Taiwan has unveiled a set of economic stimulus measures to boost its slowing economy.

While the government hopes that the measures could boost GDP growth by 1 to 1.6 percentage points, some analysts said challenges in the near term still remain.

Like other export-dependent economies in Asia, Taiwan has been hurt by weakening demand from Europe and the West.

And the government is now stepping in with new measures to boost growth.

These include industrial diversification, infrastructure projects, promoting exports and developing new markets.

Taiwan also plans to relax investment barriers for foreign and Chinese investors, hoping to attract US$34 billion a year.

And tourism is expected to kick start the recovery.

Taiwan Premier, Sean Chen, said: "Taiwan's tourism generates about US$11 billion in revenue a year. In the past few years, we have accommodated so many visitors by investing US$5 billion in building hotels in recent years."

The government hopes that the measures will boost growth by as much as 1.6 percentage points.

Analysts are confident that this is achievable but they worry that the measures may not produce the immediate impact the island needs.

Director for Center for Economic Forecasting of Chung Hua Institution, Liu Meng Chun, said: "These measures will require long-term cultivation. For instance, you're not likely to see any immediate impact in developing emerging market. But these are tasks that must be carried out."

The Taiwanese economy is among the worst performing in Asia this year.

It saw a contraction in the second quarter of about one fifth of a per cent.

And as the government tries to tackle the challenge, analysts said it needs to pay more attention to exports, which account for two thirds of the economy.

Academia Sinica Research Fellow Ray Chou, said: "Our exports have two major imbalances. One is it's too dependent on china. Another is it's too focused on technology products. These are what made Taiwan so vulnerable to global economic conditions."

There's also the question of whether the government can fully implement the measures as planned.

Liu said: "Coordination within the government to effectively carry out these stimulus measures may be weak. But if the government can improve on its efficiency, there's a better chance of achieving its target."

Despite the government's efforts, analysts said the global slowdown will continue to weigh on the island. So there is still a long way to go for Taiwan and these stimulus measures are just the beginning.

channelnewsasia.com