Taiwan business TOPICS August 2014: Taoyuan Steps Up

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號執照登記為雜誌交寄

www.amcham.com.tw

Taiwan Business

Topics

ISSUE SPONSOR

NT$150

August 2014 | Vol. 44 | Issue 8

Published by the American Chamber Of Commerce

In Taipei

大有可為的桃園大有可為的桃園

Taoyuan Steps Up

• 2014 Doorknock Report• Industry Focus: Energy

8_2014_Cover.indd 1 2014/8/5 11:52:45 AM

Celebrating America’s Birthday

3 taiwan business topics • august 2014

AmCham Taipei marked Independence Day 2014 in style! On July 5, over 150 people celebrated the holiday at AmCham’s annual 4th of July barbeque. Partygoers converged on the American Club in China to take part in an evening of fun activities. Attendees beat the heat with ACC’s large swimming pool and various water activities, and the children in attendance jumped to their hearts’ content in a red, white, and blue bouncy castle.

No Independence Day celebration would be complete without food – especially barbeque – and this year's party was no exception; guests feasted on offerings from a gourmet grill, noodle bar, and a shaved ice station. A live band took to the stage later in the afternoon, and serenaded attendees with covers of the latest hits. The party wrapped up in the late evening with a soulful rendition of America’s National Anthem. Everyone had a great time!

8_july4.indd 3 2014/8/5 11:50:37 AM


NEWS AND VIEWS

AMCHAM EVENT

C O N T E N T S

auguST 2014 vOlumE 44, NumbEr 8一○三年八月號

Publisher 發行人

Andrea Wu 吳王小珍

Editor-in-Chief 總編輯

Don Shapiro 沙蕩

Associate Editor 副主編

Tim Ferry 法緹姆

Art Director/ 美術主任/Production Coordinator 後製統籌

Katia Chen 陳國梅

Manager, Publications Sales & Marketing 廣告行銷經理

Caroline Lee 李佳紋

Translation 翻譯

Jay Chen, Yichun Chen, Agnes Chiu

陳正杰,陳宜君,邱意豪

Chairman/ Thomas FannVice Chairmen/ Scott Meikle / William J. Farrell Treasurer: Cosmas Lu Secretary: Fupei Wang

2013-2014 Governors:Thomas Fann, William Farrell, Ajit Nayak, Neal Stovicek, Stephen Tan, Fupei Wang, Bill Wiseman.

2014-2015 Governors: William E. Bryson Jr., Sean Chao, Rodney Van Dooren, Douglas Klein, Cosmas Lu, Scott Meikle, Dan Silver, Ken Wu.

2014 Supervisors: Anita Chen, Midee Chen, Joseph Lin, Louis Ruggiere, Vincent Shih.

COMMITTEES: Agro-Chemical/ Melody Wang; Asset Management/ Christine Jih, Derek Yung; Banking/ Victor Kuan; Capital Markets/ Miranda Liaw, C.P. Liu, Shirley Tsai; Chemical Manufacturers/ Michael Wong; CSR/ Lume Liao, Fupei Wang; Customs & International Trade/ Stephen Tan; Education & Training/ Robert Lin, William Zyzo; Greater China Business/ Helen Chou, Cosmas Lu; Human Resources/ Richard Lin, Seraphim Mar, Vickie Chen; Infrastructure/ L.C. Chen, Paul Lee; Insurance/ Arthur Cozad, Joseph Day, Dan Ting; Intellectual Property & Licensing/ Jason Chen, Peter Dernbach, Jeffrey Harris, Vincent Shih; Manufacturing/ Thomas Fan, Hans Huang; Marketing & Distribution/ Wei Hsiang, Gordon Stewart; Medical Devices/ Susan Chang, Tse-Mau Ng, Dan Silver; Pharmaceutical/ Margaret E. Driscoll, David Lin, Jun Hong Park; Private Equity/ William Bryson; Public Health/ Jeffrey Chen, Dennis Lin; Real Estate/ Tony Chao; Retail/ Prudence Jang, Douglas Klein, Ajit Nayak; Sustainable Development/ Kenny Jeng, Kernel Wang; Tax/ Cheli Liaw, Jenny Lin, Josephine Peng; Technology/ Revital Golan, Scott Meikle, Jeanne Wang; Telecommunications & Media/ Thomas Ee, Joanne Tsai, Ken Wu; Transportation/ Michael Chu; Travel & Tourism/ Anita Chen, Pauline Leung, Achim v. Hake.

American Chamber of Commerce in Taipei

129 MinSheng East Road, Section 3, 7F, Suite 706, Taipei 10596, TaiwanP.O. Box 17-277, Taipei, 10419 TaiwanTel: 2718-8226 Fax: 2718-8182 e-mail: [email protected]: http://www.amcham.com.tw

名稱：台北市美國商會工商雜誌發行所：台北市美國商會

臺北市10596民生東路三段129號七樓706室電話：2718-8226 傳真：2718-8182

Taiwan Business TOPICS is a publication of the American Chamber of

Commerce in Taipei, ROC. Contents are independent of and do not

necessarily reflect the views of the Officers, Board of Governors,

Supervisors or members.

© Copyright 2014 by the American Chamber of Commerce in Taipei,

ROC. All rights reserved. Permission to reprint original material must

be requested in writing from AmCham. Production done in-house,

Printing by Farn Mei Printing Co., Ltd.

登記字號：台誌第一零九六九號

印刷所：帆美印刷股份有限公司

經銷商：台灣英文雜誌社台北市108台北市萬華區長沙街二段66號

發行日期：中華民國一○三年八月

中華郵政北台字第5000號執照登記為雜誌交寄

ISSN 1818-1961

6 Editorial The Need to Spur Innovation 鼓勵創新乃當務之急

7 Taiwan Briefs Jane Rickards and Timothy Ferry

12 IssuesReviewing the Financial Tax Hike; Agree-ment Signed as FATCA Goes into Effect重新檢討金融保險營業稅率By Don Shapiro

3 Fourth of July celebration

ANALYSIS

29 2014 Doorknock Finds Encouraging Prospects for Investment AgreementBut agricultural trade issues may still be an obstacle unless a breakthrough can be achieved.

By Don Shapiro

COVER SECTION

16 Taoyuan Steps Up 大有可為的桃園 The county’s prime location and

pending elevation to special city are opening further opportunities for development.

By Philip Liu

21 Taoyuan Aerotropolis Gets Ready for Takeoff

桃園航空城蓄勢待發

This huge infrastructure project is seen as a prime driver of Taiwan’s future economic development, helping to take full advantage of the island’s commercially strategic loca-tion within the Asia Pacific.

By Jens Kastner

26 Assessing Taoyuan’s Business Climate

AmCham companies with headquar-ters in the county evaluate the pluses and minuses of operating in Taoyuan.

By Katherine Moon

8 Contents.indd 4 2014/8/5 12:56:23 PM

Taoyuan County in northwestern Taiwan borders to the north on the

Greater Taipei Region, the hub of Taiwan’s political and economic activi-

ties, and to the south on Hsinchu, the country’s high-tech capital. Stretch-

ing from the coastal plain along the Taiwan Strait to the Taoyuan Plateau

and then to the Xueshan Mountain Range, Taoyuan boasts a widely varied

and attractive landscape that makes it a popular destination for tourism.

“Taoyuan” means “peach garden” in Chinese. Formerly the County

was known as “peach garden” because of the omnipresent peach blos-

soms, the official County flower. Occupying an area of 1,221 sq. km.

divided into six cities, one urban township and six rural townships,

Taoyuan County has a population of approximately 2.05 million. It will

be formally reorganized on December 25, 2014 as a special municipality.

The Taoyuan Aerotropolis Project, which is fully supported by Taoyuan

County, is the largest construction project in the history of Taiwan and is

regarded as crucial for Taiwan’s future economic success.

about Taoyuan County

COvEr SPONSOr

桃園縣位居臺灣西北方，北與臺灣政經重心大臺北為鄰，南接

臺灣科技大城新竹，地形由臺灣海峽之濱，經桃園台地延伸至雪山

山脈。沿海平原、丘陵台地、高山地形三大部分豐富的地形，變化

出多元的觀光資源風貌。早期因縣內遍開桃花，故有「桃仔園」古

稱，並以桃花為縣花。轄內行政區域共劃分為6市1鎮6鄉，土地面

積達1,221平方公里，人口約205萬人，民國103年12月25日正式升

格為直轄市。桃園縣正積極推動桃園航空城計畫，它不但是臺灣有

史以來最大的計畫，也是臺灣經濟發展的引擎。

桃園縣簡介

By Timothy Ferry

36 The Risks and Rewards of Nuclear Energy

The Taiwan public has been highly skepti-cal about the safety of nuclear power

40 Nuclear Waste – Another Thorny Problem

41 The Electricity Market and Liberalization

Despite widespread support for reform, practical obstacles are making it very dif-ficult to achieve.

44 LNG’s Role in the Energy Mix

taiwan business topics • august 2014 5

august 2014 • Volume 44 number 8

TAIWAN BUSINESS

46 The “Most-Favorable Bid” Trend in Government Procurement

The authorities have also been seeking ways to inject greater flexibility into the process.

By Philip Liu

48 Who’s in Charge of Procurement?

By Don Shapiro

INDuSTrYF CuS

Special Report on Energy PolicyThe Debate goes On

8 Contents.indd 5 2014/8/5 12:56:25 PM


正值各界對台灣長期經濟競爭力可能下滑而感到憂心

忡忡之際，對於像台灣這樣相對成熟的經濟體而

言，持續創新無異被視為是推動成長的驅動力。

值此之際，政府單位已著手規劃各項方案來因應這波鼓勵

創新的需求。有鑑於此，本商會亦期望能貢獻一己之力。本

商會理事會所新成立之創新推動小組，將致力於結合具有創

新企業文化而聞名的各會員公司的資源，共同為鼓勵創新而

努力。此外，創新推動小組期望能成為國內政府官員、教育

界、企業界代表及其他專家學者的創新平台，成為不僅是鼓

勵高科技產業的創新而是社會各產界創新的意見交流管道。

創新推動小組另一努力的方向即在於主動接觸台灣年輕人、

鼓勵他們增廣視野以發揮創意來解決問題。過去四年來，本

商會每年均就高階主管進行商業景氣問卷調查。報告顯示，

台灣在人力資源的部分已有持續性的結論。台灣員工勤勉、

肯學習及忠心可靠的特質受到各方高度讚揚，但在創造力、

願意採取主動的積極性，以及國際觀上則有所不足。這些心

得促使本商會積極的成立新專案，例如邀集許多企業執行長

在台灣各大學舉辦演講，暢談在日益全球化的世界，學子們

該如何為自己的職業生涯做最好的準備。

同樣顯而易見的是，雖然新創公司乃是推動經濟創新的龍

頭，然而台灣的法制與金融環境仍不利於創業發展。許多擁

有絕佳創業靈感的台灣年輕人，因為台灣法律與規範的繁瑣

還有創業資金的不足而卻步之後，認為自己必須去他國市場

才能創辦他們的新事業。創新推動小組就其會員公司在美國

及其他世界各國的企業經驗，針對如何爭取創投資金來台與

培育新創公司向有關單位提出建議，同時也將為台灣青年創

業家(或準創業家)穿針引線，促其得向重要企業主管汲取洞

見。

創新推動小組的另一任務是喚起各界對電子商務包括跨境

電子商務在台灣未來的經濟中必將扮演重要角色的注意。不

論是企業對企業(B2B) 或企業對消費者(B2C)，全世界有愈

來愈多的交易是透過線上進行，而至關重要的是台灣能否提

供有利的規範以充分成功的參與並掌握這波線上趨勢帶來的

商機。

本商會堅信，若能有效的鼓勵創新，台灣可以更創經濟新

高以成就新的自信心，來面對未來諸多挑戰。本商會熱切希

望能發揮會員公司的專長，鼓勵創新共同為台灣的經濟新高

而努力。

Amid gnawing concern about the potential erosion of Taiwan’s long-term economic competitiveness, the importance of constant innovation is being recognized

as a key driver of growth, especially for a relatively mature economy such as Taiwan’s.

While the government is devising various programs to address this need, AmCham Taipei has also sought to do its part to help. The newly established Innovation Council under the Chamber’s Board of Governors will oversee AmCham’s efforts to contribute, mobilizing the resources of member companies well known for their innovative business cultures. The Council also seeks to provide channels for the exchange of ideas with domestic govern-ment officials, educators, business representatives and other experts on ways of promoting innovation – not merely in high-tech industries but throughout various sectors of society.

One aspect of the Innovation Council’s efforts will be to reach out to young people in Taiwan to encourage them to broaden their horizons and attack problems creatively. For the past four years, AmCham has annually conducted a Business Climate Survey of executives of its member companies, and the section regarding human resources each year has produced a consistent result. Taiwan employees are highly regarded for being hard-working, easy to train, loyal, and dependable, but they fall short in terms of creativity, willingness to take initiative, and international minded-ness. Those findings are inspiring initiatives by the Chamber such as lectures by CEOs at local universities on how best to prepare for business careers in this increasingly globalized world.

It is also clear that while start-up companies are the engines of innovation in an economy, Taiwan’s legal, regulatory, and financial environment has not been sufficiently conducive to entrepreneurship. Many young Taiwanese with promising ideas for new companies feel the need to go to other markets to launch their enterprises after being discouraged by burdensome laws and regulations in Taiwan, as well as by the lack of adequate venture-capital funding. Based on AmCham member compa-nies’ experience in the United States and elsewhere around the world, the Innovation Council will offer suggestions to the authorities on ways to encourage venture capital and cultivate start-up enterprises. It will also arrange opportunities for young Taiwanese entrepreneurs (or would-be entrepreneurs) to meet with established corporate executives to gain the benefit of their insights and advice.

Yet another facet of the Innovation Council’s agenda will be to call attention to the vital role that e-commerce – including cross-border e-commerce – is bound to play in Taiwan’s economic future. Whether B2B or B2C, more and more of the world’s transactions are being performed online, and it is crucial for Taiwan to provide a favorable regulatory regime to enable this country to take full advantage of that trend.

AmCham is convinced that with more effective promotion of innovation, Taiwan can recharge its economy and foster a renewed sense of confidence as it tackles future challenges. The Chamber is eager to harness the expertise of our member compa-nies to help bring that objective to reality.

The Need to Spur Innovation

鼓勵創新乃當務之急

E d i t o r i a l

8_Editorial.indd 6 2014/8/5 12:27:05 PM

t a i w a n b r i e f s


— by jane rickards —

M A C R O E C O N O M I C S

tHe eCOnOMY warMs UP

Loca l in s t i tu t ions ra i s ed the i r

economic growth forecasts for export-

dependent Taiwan last month in light

of gradual improvement in the global

economy. In late May, the government’s

statistics agency, the Directorate General

of Accounting, Budget and Statistics,

adjusted its GDP forecast for 2014 to

2.98%, up from a February forecast

of 2.82%. DGBAS cited tourism and

improving domestic demand as contrib-

uting factors, but added in a statement

that it expected global recovery to be

“very gradual” as growth was being

dragged down by decelerating emerging

economies.

Later, the Chung-Hua Institution

for Economic Research (CIER) raised

its 2014 GDP forecast to 3.15%, up

from an earlier forecast of 3.05%. CIER

predicted that private consumption

will post a mild increase of 2.03% this

year, and the director of its Center for

Economic Forecasting, Liu Meng-chun,

noted an upward t rend in whole -

sale and retail sales over the past few

months. Fixed capital formation will

grow by 2.22%, CIER said. Downside

risks cited by Liu include a slowdown

in the Chinese economy as it undergoes

structural readjustment, and increas-

ing competition between Taiwanese and

Chinese industries.

Meanwhile, the Institute of Econom-

ics at Academia Sinica, the nation’s most

prestigious research institute, offered the

most optimistic forecast so far, predict-

ing 2014 GDP growth of 3.31%. The

institute noted that the National Devel-

opment Council’s Monitoring Indicator,

a measure of business activity, had

shown a “green light” for four consecu-

tive months.

Exports in June, at US$26.8 billion,

posted a mild increase, expanding 1.2%

on the same month a year earlier, the

Ministry of Finance reported. However,

imports, which can be a leading indi-

cator of manufacturing activity as

companies procure equipment and mate-

rials, rose 7.5% from a year earlier

to reach US$24.91 billion. The trade

balance was a favorable US$1.89 billion.

Shipments to the United States in

June posted a solid increase of 11.8%

compared with the same month a year

ago, in a sign that technology firms may

be benefiting from demand for compo-

nents for new smartphone models such

as Apple’s iPhone 6. Exports to China

and Hong Kong, which together receive

almost 40% of Taiwan’s goods, rose

by a more modest 3.4%, while sales

to Europe increased by 2.8% and to

Japan by 4.8%. The value of exports to

the ASEAN-6 nations fell by 7% year-

on-year. Meanwhile, export orders,

reflecting business to come in the next

few months, rose 4.7% year-on-year in

May to come to US$38.02 billion, the

Ministry of Economic Affairs said.

The Central Bank in late June kept

its policy rate unchanged at the 1.875%

level maintained for the past three

years. The bank said it was taking a

cautious attitude regarding the improve-

ment in the global economy, noting that

“uncertainties linger.” While economic

activity has rebounded in the United

States, and the European Central Bank’s

recent announcement of further mone-

tary easing has strengthened growth

momentum in the Eurozone, “growth

in emerging market economies contin-

ued to slow down,” the bank explained.

Another reason why the Central Bank

does not see the need to raise rates is

that DGBAS is projecting an increase in

the Consumer Price Index this year by

a relatively low 1.53%. Taiwan’s inter-

est rates are likely to rise in tandem with

those in the United States, economists

Economic indicators

Unit: US$ billion Year Earlier

Current Account Balance (Q1 2014) 15.49 11.34

Foreign Trade Balance (June) 1.8935 3.3055

New Export Orders (June) 38.817 35.094

Foreign Exchange Reserves (end June) 423.45 406.61

Unemployment (May) 3.85% 4.06%

Discount Rate (July) 1.875% 1.875%

Economic Growth Rate (Q1 2014)p 3.14% 1.44%

Annual Change in Industrial Output (May)p 5.19% -0.43%

Annual Change in Industrial Output (Jan.-May)p 3.61% 0.47%

Annual Change in Consumer Price Index (May) 1.61% 0.74%

Annual Change in Consumer Price Index (Jan.-May) 1.14%

souRces: Moea, Dgbas,cbc, boFt

July

THE RED LINE SHOWS CHANGES IN TURNOVER AND THE SHADED AREA CHANGES IN THE TAIEX INDEX.

7500775080008250850087509000925095009750

30

45

60

75

90

105

120

135

150

165

taiwan stock ExchangE indEx & valuE

Unit: nt$ billiondata soUrce: twse

8_Briefs.indd 7 2014/8/5 11:28:32 AM



have said. Such a hike is widely expected

sometime next year.

Perhaps the biggest winners from the

improving economy are jobseekers. The

unemployment rate in May, at 3.85%,

stood at its lowest in almost six years,

having dropped 0.06 percentage points

from the previous month. The seasonally

adjusted unemployment rate dropped

0.05 percentage points to 3.99%.

C R O S S - S T R A I T

CHinese Minister MaKes HistOriC Visit

In the first-ever ministerial-level

visit from a Communist Chinese offi-

cial, Zhang Zhijun, director of China’s

Taiwan Affairs Office, arrived in Taiwan

in late June to hold talks with his

Taiwanese counterpart, Wang Yu-chi,

Minister of the Mainland Affairs Coun-

cil. The talks saw Taiwan and China

nudge closer towards establ ishing

representative offices. Zhang also met

informally with ordinary Taiwanese and

visited less affluent areas in the center

and south of the island in a charm offen-

sive that followed anti-China protests

a few months ago when students asso-

ciated with the Sunflower Movement

occupied the Legislative Yuan for over

three weeks to show their opposition to

a cross-Strait services trade agreement.

The agreement is still stalled in the legis-

lature. Zhang also held an unprecedented

meeting with a prominent member of

the opposition Democratic Progres-

sive Party, Chen Chu, in her capacity as

mayor of Kaohsiung. Analysts surmised

that China, despite its unease over the

opposition’s commitment to Taiwan

independence, may be preparing for the

possibility of a DPP victory in the 2016

presidential elections. Zhang was dogged

by rowdy protests, but DPP leaders, also

opting for pragmatism, for the most part

did not participate.

HOnG KOnG bLOCKs sUnfLOwer LeaDers

Hong Kong denied visas to Sunflower

Movement leaders Lin Fei-fan, Chen

Wei-ting, and Huang Kuo-chang, who

had planned to attend a pro-democ-

racy rally and forum on democracy in

early July. Hong Kong immigration offi-

cials provided no explanation for the

refusal. The rally attracted more than

510,000 people, the organizers said. The

demonstrators were demanding greater

democracy in elections for Hong Kong’s

chief executive in 2017.

fsC tO neGOtiate seCUrities aGreeMent

The Financial Supervisory Commis-

sion (FSC) plans to renegotiate an

agreement to allow Taiwanese invest-

ment in Ch ina ’s cap i ta l marke t s ,

Bloomberg reported, quoting FSC

deputy minister Jennifer Wang. The FSC

wants to separate the agreement from

the controversial cross-Strait services

pact, which is stalled in the Legislative

Yuan. China originally permitted Taiwan

fund managers to invest in Chinese

stocks as part of the services trade agree-

ment signed in June last year, but amid

strong opposition from the DPP, it seems

unlikely that the pact will be approved

by the legislature in the near future. To

work out an alternative arrangement,

FSC officials are due to meet China

Securities Regulatory Commission repre-

sentatives in September to negotiate a

Renminbi Qualified Foreign Institutional

Investor (RQFII) quota for Taiwan,

Wang said.

D O M E S T I C

CanDiDates set fOr MaYOraL CaMPaiGns

New Taipei City Mayor Eric Chu in

late June dashed widespread specula-

tion about 2016 presidential ambitions

by announcing he would run for re-elec-

tion in mayoral elections slated for the

end of November. Chu, who is a vice

chairman of the ruling party, the Kuom-

intang (KMT), promised to serve out his

four-year term if re-elected. The KMT

has endorsed his decision. Chu will run

against DPP candidate Yu Shyi-kun, who

served as premier from February 2002 to

February 2005 during the administration

of President Chen Shui-bian.

