(Bloomberg) — The future of relations with China isn’t the only issue the Taiwanese public will vote on in Saturday’s presidential election. Property prices, energy policy and the broader economic dividend from several years of strong growth are among key topics exercising voters.
Opposition challengers Hou Yu-ih from the Kuomintang and Ko Wen-je of the Taiwan People’s Party have made the case that only a change in ruling party can fix Taiwan’s domestic issues. The Democratic Progressive Party candidate and current Vice President Lai Ching-te points to progress in many areas made under President Tsai Ing-wen, urging voters to give the party more time.
As with many places around the world, the affordability of housing is a seemingly intractable issue that successive governments have failed to bring under control. It has been one of the main topics on people’s minds, especially among younger voters, for multiple election cycles.
Properties in the capital, Taipei City, are some of the least affordable in the world when compared to incomes. A person earning the median salary would have to save their entire salary for almost 16 years to be able to buy the average home in Taipei.
Price gains are slowing, especially in Taipei, but it’s too little too late for many, especially younger voters, who feel priced out of the market.
Both the DPP’s Lai and the TPP’s Ko aim to tackle the issue by building more social housing and raising property taxes for those who own multiple homes. The KMT’s Hou has proposed preferential loans for people under 40 to help them get on the property ladder.
Stagnant wage growth has been a severe problem for Taiwan since the turn of the millennium. Tsai has had some success in tackling the issue since she came into power. Under her, Taiwan’s salaries saw the fastest growth since the heady days of the 1990s.
But the gains have been undone over the past couple of years by rising consumer prices. Inflation topped out at 3.6% in June 2022, and while that might not sound like much compared to the gains seen in much of the world, it was enough to all but wipe out the hard-won increases in people’s wages.
All three candidates recognize the problem of low wage growth. Hou has the most concrete proposal, promising to increase Taiwan’s minimum wage to NT$33,000 (roughly $1,060) per month from its current NT$27,470, and to bolster salaries at government-controlled companies. Lai has vowed to raise the minimum wage too — but without offering a target — and to investigate listed companies to make sure they are complying with pay rules. Ko says he will encourage companies to raise wages.
Taiwan Semiconductor Manufacturing Co.’s emergence as the world’s leading chipmaker has proved a boon for the economy. It has propelled the security of the Taiwan Strait close to the top of the agenda in capitals around the world and made TSMC Asia’s largest company by market capitalization, excluding the Middle East.
Concerned by an over-reliance on Taiwan for the semiconductors crucial to electronics, the internet and automotive industries, several governments have sought to bring more chip manufacturing to their shores. TSMC has agreed to build new plants in Arizona, Japan and Germany.
This trend is an area where the three candidates differ: Lai supports TSMC’s decision to expand its manufacturing overseas, saying it only strengthens the company’s — and by extension Taiwan’s — influence internationally. While senior members of the KMT have said economic considerations should be the main factor in where to build new chip plants, Hou has said he is in favor of continuing the US “friend-shoring” policy. As for Ko, he says while TSMC operations that are crucial to US national security should be ring-fenced, decisions on plant locations should otherwise be dictated by the market, not politics.
Core Energy Issue
Whether to keep or get rid of nuclear power is one of the main dividing lines between the main parties. Tsai is on the nuclear-skeptic side of the debate, vowing to phase out nuclear power by 2025 while at the same time pushing a major build-out of liquid natural gas, solar and offshore wind. She has committed to make Taiwan a net-zero emitter of carbon by 2050.
While her policies have spurred the local wind industry and decarbonized Taiwan’s overall energy mix to a degree, they haven’t been without challenges. Widespread blackouts in 2021 and 2022 led to criticism the phaseout of nuclear power has left Taiwan without enough baseload capacity, leaving the electrical grid vulnerable to sudden spikes in demand that renewable energy sources aren’t able to meet.
Both Hou and Ko say they would reverse Tsai’s decision to decommission Taiwan’s nuclear power stations, either by extending the life span of the current reactors or by starting up the long-stalled Lungmen power plant. While Lai has largely promised to continue Tsai’s policies in most areas, he has indicated he may be willing to rethink the DPP’s longheld opposition to nuclear energy. Lai has said if new technologies can address safety issues and concerns over how to store waste, he would not rule out the use of nuclear power in the future.
—With assistance from Cindy Wang.