Local Companies Optimistic About Business Prospects for 2004

Most local enterprises are optimistic about business prospects for 2004, according to a recent survey conducted by the Chinese-language Economic Daily News (EDN). Almost 58% of the companies contacted predicted that business would recover in the first half of next year, while only 5.2% expected a continuing decline. Nearly 35% thought that business will remain the same as in the second half of 2003.

This is in sharp contrast to the results of a June survey on the coming year, in which 28.7% of the contacted companies looked for improvement while 20.7% predicted a decline and 49.4% expected no change.

The recent survey also looked into the attitude of local businesses toward the government's economic policies and their willingness to invest in the forthcoming six months. The results were very close to those achieved by surveys conducted by research institutions (both domestic and international) and government agencies.

The Academic Sinica and the Directorate General of Budget, Accounting and Statistics (DGBAS) are currently both predicting that the island's economy will grow at a rate of more than 4% next year, around one percentage point higher than 2003. The International Monetary Fund puts growth in 2004 at 4%.

Nearly 70% of the companies recently surveyed by EDN forecast improved revenues next year—17.5 points higher than in the previous survey. Around 6.4% expect massive growth, 25.3% predict moderate growth, and 35.4% limited growth.

Just 7.3% expect revenues to decline—6.4% predict small drops, 0.9% moderate drops, and 0.5% massive drops.

Asked to choose the top three factors in Taiwan's economic performance in the first half of 2004, the companies pinpointed the global (especially United States) economy, cross-Strait relations, and the foreign exchange rate. Less important factors, according to the respondents, include Taiwan's presidential election next March and local interest rates, energy prices, the stock market, and human resources.

The survey spanned 20 industries, including manufacturing, services, and construction. Most of the manufacturers are engaged in the production of information-technology and electronic products, followed by those in metals processing, food and beverages, and chemicals. Service industries included finance, banking, insurance, and the export and import trade.

Of the companies surveyed, 56.6% were dissatisfied with the government's current economic policies and 28.5% proclaimed satisfaction. Just over 15% of the companies said that they were extremely dissatisfied.

The top three priorities for improvement by the government, according to the survey results, are to implement the "three links" with China (with 53.7% of the companies approving), further improve government efficiency (42.2%), and improve government finances (39.9%).

More than 35% of the companies surveyed expected to boost their investment in the first half of 2004, a huge jump from the 17.3% expressing such sentiment in June. Only 5.6% expected their investment to be reduced, and 41.5% said that investment would remain the same.

Of the companies expecting to increase investment, 27.2% said that the increase would be for capacity expansion, 25% for a larger R&D budget, and 19.4% for the renewal and upgrading of production equipment.