In Taipei , the DPP in mid-June

decided to back an independent candi-

date in the mayoral elections, rather

than field its own candidate, after the

party’s internal opinion polls found

that non-aligned Ko Wen-je, chairman

SMILES IN THE SOUTH — Kaohsiung Mayor Chen Chu, a prominent figure in the opposition Democratic Progressive Party, which traditionally has been wary of overly close ties with China, welcomes Zhang Zhijun, director of China's Taiwan Affairs Office, to her city.

photo: cna

8_Briefs.indd 8 2014/8/5 11:28:32 AM



of the Department of Traumatology at

National Taiwan University Hospital,

was more popular than any polit i-

cian the DPP could offer. He will run

against the KMT’s Sean Lien, the son

of KMT honorary chairman and two-

time presidential candidate Lien Chan.

Ko currently holds a large lead over Sean

Lien in many opinion polls, even though

Taipei is traditionally a KMT stronghold.

eDUCatiOn Minister tenDers resiGnatiOn

Education Minister Chiang Wei-

ling resigned in mid-July after he was

implicated in an academic scandal that

attracted international media attention,

public outrage, and an investigation

from prosecutors. Chiang was linked to

a local scholar, Peter Chen, whose papers

were retracted by SAGE Publications of

the U.K. following allegations that Chen

used bogus identities to peer review his

work. Chiang appeared as a co-writer

in five out of 60 articles that were with-

drawn from the Journal of Vibration

and Control published by SAGE. Chiang

protested his innocence, saying he did

not know Chen personally, and an inves-

tigation by the Ministry of Science

and Technology later cleared Chiang

of wrongdoing. Wu Se-hwa, president

of National Chengchi University, was

appointed to be the new Minister of

Education.

I N T E R N AT I O N A L

taiwan anD JaPan in rOw OVer MUseUM naMe

At first it seemed as if Taipei’s rela-

tions with Tokyo were warmer than

ever when the National Palace Museum

(NPM) last year announced that it

would loan over 200 valuable artifacts

from its famed collection of Chinese

treasures for an exhibition in Japan, the

first time such an arrangement had been

reached with an Asian nation. For years

the NPM had been unwilling to lend

works of art to Japan for fear that China

would try to reclaim them, but in 2011

the Japanese government passed a law to

prevent such seizures.

The atmosphere soured dramatically

in late June, however, when promo-

tional posters and tickets released by

the Tokyo National Museum ahead

of the exhibition excluded the word

“National” from the museum’s title in

what Taiwan interpreted as negation of

its sovereignty. An infuriated Ministry of

Foreign Affairs threatened to cancel the

event. The two sides eventually patched

things up at the last minute after the

Japanese museum agreed to revise the

problematic promotional literature.

Although the exhibition opened on

schedule, First Lady Chow Mei-ching,

who had originally planned to attend

the opening, postponed her visit.

42 taiwanese arresteD in tHe PHiLiPPines

Philippine police in mid-July arrested

42 Taiwanese and two Chinese who

allegedly ran an online blackmail syndi-

cate that defrauded victims in China

and Taiwan by duping them into believ-

ing that their bank accounts have been

used by money launderers or terrorists,

and asking them to send their money to

bogus “government secured” accounts,

the Associated Press reported. The

arrests were the latest results of a Phil-

ippine government crackdown with

help from Interpol and foreign govern-

ments. The 44 suspects were arrested in

two hideouts in central Iloilo province.

Police said the authorities are consid-

ering whether to deport the Taiwanese

suspects to face criminal charge here.

taiwan beefs UP sPratLY faCiLities

Taiwan has shipped the first round

of equipment for building a US$100

million port next to an airstrip on Itu

Aba, also known as Taiping island, the

lone islet Taiwan occupies in the hotly-

disputed Spratly archipelago in the South

China Sea. KMT Legislator Lin Yu-fang,

a defense expert, said the shipment of

cranes and excavators showed that the

project to build the port had moved

beyond the planning stage. A fleet of six

navy frigates accompanied the shipment.

Officials said the upgrade of the

port will be finished by the end of next

year at the latest. Replacing an existing

wharf that can handle only small vessels,

the new port will reportedly be able to

accommodate 3,000-tonne naval frigates

and coastguard cutters.

20142013

20142013

20142013 20142013

2014201320142013

U.S.

HK/China Japan TOTALASEAN

Europe

Exports Imports UNIT: US$ BillionSOURCE: BOFT/MOEA

60.7

23.8

59.1

21.6

20.8

9.69.4

22.1

15.7

28.8

16.7

28.8

13.2

15.8

1416

.9

14.4

13.5

15.5

14.3

135.

8 150.

4

137.

2 153.

4taiwan's Jan.-July 2014 tradE FigurEs

(yEar-on-yEar comParison)

8_Briefs.indd 9 2014/8/5 11:28:33 AM



Improvements are also being made

to the 1,200-meter long runway. Tai-

ping island is also claimed by China,

Vietnam, and the Philippines. The move

came at a t ime of tension between

China and Vietnam, which was caused

by Beijing’s mid-May deployment of

an oil rig in South China Sea waters

claimed by Hanoi, triggering anti-China

riots in Vietnam that also led to damage

to Taiwanese-owned factories. The

deployment of the rig was widely seen

as part of a strategy by China of grad-

ually staking out its claims in the South

China Sea. China eventually moved the

oil rig out of the region two months

later in advance of the arrival of a

major typhoon.

B U S I N E S S

bnP Paribas wins fOreiGn bOnD LiCense

French bank BNP Paribas in mid-

July became the f irst foreign bank

licensed to sell offshore bonds directly

to Taiwanese investors through a local

branch, taking advantage of new rules

aimed at making it easier for investors

to buy such bonds, Reuters reported.

Previously foreign banks were required

to market bonds to Taiwanese inves-

tors via offshore financial hubs such

as Hong Kong, making the process

cumbersome for both sides. Insur-

ance companies stand to benefit the

most from the new rules, as they will

gain easier access to foreign bonds that

provide higher yields than local debt.

tOUrisM reVenUes reaCH reCOrD HiGH

Taiwan’s tourism revenue last year

reached a new high of US$12.32 billion,

the Tourism Bureau said, boosted by

growing numbers of mainland tourists.

Last year, a record 2.87 million Chinese

nationals visited the island, up 11.15%

from 2012 and generating an estimated

US$5.53 billion in revenue, the bureau

said. The number of Japanese tourists to

Taiwan dipped to 1.42 million last year,

contributing around US$1.82 billion to

the economy.

taiwan’s answer tO tHe nObeL Prize: tHe tanG Prize

Samuel Yin, founder and head of

the Ruentex Group and eighth

wealthiest person from Taiwan on

the Forbes list, is putting his fortune to

work to pay tribute to those who have

made signal contributions to mankind.

In 2012, Yin established the Tang Prizes

to honor excellence in research that has

proven demonstrably effective in improv-

ing the world. Named for the golden

age in Chinese history, the Tang Dynasty

(618-907AD), when arts, literature and

sciences flourished, the Tang Prizes will be

awarded to those who bring the Tang-era

spirit of intellectual inquiry and practical

application to bear in solving the modern

world’s most pressing problems.

The first Tang Prizes will be awarded

on September 18, with each recipi-

ent receiving NT$50 million (US$1.7

million), making it the highest value

research award in the world. Unlike

the Nobel Prize, which mainly recog-

nizes research in primary disciplines such

as mathematics and physics, the Tang

awards focus on the broader categories

of Sustainable Development, Biopharma-

ceutical Science, Sinology (not including

works of literature), and Rule of Law.

According to the Tang Prize organiz-

ing committee, candidates are nominated

and laureates chosen by panels of schol-

ars appointed by Taiwan’s prestigious

Academia Sinica. This year’s laureates,

chosen from among hundreds of nomi-

nees, are Gro Harlem Brundtland of

Norway for Sustainable Development;

James Allison from the United States and

Tasuko Honjo of Japan for Biopharmac-

uetical Sciences; Yu Ying-shih of China

and the United States for Sinology; and

Albie Sachs from South Africa for the

Rule of Law.

The awards ceremony will cap a

week of events held throughout Taiwan

that will include lectures, tours, and

events to celebrate “virtues and contri-

butions” of the laureates. The organizing

committee says it wishes to demon-

strate that “innovative, non-traditional

ways of thinking and doing” can lead

to great achievements and even change

the world. In addition, it aims to show

that “big things are possible on the small

island of Taiwan.”

sUstainabLe DeVeLOPMent

Gro Harlem Brundtland, a former

Norwegian Prime Minister, is a scien-

tist, doctor, environmentalist, politician,

and international adviser on sustainable

development.

Brundtland has been involved in

sustainable development for decades

and in fact in 1987 chaired the United

Nations Commiss ion on the Envi-

ronment and Development – more

commonly known as the Brundtland

Commission – that coined the term

“sustainable development,” – defined as

“development that meets the needs of

the present without compromising the

ability of future generations to meet their

own needs.”

Brundtland became aware of the

c lose connec t ion be tween human

health and the state of the natural ecol-

ogy while earning her master’s degree

— by TiMOTHy Ferry —

8_Briefs.indd 10 2014/8/5 11:28:33 AM



in public policy at Harvard in 1965.

After returning to Norway, she eventu-

ally became Minister of Environment and

later Norway’s first female, and young-

est, prime minister. She then moved to an

international stage and, along with the

Brundtland Commission, was involved in

most of the most important global policy

initiatives on the environment, including

the pivotal UN Framework Convention

on Climate change (UNFCC). As head of

the World Health Organization (WHO)

from 1998 to 2003, she also effectively

addressed global pandemics, including the

SARS pandemic that ravaged East Asia in

2002. She is admired in Taiwan for her

commitment to ensuring – over China’s

objections – that the island had access to

all WHO resources to contain SARS.

biOPHarMaCeUtiCaL sCienCe

The pr ize in Biopharmaceut ica l

Science is designed to recognize “orig-

inal biopharmaceutical or biomedical

research that has led to signif icant

advances towards preventing, diagnosing

and/or treating major human diseases to

improve human health.” The committee

hopes to help invigorate Taiwan’s biotech

industry and to promote interaction and

cooperation between the medical and

biotech industries.

The inaugural Tang Prize in Biophar-

macuetical Science is shared by Allison

and Honjo for their discoveries regard-

ing human immune systems that spurred

a revolution in immunotherapy. Allison,

chairman of the Department of Immu-

nology and Executive Director of the

Immunotherapy Platform at the MD

Anderson Cancer Center at the Univer-

sity of Texas, in 1995 was the first to

identify the molecule CTLA-4 as an

inhibitory receptor on T-cells – the

primary weapon of the human immune

system. He recognized the potential for

cancer therapy, and his work led directly

to the development of an antibody drug

that has been U.S. FDA approved for

treatment of melanoma, a form of skin

cancer that is often fatal.

Honjo, a professor in the Department

of Immunology and Genomic Medi-

cine in Kyoto University, and his team of

researchers discovered the molecule PD-1,

another inhibitory receptor on T-cells,

leading to antibody-based drugs that

promise to offer powerful new weapons

against lung, skin, and renal-cell cancers.

sinOLOGY

As China and Chinese culture take

increasingly prominent roles in global

society, the Tang Prize appropriately

offers an award in Sinology, the field of

inquiry focused “on the contributions

of Chinese culture in a wide variety of

fields, such as thought, history, philos-

ophy, and religion.” The laureate is the

accomplished and versatile Yu Ying-shih,

considered “the greatest living historian

of China.” He has held full professor-

ships at Harvard, Princeton, and Yale,

taught at Cornell and the University of

Michigan, served as president of the

New Asia College in Hong Kong and as

vice-chancellor of the Chinese Univer-

sity of Hong Kong, and was elected to be

an Academician in Taiwan’s prestigious

Academia Sinica.

Yu’s scholarly work focuses on two

millennia of Chinese history, with special

attention to the role of intellectuals and

scholars in civil society. He is also a

humanitarian who has remained prolific

even into his eighties, writing essays for

journals as well as mainstream publica-

tions that touch on cross-Strait issues,

human rights in modern China, and

many other subjects.

rULe Of Law

The Tang Prize in Rule of Law award

is the first major international prize to

recognize the legal profession. Encompass-

ing both “due process” and “substantive

justice,” the award aims to “champion

peace, human rights, and sustainable

development in order to serve the common

good of humankind and nature.” It

honors individuals or institutions that

have significantly advanced legal theory or

practice, and helped promote the rule of

law in contemporary societies.

Laureate Sachs spent a l i f e t ime

battling the unjust regime of apartheid

in his native South Africa. He underwent

imprisonment and torture, exile, and

even an assassination attempt by secu-

rity forces that left him without one arm

and partially blind. When the apartheid

regime finally ended, Sachs helped guide

the reborn nation on the path towards

peace and reconciliation. Appointed by

President Nelson Mandela to the new

Constitutional Court, he authored many

of the court’s most important decisions

and was highly instrumental in “building

its reputation as one of the most impor-

tant sources of transformative human

rights jurisprudence in the world,”

according to the prize committee.

8_Briefs.indd 11 2014/8/5 11:28:35 AM


Issues

7月1日起，銀行與保險公司核心業務營業稅率

從2%調升為5%。財政部為了增加政府稅收，

促請立法院在今年春季修法通過這項稅率調整

案。

但這項調整是否合宜，仍有爭議。在銀行與保險

業敦促之下，立法院財政委員會已要求財政部考慮

接受落日條款，限制這項調整實施的效期，並為恢

復採用較低稅率鋪路。

台北市美國商會保險委員會在2014白皮書中列出

多項理由，說明為何較高稅率並不合宜，特別是在

此時：

•人壽保險業者在挑戰性高且利率偏低的環境中

營運已超過10年，許多公司因為利差損問題面

臨龐大財務壓力。調升稅率使得人壽保險業者

的財務壓力更形沉重。一項無心造成的後果，

是部分公司可能無法繼續正常營運，這可能損

及被保險人利益，也使台灣保險業整體的名聲

受到傷害。

•政府基於保障社會安定的考量，鼓勵保險業者

提供保障型保單，但營業稅課徵方式對以銷售

這類保單為主的公司衝擊特別嚴重。稅則允許

以提高準備金抵消保費總收入，因此稅率調高

對儲蓄型保單業者衝擊有限，但這項規定不適

用於保障型保單，因此提供保障型保單的業者

準備金增加幅度相對較低。保障型產品的利潤

降低之後，部分產品可能從市場上消失，影響

消費者選購的權益。

•在執行層面，這次調高稅率的做法違反法律不

溯既往的原則，因為這項調整要適用於所有目

前有效保單所帶來的營收，包括營業稅率在2%

時所賣出的保單。這些保單的條件，是依銷售

當時的稅賦來訂定，現在要依新通過的稅率來

針對保單收入課稅，並不公平。

•最終而言，調高營業稅率使台灣做為跨國公司

投資地點的吸引力降低。政府表明要使台灣成

為亞洲金融中心，也說要維持金融業的穩定，

但調高稅率的做法與這些目標是背道而馳。

基於以上考量，台北市美國商會、歐洲在台商務

協會和中華民國人壽保險商業同業公會持續呼籲找

出方法，以緩和最近調高營業稅率所造成的負面衝

擊。

重新檢討金融保險

營業稅率

As of July 1, the business tax rate on the core business earnings of banking and insurance institutions was raised from 2% to 5%. The increase was enacted by the Legisla-

tive Yuan this spring as part of a Ministry of Finance (MOF) plan to boost government revenue.

Debate continues, however, over the suitability of the increase. In response to appeals from both the banking and insurance industries, the Legislative Yuan’s Finance Committee has asked the MOF and Financial Supervisory Commission to draft a sunset provision that would limit the period of effectiveness of the increase and pave the way for a return to a lower rate.

In its position paper in the 2014 Taiwan White Paper, AmCham Taipei’s Insurance Committee set out a series of reasons why the tax rate increase was inappropriate, especially at the current time:

• Thelife insuranceindustryhasbeenoperatingwithinahighly challenging low interest-rate environment for more than a decade, with many companies facing considerable financial strain due to the negative spread. The higher tax rate compounds that financial pressure. An unintended consequence is that some companies may be unable to carry on normal business operations, putting their policyholders’ interests at risk and damaging the reputation of Taiwan’s insurance industry as a whole.

• Thewaythebusinesstaxis imposeddisproportionatelyimpacts companies focusing on the sale of protection-ori-ented policies, which are precisely the kind of insurance products that the government in principle wishes to encourage in the interest of social stability. Because the tax code permits increases in reserves to be written off against gross premium income, the impact is reduced for savings-oriented products, while that cushion is unavailable for protection policies, which require relatively little buildup of reserves. There is a risk that the reduced profitability of protection products may lead to some products being with-drawn from the market, to the detriment of consumer choice.

• Inpractice,thetaxincreaseviolatesthelegaldoctrineofnon-retroactivity, as it is being applied to income from all policies in force, including those written when the 2% rate was in effect. Since the conditions included in those contracts were based on the then-existing tax burden, it is unfair to now tax financial institutions’ proceeds on the basis of newly adopted criteria.

• Ultimately,thebusinesstaxincreasemakesTaiwanlessattractive as an investment location for multinational compa-nies and runs counter to the government’s stated goal of becoming a financial hub in Asia, as well as its stated policy of maintaining a stable financial sector.

As a result of these types of considerations, the American and European Chambers of Commerce in Taiwan, along with the Life Insurance Association of the Republic of China, are continuing to call for ways to mitigate the negative impact from the recently adopted tax rate increase.

Reviewing the Financial Tax Hike

TOPICS can be found in the Eslite, Kingstone, Caves and Hess bookstores in Taipei, Taichung and Kaohsiung. But why wait until we’re on the stands? Make sure to get a copy by filling in the subscription form below.

8_Issues.indd 12 2014/8/5 10:30:37 AM

Issues

Agreement Signed as FATCA Goes into Effect

After several years’ delay in implementation, the Foreign Account Tax Compliance Act (FATCA) enactedbytheU.S.Congressin2010asameans

of reducing tax evasion and increasing revenue came into force as of July 1 this year. The law requires financial insti-tutionsoutsidetheUnitedStatesthathaveU.S.accountsorcustomers to provide information to the Internal Revenue Service (IRS) on those accounts or face a mandatory 30% withholdingobligationontheirU.S.income.TheUnitedStatescollectstaxontheincomeof“U.S.persons”(bothciti-zens and permanent residents) no matter where in the world they reside.

To make it easier for foreign financial institutions to complywithFATCAprovisions,theUnitedStateshasbeennegotiating Intergovernmental Agreements (IGAs) with partner countries. In AmCham Taipei’s 2013 Taiwan White Paper, the Asset Management Committee urged the Taiwan andU.S.governmentstonegotiatesuchanagreementtoeasethe burden on financial institutions here.

This June, Taiwan’s Financial Supervisory Commission andtheU.S.TreasuryDepartmentannouncedthatanIGA“insubstance”(furtherdetailsstillneedtobefinalized)hadbeen entered into. Consistent with the terms of the Taiwan Relations Act, the agreement was signed by the American Institute in Taiwan and the Taipei Economic and Cultural RepresentativeOfficeintheUnitedStates.A“Model2”IGAdesigned to address potential conflicts with domestic legisla-tion in some other countries, such as laws on the protection of personal information, the agreement reportedly was similartowhattheUnitedStateshadearlierconcludedwithSwitzerlandandJapan.UnderModel2,financialinstitu-tions report account-holder information directly to the IRS, whereas Model 1 calls for the information to be passed to the tax authorities in the foreign country, which in turn would transfer it to the IRS.

— By Don Shapiro

American Chamber of Commerce in Taipei Tel : 886-2-2718-8226 E-mail: [email protected]

Name: _________________________________________________________________ Membership ID#: (if applicable)_______________________

Company: ___________________________________________________________________________ Telephone: ____________________________

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• Please make checks payable to: American Chamber of Commerce in Taipei• Please direct telegraphic transfers to: American Chamber of Commerce in Taipei

• Acct. #: 018-1-093665-6 Standard Chartered Bank, Tunpei Branch (Please fax your transfer receipt to AmCham.)

Fill out this form and post or fax to 886-2-2718-8182 with your payment or receipt. AmCham will begin your subscription upon receipt of payment.

TOPICS can be found in the Eslite, Kingstone, Caves and Hess bookstores in Taipei, Taichung and Kaohsiung. But why wait until we’re on the stands? Make sure to get a copy by filling in the subscription form below.

Taiwan q1 year = NT$1,500 q2 years = NT$2,700HK/PRC q1 year = US$68 q2 years = US$130

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8_Issues.indd 13 2014/8/5 10:30:37 AM


The proposed Aerotropolis proj-ect – one of the biggest, most daring infrastructure projects

ever conceived in Taiwan – is designed to enable Taiwan to realize its true strengths in the global marketplace. As the name suggests, the Aerotropolis will be a brand new city built on more than 4,000 hectares of land surrounding the Taoyuan International Airport. Dubbed the Gateway of Taiwan and to Asia, the Aerotropolis will serve as a logistics and trading hub to attract people, capital, goods, and information. It is expected to boost Taiwan’s economy with the promise of billions of dollars in invest-ment, 300,000 new jobs, and NT$2.3 trillion (US$76.7 billion) in revenue over a 10-15-year time period. Most importantly, though, it will bring the global marketplace to Taiwan.

“Through the Aerotropolis plan, we will be able to showcase our MIT (Made in Taiwan) strengths in terms of our conference centers, our R&D centers, our creativity and arts centers for the entire world,” says John Chih-yang Wu, mayor of Taoyuan County, which later this year will become the special munici-pality of Taoyuan City. “As a result, our industries in Taiwan will improve signif-icantly, and Taiwan will become a truly internationalized country.”

Supporters say that by enabling Taiwan to build off its existing advan-tages in geography, culture, technology, and costs, the Aerotropolis will posi-tion Taiwan as a world-class competitor in R&D, logistics, creative enterprises, administration, and finance. In fact, the benefits for Taiwan and Taoyuan are so clear the project enjoys support not only from incumbent Mayor Wu but also his opponent in this fall’s election for mayor of the upgraded Taoyuan, DPP candidate Cheng Wen-tsan. The project is also already catching the interest of some of the world’s leading construction, logistics, and consult-ing firms from the United States, Japan, and Europe.

One reason for this interest is that Taiwan is ideally located in East Asia, being within four hours’ flight time to almost all major East Asian destina-tions, ranging from Singapore in the south to Tokyo in the north. Taoyuan International Airport has seen steady growth in both inbound and transiting air passengers, and freight volumes also continue to grow. Arriving visitors will enjoy easy access to other parts of the island with the help of the High Speed Rail system and new Airport Metro (MRT) link.

