Taiwan’s Lovely Little Stimulus

The Triple Stimulus Vouchers was the right-sized solution that turned retail around

Spare a thought for Taiwan’s macroeconomic bureaucrats. Unlike, say, the US, dropping money in people’s pockets is no guarantee the economy will be stimulated due to the Taiwanese people’s formidable savings rate. During the teeth of the COVID-19 induced retail slowdown, retail inevitably contracted month after month. Something had to be done. But what?

Enter the Triple Stimulus Vouchers program. The program which came online in July 2020 was intricately designed to maximize economic activity while being light in terms of public spending.

• The vouchers, NT$3,000 (around US$100) per person, can be spent as good as cash, but only until the end of 2020.

• People had to spend NT$1,000 of their own money to purchase the vouchers, cutting down the burden on the treasury. Marginalized and low-income groups got subsidized though.

• The vouchers couldn’t be used for online shopping, because physical stores needed help more while people were spending more money online due to the pandemic anyhow.

• Vendors who receive the vouchers have the option of spending it on again, generating more economic activity.

• The government encouraged vendors to come up with “combo deals” to tempt consumers to treat themselves, especially since change cannot be made from the vouchers to prevent consumers from making a small purchase and banking the rest.

Of course, if a consumer was truly determined to save their stimulus, it was possible. They could simply use the vouchers on a purchase they already planned to make, such as gas, and bank the money they didn’t use on that purchase. But an informal poll of my friends and acquaintances showed that more often than not, people took the cue to treat themselves to meals, shoes, cameras and other “little luxury” upgrades. “I got some nicer teabags than I otherwise would,” said a friend.

The results? Taiwan’s retail, after 5 consecutive months of COVID-19 related contraction, made a big comeback. After returning to positive territory in July, the month the voucher program took effect, retail figures broke records all the way from August to November. The cost to the treasury? Very little as those things go. NT$64.28 billion (US$2.25 billion) were redeemed by vendors. The administration of the program, including the printing of the vouchers and the distribution via convenience stores and post offices, was another NT$2 billion.

Of course, we cannot entirely credit the return of retail to the Triple Stimulus Voucher program. Thanks to Taiwan’s exceptional COVID-19 control, the consumers of Taiwan were safe to shop, though they cannot leave the country as many Taiwanese people love to do. “Revenge shopping” was a real phenomenon.

Nevertheless, I think kudos are in order for the Ministry of Economic Affairs. The Triple Stimulus program was modest, nifty and well-administered. In addition to giving the retail sector a needed pop, I can attest that it also sparked some joy in a year beset by anxiety and uncertainty.