Taipei hopes that the loans it gives to St. Vincent and the Grenadines will help the country to replicate what has been described as the “Taiwan Miracle”.
The “Taiwan Miracle” refers to the rapid industrialisation of the Asian nation in the second half of the 20th Century, during which it moved from an agrarian society, to a leading supplier of some of the world’s most high-tech commodities.
Taiwan Ambassador to SVG, Peter Sha-li Lan said that his country obtained loans from other countries that aid in its economic development.
He was speaking on Boom FM, on Tuesday, weeks after Prime Minister Ralph Gonsalves triggered debate about SVG-Taiwan ties when he said that the EC$577 million in loans SVG has contracted from Taiwan “put a hook in the gill” of anyone in SVG wishing to end the diplomatic relations.
Gonsalves’ Unity Labour Party (ULP) says it remains committed to maintaining diplomatic recognition of Taiwan, whose diplomatic allies have dwindled to 13 over recent years.
The main opposition New Democratic Party officially recognises the One China policy, under which Beijing maintains that self-ruled Taiwan is a province of China rather than an independent country.
Lan said that there is official development assistance (ODA) among any two countries that have formal relations, noting that ODA could come in the forms of grants, loans or bilateral projects that are jointly implemented.
“So, we are actually doing something that everybody’s been doing,” he said. “So, loans are only part of those programmes.”
Lan said that before Taiwan gives a loan to another country, the loan is first scrutinised intensely by both governments and the commercial bank in Taiwan from which the loan would come.
“We want to make sure that those loans will eventually benefit all Vincentians here, put their money into some useful programme,” the diplomat said.
He said another way of giving developmental assistance is to share experience, noting that Taiwan used to be an agrarian society but grew its small and medium size businesses.
Lan said Taiwan is also sharing its experience “with our friends here in SVG”, adding that after growing its businesses, Taiwan upgraded to heavy industries, including shipbuilding and petrochemicals.
“And then the next stage is the knowledge-based industry,” he said, noting that Taiwan produces over 60% of the world’s semiconductors.
“… we did not do that alone. For example, when we’re trying to turn those small and medium businesses into heavy metals — steel mills, those kinds of heavy industries, we didn’t have the money to start with. And if you want to expand your industry, you want to expand your trade, you have to have an upgraded infrastructure.”
He said this is why Taiwan launched 10 major construction projects in the 1980s.
“Now, we build out one up the first highway system to modernise ports and all our other railroads, and our first international airports. So, does that sound familiar? It does, right?” he said, noting that SVG has constructed an international airport and is building a modern port.”So basically, it’s almost like it’s on the same path of what we experience.”
He said that when Taiwan was constructing its 10 major projects, it did not have money and took loans from partner nations, including in the Middle East and the United States.
“So, those loans, to me, are not simply borrowing money, spending it without getting anything. Instead, it’s an investment to the future of the country, and the benefit of everybody in that country.
“And I believe St. Vincent and the Grenadines right now is doing the same thing. If our friend, our good friend of 42 years, wanted to do something to benefit their own people and what they are lacking is only a small amount of loans to start with, drawing from our own experience, of course, we think that’s important for us to do that. Because our friends a few decades ago did that to us to help us.”
The diplomat said that in the year 2000 Taiwan was still repaying the loans it received decades earlier to build its first highway and the international airport.
“But you didn’t hear people criticising the government for making those loans because everybody benefited from that…
“So, I would like to look at those loans that we are dealing with right now here in St. Vincent and Grenadines, the same way they are looking at our own experience.”
Lan said the loan amounts have been widely discussed in the media and he would not get into the detailed numbers.
“… what we did is just to try to match one of our commercial banks to see if they can make a loan to assist those major infrastructure projects.”
He said that while the loan amounts have been contracted, all of them have not been drawn down.
As of September 2022, SVG’s disbursed debt to Taiwan was EC$99.9 million.
“I think the St. Vincent and Grenadines [is] making those drawing of the loans very carefully, step by step. So, it’s not even close to those ceilings … So, it’s really up to St. Vincent and Grenadines, to determine how you’re going to use the loans, at what tempo and also depending on how you spend that, to make those infrastructure projects happen.”
On the issue of what would happen if SVG is unable to repay the loans, Lan reiterated that the loans are supposed to contribute to the economic development of SVG.
“And, frankly speaking, I think paying back debts it’s up to the fiscal strategy and fiscal policy of your own country. We, on our side, are only a commercial bank, lending out on very good terms. We are doing that as good friends.
“We are not getting to the stage that we should be discussing the questions that you are asking. But I am sure with good friends that we will work together trying to see what is going to happen.”
The diplomat said that if things go as designed, defaulting on the loans is not something that Vincentians should worry about.
He further noted that only a small portion of the loans have been disbursed.
“You are still under the process of construction, all those major infrastructures, and we should be patient and wait for the result to come out,” Lan said.