Selected editorial excerpts from the Asia-Pacific press:

ECONOMIC SUCCESS MUST BE PROTECTED (Taipei Times, Taipei)

Taiwan's economy is forecast to eclipse its neighbors with 1.56 percent growth this year, buoyed primarily by expanding investment by the private and public sectors, as the nation's success in containing the COVID-19 outbreak has encouraged Taiwanese manufacturers to build new capacity at home to avoid production disruptions due to lockdowns elsewhere.

The pandemic has prompted manufacturers to accelerate production diversification after US-China trade friction triggered an exodus of manufacturers from China, some of which returned to Taiwan to avoid US tariffs.

Nevertheless, Taiwan's GDP growth this year is expected to be the weakest since 2005, as the nation has not been fully spared from the pandemic's fallout amid shrinking external demand and plummeting tourism, according to the Directorate-General of Budget, Accounting and Statistics (DGBAS).

However, any level of growth would be a blessing for Taiwan: South Korea's economy is expected to contract 0.8 percent, Hong Kong's is forecast to shrink 7.4 percent, Singapore faces a 9.1 percent contraction and Japan's economy is expected to shrink 5.2 percent, market researcher IHS has said.

Capital formation and government consumption would underpin Taiwan's economy, with annual projected increases of 4.65 percent and 2.44 percent respectively, DGBAS officials said last week.

Local semiconductor companies, Taiwan Semiconductor Manufacturing Co (TSMC) in particular, are investing heavily in new facilities and equipment to safeguard their technology leadership.

However, small and medium-sized manufacturers are investing in Taiwan to buy time and increase their agility in capacity allocation, in the event that their factories elsewhere are forced to close due to virus lockdowns. In that case, they could at least ship products from their Taiwanese factories, which are at much lower risk of closure.

Telecom equipment maker Sercomm Corp said that it has diversified its production to Taiwan, the Philippines and India in the past few years to tackle outward environmental changes and various forms of lockdown worldwide.

Sercomm said it relied on its factories in Taiwan and the Philippines to fulfill orders in February, when its production in China's Suzhou was disrupted due to virus lockdowns and transportation bans.

Its number of production line workers in Taiwan has climbed to 1,000 from 200 when the US-China trade ties began to sour, Sercomm said.

Local capacity accounts for 20 percent of its total manufacturing capacity, while China's share fell to less than 50 percent in the second half of this year from 60 percent, the company said.

Although capacity relocation comes at a cost, such as higher wages, expensive air freight fees and extra inventory management skills, manufacturers can still manage to eke out a profit from the products shipped.

Taiwan has been doing relatively well so far in containing the spread of the virus, thanks to a quick and early response.

However, the nation has reported new imported cases amid virus resurgences in other parts of the world.

The authorities should reassess whether current containment measures and economic stimulus packages would be sufficient to contain the disease and drive the investment momentum, given the lack of a vaccine against the virus.

(Aug. 18)

==Kyodo

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