Another advantage is that Taoyuan is

home to nearly 30 industrial parks, and is in close proximity to Hsinchu’s vast high-tech manufacturing centers as well as New Taipei City’s industrial might. Combined with the nearby Port of Taipei, the Aerotropolis will be ideally located as a hub for logistics, transship-ment, and time-sensitive manufacturing in the adjacent industrial parks. It will also be one of the designated Free Economic Pilot Zones, allowing it to enjoy liberalized trade, immigration, and tax regulations to encourage invest-ment and stimulate trade.

While the Aerotropolis will certainly benefit Taiwan’s industry, Lee Wei-feng, secretariat-executive for the County’s project task force, stresses that no manufacturing will be allowed within the Aerotropolis. He notes that previous plans calling for light manu-facturing within the zone were dropped in view of the government’s efforts to transform the economy away from commodity manufacturing towards

a d v e r t o r i a l

AerotropolisBringing Taiwan into the Future

8 aeropolis.indd 14 2014/8/5 10:35:38 AM


more services-oriented businesses that will emphasize Taiwan’s strengths in R&D, creative arts, and administration.

“Our industry needs to be upgraded and transformed,” says Mayor Wu, noting that the commodity manufactur-ing model is under pressure from lower-cost rivals. “What we need for the future are more innovative and service-related industries.”

Accordingly, the project is now set to follow a clean, green, and sustainable development model that will support Taiwan’s campaign to excel in such leading-edge sectors as 3D printing, biotechnology, and green transporta-tion. Its four overall objectives have been defined as driving comprehensive development, creating new themes in urban lifestyles, facilitating the trans-formation of Taiwan’s industrial sector, and supporting the internationalization of Taiwan.

Be s ide s the a i rpor t i t s e l f , the Aerotropolis will consist of five districts: a transportation and entertainment center called Gateway of Taiwan; an Administration and Finance center; a Culture, Creativity, Science, and R&D district; a Logistics and Trading hub; and the LOHAS Quality Residences area with housing for up to 300,000 people.

Gateway of Taiwan

With Taiwan’s convenient proxim-ity to all major East Asian destinations, the Aerotropolis is uniquely quali-fied to capitalize on the MICE industry (meetings, incentive, conferences, and exhibitions) by means of its transporta-tion and entertainment hub, Gateway of

Taiwan. The area will include a massive convention and exhibition center, hotels, shopping malls, entertainment venues, and even a theme park. The Airport MRT link will allow visitors to reach Taipei City in 35 minutes, while the High Speed Rail will speed them along in even less time. The Aerotropo-lis will also be the center for Taoyuan’s own MRT system and light rail. Lee notes that “within the Aerotropolis, a transport station such as a metro, light rail or bus must be within five minutes’ walking distance.”

Administration and Finance

The Administration and Finance district will also be serviced by two MRT stations and will include commer-cial and finance centers and government institutions, as well as the Aerotropolis management service center. But it’s not all work in this district, as it will also feature a performing arts and cultural center, library, and theater.

Culture, Creativity, Science and R&D

The CCSR&D d i s t r i c t a s s em-bles green zones and structures into a “barcode” design that the planners hope will represent the Aerotropolis’ goals of sustainable, green, and smart develop-ment. Planned on the basis of “3 low, 1 high” (low pollution, low energy usage, low water consumption and high value added), the CCSR&D district will show-case how science and creative arts can come together to create sustainable tech-nologies and business models. It will

feature the headquarters and R&D centers for major multinationals, inter-national incubators, creative design facilities, entertainment production and performance centers, and value-adding commercial enterprises.

Logistics and Trading

The Logistics and Trading district will fully leverage Northern Taiwan’s enterprise and commercial zones and free trade ports to develop a strong logistics and international trading district. This zone will include interna-tional freight and transit centers, as well as international logistics and commer-cial areas, all aimed at stimulating trade through Taiwan and around the world.

LOHAS Quality Residences

In keeping with the theme of sustain-able, green development, the LOHAS (Lifestyle of Health and Sustainabil-ity) Quality Residence district will be home to up to 300,000 residents who will relish living in stylish homes amidst parklands and ponds, with plenty of green and blue corridors. Planners expect up to 40% of the residents to come from abroad, taking advantage of liberalized immigration rules and attracted by the superior living condi-tions and favorable tax breaks.

Having been awarded final approval by the Urban Planning Commission of the Ministry of Interior on July, 2014, the Taoyuan Aerotropolis looks ready to fly!

a d v e r t o r i a l

For more information, please contact:Taoyuan Aerotropolis Co., Ltd.

桃園航空城股份有限公司

Tel: +886-3-3391000http://taoyuan-aerotropolis.com

8 aeropolis.indd 15 2014/8/5 10:35:40 AM

Cover story

大有可為的桃園大有可為的桃園

Taoyuan sTeps up

Cover story

photo: taoyuan county


8_CoverStory.indd 16 2014/8/5 10:13:58 AM


T a o y u a n

Coupled with the ambitious infra-structure project to develop a Taoyuan Aerotropolis, the eleva-

tion of Taoyuan County to a special municipality under the direct jurisdiction of the central government on December 25 this year is expected to spur the devel-opment of the area into a vibrant metrop-olis, with a ripple effect spreading to adjacent Hsinchu and Miaoli Counties.

Taoyuan will become the sixth city in Taiwan to have special municipal-ity status, after Taipei, Kaohsiung, New Taipei, Taichung, and Tainan, leaving

16 second-tier cities on the island. The change in status was approved by the Executive Yuan on January 3, 2013 in recognition of the rapid development of the county in recent years. With its popu-lation of over 2 million, Taoyuan is now the second highest source of tax revenue in Taiwan (after Taipei). It has also led all other cities and counties in industrial output for the past nine years, and as the home of Taiwan Taoyuan International Airport, it serves as the national portal.

As a special municipality, Taoyuan will gain over NT$8 billion (US$267

million) of additional income a year in the form of a higher allocation of tax revenue and subsidies from the central government. That will boost its annual budget to over NT$70 billion (US$2.33 billion).

The new municipal government will have direct jurisdiction – including the control of personnel and finance – over the 13 cities and townships currently under the auspices of Taoyuan County. These cities and townships will be trans-formed into administrative districts of the new Taoyuan City, and their administra-

肩負著發展桃園航空城的重大基礎建設計畫，

桃園縣今年12月25日將升格為直隸中央政

府的直轄市，預料不但促使桃園地區發展成

為繁榮的都會區，其周邊效益更遍及到鄰近的新竹

縣和苗栗縣。

桃園將成為繼台北、高雄、新北、台中和台南之

後，台灣第6個享有直轄市特殊地位的城市。行政

院有鑑於桃園縣近年來的快速發展，在2013年1月

3日同意桃園升格為直轄市。桃園坐擁超過200萬人

口，是台灣第2大稅收來源（僅次於台北）。過去9

年，桃園工業產值在台灣各縣市當中高居首位，境

內並有視為國家門戶的桃園國際機場。

桃園升格之後，每年可從中央政府多取得新台幣

80多億元（2億6,700萬美元）的中央徵收稅款和補

助款，使年度預算增加到700億元（23億3,000萬美

元）以上。

新的直轄市政府將直接管轄目前桃園縣境內的

13個鄉鎮市，包括其人事和財政。各鄉鎮市將轉為

桃園直轄市的行政區，區長由市長直接任命，不再

像目前以選舉方式產生。未來除了獲得更多財政資

源，桃園升格之後的地位，也會有助於體現其在協

調整體計畫與發展上的努力

升格後的桃園市長選戰已經展開，現任的中國國

民黨籍桃園縣長吳志揚將與民主進步黨籍立法委員

鄭文燦對決。

吳志揚縣長是爭取桃園升格的主要人物。他指

出，做為直轄市還有一些實際的好處。比方說，升

格之後，桃園可以實施更嚴格的防洪措施，此外，

升格之後，建築計畫將採不同的容積率，因此可以

蓋更高的大樓。

桃園官員與民眾對於升格能給地方帶來新的繁榮

氣象，都充滿期待。吳志揚提出的願景，不僅包括

提升經濟發展，還包括文化的提升、環境的美化以

及加強社會福利，同時要發揮人文特色。

桃園的經濟發展，將以行政院在2012年9月年啟

動的航空城計畫為主軸。桃園縣政府今年第一季舉

辦一系列論壇介紹航空城計畫，吳志揚一月在論壇

首場開幕儀式上表示：「航空城是大家夢想起飛的

The county’s prime location and pending ele-vation to special city are opening further oppor-tunities for development.

即將升為直轄市的桃園縣有極佳的地理位置，正開

創商機而努力


Taoyuan sTeps up大有可為的桃園

BY PHILIP LIU 撰文 / 劉柏登



Cover story

tive chiefs will be appointed rather than elected as now. In addition to providing Taoyuan with greater financial resources, the upgraded status should make it much easier to plan and coordinate Taoyuan’s overall development.

The race for head o f the newly upgraded Taoyuan is already on, with John Chih-yang Wu, current county chief and Kuomintang member, facing off against Democratic Progressive Party candidate Cheng Wen-tsan, a member of the Legislative Yuan.

Wu, the leading advocate for the change in status, notes some other prac-tical advantages of being a special munic-ipality. Once it achieves that status, for example, Taoyuan will qualify to imple-ment stricter flood control measures. In addition, a different land area-to-build-ing ratio will apply to construction proj-ects, enabling higher rise structures to be erected.

Taoyuan officials and residents have high hopes for what the elevation in status may mean for ushering the area into a new era of prosperity. Mayor Wu has promoted a vision that features not only greater economic prosperity but also cultural development, beautification of the landscape, and the fostering of social welfare, all with a humanistic touch.

The municipality’s economic devel-opment will center on the Aerotropo-lis project, which was launched by the Executive Yuan in September 2012. “The Aerotropolis is the runway for the takeoff of everyone’s dream,” Wu said in his remarks in January this year at the opening ceremony for a series of forums on the project held by the county government during the first quarter of the year.

One of the municipality’s advantages will be the increasingly convenient trans-portation network in the area, includ-ing the newly inaugurated Wugu-Yang-mei elevated section of freeway and four planned MRT lines. Among the new lines is the long-awaited Taoyuan International Airport Access MRT System that will eventually connect Taipei Main Station with the international airport, with a further extension to Zhongli.

At tracted by the rosy economic outlook in the area, many people have been purchasing real estate in Taoyuan. Last year, new housing construction starts surpassed 22,500 units, an increase of 1.62 times from 2012, with a total value of NT$330.7 billion (US$11 billion), according to My Housing magazine. A recent report by Sinyi Realty showed that in the first half of this year Taoyuan

continued to lead other major areas in Taiwan in home purchases, with a 3.1% ratio of households to home purchases. Among Taoyuan’s advantages, Sinyi cited the lower cost of property compared with Taipei or New Taipei City, the expecta-tion of improved living conditions follow-ing the county’s elevation to special municipality status, and improved trans-portation links shortening the commute to Taipei. Home buyers have reportedly also been attracted by Taoyuan’s absence of seismic faults and its location outside the path of most typhoons.

Avoiding over-development

Rather than a city crowded with skyscrapers, John Wu has called for making Taoyuan into a municipal-ity with “medium-level development” – one with mountains, forests, rivers, and other unspoiled natural beauty within easy reach. Among the abundant scenic resources the municipality will highlight, Wu cited Shihmen Reservoir, the Daxi floral zone, mountainous Fuxing Town-ship with its Atayal aboriginal commu-nity, the Two Chiangs Cultural Park with memorials to Chiang Kai-shek and Chiang Ching-kuo, and the Hakka cuisine tourism zone in Longtan, all in

跑道。」

桃園直轄市的優勢之一，在於交通網路日趨

便利，包括通車不久的國道五股─楊梅高架路

段和4條規劃興建中的捷運路線。其中1條是等

待已久的桃園國際機場捷運線，完工後將連接

台北車站和桃園國際機場，並將延伸到中壢。

在美好經濟前景的吸引下，許多人在桃園購

買房地產。據《住展》雜誌報導，桃園去年動

工興建的住宅超過2萬2,500戶，是2012年的

1.62倍，總價達到新台幣3,307億元（110億

美元）。信義房屋最近1份報告顯示，今年上

半年，桃園的住戶購屋率達3.1%，仍居台灣主

要地區首位。報告說，桃園的優點包括房價低

於台北或新北市、升格後生活條件可望改善，

以及通車到台北的時間隨著交通渠道改善而縮

短。桃園沒有地震斷層，很少受颱風直接侵

襲，據說也是購屋族心動的原因。

避免過度開發

吳志揚的願景不是1個蓋滿摩天大樓的城市，

The newly built Wugu-Yangmei elevated portion of the No. 1 Freeway is designed to improve traffic flow in northern Taiwan.




T a o y u a n

eastern Taoyuan. Currently under plan-ning is a 720-hectare scenic zone center-ing on Hutoushan (Tiger-Head Moun-tain) Park.

Using its increased financial resources, the municipal government plans to augment social welfare after its eleva-tion in status. Citizens over 65 years of age, for example, will receive subsidies for the implantation of artificial teeth and increased stipends (up from NT$2,000 to NT$2,500) at the time of the three major festivals each year. The government will also set up public nurseries and offer free vaccinations against cervical cancer. The Taoyuan County government has even started a program to provide free school lunches that include organic vegetables and other ingredients sourced from local farmers.

In addition, the municipal government will seek to help young people and lower-income families solve their housing prob-lems by building public housing units that are mainly for rent rather than sale. The policy represents a change made in the wake of the scandal involving former deputy county chief Yeh Shih-wen in a public housing project.

A n o t h e r a s p e c t o f t h e m u n i c i -pal government’s vision is to develop Taoyuan into an “intelligent city.” A

centerpiece of the project is to promote use of a multifunctional “Taoyuan Citi-zen Card,” installed with a chip that can be used for taking mass transportation, paying parking fees, borrowing library books, receiving preferential rates at shops and exhibitions, and other applica-tions. Besides providing convenience for citizens in their daily lives, the card will also boost their sense of identification with their home municipality.

Also related to the “intelligent city” project, ICT applications will be intro-duced to various municipal services,

including transportation, medicine, education, tourism, and public safety. Further, Wi-Fi hot spots will be installed in various public indoor spaces, includ-ing tourism sites, transportation stations, cultural and educational facilities, public hospitals, and government agencies.

The County’s existing e-facilities already include an e-security surveillance network that integrates the surveillance systems of individual communities, access to popular municipal government services through the “ibon” kiosks at 7-Eleven convenience stores, and e-certificates.

而是要把桃園變成「中度開發」的都會，可以輕易

接近山區、森林、河流和其他不受污染破壞的自然

美景。桃園觀光資源豐富，吳志揚說，市府將加強

行銷的景點都位在桃園東部，包括石門水庫、大溪

花海、泰雅部落居住的復興山區、紀念蔣介石和蔣

經國的兩蔣園區，以及龍潭的客家美食觀光區。同

時，當局正在規劃新的風景區，以虎頭山公園為中

心，占地達720公頃。

升格之後，市府計畫利用增加的財政資源提升

社會福利，例如65歲以上民眾安裝假牙將獲得補

助，3節慰問金也將提高（從2,000元調整為2,500

元）。市府並將設立公立托兒所，免費提供子宮頸

癌疫苗。桃園縣政府甚至已經開始提供學童免費營

養午餐，用的是當地農民所生產的有機蔬菜和其他

食材。

此外，升格後的市政府將興建只租不售的公共住

宅，設法幫助年輕族群和低收入戶解決住房問題。

這顯示前任副縣長葉世文捲入合宜住宅貪瀆醜聞

後，相關的住宅政策已有所調整。

新市府的另一個願景，是要把桃園打造成「智

慧城」。這項計畫的主要內容是推動具有多重功能

的「桃園市民卡」，它內含晶片，可以用來搭乘大

眾交通工具、付停車費、向圖書館借書，以及讓持

有人在商店和展覽享受折扣等用途。市民卡除了提

供日常生活上的便利，也可強化市民對桃園的認同

感。

在「智慧城」發展計畫下，資訊與訊通科技將引

進到各種市政服務項目，包括交通、醫療、教育、

觀光和治安。Wi-Fi熱點將在各個市內公共場所設

立，包括旅遊景點、車站、文教設施和政府機構。

桃園縣現有的電子設施，已經包含電子安全監控

網路。它整合了個別社區的監視系統、並透過統一

超商7-Eleven iBon設備所提供的公共服務，以及電

子憑證服務。

吳志揚在談到桃園的特色時，首先提到當地人

口高度多元化。他說，這個現象使桃園縣像是文化

的「小亞洲」。桃園多數居民是閩南人，另外40%

是客家人。除此之外，桃園有最多的都市原住民人

口，還有許多眷村，住的是來自中國大陸各地的退

役國軍和他們的眷屬。他指出：「我們也有許多來

自東南亞的新住民和外來勞工。這表示我們高度多

元化，但桃園也是個不同背景的人可以和諧共處、

The Shihmen Reservoir is among the popular scenic destinations within Taoyuan County. The dam is also used for water supply, flood control, and electricity generation.




Cover story

In describing Taoyuan’s special characteristics, Mayor Wu starts with the highly diversified nature of the population, which he says cultur-ally makes the county a “mini Asia.” Aside from a majority of residents of Hokkien (Fujianese) origin, some 40% of Taoyuan’s population is Hakka. In addition, says Wu, Taoyuan is home to Taiwan’s largest concentration of aboriginal people living in urban areas, as well as to many military veteran villages housing former Republic of China soldiers originally from vari-ous parts of mainland China, and their families. “We also have a large number of new immigrants and foreign laborers from Southeastern Asian countries,” he notes. “All this adds up to an unusual degree of diversity – but Taoyuan is also a place where people of different backgrounds live together in harmony and mutual respect.”

Moreover, Taoyuan is also the youngest county in Taiwan, with an average age of 37.49 years among its residents, compared with Taiwan’s overall average age of 39.61 years. The relative youthfulness of Taoyu-an’s population in part reflects ongo-ing migration from southern Taiwan to the north; with its reasonable cost of living and abundance of entry-level jobs, Taoyuan remains the first choice for many young people searching for opportunity. In an aging society, this relative youth is an added bonus for Taoyuan – instilling greater vigor into the economy and society. It also means that Taoyuan’s population is sti l l

rising, in contrast to some other parts of the island.

DPP candidate Cheng says he “would like to establish Taoyuan as the first stop, or the starting point, for the younger generation to enter their careers,” but he expresses concern that the infrastructure remains inadequate for the demands of the growing and youthful population. He contends that the county lacks sufficient recreation space, and that educational resources remain inadequate. To help upgrade Taoyuan, Cheng says, the county must foster greater integration with Taipei City and New Taipei City by priori-tizing extensions of the Banqiao and Xinzhuang MRT lines into Taoyuan. “The goal is to make sure that people can travel between Taipei and Taoyuan within one hour,” says Cheng.

While integration with the cities to the north might be appeal ing, Wu points to certain differences that enhance Taoyuan’s appeal. “Taoyuan may not be as fancy or modern or pros-perous as Taipei, but we offer a lot of what it takes for people to live happily and comfortably,” he observes, such as the diversity of landscapes, includ-ing tall mountains, extensive seacoasts, and many rural villages. “Within 5-10 minutes’ drive from anywhere in the county, you can enjoy a view of farm-land or natural scenery,” says Wu. “That gives us a special and unique environment, making Taoyuan not just a great place to be productive but also a great place for people to feel relaxed.”

相互尊重的地方。」

此外，桃園也是台灣最年輕的縣，居民平均年

齡37.49歲，低於台灣人口的平均年齡39.61歲。桃

園人口相對年輕，部分反映出台灣南部人口持續往

北部遷移。桃園消費水準合理，而且有大量入門職

缺，因此依然是許多謀職青年的首選。在人口老化

的時代，桃園人口相對年輕是額外的好處，因為它

為經濟和社會注入更多活力。這也表示桃園的人口

仍持續成長，不似台灣其他地方。

民進黨市長候選人鄭文燦說：「我希望使桃園

成為年輕一代進入職場時的第一站，也就是起跑

點。」但他擔心桃園基礎建設依然不足，無法因

應正在成長中的年輕人口的需求。他具體指出，

桃園沒有足夠的休閒空間，教育資源也依然欠缺。

鄭文燦說，要讓桃園進步，必須提供往返台北和新

北市之間便捷的交通，並把台北捷運板南線和新莊

線延伸到桃園列為優先施政項目。他說：「目的是

要使民眾在台北和桃園之間通車，最多只需一個小

時。」

與台北和新北市整合固然有它的吸引力，但吳志

揚指出，桃園也有它自己的吸引人之處。他說：「

桃園或許不像台北那麼時髦和繁榮，但這裡有很多

條件，讓民眾可以生活得快樂而舒適。」他指出，

桃園有多樣化的景觀，包括高山、長長的海岸線，

還有許多農村。他說，「不論你在縣裡任何地點，

開車5到10分鐘，就可以看到農田或自然景觀。這

讓我們有個特殊而獨特的環境，使桃園不僅是個從

事生產的好地方，也是個放鬆的好地方。」

Taoyuan At a Glance

Population2.05 million

Area1,221 sq. km.

