profitable for that.

In terms of how the overall environment compares with Silicon Valley’s (not actual competitors), besides semi fabs, there’s also a bunch of IC design firm startups, people doing RFID, WiMax related startups, PC accessory startups…
anything that’s a box with a circuit board and chips inside, there’s someone in Taiwan that wants to design and manufacture it.

Remember, Taiwan is the kingdom of small and medium size businesses, and it is very conducive to startups.

As proof, a statistic that has been totally ignored in Taiwan’s mainstream media is the TAIEX’s overall market cap from 2000 to today has gone from 8 trillion NT (260 billion USD) to 20 trillion NT (630 billion USD).

For comparison, from 1997 to 2000, when Siew, Ma’s running mate was running this country, the market cap went from 9 trillion NT to 8 trillion NT.

I’ll let that sink in for a minute. Yes, that’s right, it grew 150% or it is 250% of where it was 8 years ago. But the TAIEX index hasn’t gone up much you say? Exactly. A whole lotta value has been generated by new startups that have IPO’d in the past 8 years.

It’s unbelievable how the media portrays Taiwan’s economy and financial environment as deteriorating when there has been good, steady GDP growth and huge amounts of value have been created as reflected in the stock market.

If you’re a laborer, just like all over the world, your wages have been stagnant these 8 years because of China and the rest of the developing world.

If you’re thinking of doing some kind of electronics startup in Taiwan, you have one of the best environments in the world to do it in.

For reference, you can get the same statistics I cited on the TAIEX website: annual TAIEX date and current weekly data.

Yup. Yup. Yup.