Direct cargo links between Taiwan and China, launched on Monday after a six-decade gap, will help Taiwan compete with rival transport hubs Hong Kong and Singapore, and will enable logistics firms to triple their contribution to economic growth, Reuters reports.

Taiwan leaders said the links will spur Taiwan's economy in years to come by luring more businesses to set up shop on the island due to its proximity to China.

Previously, goods from Taiwan had to be transported to a third destination, such as Hong Kong, before heading towards China. Direct links could save shippers about T$1.2bn (US$36m) a year through shorter transit times and lower fuel costs and working hours, according to government estimates.

'It's never too late to implement these links,' President Ma Ying-jeou said at the inaugural ceremony in Kaohsiung, once the world's third-largest port and launch point for the first ship taking the direct route to China under the new agreement.

President Ma's China-friendly policies have been welcomed by Taiwanese businesses, which have long complained that they were losing competitiveness to Asian peers due to testy ties under former President Chen Shui-bian, Reuters reports.

Transportation, logistics and communications contributed just 0.14 percentage point to Taiwan's GDP growth of 5.7 percent in 2007. But analysts said the figure could at least triple under the new agreements and infrastructure improvements.

'These links will put Taiwan's shipping firms on a more level playing field in the region,' said Frank Lu, chairman of Yang Ming Marine, Taiwan's second-largest cargo shipping firm. 'We've been yearning for this for years.'

But the island will need to act fast if it wants to reclaim a place alongside such logistics powerhouses as Hong Kong and Singapore, analysts said.

'The current financial crisis is a good time for us to catch up with our rivals,' David Hong, president of Taiwan Institute of Economic Research, told Reuters, referring to Hong Kong and Singapore.

'These deals will definitely help, but it will require a lot more other things to create a package to convince foreign investors that Taiwan has all it takes to become a key transportation hub in Asia,' Mr Hong said.

The launch of first-ever direct cargo flights and shipping routes between both sides on Monday marked a resumption of services after a 60-year hiatus dating back to the end of the Chinese civil war in 1949.

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