Main Population CentersTaoyuan City: 415,915Zhongli: 380,136Pingzhen: 211,523Bade: 180,231Yangmei: 156,332

Major Industries Electronics, automobiles

Major Agricultural Products Rice, tea, bamboo shoots, leafy vegetables, sweet potatos

Political Orientation2012 Legislative Yuan ElectionKuomintang: 57.2%Democratic Progressive Party: 39.85%Statistics compared to 2008 Election: +4.49% for Democratic Progressive Party-7.44% for Kuomintang Source: Central Election Commission

Main Tourist Attractions• LalaMountainNatureReserve• DaxiOldStreet• ShimenReservoir• XiaoWulaiSkywalk• WindowonChinaThemePark



T a o y u a n

規畫中的桃園航空城總面積約685平方公里，估

計最終投資額新台幣6千億元，被視為是台灣

半世紀來最大的基礎建設計畫。

航空城涵蓋既有的桃園國際機場和周遭地區，規劃

興建多種設施，例如會展中心、主題樂園、飯店、金

融中心、研發中心，以及可供30萬人居住的合宜住

宅。新建的機場捷運線將連接航空城和台北，大幅提

升交通便利。此外還針對桃園市和姊妹市中壢市，規

劃興建另一條連接航空城和機場捷運線的航空城捷運

線。同時桃園機場本身將進行重大升級計畫，在沿海

沼澤地增建第三跑道和第三航廈。預料航空城計畫不

但可讓桃園的經濟產出成長一倍，還可讓台灣的整體

國內生產毛額（GDP）提高10%。

負責執行航空城計畫的桃園縣政府在2012年成立桃

園航空城推動委員會，成員包括縣府各局處主管。另

外還成立桃園航空城公司，在推動委員會的協助下管

理航空城計畫。

這項計畫分為五大發展區域，包括稱為台灣門戶區

的會展中心、行政及金融中心、供創意業者進駐的文

創科研產業區、物流經貿區，以及能容納多達30萬人

居住的住宅區，居民預料有40%是外國籍，將可享有

航空城放寬移民和賦稅規定的優惠待遇。

航空城計畫經內政部批准後，預定本月開始進行

策略規劃、工程，以及產業與財務策略的顧問合約

招標。三菱（Mitsubishi）、東芝（Toshiba）和川崎

重工業（Kawasaki）等日本財團，以及英商奧雅納

（ARUP）工程顧問公司，目前都參與航空城的都市

規劃，據媒體報導已完成90%進度。此外，勤業眾

Covering a total area of about 685 square kilometers and involving an estimated ultimate investment

of NT$600 billion (US$20 billion), the Taoyuan Aerotropolis project now under planning is considered Taiwan’s biggest infrastructure project in half a century.

Surrounding and including the existing Taiwan Taoyuan International Airport, the project calls for the construction of a wide variety of facilities, such as conven-tion centers, theme parks, hotels, finan-cial centers, and R&D centers, as well as homes for 300,000 people. A new MRT line will connect the Aerotropolis with Taipei, greatly increasing travel conve-nience, while another line will join the Aerotropolis with the MRT system being

planned for Taoyuan City and its sister city Zhongli. At the same time, the addi-tion of a third runway and third terminal on coastal marsh lands will significantly upgrade the airport itself. The project is expected to double Taoyuan’s economic output and expand Taiwan’s overall GDP by 10%.

The Aerotropolis project is being carried out by Taoyuan County Govern-ment, which in 2012 assembled a task force from within the government that includes directors-general of all bureaus and departments. The county formed the Taoyuan Aerotropolis Corp. to administer the project under the auspices of the proj-ect’s task force.

The project is divided into five major

development zones, including a conven-tion and exhibition center dubbed “Gate-way to Taiwan,” an administration and finance district, a “Culture, Creativity, Science and R&D” district dedicated to creative enterprises, a zone for logistics and trading, as well as residential areas able to house up to 300,000 people. Of the residents, 40% are expected to be foreign nationals, who will be able to benefit from liberalized immigration and tax regulations.

After approval of the project by the Ministry of Interior, tender offers are scheduled to start this month for consul-tancy contracts in strategic planning, engineering, and industrial and financial strategy. Japanese conglomerates Mitsub-

This huge infrastructure project is seen as a prime driv-er of Taiwan’s future economic development, helping to take full advantage of the island’s commercially strategic location within the Asia Pacific.

這項龐大的基礎建設計畫有助台灣充分利用其亞太地區商業

戰略位置優勢，被視為是台灣未來經濟發展的主要驅動力。

Taoyuan aerotropolis Gets Ready For Takeoff

桃園航空城蓄勢待發

BY JENS KASTNER 撰文 / 嚴斯

image: taoyuan county



Cover story

信（Deloitte）、安永（Ernst &Young）、安侯建業

（KPMG）和資誠（PwC）等跨國金融機構也洽詢投

標航空城融資事宜，希望導入創新性的政府與民間

夥伴關係計畫。

土地鑑價結果預定在今年內公布，接著展開為期

約30個月的土地徵收，將須重新安置8千戶3.2萬

人。安置作業在航空城推動委員會的監督下，由桃

園縣地政局協調進行，所有居民將獲得航空城住宅

或金融區的公有土地作為補償，取代現金賠償。補

償的新土地面積只有原本農耕保留地的40%，但因

為可以立即興建住宅或商辦，反而更具價值。不過

部分地主斷然拒絕搬離祖居。為了幫助平撫民怨，

桃園縣府同意部分個案可以全村集體遷移，讓老鄰

居繼續一起住在從小就習慣的咫尺之內。

用來興建桃園機場附近產業園區的公有地，將在

2016年底移交投資人開始動工，成為航空城的第一

個重大開發里程碑。等到2023年如期落成時，預料

可提供30萬個工作機會。

桃園航空城推動委員會執行秘書李維峰表示：「

航空城計畫不但要創造新種類的工作機會和商務，

還要讓台灣轉型為服務型經濟。」外界普遍視為是

航空城計畫幕後智囊的李維峰，曾參與多項台灣重

大基礎建設計畫，包括高鐵、高雄捷運和蘇花公路

改善計畫等，現在則將他的專業知識和豐富經驗應

用於航空城。

航空城將依照永續發展原則興建，商業和住宅

區整合綠帶和水道，採用捷運系統和自行車等低耗

能綠色運輸工具，還將導入物聯網等「智慧型」

科技，使用的部份電力將來自再生能源。此外，航

空城透過興建大量表演空間、創意公園和鼓勵外國

人入住的政策，希望鼓勵充滿活力與多元文化的環

境。航空城原規劃包含製造業，但因為和推動台灣

從仰賴製造業轉向服務經濟的產業結構升級國家目

標不合，最後遭到駁回。

李維峰指出，台灣民間「長年對投資興趣缺缺，

因此手上現金滿滿」，可能會把航空城視為投資機

會。他說：「在海外低成本地區經營的台商把錢帶

回台灣，工廠則留在海外。」

台灣政府希望透過航空城，讓倚賴出口的經濟復

甦。近年來海外市場景氣疲軟，加上許多出口產品

競爭力下滑，致使台灣過去兩年只有些微的經濟成

長。政府研議設立自由經濟示範區，目前正等待立

ishi, Toshiba, and Kawasaki and U.K. design firm ARUP have all been involved in the urban planning so far, which is reportedly 90% complete. In addition, multinational financial firms such as Deloitte, Ernst &Young, KPMG, and PwC have been approached to bid on the project’s financing with an eye to intro-ducing innovative public-private partner-ship schemes.

An announcement of land appraisal is planned for later this year, to be followed by some 30 months of land acquisition involving the relocation of 8,000 house-holds or 32,000 people. The resettle-ment process is being coordinated by the Land Administration Bureau of Taoyuan County under the supervision of the Aerotropolis task force, and all resi-dents will receive compensation in the form of government-owned land within the Aerotropolis residential or financial districts, rather than money.

Although the size of the new plot of land will be only 40% that of the orig-inal holding zoned for agricultural use, the new land will be more valuable as it can be readily used for construc-tion for either residential or commer-cial use. Nevertheless, some landown-ers are bitterly objecting to the plans to remove them from their ancestral homes.

To help assuage this anger, Taoyuan has actually agreed in some cases to move entire villages en masse, allowing old neighbors to continue to live together in the same proximity as they had grown accustomed to.

The first major development mile-stone is set for the end of 2016, when public land for the Aerotropolis’ indus-trial park near the airport will be handed over to investors for the start of construc-tion. By the time of the project’s sched-uled completion in 2023, it is expected to provide jobs for 300,000 people. “The Aerotropolis project is about the creation of new kinds of jobs and busi-nesses, and about Taiwan transforming into a service-providing economy,” says Wei F. Lee, Secretariat Executive of the Taoyuan Aerotropolis Project Task Force under the Taoyuan County government. Lee, who has been involved in numerous major infrastructure projects in Taiwan, including the High Speed Rail, Kaohsiung Metro, and Suhua Expressway upgrade, is now bringing his expertise and wealth of experience to bear on the Aerotropolis.

The Aerotropolis will be constructed in line with the principles of sustainable development, integrating greenbelts and waterways into the commercial and resi-dential districts and featuring low-en-

ergy green transportation such as MRT systems and bicycles. It will also be dedi-cated to “smart” technologies such as the Internet of Things, and will generate some of its power from renewable ener-gies. At the same time, the Aerotropolis aims to stimulate a dynamic and diverse cultural milieu with an array of perfor-mance spaces, creativity parks, and poli-cies that encourage foreign nationals to take up residence. The project was origi-nally planned to include manufacturing, but this approach was ultimately rejected as antithetical to the national goal of upgrading Taiwan’s industrial composi-tion away from reliance on manufactur-ing and towards services.

Lee notes that Taiwan’s pr ivate sector is “cash-rich after years of weak appetite for investing” and will likely target the Aerotropolis as an investment opportunity. “It is about Taiwanese companies operating in low-cost places overseas bringing their money back to Taiwan, while leaving their factories there,” he says.

Through the Aerotropolis, the govern-ment hopes to reinvigorate the export-reliant Taiwanese economy, which has posted only marginal GDP growth in the last two years amid weak economic senti-ment in key overseas markets and declin-



T a o y u a n

法院批准，而桃園航空城就是其中一環。自由經濟示

範區希望促進高附加價值的產業群聚興起，並打造自

由貿易環境。就此，台灣可能會先試辦有限規模的法

規限制鬆綁，然後再擴大施行。自由經濟示範區的重

點計畫為智慧物流、國際健康、農業加值、金融服務

和教育創新，台灣政府希望藉此將台灣經濟推向未

來，而桃園航空城正是此計畫的旗艦。

台灣政府也希望航空城能讓台灣更充分利用自身

的有利地理位置。李維峰指出：「從桃園搭機飛往

亞洲主要城市，平均只需約2.5小時，這意味桃園

航空城民眾到其它亞洲城市開會，或是他國人士來

訪，通常可以一天內來回」，「相較下，從桃園航

空城的競爭對手，亦即南韓仁川自由經濟區飛到東

南亞國協（ASEAN）地區的城市，起碼要多花兩小

時。從新加坡自由貿易區飛日本，可能需要超過八

小時。」

李維峰還指出，監管透明化是台灣的另一項資

產，就像人民友善一樣，對商業文化都有正面效

益。

台灣和中國大陸市場的地理和文化相近性，顯然

也對桃園航空城的發展潛能具有直接影響。中國法

令仍禁止其人民把台灣當過境地點，理由是持中華

人民共和國護照入境台灣，會意味台灣具有國家地

位。不過這個外交問題預料不久就可解決。自從中

國國務院台灣事務辦公室主任張志軍六月下旬訪台

時，將此問題列為最重要的討論議題之一，外界就

特別高度期待此事即將有所突破。

台灣國立交通大學運輸科技與管理學系教授汪進

財認為，中國若解除過境禁令，桃園航空城就具有

吸引從華南飛北美，以及由華北前往東南亞與澳洲

旅客的充分優勢地位。他說：「台灣可成為具吸引

力的交通樞紐，尤其是對中國二、三線城市的居民

而言。」「這些地方和國際的交通連結通常不夠完

善，每週卻有數百班往來台海兩岸的班機。」

要求匿名的一位台北市航空運輸商業同業公會幹

部預測，中國若廢除過境禁令，桃園機場的旅客人

次會增加20%到30%。

招商目標

台灣政府強調，無意讓桃園航空城成為中國投

資的後門。台灣基於政治敏感，仍嚴格限制中資。

ing competitiveness for many of Taiwan’s export products. The project is designed to become one of the government’s proposed free economic pilot zones (FEPZs), which are currently await-ing legislative ratification. The FEPZs are envisioned as facilitating the emer-gence of high-value-added industry clus-ters and creating a free-trade environ-ment in which proposals for deregulation can be tried out on a limited scale before being adopted more widely. Focused on smart logistics, international healthcare services, value-added agriculture, finan-cial services and education innovation, the government is banking on the FEPZs to propel Taiwan’s economy into the future, with the Aerotropolis being the flagship of the program.

The government a l so v i ews the Aerotropolis as enabling Taiwan to better exploit its favorable geographic position. “From Taoyuan, the flight time to Asia’s major cities averages just above 2.5 hours, meaning that one-day trips to meetings are often possible for those based in the Aerotropolis or visiting it,” Lee observes. “For comparison, flights to cities in the ASEAN [Association of Southeast Asian Nations] bloc from rival South Korea’s Incheon Free Economic Zone take at least two hours more, and flights from Singa-

pore’s Free Trade Zone to Japan may take longer than eight hours.”

Lee adds that Taiwan’s regulatory transparency is a further asset, as is the friendliness of the Taiwanese people, which has a positive effect on business culture.

Clearly Taiwan’s geographical and

cultural proximity to the mainland Chinese market also have a direct bearing on the Aerotropolis’ potential. Although China’s regulations still prevent its citizens from making transit stops in Taiwan on the grounds that carrying People’s Repub-lic of China passports into Taiwan would imply Taiwanese statehood, a solution

A look at the Aerotropolis area from the air. The "A15" Gateway to Taiwan sector for an exhibition and convention center is on the south side of the airport, while the Logistics & Trading Park is on the north side.




Cover story

李維峰指出，桃園航空城的定位是通往中國和東協市

場的理想門戶，招商對象主要為美、日、歐和中東企

業。

至於桃園航空城的發展潛能，李維峰舉例，目前有

許多環保大眾運輸設備的零件是在航空城的桃園、新

竹和台中工業腹地製造，這個地區還有數十處傳統和

知識產業的工業園區。

他表示：「按照我們的『低污染、低耗能、低用

水』三低準則，桃園航空城本身不會有任何工廠。不

過總部設於航空城的台灣業者可以組裝零件，然後把

成品和技術一起出口到東協的大城市，在當地建造地

鐵。」「此外，日資企業希望和我們合作生產鐵路機

車車輛、地鐵控制系統等重要設備，因此他們也有充

分理由在桃園航空城設置據點」。

航空城計畫是由交通部和桃園縣政府聯手執行，其

中桃園縣負責工程和極敏感的土地徵收。將在11月「

七合一」地方選舉中尋求連任的桃園縣長吳志揚，正

試圖平息前副縣長葉世文最近引發的風暴。葉世文被

控向建商索賄，換取和航空城無關的桃園縣政府工程

合約。

葉案不但讓公民團體有理由反對航空城的土地徵收

to the diplomatic problem is expected to be solved before long. Anticipation of a breakthrough is particularly high since the issue was one of those most prominently mentioned during the visit to Taiwan by China’s Taiwan Affairs Office Minister Zhang Zhijun in late June.

Wong Jinn-tsai, professor at National Chiao Tung University’s Department of Transportation and Logistics, contends that i f the transit ban is l i f ted, the Aerotropolis would be well-positioned to catch both North America-bound passen-gers from Southern China and those from Northern China going to Southeast Asia and Australia. “Taiwan could become an attractive hub, particularly to those people living in China’s second and third-tier cities,” Wong says. “Those places are typically not well-connected internation-ally, but are served by the hundreds of weekly cross-Strait flights.”

A Taipei Airlines Association offi-cial who wished not to be named predicts that a scrapping of the transit ban would boost passenger numbers at the Taoyuan Airport by between 20% and 30%.

Targeted investors

The government emphasizes that the Aerotropolis is not intended to provide

a backdoor for mainland Chinese invest-ment, which is still heavily restricted in Taiwan because of the political sensitivity. Lee notes that the efforts at promoting investment in the Aerotropolis focus on companies from the United States, Japan, Europe, and the Middle East, positioning the Aerotropolis as a good gateway to the China and ASEAN markets.

As one example of the Aerotropo-lis’ potential for development, Lee points to the numerous components for eco-friendly mass transportation equipment that are currently being manufactured in its industrial hinterland comprised of Taoyuan and nearby Hsinchu and Tai-chung. The area is home to dozens of industrial parks containing both tradi-tional and knowledge-based industries.

“While the Aerotropolis itself will not host any factories – in line with our ‘low pollution, low power consumption, low water dosage’ maxim – Taiwanese firms headquartered in the Aerotropolis can put such components together and export them along with their capabilities to the big ASEAN cities to build metros there,” he says. “In addition, Japanese companies want to produce the key elements such as rolling stock and metro control systems in cooperation with us, making a good case for them to also establish footholds

in the Aerotropolis.” The Aerotropolis project is being

joint ly shouldered by the Ministry of Transportation and Communica-tions (MOTC) and the Taoyuan County government, with the county respon-sible for the engineering work and the extremely sensitive issue of land acquisi-tion. Taoyuan County chief John Chih-yang Wu, who is running for re-elec-tion in the “seven-in-one” local elections in November, is seeking to overcome a recent setback when his former deputy, Yeh Shih-wen, was indicted on charges of soliciting bribes from a construction company in return for a government construction project in Taoyuan unre-lated to the Aerotropolis.

The Yeh case provides ammunition to civic groups protesting the Aerotropo-lis land expropriation plans as well as to the opposition Democratic Progressive Party. The DPP has objected to passage of the government’s FEPZ proposal by the Legislative Yuan on the grounds that it is non-transparent and carries dereg-ulation too far, particularly regarding investment from China, at the expense of local small and medium-sized enter-prises (SMEs). That the relationship between the existing Taiwan Taoyuan International Airport and the residents

County chief John Chih-yang Wu has been the leading advocate of Taoyuan's elevation to become a special municipality.




T a o y u a n

計畫，也讓民進黨有機可趁，以作業過程不夠透

明，及法規過度鬆綁、尤其是為了中資犧牲本土中

小企業為由，反對立法院通過中央政府的自由經濟

示範區提案。桃園國際機場和周遭社區居民過去數

十年來關係緊繃，也成為航空城計畫的另一個挑

戰。

不過李維峰強調，自由經濟示範區特別條例是否

通過，對桃園航空城計畫的執行並不重要，因為航

空城「也可根據既有的自由貿易港區設置管理條例

執行，只要修改部分條文即可」。

民進黨對自由經濟示範區條例有所保留，卻支持

桃園航空城計畫。11月將代表該黨角逐桃園升格直

轄市後首屆市長的鄭文燦表示，「我們有桃園國際

機場，它是台灣和世界之間的通道」，「我們希望

擴展桃園的繁榮與商機。現任縣長已這麼做，但事

實上有些應解決的問題仍未解決」。

鄭文燦除表示希望航空城計畫能興建更多飯店和

會展中心，還認為目前的招商成績無法令人滿意。

他主要是反對土地徵收作業的執行方式，表示即使

政府透過代價並不昂貴的換地方式徵收土地，但對

於希望進駐航空城的業者而言，成本仍相當高。他

指出，一份縣府評估報告估算，政府可從航空城計

畫賺得50億美元的淨獲利。鄭文燦表示自己若當

選，將改變策略，讓土地徵收和招商同步進行。他

說：「這樣做，才能讓有興趣在這區域做生意的業

者更加明白，對桃園航空城可以抱有哪些期待。」

吳志揚則反駁說，他曾聽到其他民進黨立委有

截然不同的抱怨，認為航空城計畫不應一直向海外

招商，卻未先徵收土地。他說曾有在野黨立委問

道：「若不先取得土地，要如何吸引外資前來？」

在台灣，縣長的英文翻譯通常是county magistrates，

但吳志揚喜歡使用mayor作為英文職銜。

向台灣中央政府提供建言的台北知名經濟智庫「

環球經濟社」社長林建山也對招商作業表示憂慮。

他說：「上次我參加航空城簡報會，並未有人提到

具體的廠商名稱。」「他們早該派專案小組前往美

國和歐盟地區，結果並沒有，如今為時已晚。」

對此，吳志揚回應說，他早就率領招商團訪問法

國、香港和日本，並向所有在台主要商業組織進行

簡報，包括台北市美國商會在內。他說：「世界主

要國家現在都已知道桃園航空城，也更加留意這個

計畫。」「對全球投資人而言，它已成為非常好的

of nearby communities has been testy for decades poses another challenge for the Aerotropolis project.

Lee stresses, however, that passage of the FEPZ act is not vital to imple-mentation of the Aerotropolis, as the Aerotropolis “would also be feasible under the existing Free Trade Port Act, if that act underwent some modifications.”

And whi le the DPP has reserva-tions about the FEPZ law, it is other-wise supportive of the Aerotropolis proj-ect. “We have the Taoyuan International Airport here and it serves as the gate-way between Taiwan and the world,” says Cheng Wen-tsan, the DPP’s mayoral candidate in the November elections. “We would like to enlarge the prosper-ity and the opportunities in the city. The current county chief is working on this, but in reality there are problems that should be solved but are not solved.”

Cheng says he would like to see even more hotel and exhibition space included in the project, and he regards the invest-ment-promotion efforts as unsatisfac-tory. His main objection is the way the land acquisition process is being carried out, noting that even though the govern-ment is acquiring the land inexpen-sively through property swaps, the cost will still be high for industries wishing

to locate in the Aerotropolis. He refers to a County evaluation report estimat-ing that the government could earn a net profit of US$5 billion from the project. If elected, Cheng says he would change the approach by acquiring land and seeking investments simultaneously. “That way companies interested in doing business in this area can have a better idea of what to expect from the project,” he says.

John Wu (who prefers the title of Mayor although county chiefs in Taiwan have usually been called “county magis-trates” in English) counters that he has heard the opposite complaint from other DPP legislators: that the Aerotropolis project has been seeking investment from abroad without having first acquired the land. He says opposition lawmak-ers have asked, “If you don’t have the land already, how are you going to solicit foreign investment?”

Bert Lim, president of the World Economics Society, a prominent Taipei-based economic think tank advising the central government, also expressed concern about the investment recruit-ment process. “The last time I attended an Aerotropolis presentation, there was no mention of concrete company names,” Lim says. “By now, they should be send-ing task forces to the U.S. and EU, but

this isn’t happening. It’s late.” Mayor Wu responds that he has

already led investment missions to France, Hong Kong and Japan, as well as giving presentations to all of the major busi-ness organizations in Taiwan, including AmCham. “The major countries in the world have now been made aware of the Aerotropolis plan and are now paying much more attention to it,” he says. “It has become a very good target for inves-tors around the globe.”

Wu adds that as the plan progresses, he hopes to see more input from the central government to help attract “the best foreign investments in the world.”

Economist Lim notes that Taiwan’s lack of free-trade agreements (FTAs) with other countries also clouds the Aerotropolis’ prospects by making oper-ations there less competitive compared with similar zones elsewhere in the region. But the reason for establishing the FEPZs, including the Aerotropolis, of course is precisely to counter the isolating effects of Taiwan’s lack of participation in regional trade blocs.

