KINGSTOWN, St. Vincent, CMC – Taiwan hopes that the loans it provides to St. Vincent and the Grenadines will help replicate what has been described as the “Taiwan Miracle” — the rapid industrialization of the Asian nation in the second half of the 20th Century.
Taiwan’s Ambassador, Peter Sha-li Lan, said that his country obtained loans from other countries to aid its economic development.
He was speaking on local radio weeks after Prime Minister Dr. Ralph Gonsalves triggered a debate here about St. Vincent and the Grenadines-Taiwan ties when he said that the EC$577 million (One EC dollar=US$0.37 cents) in loans the island has contracted from Taiwan “put a hook in the gill” of anyone here wishing to end the diplomatic relations.
Gonsalves’ ruling Unity Labour Party (ULP) says it remains committed to maintaining diplomatic recognition of Taiwan, which China regards as a renegade province and whose diplomatic allies have dwindled to 13 over recent years.
The main opposition New Democratic Party (NDP), officially recognizes the One China policy. 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) between any two countries with formal relations, noting that the ODA could come in the forms of grants, loans, or bilateral projects that are jointly implemented.
“So, we are doing something that everybody’s been doing,” he said, adding, “So, loans are only part of those programs.”
Lan said that before Taiwan gives a loan to another country, the loan is first scrutinized 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 program,” the diplomat said, noting that 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,” 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 percent 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 must have an upgraded infrastructure.”
He said this is why Taiwan launched ten major construction projects in the 1980s.
“Now, we build the first highway system to modernize ports, all our other railroads, and our first international airports. So, does that sound familiar? It does, right?” he said, noting that St. Vincent and the Grenadines have constructed an international airport and are 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 ten significant projects, it needed more money and took loans from partner nations, including the Middle East and the United States.
“So, to me, those loans are not simply borrowing money, spending it without getting anything. Instead, it’s an investment in the country’s future and the benefit of everybody in that country.
“And St. Vincent and the Grenadines are doing the same thing right now. If our friend, our good friend of 42 years, wanted to do something to benefit their 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 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 criticizing 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 had been widely discussed in the media, and he would not get into the exact 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, they have yet to be drawn down.
As of September 2022, St. Vincent and the Grenadines disbursed debt to Taiwan was EC$99.9 million.
“I think St. Vincent and Grenadines [is] making those drawings of the loans very carefully, step by step. So, it’s far from those ceilings. So, it’s really up to St. Vincent and Grenadines to determine how you will 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 the island could not repay the loans, Lan reiterated that the loans are supposed to contribute to the economic development of St. Vincent and the Grenadines.
“And, frankly speaking, paying back debts is up to your country’s fiscal strategy and fiscal policy. We, on our side, are only a commercial bank, lending out on excellent terms. We are doing that as good friends.
“We are not getting to the stage where 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 will happen.”
The diplomat said that if things go differently than designed, defaulting on the loans is something that Vincentians should worry about, noting that only a few have been disbursed.
“You are still under construction, all those major infrastructures, and we should be patient and wait for the result to come out,” Lan said.
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