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Taiwanese eye Africa as investment destination amid marginalization

photo: Solomon203

Focus Taiwan | 12 November 2020

Taiwanese eye Africa as investment destination amid marginalization

By Emerson Lim

Taipei, Dec. 11 (CNA) Taiwan’s Chinese International Economic Cooperation Association (CIECA) on Friday encouraged Taiwanese companies to take advantage of free trade deals in Africa and explore investment opportunities on the continent amid Taiwan’s continued isolation in regional trade blocs.

CIECA is a private business organization established in 2000 under the government’s guidance. It is aimed at promoting cooperation between Taiwanese businessmen and their foreign counterparts.

"As markets in Europe, the United States and China are becoming saturated, Africa, a long-neglected market, is a potential investment destination for Taiwanese companies," Y.C. Tsai (蔡允中), director-general of the foreign ministry’s Department of International Cooperation and Economic Affairs, said at a workshop.

"This is especially true for small and medium-sized enterprises (SMEs) and young entrepreneurs," he said, adding that the government will make Africa a priority when arranging trade missions, along with Latin America and the Middle East, once the COVID-19 pandemic eases.

CIECA Vice Chairman Jeff Sun (孫杰夫) echoed Tsai’s view, saying that there are currently about 100 Taiwanese factories operating in Africa in the garment industry alone.

"They are doing good business, taking advantage of the African Growth and Opportunity Act, a U.S. trade act that provides preferential treatment to sub-Saharan countries," he said.

Jiang Wun-Ji (江文基), an assistant research fellow at the Chung-Hua Institution for Economic Research (CIER), highlighted the opportunities offered by the African Continental Free Trade Area (AfCFTA), which entered into force in May 2020.

The AfCFTA groups 54 of the 55 African Union nations to eliminate tariff and non-tariff barriers, according to Jiang.

Taiwanese companies that invest in AfCFTA member states and meet the requirements under the rules of origin can enjoy free flow of their products on the continent, he told the more than 60 participants who attended the workshop.

The top 10 industries with good prospects for exports include chemicals, plastics and rubber, automobiles and components, sugar and fertilizer, he added.

However, there are challenges for Taiwanese businessmen who wish to venture into Africa, such as poor infrastructure, difficult labor management, personal safety, unstable political environments, strict foreign exchange regulations, exchange rate fluctuations and competition from Chinese firms, he said.

Liu Da-nien (劉大年), director of the Regional Development Study Center at CIER, said for his part that one bright spot in investing in Africa is that to his knowledge, no economies have implemented unfriendly trade measures against African countries.

Aside from AfCFTA, other regional trade blocs in Africa that Taiwanese businessmen can utilize include the Common Market for Eastern and Southern Africa (COMESA) and the Tripartite Free Trade Area (TFTA), he said.

COMESA encompasses 21 African states with a combined population of 583 million, while the TFTA is a proposed African free trade agreement between the COMESA, the Southern African Development Community and the East African Community.

Liu said that demand for basic commodities will surge on the continent when the COVID-19 pandemic subsides and when people are eager to spend what they have saved during the pandemic.

Due to opposition from China, Taiwan is excluded from most regional trade agreements, including the recently signed Regional Comprehensive Economic Partnership and has difficulty negotiating free trade agreements with other countries.

Taiwan is currently seeking to participate in the Japan-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership and is also hoping to begin negotiations with the U.S. for a bilateral trade agreement.

 source: Focus Taiwan