Hu Sheng-Cheng, an Academician at Academia Sinica’s Institute of Econom-ics and chairman of the Council for Economic Planning and Development during the Chen Shui-bian administra-



Cover story

投資標的。」

吳志揚還表示，隨著計畫不斷推展，他希望看到中央能投

入更多奧援，協助吸引「全世界最棒的外資」。

本身是經濟學家的林建山指出，台灣缺乏和他國達成的自

由貿易協定，導致在桃園航空城經營業務的競爭力，比不上

亞洲其它類似的經濟區，也讓桃園航空城的前景蒙上陰影。

不過建立航空城和其它自由經濟示範區的理由，當然就是要

抵銷台灣沒有參加區域貿易集團的孤立效應。

曾在前總統陳水扁時期擔任經建會主委的中研院經濟研

究所研究員胡勝正，並不懷疑桃園航空城計畫的好處，但他

質疑在當前政治環境下推行這項計畫的可行性。他說：「出

現葉世文貪污案、地主反對徵收，還有（太陽花學運極力反

對）政客和商界之間的黑箱協議。」「如果他們像這樣持續

抗議，結果不會被人民所接受。接著我們會看到示威導致所

有事情都耽擱，進而引發不夠理想的不成熟結果。」

吳志揚承認，像桃園航空城這樣規模的計畫，顯然無法令

所有人滿意，而且台灣精力充沛的媒體為了吸引觀眾而過分

凸顯衝突。不過他也強調，政府已尋求回應示威訴求，舉辦

多場公共論壇向地方民眾和商業組織說明桃園航空城計畫。

他表示：「大部分與會者現在都同意並接受工程計畫。」

吳志揚指出，若想幫助台灣產業轉型為較服務導向的經

濟模式，讓台灣能在全球舞台上成功競爭，桃園航空城計畫

不可或缺。他警告說，立法院若未通過航空城計畫，「就意

味台灣人民並不了解我們在國際間的真正價值」。不過他堅

稱，若計畫能按部就班執行，「將可提振台灣經濟，桃園將

能成為台灣的經濟引擎」。

tion, expresses doubts not about the merits of the project but about the practicality of pursuing it within the current political environment. “There is this Yeh corruption case, landowners’ opposition, as well as [the Sunflower Move-ment decrying] the ‘black box’ deals between politicians and the business world,” he says. “If they just go on with the project like this, the outcome won’t be accepted by the public. And then we’ll see protests delaying the whole thing, which in turn will bring about less-than-ideal tender results.”

Mayor Wu acknowledges that with a project of this scale, clearly not everyone will be happy, and that Taiwan’s spirited media has played up conflict to attract an audi-ence. But he also stresses that the government has sought to respond to protests, arranging numerous public forums to explain the Aerotropolis to local residents and business organizations. “Most of them are now in agreement and accept the construction plan,” he says.

According to Wu, the Aerotropolis plan is essential to help Taiwan transform its industry to a more services-based model to enable Taiwan to compete successfully in the global arena. If the legislature fails to pass the Aerotropolis plan, he warns, “that would suggest that Taiwanese people failed to realize our true value internationally.” But if the project can be carried out as planned, he asserts, “it will boost Taiwan’s economy and Taoyuan will be able to serve as the economic engine of Taiwan.”

AmCham companies with headquarters in the county evaluate the pluses and minuses of operating in Taoyuan.

assessinG Taoyuan’s Business ClimaTe

BY KATHERINE MOON

Taoyuan’s growing importance in Taiwan’s economic landscape hasn’t been lost on AmCham

member companies, and those that oper-ate in Taoyuan – mostly in manufacturing – are optimistic about the area’s future.

Asked about the advantages of locat-ing their facilities in Taoyuan, executives tend to start by citing the high quality of the workforce, particularly the depth of practical skills applicable to indus-try. “The biggest advantage that we’ve

seen with this location is the broad range of talented engineers with a background in CNC (computer numerical control), tooling, molding, and automation,” explained Steven Kaufman, Marketing Director of medical-device manufacturer Scandinavian Health Ltd. (SHL Group) in an email to Taiwan Business TOPICS. “We’ve been able to hire more than 1,000 new staff in the past two years and we plan to continue hiring in this region over the next five years.” The Swire Coca-Cola bottling plant in Taoyuan is

one of two manufacturing facilities that the com-pany operates in Taiwan.

photo: swire



T a o y u a n

Jesse Chiou, head of the government affairs department at the Zhongli-based Ford Lio Ho Motor Co., praises Tao- yuan’s six major universities, including the Taoyuan Innovation Institute of Technol-ogy, for their success in producing well-educated – and highly employable – grad-uates. And Micron Technology’s Execu-tive Vice President Scott Meikle credits the “large and stable talent pool” for blue-collar workers as another asset. With most workers residing locally, Meikle notes that the attrition rate is low at Inot-era Memories, the Micron joint venture located in the sprawling Hwa-Ya Technol-ogy Park in Gueishan Township.

Low property prices are another advantage, according to Neil Waters, Director and General Manager of Swire Coca-Cola Beverages. As his company “requires large production and warehous-ing facilities,” the low cost of land has been “key” to Swire’s growth, he notes. Property prices were also a major factor in the decision of Recall Taiwan to locate its three large document-storage ware-houses in the Nankan area of Taoyuan.

At HAVI Logistics Taiwan, Manag-ing Director Charles Chang tells a similar story. Although most of HAVI’s delivery points are concentrated in Taipei, opera-tional costs in Taoyuan are lower, while the distance from there to Taipei is short enough that transportation costs are not a significant factor.

Besides the positive labor-force envi-ronment, another favorable aspect of the Taoyuan location for Ford Lio Ho is the close proximity to many of its suppli-ers. As a number of Taiwan’s automobile manufacturers are situated in the county, making it something of the equivalent of Taiwan’s Detroit, many enterprises making automotive parts and compo-nents have also tended to congregate in the county.

Despite the many strongpoints, room still remains for improvement, according to AmCham member executives. Ford’s Chiou and HAVI’s Chang, for example, express concern over industrial pollu-tion. In particular, Chang cites the air and water pollutants generated by Taoyuan’s industrial parks. The county, with more than 100,000 registered factories, has dealt with multiple cases in which acidic

wastewater entering rivers and estuar-ies failed to meet the discharge standards of Taoyuan’s Environmental Protection Bureau, he says.

Chiou suggests that the local govern-ment “offer more incentives and long-term strategies to promote Green and Smart city objectives.” Green and Smart cities are urban centers where systems like water distribution, electric grids, and commercial buildings are built with utmost efficiency, livability, and sustain-ability. Chiou recommends that Taoyuan develop low or zero-emission transpor-tation and energy-saving manufacturing facilities.

Swire’s Waters emphasizes the need for better transportation infrastructure. “The in-city traffic flow is very poor, and the roads are small and generally not well-planned,” Waters says. “This generates large traffic delays in reach-ing the freeways.” As someone who lives in Taipei and must commute to work, Waters describes his Monday mornings and Friday evenings as “poor and slow.”

Despite improvements in the infra-structure over the past 10 years, says SHL Group’s Kaufman, “greater access to downtown (Taipei) and the airport by MRT is vital” to improve connec-tivity between Taoyuan and Taipei. But he expects that government will put in increased investment over the coming years to strengthen the existing infra-structure and facilitate transportation.

Micron’s Meikle, another executive who commutes from Taipei, sees the situ-ation as getting better. He notes that the new elevated portion of the freeway has eased the traffic flow, while the construc-tion of an MRT line to the airport and elsewhere in Taoyuan is another sign that conditions are moving in an “overall very positive direction.”

Another issue for companies oper-ating in Taoyuan is difficulty in recruit-ing senior-level executives. Though most companies are satisfied with the avail-ability of lower-level and technical talent, they often struggle to find experienced managers in Taoyuan. “Labor supply is abundant and with fair quality, but there are not enough senior-level profession-als such as financial analysts and senior managers,” says HAVI’s Chang. Kauf-

man of SHL agrees, saying his company occasionally needs to bring in experts and technical engineers from Europe and North America because they can’t find local professionals willing to live or work in Taoyuan.

The Taoyuan Aerotropolis Project – estimated to be completed in 2023 – is another reason for excitement about Taoyuan. “The project is expected to offer aggressive incentives to attract more foreign investment,” Ford’s Chiou observes.

SHL’s Kaufman predicts that the proj-ect will “internationalize this region by attracting a broad range of multina-tional companies.” He cites the planned construction of a third terminal at the international airport and the expansion of the free-trade designated area as initiatives that will cause multinational businesses to explore opportunities in Taoyuan.

The executives also anticipate posi-tive changes in infrastructure over the next five years. Waters expects inter-city and urban transportation to improve in terms of “planning and implementation.” Kaufman says he “strongly encourages the government to actively invest in this region [Taoyuan] as it is a key economic driver in Taiwan.”

AmCham Members in Taoyuan

3M Taiwan Ltd., established in 1969, has over 2,000 employees and markets more than 30,000 different products in six different business segments. Several of its facilities are located in Taoyuan, including a manufacturing plant in Yang-mei and a warehouse in Dayuan.

Atlas Copco Taiwan Ltd., whose parent company is based in Sweden, develops products ranging from air treat-ment systems and underground venti-lation fans to drilling tools and mining equipment. The factory in Taoyuan specializes in manufacturing air compres-sors and construction machinery for international markets.

Capital Machinery Ltd. (CML) is the only authorized dealer in Taiwan for the sales and service of products manufac-tured by Caterpillar Inc. – the world’s largest manufacturer of earth-moving and construction equipment such as wheel



Cover story

loaders and hydraulic excavators. CML is also one of Taiwan’s leading suppli-ers of power systems and offers a variety of power-generating solutions to a range of companies in the manufacturing, tech-nical, and medical industries. In addi-tion, CML supplies diesel and natural gas Caterpillar engines to Taiwan’s commer-cial marine sector.

Dow Chemica l Taiwan Ltd. has been operating in Taiwan for over four decades, providing innovative solutions to such problems as the shortage of clean water, the need for renewable energy, and the lack of crop protection. Dow’s manu-facturing site in Taoyuan specializes in producing electronics materials, specialty chemicals, and plastics.

DuPont Taiwan was established in 1968, and operates four wholly owned manufacturing sites and two technol-ogy centers in Taiwan. Three of the manufacturing facilities are located in Taoyuan: the Electronics Materials Plant in Taoyuan City, Crop Protection Plant in Lungtan, and Titanium Dioxide (Ti02) Plant in Kuanyin.

Ford Lio Ho Motor Co. , a joint venture between the Ford Motor Co. and Taiwan’s Lio Ho Group, was established in 1972 and has about 1,300 employ-ees. The company’s plant in Taoyuan’s Zhongli city assembles such models as the popular Mondeo and Focus. Ford Lio Ho also makes an effort to engage in service-oriented activities within the community, as seen by the 1,000 employ-ees who cleaned the Yung-An beach in Taoyuan during the company’s annual “Global Week of Caring.”

H AV I L o g i s t i c s ( Ta i w a n ) L t d . provides sophisticated transportation, warehousing and distribution, mate-rial sourcing, marketing and purchase, freight payment, and audit services to support the operations of McDonald’s and other restaurants. The facility in Taoyuan is equipped with a warehouse management system (WMS) that allows HAVI’s business partners to enjoy full visibility of their operations.

Kimlan Foods, established in Taoyuan almost 80 years ago, produces crafted soy sauce, other condiments, and pick-les. Kimlan has the world’s largest contin-uous soybean steamer and cooks 4,000

kilograms of soybeans per hour. Besides sales in Taiwan, the goods produced in Kimlan’s factory in Taoyuan are exported to Japan, the United States, and many European countries.

Micron Technology Asia Pacific Taiwan designs and builds memory and semicon-ductor products for use in everything from computers and mobile devices to auto-mobiles. In 2008, the company partnered with the Nanya Technology Corp. to form Taoyuan-based Inotera Memories, which manufactures high-quality, sub-50 nano-meter DRAM (dynamic random-access memory) products. Inotera employs more than 3,000 people in its two fabs.

Novotel Taipei Taoyuan International Airport, Taiwan’s only airport hotel, was awarded five stars by the Taiwan Tour-ism Bureau. With its spacious rooms and convenient location just five-minutes’ drive from the airport’s touchdown gate, the Novotel positions itself as an ideal place to recharge during a business trip or family vacation.

Recall Taiwan Ltd. is a specialist in the secure storage, retrieval, and disposal of documents, both physical and digital. It has been operating in Taiwan for over ten years, providing consulting services to hundreds of corporate customers. Recall also provides immediate online access to customers’ data and safeguards the infor-mation with data protection solutions.

Scandinav ian Heal th Ltd . (SHL Group) takes pride in being the world’s

largest privately owned designer and manufacturer of advanced drug delivery devices. The company supplies systems such as pen injectors, auto injectors, and inhaler devices to almost 80% of the world’s top biopharmaceutical compa-nies. While the company’s primary design centers are in Sweden and the United States, Taoyuan has been home to one of SHL’s chief manufacturing centers for more than 20 years.

Swire Coca-Cola Taiwan, a branch of Swire Beverages, has been in opera-tion since 1968. The Taoyuan factory manufactures, develops, and distrib-utes beverages ranging from Coca-Cola, Sprite, and Fanta to Nestea, Aquarius sports drink, and Minute Maid juices. The company is a strong advocate of corporate social responsibility and regu-larly supports Taoyuan’s service-oriented programs.

Super Dragon Technology Co., Ltd., founded in Taiwan in 1996, has been a leader in Taiwan’s electronic waste recy-cling industry. It extracts valuable metals from electronics, semiconductors, and other industrial waste. Super Dragon has set the goal of managing and recycling any type of waste created from a manu-facturing process.

Other member companies with a substantial presence in Taoyuan include Amway Taiwan, Fedex, DHL, UPS, and of course airlines Cathay Pacific, Delta, and United.

The production line at Ford Lio Ho. The company has been located in Zhongli since its establishment in 1972.

photo: ford lio ho



For the AmCham Taipei 2014 Doorknock mission to Wash-ington, D.C., the number

one objective was to seek to build support for the launch of negotia-tions between the United States and Taiwan for a Bilateral Investment Agreement (BIA). The Chamber v i ews a BIA as not on ly va lu -able in its own right as a means of strengthening the bilateral economic relationship, but also as beneficial in helping pave the way for Tai-wan’s eventual participation in the emerging Trans-Pacific Partnership (TPP) trade grouping.

“In general, we found a quite receptive atmosphere for our mes-sage,” reports AmCham President Andrea Wu. “No one that we talked to raised any objections to the idea of a BIA per se, although we frequently heard the argument that Taiwan must first prove its commitment to trade liberalization by resolving certain outstanding bilateral issues.” Foremost among those issues are continuing restrictions in Taiwan on the import of various pork and beef products.

In some quarters in Washington, especially among key Congressional committees, the Chamber found an inclination to refrain from any new initiatives with Taiwan until progress in made on the pork and beef issues. But AmCham believes that in light of the difficulty for the Taiwan government of

moving forward immediately on those politically controversial issues, treating such progress as a pre-con-dition for BIA negotiations may just prolong the current stalemate. The Doorknock delegation there-fore proposed that it would be more effective to start BIA negotiations and use that engagement as a further opportunity for discussion of sensi-tive topics. Signing a final agreement could still be made contingent on satisfactory action on specified out-standing issues – but at that stage the Taiwan public would have a clearer understanding of the con-crete benefits available through a BIA.

With regard to the TPP, the delegation found a general consensus that Taiwan, as a leading trading nation, would be a logical candidate for inclusion in that organization when it is ready to expand its membership after the current first round of negotiations is completed. U.S. officials have already publicly stated several times that Washington welcomes the recent steps Taiwan has been taking to liberalize its trade and regulatory regimes to demonstrate its readiness to take on the high-standard commitments that TPP participation would involve. U.S. government representatives have also briefed their Taiwan counterparts on the TPP process, without get-ting into the specifics of the negotiations, and have advised

d o o r k n o c k

But agricultural trade issues may still be an obstacle unless a breakthrough can be achieved.

2014 Doorknock Finds Encouraging Prospects for

Investment Agreement

BY DON SHAPIRO

8_DK.indd 29 2014/8/5 12:28:21 PM

A N A LY S I S


Taiwan to study the provisions of the Korea-U.S. Free Trade Agreement (KORUS) as an indicator of what TPP accession would entail.

But although TPP is often described as a “U.S.-led initiative,” American officials also stress that the admission of any additional economies in the future will require the unanimous consent of all 12 nego-tiating parties. They therefore urge Taiwan to reach out to the governments of all the prospective first-round TPP members.

Typically the Doorknock meetings opened with the AmCham team’s presentation of two documents – a double-sided handout on “Why Taiwan Matters” and a copy of the Chamber’s 2014 Taiwan White Paper. “The handout was designed to remind our contacts in Washington of Taiwan’s importance as a bulwark of democracy in East Asia, the 12th largest trading partner of the U.S., and a powerhouse in the global technology supply chain,” says Andrea Wu. “It’s very helpful to provide that context, especially for those whose jobs do not require them to closely follow developments in Taiwan.”

Introducing this year’s White Paper provided an opportunity to inform counterparts in Washington about the significant progress achieved in Taiwan since the end of last year, when President Ma Ying-jeou passed word down through the bureaucracy that Taiwan needed to get serious about preparing for TPP accession. Government agencies were instructed to identify any of their regulatory practices that deviate from international norms and to report back by the middle of this year on their findings and sug-gested remedies. (Top government leaders should be receiving that report this month).

Even as that exercise was underway, the Regula-tory Reform Center under the National Development Council was busy meeting with AmCham commit-tees and other business associations to offer its good offices in trying to resolve issues of concern to the business community. In addition, bilateral negotia-tions under the Trade and Investment Framework Agreement (TIFA) platform also made progress on some key issues. As a result, the Doorknock delegation was able to list a number of favor-able developments during the first half of this year, including positive discussions between AmCham’s Private Equity Committee and the Financial Super-visory Commission regarding the criteria used in foreign investment approval decisions, agreement by the Taiwan Food and Drug Administration to estab-lish a Patent Linkage system to prevent generics from reaching the market while the original drug is still under patent, a reversal of plans by the Taiwan authorities to require banks to conduct all of their data processing onshore (which would have violated the principle of the free flow of information across

若能在農業貿易上達成突破，農業貿易議題仍可能一大障礙。

2014年叩門之旅代表團帶回

投資協定簽署樂觀的訊息

撰文／沙蕩

對於台北市美國商會2014年叩門之旅代表團而言，他們在華府的首要目標為尋求展開美台展開雙邊投資協定（BIA）談判的支持。商會認為BIA的價值不僅

可作為強化雙邊經濟關係的工具，同時也可為台灣最終加入正在成形的跨太平洋夥伴協議（TPP）奠定基礎。

美國商會執行長吳王小珍表示：「大致而言，我們發現美方皆保持開放的態度來接受我們傳達的想法。」「儘管過去我們常聽到的說法是台灣須先解決某些懸而未決的雙邊議題，以證實台灣支持貿易自由化的決心，但我們接觸的機構代表均未反對BIA本身的構想。」在尚未解決的議題中，最重要的就是台灣持續限制的各項豬肉和牛肉產品進口。

商會同時觀察到在華府某些局處，尤其是一些美國眾議院主要委員會的立場，傾向除非美豬和美牛問題所進展，否則不會和台灣進行任何新計畫。不過商會也了解台灣政府很難立刻推動這些有政治爭議性的議題，就算這些議題被列為BIA談判的先決條件，其結論可能只會讓目前的僵局持續下去。因此叩門之旅代表團建議雙方應採取較有效率的作法，先展開BIA談判，在談判過程中借機正式討論敏感議題。美方仍可將其列為簽署最終協定的附帶條件，並要求台灣在特定議題上採取令雙方滿意的行動。屆時台灣民眾能更清楚了解簽署BIA所能帶來的具體好處。

至於TPP，叩門之旅代表團也觀察到美方普遍的共識是TPP在完成目前的首輪談判後，若準備擴增成員，身為主要貿易國的台灣為理所當然的候選成員。美國官員已數度公開表示，華府樂見台灣最近採取的貿易和監管機制自由化措施，證明台灣有準備接受加入高標準TPP所須承擔的義務。

A Doorknock team called at the U.S. Environmental Protection Admin-istration to follow up on the recent visit to Taiwan of EPA Administra-tor Gina McCarthy.

8_DK.indd 30 2014/8/5 12:28:22 PM


A N A LY S I S

borders), the drafting of legislation that could open the way for prestigious foreign uni-versities to establish educational programs in Taiwan, the consideration of methods to recognize the status of foreign-licensed chiropractors, and the removal of several reg-ulations that appeared to be technical barriers to trade.

“Citing that progress so far – and the expectation that the liberalization trend will continue – we were able to make the case that Taiwan deserves to be considered for a BIA and eventually for participation in the TPP,” notes Andrea Wu.

Uncertain TPP schedule

Opinions vary in Washington as to the status of the TPP negotiations. Some critics have questioned the Obama administration’s commitment to closing the deal, particu-larly at the high standard of content that it has pledged to achieve. They note that talks seem to be dragging on much longer than orig-inally anticipated, that it is unclear whether Japan will give in on sensitive agricultural and other issues, and that other countries are waiting to see how Japan responds before staking out their own positions. Many Repub-lican members of Congress express concern that the White House has not yet asked for renewed Trade Promotion Authority (TPA) to expedite eventual TPP approval by Congress by shielding the legislation from amend-

American Chamber of Commerce in Taipei2014 Doorknock, Washington, D.C.

June 16-20, 2014

GOVERNMENT MEETINGSNational Security Council

Office of the U.S. Trade RepresentativeDepartment of State

Department of Commerce (International Trade Administration)Department of Health & Human ServicesEnvironmental Protection Administration

Members of Congress John Carter, Mario Diaz-Balart, and Albio Sires, co-chairs of the Taiwan Caucus; Charles Boustany; Randy Weber.

Offices of Senators James Inhofe (co-chair of Senate Taiwan Caucus), Benjamin Cardin, Mike Crapo, Christopher Murphy, Marco Rubio,

Charles Schumer, and Ron Wyden.Offices of Representatives Gerald Connolly (co-chair of House Taiwan

Caucus), Ron Kind, Charles Rangel, Tom Reed, and David Reichert. Staff from Senate Finance Committee, Senate Foreign Relations Committee, House Foreign Affairs Committee, and House Ways and Means Committee.

