April 2, 2008 / 1:30 AM / 11 years ago

RPT-UPDATE 1-Taiwan's Ma aims for 5 pct growth

(Repeats story first sent late on April 1)

(Adds details, quotes)

By Brian Rhoads and Lee Chyen Yee

TAIPEI, April 1 (Reuters) - Taiwan President-elect Ma Ying-jeou said on Tuesday he will push for curbs on investment in China to be removed and for regular weekend flights to China to be introduced by July to stimulate growth and build up the island as a financial hub.

Boosting business ties with China will boost domestic consumption and economic growth this and next year, which will help offset weak external demand stemming from a global slowdown due to the U.S. subprime crisis, Ma said.

Ma expects to introduce direct weekend charter flights to China two months after taking office on May 20. He also expects to gradually phase out a rule under which Taiwanese firms cannot invest more than 40 percent of their net assets in China, making some of them less competitive in the region.

Ma’s landslide victory last month has lifted Taiwan’s financial markets as investors banked on better economic prospects as his Nationalist Party (KMT) aims to push ahead with China-friendly policies.

“There is growing optimism for the future,” Ma told Reuters in his first interview with a foreign news agency since being elected president on March 22.

“There will more consumption in the future, more investments. If we let mainland tourists come here, that will be a big boost to our tourism industry.”

China has claimed sovereignty over Taiwan since the end of the civil war in 1949. It has vowed to bring the island back under mainland rule, by force if necessary.

Domestic consumption, which made up 60 percent of Taiwan’s GDP totalling $383 billion in 2007, will likely rise as people at home start spending again after several years of weakness due to a domestic credit card crisis and wage stagnation.

TOURISTS TO BRING FORTUNE

Ma said his economic moves should be able to help him meet his targets for growth in the next few years.

“This year, maybe we can get to 5 (percent) or more than 5, but next year, hopefully we can get 6 (percent),” the 57-year-old said.

Ma’s estimate is more optimistic than the statistics agency’s forecast for 4.32 percent growth this year as a slew of measures to boost government spending and domestic consumption will help lift growth.

Like other Asian economies, Taiwan is expected to see weaker export growth this year as the credit crisis hits demand from the U.S. and possibly Europe. Exports are a key driver of the island’s economic growth.

Ma said he will also rely on government spending to increase domestic demand.

“This year, for the whole year, we are actually implementing the budget of the previous government. So we are thinking about making a revised budget proposal,” Ma said.

“We’ve got to move fast, so that we could have our own budget. That means we will certainly increase our investments, our government investments.”

Government investment spending has been logging annual declines since President Chen Shui-bian took office in 2000.

Given that trend, Ma said he realistically hoped to boost the figure by about 5 percent this year and maintain that level in coming years, with the money spent on infrastructure projects, such as port expansions and improving transportation networks.

“We will also invest heavily in our construction and infrastructure projects,” he said.

Ma also plans to allow more Chinese tourists to visit Taiwan, by increasing the number from an initial 3,000 a day to 5,000 in the following year and gradually to 10,000 in the fourth year.

“So from the tourists alone, that will bring us a fortune and create many jobs,” he said. (Additional reporting by Rachel Lee and Fanny Liu)

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