Tuvalu

As a diplomatic ally of Taiwan, the southern African country of Swaziland once attracted considerable investment from Taiwanese businesses, especially those in the textile industry. At one point, after the US gave goods from Swaziland preferential tariff treatment, it became a base for many Taiwan-owned manufacturers. But just last year, those same Taiwanese businesses were broadsided by the US announcement that it would cancel preferential duties on Swazi imports. Many shut their doors and withdrew their investments, but some stayed on and managed to adapt to the new circumstances. On this Friday afternoon, a small market suddenly forms on a road near one of Swaziland’s industrial parks. Sellers are expecting their customers to come from the large factory just across the street because today is payday. Two weeks on the job earns these workers 1,000 Swazi emalangeni, the equivalent of about NT$2,200. It’s considered a decent wage by those in the region.After collecting their wages the workers head across the road, where business at the market is heating up.The salaries paid out by the factory help its workers make a living but also give a boost to these small vendors, who have prospered since the factory appeared. But the factory itself? The people who set it up came from a small, faraway country – Taiwan.Here, two different colors of yarn are woven together to create a fabric with a horizontal stripe pattern. This type of machinery may be fairly common in Taiwan, which has a relatively developed textile industry, but in southern Africa, it cannot be found. Dai Ho-liangTaiwanese Chamber of Commerce, SwazilandThere are no other suppliers in the whole of South Africa that can make fabric like this, so it’s one of our best-selling products in South Africa. This machine that makes it came from Taiwan.This Taiwanese textile factory came to Swaziland in 2001. At that time, the United States had passed the African Growth and Opportunity Act, or AGOA, as part of a bid to spur economic growth in sub-Saharan Africa.Thomas J.C. ChenAmbassador to SwazilandThe countries covered under AGOA export about 6,400 types of products to the United States, and these products were all given duty-free exemptions. Because the costs of shipping products to the US were low, they were competitive in the US market. Seeing a big commercial opportunity, many Taiwanese entrepreneurs began to pour money into businesses in Swaziland, with textile production the main focus. But the whole calculus changed in 2015, when the United States removed Swaziland from its list of AGOA countries.Thomas J.C. ChenAmbassador to SwazilandWithout the benefits from AGOA in the United States, the import duties paid on clothing from Swaziland rose from 15 percent to 32 percent, so clothing made here was no longer competitive in the US market.The US cancellation of preferential tariffs sent the Swazi economy into a tailspin, and forced many Taiwanese businesses operating in the country to reconsider their position and shutter their operations.Lin Ruei-yueTaiwanese Chamber of Commerce, SwazilandI still recall last year when discussions over AGOA were in progress, there was a period when they were discussing canceling (the preferential tariffs). At that time I ran to see the US representative and talk with their people. When those talks eventually failed, and the US did in fact cancel tariff breaks on imports from Swaziland, the King of Swaziland summoned us, and he asked me, will you withdraw your investment?Lin Ruei-yue at that point employed over 5,000 people in Swaziland, and his decision on whether to stick around or get out would inevitably have consequences for Swaziland’s economic development.Lin Ruei-yueTaiwanese Chamber of Commerce, SwazilandConditions in Swaziland’s society mean that one wage-earner here is on average supporting 8 people, which is to say that, if we had left, it would have affected the livelihoods of around 40,000 people. Maybe it was because of emotional reasons, or because of the foundations we already had – but I had no reason to withdraw investment.Having effectively lost access to the US market, Lin Ruei-yue regrouped to focus on domestic demand. With growth ramping up across Africa, his top target became Swaziland’s close neighbor, South Africa.Lin Ruei-yueTaiwanese Chamber of Commerce, SwazilandOur current approach is to work to expand the domestic market, because when it comes to South Africa, our company has the most advantages.Lin even continued to help raise relief aid for locals, part of his company’s ongoing efforts over the past 10 years to address hunger and poverty in the region. Thomas J.C. ChenAmbassador to SwazilandAccording to their government’s current statistics, of a national population of 1.2 million, around 300,000 don’t have enough food. Of course, most of those living in such conditions are in more rural areas...

• published: 01 Aug 2016
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