AIT-Washington

OTHER ORGANIZATIONSAdvaMed

American Enterprise Institute The Asia Group

Brookings InstitutionC&M International

Coalition of Service IndustriesDPP Liaison in Washington

Emergency Committee on American Trade (ECAT)Heritage Foundation

Inside U.S. Trade National Foreign Trade Council

National Pork Producers CouncilNelson Report

Taipei Economic & Cultural Representative OfficeU.S. Chamber of CommerceU.S.-Taiwan Business Council

Right: Members of the Doorknock delega-tion from the medical device industry call at AdvaMed, the industry association based in Washington.

Below: Congressman John Carter (R-TX), a co-chair of the House Taiwan Caucus, receives one of the Doorknock teams.

8_DK.indd 31 2014/8/5 12:28:23 PM

A N A LY S I S


ments. In the absence of that “fast-track authority” as assurance that provisions of a signed TPP won’t be overturned on Capitol Hill, analysts say, the other TPP negotiating parties may be reluctant to make sig-nificant trade concessions.

But U.S. government officials counter that Pres-ident Obama and U.S. Trade Representative Mike Froman remain firmly committed to completing the TPP agreement and to do so without sacrificing the high quality that is being aspired to – adding that far more progress has already been accom-plished than can be made public while negotiations are still underway. Administration supporters also make the point that complicated trade agreements invariably involve a period of anxiety and seeming inaction before the final spurt to completion. As to the handling of fast-track authority, the administra-tion is expected to wait at least until after this fall’s mid-term elections before submitting its request to Congress. It is even possible that the TPA request and the final TPP agreement would reach Congress at the same time.

The most likely timeframe for concluding the cur-rent TPP negotiations is now thought to be the latter part of 2015. The participating countries will then need to obtain ratification by their national legis-latures, which may take another year or so, before the pact goes into effect. It is still not clear at what point the group will wish to consider applicants for a second round of membership, but the Doorknock delegation was told by U.S. officials that whenever a candidate country is ready to make the commitment to the TPP’s high standards of trade liberalization, it may communicate its formal expression of interest to the New Zealand government, which is acting as the TPP secretariat. Consultations would then begin with the existing TPP countries.

Since several years may well elapse before Taiwan can actively pursue a TPP candidacy, a BIA takes on added importance as a means to keep the momentum going in strengthening the U.S.-Taiwan economic

美國政府代表也在未透露談判細節的情況下，對台灣官員簡報TPP的進展，並建議台灣將美韓自由貿易協定（KORUS）做為基準，以了解加入台灣TPP所需完成的內容。

雖然TPP常被視為「美國領導的計畫」，不過美方官員強調，未來任何經濟體如想加入TPP，都須獲得全體12個會員國的一致同意。因此美方敦促台灣和所有參與第一輪談判的準會員國接觸。

叩門之旅在華府會談的開場通常由商會代表就兩份文件進行簡報，一是題為「台灣為何重要（Why Taiwan Matters）」的單張雙面說帖，另一份是商會2014年《台灣白皮書》。吳王小珍表示：「說帖的目的是提醒與會華府人員台灣的重要性，包括台灣為東亞民主堡壘、為美國的第12大貿易夥伴，以及是全球科技供應鏈的重心。」「提供這些背景資料非常有幫助，尤其是對那些平日並不需要密切注意台灣發展的人。」

馬英九總統去年底責成所有台灣政府官員，必須認真準備加入TPP。今年的《白皮書》讓華府有機會了解台灣從去年迄今所達成的重大進展。台灣各政府機構奉命找出所有悖離國際規範的監管作法，並須在今年年中提報結果與矯正措施（台灣政府高層應會在本月收到此報告）。

在糾正悖離國際標準法規的過程中，隸屬國發會的法制協調中心致力於和本商會各委員會與其它商界社團進行會談，試圖協調和商界有關的議題。此外，美台雙方根據貿易暨投資架構協定（TIFA）平台進行的雙邊談判，也在部分關鍵議題上獲得進展。因此叩門之旅代表團也列出今年上半年許多正面的發展，包括：本商會私募基金委員會和金管會針對外資核准決策評判標準的正面討論；台灣食品藥物管理署同意建立專利連結系統，以免原廠藥專利期限還沒結束前，學名藥就已上市；台灣當局擬取消要求各銀行須在境內進行所有資料處理業務（此規定違反資訊自由流通原則）；草擬開放外國知名大學來台設立教育計畫辦法；考慮承認擁有外國執照的脊骨神經醫師；以及廢除數項顯然構成技術性貿易障礙的法規。

吳王小珍女士指出：「我們舉出截至目前為止的種種進展及可望持續的自由化趨勢，得以證明台灣理應被列為簽署BIA，以及最終加入TPP的考慮對象。」

不確定的TPP談判進程

華府人士對TPP談判進程看法不一。部分批評者質疑美國總統歐巴馬（Barack Obama）政府完成這項協議的決心，尤其是TPP要達成的高標準要求。他們也指出談判似乎拖得比原本預期要久，且目前還不清楚日本是否會在農業等敏感議題上讓

At The Brookings Institution, the group was hosted by Richard Bush (center, with red tie), director of the think tank's Center for East Asia Policy Studies and a former chairman of the American Institute in Taiwan.

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relationship. To underscore the practical value of a BIA for businesses in both countries, AmCham is encouraging the preparation of a comprehensive analytical study of its potential economic bene-fits, perhaps to be undertaken as a joint project of prominent think tanks on the two sides. Besides the microeconomic impact for individual companies, the BIA would also involve a certain security dimension, providing a counterbalance that would help Taiwan avoid becoming over-reliant on the Chinese market. The recent Sunflower Movement showed that con-siderable anxiety exists in Taiwan society about such over-dependence.

Sources of momentum

A crucial channel for spurring progress on lib-eralization and further cementing the bilateral economic relationship is the communication car-ried out under the Trade and Investment Framework Agreement (TIFA). Since the resumption of annual TIFA Council meetings in 2013 after a more than five year hiatus due to disputes over beef imports, the TIFA process has confirmed its usefulness in tackling outstanding trade issues and deepening mutual understanding. AmCham has expressed the hope that the process will be made even more pro-ductive by setting clear mileposts and monitoring progress between annual TIFA Council sessions.

The Doorknock visit was also an opportunity for representatives of various AmCham industry committees to provide updates on their issues as presented through TIFA and the Taiwan White Paper . This year, healthcare-related commit-tees, particularly Medical Devices, were especially well represented in the delegation. Besides the regular Doorknock agenda, they paid a call on the Advanced Medical Technology Association (AdvaMed), which has been paying increasing atten-tion to the Taiwan market in terms of advancing regulatory coherence and best practices. Both the

步，因而其它國家都在等待日方回應後再決定自身的立場。許多共和黨籍眾議員擔心，白宮至今未要求國會延長貿易促進授權（TPA），以加速國會批准TPP的流程，避免陷入修正案的立法泥淖。分析家表示，TPA可保障TPP在簽署後不會被美國國會推翻，若缺乏這種快速授權的保證，其它參與談判的國家可能就不願做出重大貿易讓步。

但美國政府官員反駁歐巴馬政府和美國貿易代表傅洛曼（Mike Froman）仍堅持在不犧牲高品質目標的前提下完成TPP協議。他們還說，談判尚在進行，但已完成的進展其實遠比能公開的還多。歐巴馬政府的支持者還強調，複雜的貿易協定必會經歷一段焦慮期，且在最後衝刺完成前會顯得似乎毫無動靜。至於快速授權的問題，歐巴馬政府預計起碼要等到今秋期中選舉後才會向國會提出要求，甚至延長TPA要求和TPP最終協議可能同時送達國會。

目前研判TPP談判最可能結束時間會落在2015年下半年。接著參與談判各國須取得各國立法機關批准，可能會再耗時一年左右，協議才會生效。目前仍不清楚TPP各會員國希望何時考慮接受第二批會員申請加入，但美國官員向叩門之旅代表團透露，候選國家無論準備在何時提出接受TPP高標準的貿易自由化承諾，都可向擔任TPP秘書處的紐西蘭政府正式表達申請之意。接著TPP既有的會員國就會開始諮商。

台灣可能要數年後才能積極申請成為TPP候選國，因此BIA對於維持強化美台經濟關係的動能就格外重要。為了向雙方企業強調BIA的實際價值，美國商會支持任何進行BIA潛在經濟利益的全面性分析研究的準備，或許會以雙方知名智庫合作計畫的方式進行。除了對個別企業的個體經濟影響外，BIA也可幫助提供抗衡及成為避免台灣過度依賴中國市場，。而最近發生的太陽花學運顯示台灣社會對於過度依賴中國的現象極為不安。

動能來源

刺激自由化進展與進一步鞏固雙邊經濟關係的一個重要管道，為貿易暨投資架構協定（TIFA）架構下的溝通。台美自從在2013年恢復因美牛進口爭議而中斷超過5年的年度貿易暨投資架構協定（TIFA Council）會議後，已證實TIFA管道對於處理重大貿易議題和加強共同瞭解相當有幫助。商會已表示，希望透過設定明確目標和監督每年TIFA會議的進展，提高TIFA管道的成效。

華府的叩門之旅也是商會各產業委員會代表針對他們透過TIFA和《台灣白皮書》所提出的議題，向美方提供更新的機會。今年和健保議題相關的各委員會，尤其是醫療器材委員

At the State Department, the group met with officials from both the Bureau of East Asian and Pacific Affairs, shown here, and the Bureau of Economic and Business Affairs.

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A N A LY S I S


會，參加叩門之旅代表團的人數特別多。除了固定的叩門之旅議程，代表團還拜會美國先進醫療技術協會（AdvaMed）。該協會台灣市場日益重視並對台灣在就促進法規一致性和向國際最佳作法的研習表示關心。叩門之旅代表團中的醫療器材和製藥委員會代表肯定台灣衛福部和業界互動的改善，但也表示冗長的申請許可程序和健保給付藥價過低導致創新性新產品不願進入台灣市場，是台灣病患的損失。

商會也強調除了TIFA對話之外，增加高層官員訪問頻率也另一項維持美台雙邊經濟關係關係動能的有效工具。吳王小珍女士表示：「我們在華府的每場會談中，都提到這類訪問對於促進推動雙邊議題的重要性。」「我們也特別強調，非常樂見美國環保署長麥卡馨（Gina McCarthy）能在4月訪台。她是自西元2000年以來首位來台的美國內閣層級官員，未來希望還能有更多此類層級的官員訪台。」

本商會訪問團拜訪美國環保署時，也了解到該署和台灣環保署合作進行的一系列計畫，其中不乏許多涉及區域性或其它市場的活動，讓台灣有機會展現其環保專門技術，並可進行「軟實力」外交。

至於在台灣人士赴美訪問的方面，本商會代表團不收到美方高度肯定前副總統蕭萬長先生於去年秋季率台灣企業高層一行訪美的訊息。蕭前副對於美台雙邊經濟關係不但極為了解且經驗豐富，而且民間企業代表對於增加和美國的貿易與投資往來也展現高度的興趣，讓見過他們的華府人士留下深刻印象。美國官員希望能定期安排類似的參訪，讓雙邊的高層企業主管能進行交流。

Last year, the 19 members of the AmCham Taipei dele-gation to Washington, D.C. made it the largest group since the Chamber began conducting annual Door-

knocks to the U.S. capital in 1994. This year’s group, led by former AmCham Chairman Alan Eusden, was even larger, with 22 members.

The delegation held a total of 46 meetings between June 16 and 20, frequently splitting into two or three teams to cover more appointments. The AmCham representatives met with executive branch officials dealing with U.S.-Taiwan affairs, members of Congress and their staff assistants, think tanks, scholars, and other organizations interested in the bilateral relationship.

Several U.S. government agencies praised AmCham Taipei for the professionalism of its advocacy activities, including the Doorknock and the Taiwan White Paper.

Besides Eusden, other members of the 2014 Doorknock delegation from Taipei included AmCham president Andrea Wu; Dan Silver, co-chair of AmCham’s Medical Devices Com-

mittee; former chairman Paul Cassingham, chair of AmCham’s Government Relations Committee; Margaret Driscoll, co-chair of the Pharmaceutical Committee; Steven Y. Tan, co-chair of the Customs & International Trade Committee; Technology Committee member C.W. Chin; Medical Device Committee members Emily Chiang, Angela Lo, Angela Hsu, and Cerline Tsai; AmCham Senior Director Don Shapiro; and Director of Government & Public Affairs Amy Chang. They were joined for some meetings by Washington-based representatives from six of the Chamber’s member companies.

Another Record Delegation

Meeting the AmCham representatives at the Commerce Depart-ment were Assistant Secretary Arun Kumar (third from the left) and Deputy Assistant Secretary Holly Vineyard (second from the left).

medical device and pharmaceutical representatives on the Doorknock credited Taiwan’s Ministry of Health and Welfare with improved inter-action with industry, but also cited lengthy licensing procedures and low reimbursement prices as discouraging the entrance of innovative new products into the market, to the disadvantage of patients in the Taiwan healthcare system.

In addition to TIFA, AmCham stressed that another effective means of maintaining momentum in the bilateral economic relationship is through more frequent visits by high-level officials. “In every meeting in Washington, we mentioned the importance of such visits in facilitating progress in the bilateral agenda,” says Andrea Wu. “We especially emphasized how happy we were that Environmental Protection Admin-istrator Gina McCarthy was able to come to Taiwan in April. She was the first U.S. Cabinet-rank official to make the trip since 2000, and we hope there will now be many more.”

Calling at the U.S. EPA, the AmCham team was briefed on the wide range of programs the agency is carrying out in cooperation with the Environmental Protection Administration Taiwan. Many of them involve activities that are region-wide or in other markets, giving Taiwan an opportunity both to show its environmental expertise and to engage in “soft power” diplomacy.

In terms of visits in the other direction, the Chamber team repeat-edly heard high praise for the mission to the United States last fall led by former Vice President Vincent Siew and also including top exec-utives from some of Taiwan’s leading corporations. Siew’s wealth of knowledge and experience regarding the bilateral economic rela-tionship, as well as the strong interest shown by the private-sector representatives in increasing trade and investment connections with the United States, made a deep impression on the people they met with in Washington. U.S. officials expressed hope that similar programs could be scheduled on a regular basis to bring together high-level business executives from the two countries.

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The Debate Goes On

A Special Report on Energy Policy

INDUSTRYF CUS


BY TIMOTHY FERRY

photo: cna

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INDUSTRYF CUS

IN THIS SURVEY

• TheRisksandRewardsofNuclearEnergy p36

• NuclearWaste–AnotherThornyProblem p40

• TheElectricityMarketandLiberalization p41

• LNG’sRoleintheEnergyMix p44

The Risks and Rewards of Nuclear Energy

Last April when Lin I-hsiung, the 72-year-old former Demo-cratic Progressive Party (DPP)

chairman, went on a hunger strike to protest the continued work on the Fourth Nuclear Power Plant, he was widely quoted in the media as saying that the controversy over the facility is “not just about the demand for electricity, but a choice between life and death.” Strong words doubtlessly spoken from the heart, they helped rally anti-nuclear activists to once again take to the streets in large pro-tests against the project, also known as the Longmen Nuclear Power Plant. The protests eventually forced the government to suspend – or “moth-ball” – the project until its future can be settled in a popular referendum.

The Fourth Nuclear Power Plant has been contentious throughout its 20-plus-year history, plagued by alle-gations of corruption, lax safety standards, poor construction, and a host of other charges. The earth-quake/tsunami that devastated the nuclear plant at Fukushima, Japan in March 2011 only escalated the controversy. While the Taiwan gov-ernment responded by strengthening earthquake and tsunami protection at all operational nuclear plants – and assuring the public that the Longmen plant will be operated only if it passes

rigorous safety inspections – pas-sions remain high. Polls show that a majority of Taiwanese remain uncon-vinced about both the safety and necessity of nuclear power in Taiwan.

Tsai Chuen-horng, minister of the cabinet-level Atomic Energy Council, cites a “lack of trust between the gov-ernment and the public, no matter which political party is in power,” as underpinning much of the contro-versy. Given the current culture of protest, in contrast to the enthusiasm people in Taiwan once had for eco-nomic development, he observes that it is now “really difficult for people to reach a consensus based on fact, either social fact or scientific fact.”

But reaching some form of con-sensus on the issue – one way or the other – will be essential for Taiwan to carry out the planning to ensure a cost-effective, reliable energy supply to meet future needs.

The case against the Longmen plant is strong on several counts. The project was conceived in the 1980s and construction began in 1999, only to be halted in 2000 by the newly elected DPP administration of Chen Shui-bian, whose political party had long favored creating “a nucle-ar-free homeland.” The Council of Grand Justices reinstated the project the next year on the grounds

The Taiwan public has been highly skeptical about the safety of nuclear power, despite the advantages in cost and energy security.

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executive branch lacked the authority to overturn a legislative decision, but in the meantime contracts had been broken off, personnel and equipment relocated, and lawsuits instigated. The state-owned Taiwan Power Co. (Taipower), according to several knowledgeable sources, was forced to reopen negotiations with the original contractors – including General Electric (GE) as supplier of the reac-tors and general contractor for the entire project, Mistubishi for the steam tur-bines, and Daewoo for consulting on nuclear plant construction – but on far less advantageous terms. The large number of different contractors also com-plicated the project, and the Architecture and Engineering (A/E) role was originally subcontracted to U.S. firm Stone and Webster and then switched to another American firm, Black and Veatch. The services of Japanese companies Toshiba and Hitachi were also employed.

Taipower’s relationships with Stone and Webster and then Black and Veatch both soured, and for about a year the utility acted as its own A/E services firm, a role it had never played before, contrib-uting to the turmoil. More recently the project was proceeding with URS Corp. of the United States in the A/E role.

Interviews with persons involved in or familiar with the proceedings paint a picture of mistrust, often leading to litigation, between Taipower and its con-tractors. Yeh Tsung-kuang, professor at the Institute of Nuclear Engineering and Science at National Tsing-hua University, says that when the project was cancelled in 2000, the original contractors were still required to complete their roles in order to get paid, and did poor-quality work as a result. But he notes that this shoddy construction – which included the dumping of plastic bottles and even garbage into cement – was discovered by subsequent contractors, torn out, and replaced.

Hundreds of design changes also were made to the site without the approval of GE or the A/E firm, due mostly to foot-dragging and communication problems. The AEC then gave conditional authority to Taipower to make design changes within certain parameters without first obtaining the approval of GE, though

the utility was later fined for carrying out design changes beyond the scope stipu-lated by the AEC.

The cancellation and then reinstate-ment of the project, including the cost of litigation, added approximately NT$3 billion (US$100 million) to the price tag, bringing the total to date to NT$273.6 billion, according to Taipower’s website.

The Fukushima shock

W h e n t h e F u k u s h i m a d i s a s t e r occurred, the Taiwan public was fur-ther alarmed by worrisome similarities to the situation here. The Longmen plant is also located along the seashore (as are all of Taiwan’s nuclear plants) and Taiwan likewise has many active seismic faults. And while Fukushima is located a good distance from densely populated areas, an incident at Longmen or any of Taiwan’s nuclear plants could entail evacuating large parts of major cities, including Taipei. What would be the ramifications of having to evacuate the country’s own capital?

The Longmen plant is designed to house twin 1,350 megawatt (MW) Advanced Boi l ing Water Reactors (ABWRs) bu i l t by GE, for a to ta l installed capacity of 2700MWs. If the plant is eventually terminated by refer-endum or legislative decree, the question

has been raised of whether some of the huge investment could be recouped by converting the facility to a conven-tional fossil-fuel plant. Unfortunately, experts say this option would be virtually impossible due to the different technical specifications for various fuel sources. ABWRs such as those at Longmen actu-ally operate at lower temperatures and pressure than supercritical coal or nat-ural gas plants, and converting the plant would require replacing not just the reactor housing with a new building for a boiler, but the turbines as well – in effect, rebuilding the entire structure.

Many critics question the need for the Fourth Nuclear Plant at all, considering the 22% electricity generating capacity Taipower has on reserve, well above the legally mandated 15%. Even on the hot-test summer days, Taipower currently has an abundant reserve without the Longmen plant. With power demand gen-erally tracking GDP growth, the critics express doubt that Taiwan would soon face problems with energy capacity.

In response, supporters of nuclear energy argue that since it can take as long as a decade to build a new coal-fired plant or LNG terminal, action is needed now to assure sufficient power supply years down the road. The stakes increase when the subject is expanded to cover not just the Fourth Nuclear Plant, but

A protest demonstration in Kaohsiung in April demands that the government stop the Longmen project.

photo: cna

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INDUSTRYF CUS


whether Taiwan should aim to eliminate nuclear power altogether. Three nuclear plants are currently in operation, at Jin-shan and Guosheng, both in the north in New Taipei City, and Maanshan near Kenting in the south. These plants, which together account for just over 12% of installed capacity and supply 19% of the island’s power, are scheduled to be decommissioned when they reach the end of their 40-year lifecycles between 2018 (for the first Jinshan reactor) and 2025 (for the second unit at Maanshan). Anti-nuclear activists, including the opposition DPP, call both for termination of the Longmen project and shutting down the three existing plants as they meet their scheduled retirements.

Nuclear power plants are g iven 40-year operating licenses, but con-trary to popular misconception, the U.S. Nuclear Regulatory Commission (NRC) says that this limitation is due to anti-trust concerns, rather than the tech-nical aspects of the plants – although the NRC website adds that “because of this selected time period, some systems, struc-tures, and components may have been engineered on the basis of an expected 40-year service life.”

License extension involves a thorough reevaluation that concentrates on safety,

the environment, and the economics of the plant. Taiwan’s AEC says that it must receive an application for extension five to 15 years in advance in order to prop-erly carry out the inspections. So far it has received such an application only for Jinshan.

The debate over nuc lear power becomes even more complicated when economic factors are inc luded. At NT$0.95 per kilowatt-hour (kWh), nuclear energy is the cheapest source available in Taiwan, far below its likely replacement, liquefied natural gas (LNG), at NT$3.9/kWh. The alternative favored by many antinuclear activists, wind power, receives a Feed-in Tariff (FiT) of NT$2.62/kWh, while solar energy’s FiT comes to NT$4.92 /kWh. Nuclear even beats coal (NT$2.31/kWh), but while coal furnaces spew vast volumes of CO2 into the atmosphere, nuclear has no emissions. Woody Duh, vice minister of economic affairs, was quoted in the media last April as saying that electricity prices would rise 14% if the power expected from the Longmen plant is replaced with LNG – and that replacing the three currently operating nuclear plants would entail another 40% increase.

