Long before the Tsai government announced her administration’s trademark New Southbound Policy (新南向政策) a year ago, Taiwanese businesses had already invested over $80 billion in the South and Southeast Asia regions from the 1950s to 2015. Taiwan’s businesses have set up countless fisheries, as well as electronics, machinery, textiles, and shoe manufacturing facilities in the region. The size of the Taiwanese business community in these countries averages in the thousands, and is as large as 150,000 people in Thailand. In the past, mutually beneficial economic relations have provided space for Taiwan to overcome immense political obstacles when working with other countries. Taiwan’s businesses are now facing growing political pressure from China and the future of Taiwan’s businesses in the region is increasingly precarious.
The Taiwanese business landscape in the region was constructed over the past seven decades:
- In Vietnam, Taiwanese businesses have invested $30 billion in the textile, shoe, and bicycle industries; the local Taiwanese business community consists of around 60,000 people.
- In Indonesia, Taiwanese businesses have invested $17 billion, mostly in the furniture, textile, and shoe industries; the local business population includes 10,000 Taiwanese people.
- In Thailand, Taiwanese businesses have invested $13.9 billion, predominantly in machines and electronics, as well as the chemical industry; there are around 150,000 people in the Taiwanese business community.
- In Malaysia, Taiwanese businesses have invested $12 billion, predominantly in machines and electronics; the local Taiwanese business population consists of around 40,000 people.
- In Singapore, Taiwanese businesses have invested $11 billion, mainly in the machinery, electronics, and chemical industries, establishing it as a regional transportation hub; there is a local Taiwanese business community of 15,000 people.
- In the Philippines, Taiwanese businesses have invested $2.2 billion in the machinery and electronics industries; the local business community is made up of roughly 6,000 people.
- In India, Taiwan has invested $1.5 billion in a diverse range of industries to include communications, machinery, trade, transportation, engineering, metallics, shoes, fisheries, and finance.
- In Cambodia, Taiwanese businesses have invested $1.1 billion, predominantly in the textiles industry; the local business community includes around 600 Taiwanese people.
- In Brunei, Taiwanese businesses have invested $770 million in fish feed and trade; there is a local Taiwanese business community of 30 people.
- In Myanmar, Taiwanese businesses have invested $356 million, mostly focused on agriculture, optics, and construction material, and there are around 450 people in the local Taiwanese business community.
- In Laos, Taiwanese businesses have invested $4 million, mostly in the furniture and textiles industries, and there is a local Taiwanese business population of around 200 people.
There are aspects of Taiwan’s New Southbound Policy that are more vulnerable to Beijing’s pressure. These are evident in the four immediate tasks of the New Southbound Policy, which include plans for Taiwan officials to work with the host countries in South and Southeast Asia to: hold high-level exchanges, collaborate with foreign think tanks, sign or renew bilateral investment agreements, and implement other major projects such as hosting expos and exchange student programs.
These tasks are vulnerable to triangular politics, since China consistently blocks Taiwan’s foreign relations through a mix of incentives and disincentives directed at any country that seeks cooperation with Taiwan. Beijing demarches Taiwan’s partners on a regular basis. This is evident in the PRC Foreign Ministry’s official position: “We have always been firmly opposed to any form of official contact with Taiwan from the countries that have established diplomatic relations with China, and between official organizations” (“我們歷來堅決反對與中國建交的國家同台灣方面進行任何形式的官方接觸與往來，互設任何具有官方性質的機構”) It continues by saying it hopes its diplomatic partners will, “respect and understand China’s core concerns and adhere to the One China Principle” (“尊重和理解中方核心關切，堅持一個中國原則“).
In past decades, Taiwan’s businesses in Southeast Asia have not been are vulnerable to triangular politics between Taiwan, China, and a host country, such as Vietnam, Malaysia, or others. The PRC is now putting more political pressure on Taiwan’s economic partners in Southeast Asia. Both sides publicly tussle over diplomatic partners, and there are early signs of friction between Taiwan’s New Southbound Policy and China’s Belt and Road Initiative. The question is whether Taiwan’s business diaspora will continue to endure as they have over the past seven decades; only time will tell if Taiwan’s businesses are being edged out by competitors for political reasons.
Main point: Taiwan’s New Southbound Policy is built on a foundation of decades of Taiwanese business investment and success in the region, but this foundation may be susceptible to growing political pressure from the PRC in South and Southeast Asia.