Taiwan prime minister quits as Tsai seeks reset ahead of election year

TAIPEIThe resignation of Taiwan’s prime minister (PM) sets the stage for a broader reshuffle and provides President Tsai Ing-wen a chance to raise her poll numbers ahead of local elections next year.

PM Lin Chuan (picture), who had been seen as Tsai’s chief economic policy architect, said yesterday he told the president on Sunday that he would resign after passing key pieces of the administration’s agenda. Lin, 65, said he had never planned to stay on and wanted to give his successor time to prepare before local elections late next year.

“We couldn’t wait until the end of 2018 to make the change,” Lin said. “This way the new PM has a chance to prove themselves.”

Tsai’s office said in a text message that she had accepted Lin’s resignation and would discuss the PM’s post at an 11:30am news conference today. “Lin has created a solid foundation for the success of the new Cabinet,” the Presidential Office said.

Since Taiwan’s PM appoints most of its Cabinet ministers, Lin’s resignation was expected to trigger a full reshuffle. The Central News Agency reported that Tainan city Mayor William Lai was expected to be Lin’s successor.

Tsai has seen her approval rating sink below 30% amid tensions with China and a series of difficult policy fights after her Democratic Progressive Party (DPP) secured control over the executive and legislative branches last year. The DPP, which promised to revamp the island’s sluggish economy and reduce its dependence on China, faces its first test in local elections in late 2018.

The benchmark Taiex gauge slipped 0.2% to 10,569.87 yesterday amid regional concern over US President Donald Trump’s potential response to North Korea’s weapons development. The Taiwanese dollar gained 0.2% to NT$30.105 (RM4.28) against the US dollar, the strongest in almost three months.

“Impact on markets from Lin Chuan’s resignation is limited, as it’s going to be the same ruling policy, and major policies are likely to stay on course,” Huang Wen-ching, VP of Taishin Securities Investment Advisory Co, said by phone. “Investors will be watching who’ll head the economy-related ministries, including the Finance Ministry. Policies we’ll monitor include the tax reforms, the energy policy, the workers’ holidays and special infrastructure plans.”

A former finance minister who never joined a political party, Lin was seen as a key driver of Tsai’s economic agenda. He had faced a steady stream of calls for his resignation, from those among Tsai’s own pro-independence party, as well as opponents to her pension and labour reform packages.

Lin said he wouldn’t be accepting any more full-time government jobs. He was among candidates tipped to be Taiwan’s next central bank governor in a Bloomberg survey of economists last month.

Naming Lai as PM would also make it more difficult for the Tainan mayor to challenge Tsai when her own term comes up for renewal in 2020, said Edward Chen, distinguished chair of Chinese Culture University’s political science department. Lai is a member of the DPP.

“Lin isn’t a DPP member and isn’t popular among some of the ruling party,” Chen said. “His Cabinet failed to give much of a lift to Tsai Ing-wen’s approval rate.”

Lin helped secure passage of proposals limiting workweeks to six days and creating a special NT$107 billion infrastructure budget, and slashing pension benefits for police, veterans and civil servants. His departure comes less than three weeks after Taiwan’s economy minister stepped down after a blackout left six million households without power and questions about Tsai’s plan to phase out nuclear power.

“The outages hurt investment confidence, triggered criticism from businesses and even academia,” Concord Securities Co assistant VP Allan Lin said by phone. “If the power supply remains in such a condition next year and the year after, it’s going to be worrying.”

Last month, Taiwan upgraded its economic growth forecast for the year and signalled confidence for 2018, crediting a strong exports outlook. The statistics bureau revised its estimate for 2017 gross domestic product to 2.11%, up from the previous projection of 2.05% in May. — Bloomberg