The Bureau of Energy under the Ministry of Economic Affairs (MOEA)

forecasts that if Taiwan totally abandons nuclear power, Taiwan’s GDP would shrink by NT$60.8 billion (about US$2 billion) and 28,000 jobs would be lost within a year of the shuttering of the last nuclear plant in 2025. Taipower would likely go bankrupt and brownouts might occur in northern Taiwan due to power shortages, according to the Bureau.

Besides the relatively high cost, renew-able energy sources have the added disadvantage of being unreliable in terms of energy security. Solar cells pro-duce energy only when the sun is bright and wind turbines only when the wind is blowing. Solutions for storing power remain elusive. [See a report online on the AmCham Connect blog for more back-ground on renewables].

Germany has adopted the strategy of relying on wind power in the winter and solar in the summer, with so much elec-tricity generated during periods of peak production that utilities are forced to sell power at a loss to neighboring coun-tries. But Germany also has some of the highest electricity rates in the world for consumers. Taiwan’s electricity rates, by contrast, are some of the developed world’s cheapest, even though Taiwan has no indigenous power supply and must import 98% of its energy. Cheap nuclear power has been a key factor in bol-stering Taiwan’s competitiveness against East Asian rivals South Korea and China – and unsurprisingly both of these coun-tries are ramping up their own nuclear power generation.

If Taiwan gives up all of its nuclear power, what will replace it? And are con-sumers willing to bear higher costs?

Safety inspections

To try to assure the public that the Longmen plant is safe, the government and Taipower have carried out two extensive safety evaluations. The first, ini-tiated in April 2013, was conducted by 45 experienced senior engineers from the first three nuclear power plants, along with 12 engineering consultants from GE. The panel did not find any serious prob-lems, but it did point out areas needing correction. For example, it discovered that a high-pressure pump did not meet

Taipower is considering building a tsunami wall at Maanshan, the only nuclear site in southern Taiwan.

photo: wikipedia

8 IF.indd 38 2014/8/5 1:15:43 PM



requirements for operating under low pressure as well. Although the Longmen crew said the pump was only expected to operate under high pressure, the safety commission insisted that it be replaced to enable it to operate under a variety of conditions.

The second committee was formed by MOEA to double check the work of the first because, as Tsing-hua Universi-ty’s Yeh notes, “the people just don’t trust Taipower anymore.” The MOEA safety committee consisted of nine experts: eight local specialists – not only in nuclear engineering but also in architecture and civil engineering – as well as Robert Tsai, a highly regarded authority in the United States on nuclear engineering. According to Yeh, who was one of the members of the committee, the group met monthly to review Taipower’s reports, scrutinize its efforts, and raise questions about meth-odology and conclusions. On several occasions it demanded changes.

The committee’s final report was set to be submitted as this issue of TOPICS was going to press, but offering a preview of its findings, Yeh says the tests so far show Longmen to be safe. However, he stresses that to fully certify the facility, fuel rods need to be loaded and the plant switched on. As the plant has been officially moth-balled, that is not going to happen.

Will the two safety evaluations satisfy a skeptical public? The fact that the first team consisted of personnel from Taip-ower and GE – both of which have self-interest in seeing the plant operational – inevitably raises doubts about its objec-tivity. Yeh acknowledges this problem but counters that no one else has sufficient expertise to conduct such tests. “Who else are you going to get?” he asks. Even the team assembled by the MOEA could easily be accused of bias towards opening the plant.

With emotions running so high on the issue of the Longmen plant, the only way to truly satisfy skeptics is probably to bring in outside experts. Yeh notes that Standard Operating Procedure calls for nuclear power plant safety inspec-tions to be handled by the local owner but be peer-reviewed by external con-sultants. Taiwan’s AEC has entered into several agreements with its counterpart in the United States, the NRC, covering the exchange of technical information and cooperation in such areas as safety, radiation protection, nuclear security, emergency preparedness, and the envi-ronmental impact of designated nuclear facilities. Last year the NRC inspected the Longmen plant and held meetings with the AEC on the plant’s engineering.

In addition, the safety inspections

conducted by Taipower’s team have been peer reviewed by the World Asso-ciation of Nuclear Operators (WANO) and the European Nuclear Safety Reg-ulators Group (ENSREG). In August, 2013, WANO favorably reviewed Tai-power’s efforts so far in the Longmen plant’s safety inspection, while providing some practical advice on certain issues. In addition, last November a European Commission (EC) and European Nuclear Safety Regulators Group (ENSREG) peer review of Taipower’s stress tests also gave Taiwan’s nuclear industry high marks, saying that safety standards at Taiwan’s nuclear power plants “seem to be generally high and to conform in most areas to international state-of-the-art practices.”

But the EC d id c i t e some areas needing improvement, recommending for example that Taiwan upgrade its methodology and technology regarding earthquake-related hazards. According to news reports on the findings, the EC group said the earthquake hazard assess-ment protocols “do not meet current international requirements” and “do not take into consideration new geological and geophysical data.”

The concern over earthquakes stems from Taiwan’s location in a seismic zone and Japan’s experience in Fukushima.

Nuclear power stations in Taiwan

Plant Type MW net power production

Startup Licensed until Location

JinshanBoiling water reactor (BWR)2 reactors

604 each Total 1208

19782018 reactor 12019 reactor 2

Shimen, New Taipei City

Guosheng Boiling water reactor (BWR)2 reactors

948 eachTotal 1896


Wanli, New Taipei City

Maanshan Pressurized Water reactor (PWR)2 reactors

900/923 Total 1823


Hengchun, Pingtung

Longmen

Advanced boil-ing water reactors (ABWR)2 reactors

1350 eachTotal 2700

Deferred indefinitely

Longmen, New Taipei City

Source: aec

8 IF.indd 39 2014/8/5 1:15:43 PM

INDUSTRYF CUS

Roughly 2,200 earthquakes occur in Taiwan each year, of which about 10% are noticeable without instruments. A number of devastating earthquakes have struck the island, including a June 5, 1920 quake that originated off the coast of Hualien and registered an estimated 8.0 on the Richter scale, plus the magnitude

7.3 earthquake in central Taiwan on Sep-tember 21, 1999 that killed 2,415 people and caused over US$10 billion in damage.

Before the Fukushima disaster and the EC recommendations, the AEC had already begun commissioning geolog-ical and seismological surveys of Taiwan’s many faults. The research is continuing, but preliminary results confirm that Tai-wan’s onshore faults are all quite short – less than 100 kilometers. As the length of a fault is directly proportionate to the severity of an earthquake, a 7.3 mag-nitude earthquake would be the upper limit on land. Offshore, though, the Hua-tung Basin off the coast of Hualien is now considered capable of generating an 8.7 magnitude earthquake.

Ma Kuo-fong, a professor of seis-mology at National Central University and one of the lead researchers on the AEC’s project, notes that the nuclear plants along the northern and eastern coasts would not be vulnerable to major damage from a resulting tsunami because of the shallow ocean depths in that area. In addition, detailed analysis of the ocean floor indicates that any tsu-nami generated by a strong quake would travel north-south, rather than west towards Longmen.

The Maanshan plant in the south is considered more problematic, as local conditions surrounding the plant as well as the proximity to the Manila Trench could potentially put the plant in harm’s way from a powerful tsunami. Taipower is studying the feasibility of building a massive tsunami wall to protect against such an occurrence. But it is also note-worthy that an earthquake strong enough to pose such a threat is considered to be a once-in-10,000-year event. Ma says that when people ask her if she can promise that the plants would survive an earth-quake/tsunami, she responds: “If I say I promise, I am not a scientist, because scientists always know there is some uncertainty. What we can talk about is the probability.” According to her research, the probability is extremely low.

Will this be enough to assuage a dubious public? AEC’s Minister Tsai isn’t sure. “From a scientific point of view, this risk is generally acceptable,” he says. “But the public always looks at the [pos-sible] consequences. And when they look at the consequences, they always look at Chernobyl, at Fukushima.”

Overcoming that kind of hurdle might be beyond the scope of any safety inspec-tion report.


While most of the concern over nuclear energy in Taiwan is focused on safety in the event of a disaster, the intractable

problem of what to do with Taiwan’s nuclear waste still lingers. Nuclear waste is divided into two kinds: low-level radioac-

tive waste (LLRW), comprised mostly of used gloves and safety garments, and “spent fuel,” depleted uranium that is still very hot and radioactive. Since Taiwan began using nuclear power in 1978, it has accumulated a lot of waste – 16,852 metric tons of spent fuel and 219,000 55-gallon drums of low-level waste, according to the Atomic Energy Council (AEC).

As nuclear waste remains dangerous for centuries, even mil-lennia, storing it safely and securely is of utmost importance. Exactly how this should be done, though, remains a matter of keen controversy around the world.

In Taiwan, LLRWs are stored either on-site at the nuclear

power plants (104,441 drums), on Orchid Island (100,277 drums), or at the Institute of Nuclear Energy Research (14,882 drums). The site on Orchid Island (Lanyu), however, has been criticized for lax security and poor storage systems. Corroded steel drums exposed to the weather, with radioactive mate-

Drums of low-level radioactive waste stored on Orchid Island.

photo: cna

Nuclear Waste – Another Thorny Problem

Wind power could only partially make up for the loss of electricity generation from nuclear plants.

8 IF.indd 40 2014/8/5 1:15:45 PM



The Electricity Market and Liberalization

Despite widespread support for reform, practical obstacles are making it very difficult to achieve.

Reforming Taiwan’s power market is a goal that everyone seems eager to achieve. The govern-

ment wants it, the opposition Democratic Progressive Party (DPP) wants it, and even the state-run Taiwan Power Co. (Taipower) supports the effort.

The case for reform is clear. Tai-power is deep in the red after years of losses. Power prices in Taiwan are among the lowest in the world, despite the almost complete lack of indigenous power sources, requiring over 98% of the primary fuel to be imported. With power prices regulated by the Min-

istry of Economic Affairs (MOEA), the utility generates much of its electricity at costs higher than what it is allowed to charge consumers. Meanwhile, the controversy-ridden Longmen nuclear power plant is a US$10 billion dollar albatross around Taipower’s neck that drags down the bottom line without producing any value.

As of the end of 2013, Taipow-er ’s lo s s e s had r eached a to ta l o f NT$208.4 billion (US$6.9 billion). In 2012, the utility lost a net NT$75.76 billion (US$2.5 billion) on revenue of NT$547.16 billion (US$18.2 billion),

according to the company’s Sustainability Report 2013.

Proponents of liberalization argue that market forces would compel an inefficient state-run bureaucracy into undertaking reforms that would gen-erate efficiencies and unleash innovation. “It will return an equal and competi-tive management environment to Tai-power” that will improve performance, said Taipower chairman Hwang Jung-chiou in a June 30 interview published in AsiaPower magazine. He said that a lib-eralized power market in Taiwan would entail allowing Independent Power Pro-

rials leaking out, have been widely publicized, and Taipower is accused of exploiting the island’s aboriginal inhabitants to deal with a problem that no one on Taiwan wants in their backyard.

Spent fuel is a much bigger problem than LLRWs – and it must be solved sooner rather than later if Taiwan is going to continue to generate power from uranium. Currently, as in the United States, spent fuel is stored on-site at the nuclear power plants in 12-meter deep pools filled with water that both cools off the fuel and absorbs the radioactivity. But the pools at Tai-wan’s nuclear plants are rapidly filling up, with the Jinshan plant expected to run out of storage capacity as early as next year.

Two options exist for dealing with this “cooled” spent fuel. One solution is reprocessing, which extracts fissile materials from the spent uranium, to be recycled as fuel while reducing the volume of waste. According to the World Nuclear Asso-ciation, reprocessing reduces the amount of dangerously radioactive materials to only 1% of the original volume. Repro-cessing is not a perfect solution, however. First, the 1% of waste that remains even after reprocessing is toxic and must still be stored safely; secondly, only a handful of countries have the technological and legal capability to reprocess spent fuel.

The biggest facilities for spent-fuel reprocessing are in France, and Taiwan is currently mulling sending its spent fuel there. Taipower would still need to find a final solution for the remaining waste, and there are additional complications regarding the jurisdiction over Taiwan’s spent fuel. Under the terms of the U.S.-Taiwan nuclear energy agreement, Taiwan’s uranium supply is regulated by the United States, which would need to sign off on the shipment of spent fuel to France.

Another potential solution is “dry-cask storage.” Such “dry casks” are massive steel cylinders encased in metal or concrete radiation shields. NRC describes dry cask storage as “safe and environmentally sound,” with assurance that the casks are resistant against earthquakes, floods, projectiles, and a host of other threats. In fact, although Fukushima’s reactors were badly damaged during the tsunami, its dry-cask storage site survived intact.

Taiwan’s AEC says it has already completed first-stage pre-operational tests for on-site dry-cask storage at the first Jinshan reactor, and is awaiting approval from the New Taipei City gov-ernment to conduct second-stage tests. Dry-cask storage is also being prepared for the Guosheng plant.

8 IF.indd 41 2014/8/6 2:23:23 PM


INDUSTRYF CUS

ducers (IPPs), who already fulfill some 20% of Taiwan’s power needs, to invest in power grids of their own instead of having to sell their output to Taipower. The IPPs could then sell directly to con-sumers, enabling “customers to flexibly choose the most favorable tariff” and bringing the power market to the stage where it would “no longer be monopo-listic,” Hwang explained in the article.

Taipower notes on its website that a draft amendment to Taiwan’s Electricity

Act now with the Legislative Yuan would free Taipower from its long-term Pur-chasing Power Agreements with IPPs, which have contributed to burdening the utility with high power costs.

Taipower owns 78% of the total 41.18GWs of installed capacity on its grid; the remaining 22% is owned by IPPs. Taipower bought 49.2 million MWhs of power from IPPs last year.

Explaining the DPP’s position, Paul Huang of the party’s department of inter-

national affairs, stated in an email that “we believe Taiwan’s electricity supply can be vastly improved by liberalizing the electricity market [in a way that] intro-duces new competition and ideas.”

If such wide agreement exists that Taiwan’s electricity market needs to be liberalized, why does Taipower continue to hold a monopoly position?

David Hong, president of Taiwan Institute for Economic Research (TIER) and a former power company execu-tive in the United States, says that to understand Taiwan’s power market, it’s necessary to look back to the very founding of the Republic of China. Since its earliest days, the Kuomintang govern-ment has considered low power prices to be the “core factor for industry to be competitive,” says Hong. “The funda-mental principle is to keep our electricity price as low as possible, and keep it lower than anyone else.”

But with the streak of social ism implicit within the “Three Principles of the People,” as set forth by Founding Father Sun Yat-sen, “if you take care of industry, you have to provide cheap energy to the public as well,” says Hong. “The people want the lowest electricity price. Industry wants the lowest elec-tricity price.” If Taipower were to be privatized, Hong observes, any investors interested in taking over part of Taipow-er’s operations would do so only if they could make a reasonable profit. But for the operation to be profitable, Hong con-tinues, electricity rates would certainly need to go up considerably.

A t p r e s e n t , Ta i p o w e r c h a r g e s NT$2.75/kWh to residential consumers and NT$2.35/kWh to industrial users – less than almost anywhere else in the world. Yet Taiwan generates over 30% of its electricity from liquefied nat-ural gas (LNG) at a cost of NT$3.9/kWh, meaning that its gas-fired facil-ities operate at a loss. The decision to push into LNG emerged from the Taiwan government’s desire to reduce carbon emissions while retaining reliable base-load capacity – capacity that is always on and available (and which therefore cannot be met by solar or wind power). Taipower had no control over the policy decisions to move to LNG.

BiomassOil

SOURCE: Taipower, Data from 2013

Unit:%

SOURCE: European Energy ExchangeData from 2013

SOURCE: Federal Ministry of Economics and Technology, Data from 2012

SOURCE: Taipower, Data from 2013

Note: Not all totals add up to 100% because of rounding.

Note: Wind and solar account for 0.35% of total power generation in Taiwan – too small to be visibly expressed in this graph.

INSTALLED CAPACITY

POWER GENERATION

Nuclear Coal Natural gas/LNG WindSolar

Renewable (Wind & Solar)Cogeneration Other

Hydro-including conventional and/or pumped storage

Germany Taiwan

Germany Taiwan

5.5

7

29

46 38

32

195

221

16

8

8

6

83 7

28

37

138

11

1417

18

46

2 23 2

2

8 IF.indd 42 2014/8/6 2:23:45 PM



Covering Taipower’s costs and adding in a profit would mean substantially raising energy prices, which goes “com-pletely against the basic belief of the whole country,” says Hong. Under these circumstances, “can we really talk about liberalization, about privatization?” Hong asks. “Any new economic affairs minister, any new prime minister, any new president, had better recognize this fundamental factor.”

The burden of debt

Debt is another obstacle to seeing Taipower privatized. Power industry professionals strongly doubt that the company in its present financial circum-stances could attract investors. As noted by Taipower’s director of legal affairs, Hu Ta-ming, in an op-ed piece in the Taipei Times, the utility has a debt ratio (a com-

parison of total debt with total assets) of 89.7%. The Longmen plant alone has so far cost the utility NT$273.6 billion (US$9.2 billion), paid for through corpo-rate bonds, commercial paper, and loans. Hu says that the total losses involved in terminating and writing off the facility would be NT$460 billion (US$15.3 bil-l ion), exceeding Taipower’s paid-in capital of NT$330 billion (US$11 billion) and forcing the utility into bankruptcy. The strategy of mothballing the plant defers the questions of termination and bankruptcy for now.

From the DPP’s perspective, Taipower is a bloated, inefficient state-run enter-prise that is saddled with mismanagement and corruption, and needs to be weaned off of government subsidies. The party asserts that massive inefficiencies exist at every stage of the utility’s operations, from fuel procurement to power genera-tion, transmission, and distribution. “The increase in efficiency that comes with a profit-oriented market can offset the potential increases in electricity prices,” says the DPP’s Huang.

TIER’s Hong agrees that inefficien-cies at Taipower do contribute to losses, but he doubts that tightening up Tai-

power’s operations would actually have much impact on the bottom line. Hong, who spent more than 20 years working in the United States in the deregulated power market, says that Taipower’s elec-tricity generation efficiency and costs per employee rate well in international comparisons. “Their operating costs are average” for the industry, he says. According to Taipower’s Sustainability Report 2013, in 2012 the company had 27,082 employees, with 7,296MWhs of power generated and NT$24,147,000 in revenue per employee.

As for fuel costs, Taipower obtains most of its fuel through long-term con-tracts that are generally pricier than spot-market purchases. But Hong asserts that this approach is necessary since island Taiwan, unconnected to any neighboring power grids, needs stable sources of power.

If fuel prices are a reality that cannot easily be changed, and if operating costs are within normal ranges, what options does that leave Taipower to heave itself out of the red? One possibility that has many supporters, including both environ-mentalists and energy-sector professionals, is to raise power prices for consumers.

TaiwanChina Unit : NT$/kWh

Source: Bureau of Energy, Ministry of Economic Affairs

Household Electricity Price Industrial Electricity Price

ELECTRICITY PRICES IN SELECTED COUNTRIES

South KoreaHong Kong

U.S.Singapore GermanyJapan

5.5

2.22022.7568

2.81533.4719

3.7852

6.0906

7.688

10.3699

2.04972.1773

2.35362.887

2.9263

4.51984.6325

5.275

Source Cost (NT$/kWh)

Nuclear 0.95

Coal 2.31

Biomass 2.4~2.8

Hydro 2.46

Wind 2.62

Natural Gas 3.91

Solar 4.92~ 7.37

Oil 6.97

Taipower Costs

8 IF.indd 43 2014/8/6 2:24:27 PM


INDUSTRYF CUS

Recent ly dep loyed t echno lo -gies of hydraulic fracturing – known popularly as “fracking”

– have transformed the energy equation in the United States, which is now one of the world’s leading energy producers. Policy shifts towards cleaner energy that began in the 1990s but accelerated under President Ma Ying-jeou have likewise transformed Taiwan’s energy equation, and now the island is one of the world’s biggest importers of liquefied natural gas (LNG).

LNG now fuels 37% of Taiwan’s total power generation. But with LNG prices indexed to global crude oil prices, which are now over US$100 per barrel, it is costing the state-run Taiwan Power Co. more to generate electricity from LNG

than the utility is legally allowed to sell it for. Every kilowatt-hour (kWh) generated from LNG costs Taipower NT$3.91, but the prices are capped at NT$2.75/kWh for residential users and NT$2.35 for industrial customers.

Will the boom in natural gas produc-tion in the United States offer Taiwan some relief?

Last year, the state-owned petro-leum company, the CPC Corp. Taiwan, imported 12.5 million metric tons of LNG, mostly from Qatar (45%), as well as Indonesia and Malaysia (36% combined). Around 80% of the total is imported under long-term contracts, 15% from the spot market, and approx-imately 5% in mid-term contracts. Long-term contracts tend to be more expensive

than the spot market, but are needed “to ensure the safe and stable supply of LNG,” notes Lee Huang-chang, deputy CEO of CPC’s natural gas division.

While every contract involves different specifics – and while prices are adjusted based on the average price of crude oil over three- or four-month intervals – the average price CPC pays is US$15 per MMBtu (million British thermal units – the customary unit for natural gas). Of those LNG imports, 60% is then sold directly to Taipower, while another 20% is sold to Taiwan’s Independent Power Producers (IPPs). The sales price includes an amount CPC adds on to cover “the cost for storage, regasification and delivery,” plus some profit,” says Lee. “We believe that is very reasonable.”

LNG’s Role in the Energy Mix

Natural gas has become the defining factor in energy policy in both the United States and Taiwan, but for very different reasons.

Here the DPP struggles to express a coherent policy perspective. Wu Tsung-tsong, head of energy affairs for the party, says that “there’s a misconception that the DPP is against raising electricity prices. That’s not true. We just want to be realistic about setting prices.” Yet in 2012, when Taipower last attempted to raise power rates, the DPP led public pro-tests and legislative sit-ins that forced the government to back off the price hikes.

Party spokespersons say two issues would need to be addressed before the party would come around to backing a rise in power prices. First, the DPP would want to see a new, more independent mechanism in place for determining elec-tricity rates. Although prices are now set by MOEA, not Taipower, the opposition party considers that an overly cozy rela-tionship exists between the two entities. Secondly, the DPP asks for greater finan-

cial transparency on Taipower’s part. “We believe the current process in which the government sets the prices lacks transparency and accountability,” says Paul Huang.

