Labour law reform
The new labour law is a minefield for employers. It has two core values: labour safety & healthcare (one rest day (fixed) in 7 calendar days, one rest day (floating) in 7 calendar days, limitation on working hours per day (12 hours) and on total permitted overtime per month (46 hours)) and labor economics (employees need to be paid according to their net actual working hours, not according to their contribution/duty/efforts (workload)).
The most frequently violated rules are exceeding the permitted working hours, shortfall in payment for overtime, one fixed rest day in every 7 calendar days and employee attendance records.
And then there are penalties, levied on a rising scale going from NT$20K up to NT$300K. Fines are levied on discrete business units (e.g. branch, shop) and not by company. Transgressors will be publicly listed by company name and Responsible Person, both in Chinese.
Personnel & Policy Developments
Government approval ratings are reaching historical lows, as the government seems to lack of direction. It is unknown if the public will be impressed by the Forward Infrastructure Plan. Some Taiwanese are losing patience with transitional justice (marriage equality, pension reform) rather than economy focus. The DPP is facing leadership infighting, which raises questions about their ability to win the next 2018 municipal elections.
Communication channels remain closed. International organizations (WHA, ILO) are acceding to China’s demands. China’s efforts to isolate Taiwan from ASEAN continue.
Taiwan loss of its diplomatic ties with Panama will have little impact on Taiwan’s economy. Moreover, it is likely that some in the DPP favour the loss of all recognition of Taiwan as the ROC, as they believe that it would facilitate the recognition of independence from the mainland by departing from the principle that there is only one China encompassing both territories.
Taiwan must understand personnel in the Trump Administration and Congress as well as potential US policies that impact Taiwan:
- New USTR.
- Currency manipulation report on Taiwan.
- Destination-based cash flow tax.
- Other market access issues (beef).
- The island’s gross domestic product (GDP) is now expected to expand 2.05 percent this year, up from the last estimate of 1.92 percent, the Directorate General of Budget, Accounting and Statistics said, raising its view for the second time since November. If achieved, that would be the best showing since the economy expanded 4.02 percent in 2014.
- But the statistics agency also warned of risks to its fresh forecasts such as currency volatility, China’s economic adjustments and the global impact of policy changes under U.S. President Donald Trump. Those risks and expectations for even milder inflation this year suggest the central bank will keep interest rates unchanged when it meets next month, analysts said.
- One of the catalysts for GDP is the upcoming smartphone releases. Among new product launches, Apple Inc is widely expected to debut its new iPhone 8 later this year, helping to boost demand for companies plugged into global electronics supply chains.
- Exports are expected to rise 8.57 percent this year, the statistics agency said, a bump up from the 8.5 percent estimated in February. However, a higher comparison base for the second half and a potential weakening in Chinese demand could weigh on export growth.
- The government said first-quarter GDP rose a revised 2.60 percent compared with the same period a year earlier, largely in line with an initial reading released last month. At the same time, it trimmed its second-quarter growth forecast but raised third- and fourth-quarter estimates (respectively 1.9% and 1.7%).