Taiwan to Distribute '440,000 KRW' in Cash Ahead of Elections

TSMC holds immense influence over Taiwan's economy, with its share in the Taiwan Weighted Index reaching approximately 45%. This indicates that TSMC's stock movements largely dictate the direction of the entire Taiwanese stock market.

Approximately 2.6 million people, about 11% of Taiwan's total population, invest in TSMC. This means many Taiwanese are directly impacted economically by TSMC's performance.

In South Korea, the number of Samsung Electronics investors was approximately 7 million as of June, accounting for about 14% of the Korean population. SK Hynix investors numbered about 3 million, roughly 6-7% of the Korean population.

Taiwan's TSMC investor population ratio (11%) is lower than South Korea's Samsung Electronics investment ratio, but it is notable that a significant portion of the total Taiwanese population is heavily invested in a specific stock.

This figure is significantly higher than South Korea's increase of 94%, demonstrating the high-risk tolerance of Taiwanese individual investors.

As stock prices and housing prices rose simultaneously in Taiwan, young people without homes became heavily reliant on stock investments to grow their assets.

This led to a 'FOMO (Fear Of Missing Out)' phenomenon, where individuals made excessive 'debt-financed' investments for fear of being left out of the asset price surge.

This indicates a deepening income polarization, with most workers struggling with rising living costs.

This suggests that Taipei citizens face considerable difficulties in affording housing.

Indeed, the monthly rent for a three-bedroom apartment in Taipei is around 1.8 million KRW, indicating a high housing cost burden.

Taiwan's semiconductor industry is driving economic growth, but semiconductor-related companies employ only about 7% of the total workforce. With only a small number of people benefiting from this high growth, the majority of the population does not feel the actual economic growth despite the AI boom.

The lives of most Taiwanese citizens remain difficult due to high living costs, such as the monthly rent for a three-bedroom apartment reaching 1.8 million KRW, and the food price index hitting an all-time high in July 2020.

This indicates that the ruling Democratic Progressive Party is in serious crisis, as a 30% approval rating is generally considered the beginning of a lame-duck period.

With local elections scheduled for November 28 amidst these low approval ratings, it will be a crucial test for the current ruling party.

The Taiwanese government is promoting a policy to pay 10,000 New Taiwan Dollars, approximately 440,000 KRW, to all Taiwanese citizens next year. This is justified as sharing the benefits of the AI industry, which recorded a high economic growth rate of 14% in the first half of this year.

This cash handout is interpreted as an attempt to win public support ahead of the upcoming local elections, aiming to convey the message of returning the AI industry's achievements directly to the public in cash.

This cash handout policy marks the third instance of distributing cash to all citizens in Taiwan in three years. This has amplified suspicions that it is a vote-buying policy aimed at the upcoming local elections.

Taiwanese experts criticize that instead of scattering cash as a one-time measure, funds should be managed from a long-term perspective, like Norway's sovereign wealth fund, to create stable alternatives for future generations.

In the past, when the Kuomintang (KMT) pursued cash handout policies ahead of a recall vote, the DPP strongly criticized it, stating, "Isn't vote-buying engraved in the KMT's DNA?" and "It's an irresponsible act to cover up policy failures."

However, as the ruling DPP is now pursuing similar cash handout policies ahead of elections, their past criticisms of the KMT are being re-examined, sparking a 'whataboutism' controversy.

In particular, the DPP had previously accused the KMT of "irresponsible acts of borrowing money from future generations to secure parliamentary seats," but now that they are implementing similar policies, it's difficult for them to avoid criticism.

Taipei Mayor Chiang Wan-an, affiliated with the KMT, argued that 10,000 New Taiwan Dollars is insufficient and that 20,000 New Taiwan Dollars (approximately 880,000 KRW) should be paid, fueling a cash handout competition.

He criticized the DPP's 10,000 New Taiwan Dollar handout policy as grossly insufficient.

Representing the KMT's stance, he argued that the payout should be increased to 20,000 New Taiwan Dollars instead of 10,000, aiming to gain an advantage in the cash handout competition with the DPP.

The anti-China leaning Democratic Progressive Party (DPP) previously strongly criticized the Kuomintang (KMT) when it pursued cash policies, calling it a scheme to impoverish Taiwan.

However, as they themselves implemented similar cash handout policies after coming to power, their silence on the matter has further fueled the 'whataboutism' controversy.

This is an attempt to create a structure where cash is automatically distributed when conditions are met, rather than as a one-time handout.

If this amendment passes, cash payouts could become a fixed part of government budget operations, rather than just a one-off policy.

In a K-shaped economic structure like Taiwan's, where only the upper class benefits and the lower class is marginalized, one-time cash handouts cannot change structural limitations and may even have adverse effects, critics argue.

Experts suggest that instead of cash handouts, the money should be focused on fundamental structural improvements, such as expanding housing supply.

The Control Yuan pointed out that only about a quarter of the distributed cash led to actual consumption, emphasizing the need for policy research through external researchers to find more effective alternatives.