Taipower declined requests for an interview for this report.

In addition, the DPP’s energy policy calls for a wholescale restructuring of Tai-wan’s entire industrial sector away from energy-intensive heavy industries such as steel and petrochemicals and towards services. They also call for a “Green Rev-olution” in both industry and power generation, with a greater emphasis on renewable energies such as wind and solar. Taiwan has one of the world’s big-gest solar cell manufacturing industries but has very little in power generating capacity in wind or solar. According to Taipower, Taiwan currently generates 749,000MWhs a year from solar and

wind power, accounting for 0.35% of total power generation.

“We believe the Taiwanese public at large is not against the raising of elec-tricity prices,” the DPP’s Huang assert despite the political firestorm that has accompanied every past effort to raise prices. He concedes that price hikes will likely lead to a “short-term backlash,” but says that if the “public is provided with transparent information and sound explanation as to the reason why prices go up, they can certainly be persuaded to accept the changes.”

TIER’s Hong remains skeptical. “If we stick to the Three Principles of the People, then let Taipower suffer and the government will take care of it and Taip-ower will never go bankrupt.”

In light of the fruitless decades-long effort to reform Taipower, this outcome seems to be the most likely one after all.

8 IF.indd 44 2014/8/6 2:24:51 PM



At these prices, says Lilly Teng, who represents U.S. natural gas exporters, shale gas sourced from the United States could easily be imported to Taiwan for less.

U.S. natural gas is not indexed to crude oil, but instead is tracked on its own index, the Henry Hub. According to the latest Henry Hub report, U.S. nat-ural gas is priced at US$4.59 per MMBtu. Although this amount seems far below what CPC is currently paying, LNG is very costly to ship. Within a pipeline network, natural gas can simply be com-pressed and pumped to its end-user. But shipping natural gas overseas requires that it be chilled to -162 degrees Celsius to liquefy it. The extreme temperature must then be maintained as the LNG is transported aboard specially equipped ships and stored in special terminals after arrival in port. According to CPC, these further costs add another US$7.60-7.90 per MMBtu, bringing the final price for U.S natural gas to around US$12.50.

While this is still cheaper than the price CPC now pays, Lee notes that the market in the United States has been volatile – and with the United States ramping up its exports, the price is con-sidered likely to rise. “In the future, people may regard the oil index as actu-ally more stable than the Henry Hub,” he observes.

Prices are only part of the equa-tion, however, for a country as reliant on imported energy as Taiwan. Energy secu-rity is another.

Taiwan already imports 98% of its primary energy, so it is vital to main-tain a sufficient reserve in case imports are cut off due to typhoons or other nat-ural disaster or even a wartime blockade. CPC says its current 7-10 day reserve supply of LNG should suffice. As Lee notes, “according to our 25-year expe-rience (importing LNG), typhoons may last three or four days, but fortunately our storage capacity is big enough to last longer than that.” He adds that electricity demand goes down during typhoons, pro-viding a further cushion. What about war or a blockade? “Probably from CPC’s standpoint of view, that is not a very important fact,” he says, but does note that the company has contingency plans to reroute shipping in the event of hostili-

ties in the South China Sea. A more important consideration for

CPC is the relative stability of its sup-pliers. Lee says that in order to diversify sources, CPC has also signed agreements to source LNG from Australia’s massive offshore Ichthys project. But this project won’t come online until 2018.

According to Lilly Teng, supply from the United States holds a distinct advan-tage for Taiwan. First, the U.S. doesn’t offer the kind of political risk associ-ated with the Middle East or Southeast Asia. But she also notes that in places like Australia “there are a lot of cost over-runs because the infrastructure is not as well built up as in the U.S.” She says that Australia has yet to build the con-necting pipelines, terminals or processing plants needed to export large volumes of LNG. Another potential entrant into the LNG market is Canada, but the Cana-dians haven't yet begun tapping into the resources that they know are under-ground. By contrast, “the natural gas infrastructure in the U.S. is very well-es-tablished,” she says.

CPC has already signed a Heads of Agreement (HOA) with French firm GDF-Suez, a major player in interna-tional energy markets with investment in the Cameron LNG project in Louisiana, to import 800,000 metric tons of U.S. shale gas starting in 2018.

“GDF-Suez can access an infinite number of producing fields through the existing pipelines that come through the (Cameron) terminal,” she notes. “The only risk they need to take is making sure the terminal gets built.” According to the Cameron terminal website, the terminal began construction of the LNG export terminal this year and will be open for commercial operations in 2019.

The Taiwan government aims to increase LNG imports to 16.7 million tons annually by 2017, steadily rising to 20 million tons by 2023. In anticipation of those expanded imports, both of Tai-wan’s LNG terminals – one in Taichung and the other in Kaohsiung’s Yong-an Dis-trict – are being substantially enlarged. The Taichung terminal’s handling capacity will be increased from the current 3 million tons per year to 5 or even 5.5 mil-lion by 2018 – at a cost about NT$18.4 billion (about US$613 million). Mean-while, Yong-an is also being substantially expanded to handle 9.5 million tons per year, up from the current 7.5 million. CPC is also planning to build a third terminal in Taoyuan. Preliminary estimates put the needed investment for that facility at NT$65 billion.

As the GDF-Suez deal suggests, these plans are putting Taiwan on the map for all major natural gas producing countries, including the United States.

8 IF.indd 45 2014/8/6 2:25:05 PM


To improve the quality of public engineering projects, the government in recent years has been promoting use of the “most-favorable bid” system instead of

the more common lowest-bid system, which has been found to often result in inferior construction quality. But some observers see a recent major scandal involving an affordable-housing project in Taoyuan County as potentially lessening government agencies’ willingness to promote the “most-favor-able bid” mechanism.

Deputy County Magistrate Yeh Shih-wen, a former direc-tor-general of the Ministry of Interior’s Construction and Planning Agency (CPA), has been in custody since early June after admitting to taking bribes of NT$16 million (US$533,000) – allegedly the first installment of a promised NT$26 million – from Chao Teng-hsiung, chairman of the prominent Farglory Group, who is currently released on bail. Yeh was formally indicted in late July on charges of helping Farglory win the bid for an NT$7 billion (US$233 million) public-housing project in Taoyuan’s Bade District in return for the payment.

The scandal has caused quite a stir in the public engineering market in view of the prominent status of both Yeh and Chao in the field. During his tenures at the CPA and Taoyuan County government, Yeh oversaw numerous public works projects. The affordable housing program, such as the project in Bade, was launched by Yeh when he was the CPA chief, in order to help young people and lower-income families own their own homes. Such housing is constructed on public land and sold at only 60-70% of prevailing market prices.

For its part, Farglory is one of most active construction companies on the public engineering market. Its projects include such prominent cases as the Farglory Free Trade Zone near Taoyuan International Airport, and the Taipei Dome cur-rently under construction in downtown Taipei. For a period, Chao abstained from bidding on public contracts, citing frustration over what he considered to be the onerous legal constraints and frequent failure of government agencies to fulfill their commitments. Farglory rejoined the public engi-neering market several years ago, with a particular focus on

affordable housing and government-sponsored urban renewal projects, which bring healthy profits while involving less diffi-culty in land acquisition.

As the Bade affordable-housing project was carried out under the “most-favorable bid” system, the scandal has prompted a review of that process, which assesses the overall benefits of a bid proposal, both quality and cost, instead of focusing entirely on the price. A panel of judges, usually con-sisting of both government officials and scholars and other experts, is responsible for that evaluation. In the Bade case, in which the evaluation panel was chaired by Yeh, one of the lines of investigation is whether Farglory had obtained inside information on the floor price.

Within government, the champion of the “most favor-able bid” system for public engineering projects has been the Cabinet-level Public Construction Commission (PCC), which will soon be dissolved under the central government’s restruc-turing program, with its functions divided among three other government ministries. Although many government agen-cies have preferred using the lowest bid system, which is much simpler to administer, the PCC has regarded that system as the root cause of the poor quality of much public con-struction. “Many government agencies lack the concept of sustainability and frequently choose incompetent contractors with the lowest offer, resulting in poor-quality works that will become heavy liabilities for our descendants,” wrote former PCC minister Chen Chen-chuan in an article in the United Daily News and other local media last year.

[AmCham Taipei’s Infrastructure Committee, in its 2014 Taiwan White Paper submission, notes that while the “most-favorable bid” procedure is well-suited for bids related to engineering design services such as feasibility studies, front-end engineering, and basic design, it is less suitable for the construction stage, where the major costs are the equip-ment and bulk materials. But while the final decision for the construction bids may be made on the basis of lowest cost, the Committee stressed the importance of a pre-qualification process to assure that all bidders have the necessary technical and managerial skills and experience.]

T A I W A N b u s I N e s s

The authorities have also been seeking ways to inject greater flexibility into the process.

The “Most-Favorable Bid” Trend in Government Procurement

BY PHILIP LIU

8 Procurement.indd 46 2014/8/5 10:27:32 AM



Extension to IT service bids

In recent years, the “most-favorable bid” system has been gaining increasing acceptance not only for public infrastruc-ture projects but for other forms of government procurement. In early 2011, for instance, the Legislative Yuan amended the Government Procurement Law to permit government agencies to utilize the “most favorable bid” system for procurement of information-technology service products and other techno-logical and professional services. IT service firms have argued that the system is essential since appraisals based only on price may leave government agencies with products or ser-vices that are not properly suited to their specific needs.

In 2013, a total of 39,776 public procurement cases worth NT$197.8 billion (US$6.6 billion) were implemented under the “most favorable bid” system. Compared with 2009, those figures were up 12% and 57% respectively, according to the PCC. Specifically for procurement of technical services, the “most favorable bid” system last year was responsible for 84.32% of the total in terms of volume and 96.65% in terms of value, up from 63.18% and 70.94% respectively in 2012.

To help raise the quality of public engineering works, PCC has also been establishing a mechanism to track and score the performance of contractors in terms of engineering quality, content, and adherence to schedules, as reference for government agencies in evaluating contractors’ qualifications when handling future projects. Although the most-favorable bid system allows more attention to be paid to quality, it is necessarily more subjective than the lowest-bid approach and relies on a rigorous screening of the bidders’ qualifications.

As an example of past problems with the quality and effi-ciency of public projects under the lowest-bid system, Chen Chen-chuan’s United Daily News article cited the Penghu Bay Bridge, which needs major renovation due to corrosion just 41 years after its inauguration, and the collapse last year of a pedestrian overpass near the Keelung railway station. He noted that due to lack of confidence, government agen-cies typically set a lifecycle of 50 years for most major public engineering works, while in foreign countries the designed duration often exceeds 100 years.

Another recent case was the Ministry of the Interior’s new NT$560 million (US$18.7 million) household registra-tion system, which encountered serious glitches from the time of its launch in February this year. Besides being plagued by extremely slow internet access, the new system broke down frequently and made numerous errors, arousing an outcry from citizens who were unable to receive new ID cards, reg-ister marriages, or obtain household registers. Municipal offices had to produce provisional IDs for those in urgent need of passports for scheduled overseas trips. The chaos lasted sev-eral weeks before the system gradually stabilized.

In reviewing the case at a Cabinet meeting in mid-Feb-ruary, then Minister of the Interior Lee Hung-yuan blamed the lowest bid system for the selection of a contractor who lacked the capital and capability to carry out the project properly. He stressed that government agencies should refrain

from using the lowest bid system for large-scale information service systems projects. Premier Jiang Yi-huah expressed his agreement with that conclusion.

While the lowest-bid system in principle has the advan-tage of greater objectivity, it is also subject to potential abuse through various kinds of bid rigging, including bribery to obtain insider information on floor prices, collusion among bidders to set prices or with government officials to fix specifi-cations to favor one bidder, and the use of another company’s license for purposes of the tender.

In January this year, for instance, Li Wen-lin, chief of Xihu village in Miaoli County, and a businessman surnamed Hsu were indicted for rigging eight public procurement projects. Lin allegedly revealed the floor prices to Hsu in return for a kickback equal to 10% of the projects’ value. Another case, uncovered in mid-2013, involved So Bright Electronics, which reportedly won contracts for LED streetlight projects from several municipal governments with the help of an elected representative in Changhua City.

Encouraging arbitration

While the lowest-bid system has discouraged many well-es-tablished firms from taking part in government procurement projects, the government has sought to remove another dis-incentive dampening interest in such projects: the lack of an effective arbitration system for resolving disputes. Under a proposed revision of the Government Procurement Law now being considered by the Legislative Yuan, contractors would no longer need the permission of the government agency in charge of a project in order to apply for mandatory arbitra-tion after mediation has failed to produce a settlement within six months. Due to the current difficulty of resorting to arbi-tration, contractors often have to seek redress by bringing lawsuits – a protracted process since three trials may be required before all appeals are exhausted. In the meantime, payment to the contractor is frozen.

In addition, the authorities have been seeking to intro-

Breakdown of government procurement projects, 2013

Engineering works Goods Services SOURCE: PCC

Number of cases Procurement value (NT$ billion)

5.5

25.73%

44.28%

33.7%22.02%

35.04%

39.23%




duce greater flexibility into the government procurement process. The Basic Law for Science and Technology as amended in late 2011, for instance, enables public educational and research institutions to pur-chase scientific equipment without having to hold a public tender as normally required under the Government Procurement Law for pro-curement cases valued at NT$100,000 or more. Further, the Executive Yuan is considering proposed draft legislation that would revise the Government Procurement Law, raising the threshold for mandatory public bidding to contracts worth at least NT$200,000. Also, bringing the law in line with the practice in most developed nations, the draft would remove the current stipulation that at least three bidders must take part for an open tender to be valid.

In yet another change, the government has broadened the criteria to be considered when qualifying bidders for government procurement under the “most favorable bid” system. Products holding the Envi-ronmental Protection Administration’s green label, for instance, are accorded priority in public tenders and are eligible for a 10% premium on the procurement price. In 2013, public institutions purchased NT$8 billion worth of “green” products, including goods certified for being environmentally friendly, energy-saving, or water-saving. In bidding for procurement projects of the Ministry of Labor (MOL), extra points are given to enterprises rated as having a good employee welfare program and satisfactory work-life balance. The original index, introduced last year, was more suited to larger enterprises, but the system was recently revised to make it applicable to companies of all sizes. Although the ministry’s procurement scale is relatively small, totaling NT$6.1 billion for 1,438 projects in 2013, if the results are positive the MOL plans to urge the Cabinet to embrace the practice universally.

In 2013, a total of 158,868 open tenders worth NT$951.7 billion in contract value were held for government procurement, accounting for 87% of all procurement cases and 76.3% of the overall value. The figure excludes the NT$600 billion in procurement of petroleum, nat-ural gas, and fuel oil by the state-owned CPC Taiwan Corp. Of the total public-sector procurement value in 2013, goods accounted for 44.28%, followed by engineering works with 33.7%, and services with 22.02%.

To cut procurement costs, many government agencies and public institutions have taken part in the joint procurement operations over-seen by Bank of Taiwan in a role it inherited from the Central Trust of China after acquiring the latter in 2007. Last year, the joint procure-ment channel handled 1.29 million orders worth a total of NT$106 billion, realizing a saving of 15.74% from what government agen-cies would have spent handling their own individual procurement, according to the PCC. The Ministry of Education accounted for 41.5% of the total procurement value under the joint operation.

Since 2009, Taiwan has been a signatory to the Agreement on Gov-ernment Procurement (GPA) under the World Trade Organization (WTO), giving foreign firms access to government procurement in Taiwan. Of the 2,502 cases worth NT$298.3 billion that were open to foreign bidders last year, foreign companies won 247 bids worth NT$76.9 billion, accounting for 9.87% of the total in volume and 25.78% in value. Most of the contracts secured by foreign firms were for the supply of goods, mainly equipment, machine tools, and compo-nents and parts. A single enterprise, the state-run Taiwan Power Co., purchased NT$43.4 billion worth of generating equipment from Japa-nese suppliers.

Who’s in Charge?

In the U.S. government, the General Services Administration (GSA) is responsible for over-

seeing government procurement policies and practices.

As AmCham’s Infrastructure Committee noted in the 2014 Taiwan White Paper, there does not seem to be a direct counterpart to GSA in the Taiwan government. While the Executive Yuan’s Public Construction Commission (PCC) has had the authority to administer the Govern-ment Procurement Law, it does not coordinate or conduct actual procurement. What’s more, the government’s reorganization plans call for the PCC to go out of business in the near future, with its functions divided among the Ministry of Finance (MOF), the soon-to-be revamped Minis-try of Transportation and Construction (MOTC), and the National Development Council.

It even appears uncertain which one of those three entities will take over the responsibility pertaining to government procurement. The ini-tial plan was to transfer the function to a newly created Government Procurement Department under the MOF, but reportedly that decision is being reconsidered within the Executive Yuan. Some officials are proposing to revise the law to move the department to the MOTC instead.

As further discussed in the White Paper, the joint tendering program used by some govern-ment agencies for certain types of procurement has been supervised in recent years by the state-owned Bank of Taiwan, which took over the function when it absorbed the Central Trust of China in 2007. But without sufficient technical expertise, the Bank had so much difficulty han-dling tenders for package software that hardly any bids in that category were completed satis-factorily in the recently ended fiscal year, creating a major disruption in the domestic software mar-ket [see “A Government Software Procurement Crisis” on page 13 of the April 2014 TOPICS].

According to industry sources, the govern-ment has now appointed the Industrial Develop-ment Bureau under the Ministry of Economic Affairs to assume responsibility for running for joint tendering platform for government pro-curement of software, with the first tender planned for this September. Companies in the software sector are watching closely to see whether the change brings about a return to healthy business conditions.

— By Don Shapiro



s e e i n g ta i w a n

Few countries have livelier street life than Taiwan. One reason is sheer population density. Three

quarters of Taiwan’s 23.3 mil l ion people occupy just one-eighth of the country’s land area. In other words, around 17 million Taiwanese live in an area not much bigger than Rhode Island. The result is bustling cities, but also stunning mountains and forest

wilderness. Another reason is that Taiwan-

ese love to sell, buy, and eat. Even in the smallest towns, you will find shops and restaurants open until 10 p.m., and night markets where you can sample delicious and inexpensive snack foods.

The third reason is the exuber-ant festival culture that has existed on Taiwan since Han Chinese began

settling here in the 17th century, and which is matched by the enthusiasm the island’s Austronesian indigenous inhab-itants show for their traditional feasts and celebrations. Before Taiwan became an affluent society, events like gods’ birthdays and pilgrimages were impor-tant distractions from the daily grind. For ordinary people, these festivals were opportunities to take time out and enjoy themselves.

To spread the word about Taiwan’s rich and diverse festival culture, and help potential visitors plan itinerar-ies around events that interest them, Taiwan’s Tourism Bureau is highlight-ing 42 world-class activities in 2014 as part of its “Time For Celebration” promotion. Some build upon age-old traditions, while others have just a few years’ history.

The third quarter of the year is crammed to the gills with fun events and opportunities based around various themes, such as ecology, food, youth culture, and sports.

An example is birdwatching. There is no bad time to go birding in Taiwan, but if you hope to spot one of the world’s rarest species, get yourself to the offshore Matsu Islands before the end of September. The Chinese Crested Tern was long believed extinct until 2000, when its rediscovery electrified the world of ornithology. Each summer, a small number of Chinese Crested Terns return to breed on the eight unin-habited islands that now form the Matsu Islands Tern Refuge.

To make life easier for birders, the Matsu National Scenic Area Admin-istration (www.matsu-nsa.gov.tw) organizes boat excursions to the refuge. Other species often seen during these tours include the Bridled Tern, Roseate Tern, Black-tailed Tern, and Reef Egret.

Counting residents, regular migrants, and occasional vagrant birds, around 600 avian species have been recorded in the ROC, an incredible number for a country its size. Twenty-nine are endemic, meaning they can be seen nowhere else on Earth.

Another major theme is cuisine. Taiwanese society is very food-centric, so it is fitting that the Taiwan Culi-

T T B A D交通部觀光局廣告

From Summer to Fall, Taiwan is Always Celebrating

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nary Exhibition has evolved from an event lasting just a few days and held at a single location in Taipei to an island-wide festival running from July 1 to October 31. Far more than a simple exhibition showcasing mouthwatering foods, it also includes cooking contests, tasting sessions, and tours to introduce gourmets to each region’s best dishes and restaurants.

The food in Taiwan is so good you may worry about gaining weight during your stay. An excellent way to burn some calories, and enjoy one of Taiwan’s most famous scenic spots at the same time, is to join the Sun Moon Lake Ten-Thousand Swimming Carni-val. Swimming in the lake is allowed just one day each year, and the 2014 event is scheduled for August 31.

Those joining the carnival must be between eight and 75 years old and capable of swimming three kilometers. Participation is capped at 27,000, so get your application in as soon as possible if you hope to take part. Rules can be found on the website of the Puli Four-Season Swimming Association (http://pulifourswim.com).

A different kind of outdoors enjoy-ment can be had on the northeast coast during the Ho-Hai-Yan Gongliao Rock Festival. Running July 9 to 13, this gathering of bands and fans has become one of the most important annual events for the local pop music scene. The festival’s international profile rises with each passing year, and bands from as far afield as the United States have headlined the event.

Around the same t ime, there is another event that also appeals to the

younger set. The Taoyuan Interna-tional ACG Fair runs from July 4 to 13 and showcases animation, comic books (Taiwan’s are much influenced by Japa-nese manga), cosplay (“costume play,” a subculture in which fans of comic books, cartoons, or video games dress up as their favorite characters), and related arts.

Already in full swing and set to continue until August 24, the Yilan International Children’s Folklore and Folkgame Festival is a family-friendly carnival bursting with creativity, inter-nat ional cul tural exchanges , and sheer fun. Accredited by the UNES-CO-affiliated International Council of Organizations of Folklore Festivals and Folk Arts (CIOFF), the festival features multiple art forms, so visitors are sure to find something engrossing.

In addition, every summer in Taiwan sees rituals associated with what is often called “Ghost Month.” On the first day of the seventh month on the traditional lunar calendar (which in 2014 falls on July 27), it is tradition-ally believed that the gates of Hell open to allow the spirits of the dead

to return to the human world. Because these wandering ghosts are wont to cause mayhem unless appeased, Chinese communities throughout the world organize offerings of food, entertain-ment, and spirit money.

For reasons going back to the middle of the 19th century, Keelung – a port city that is now a popular stop for cruise ships – has Taiwan’s most excit-ing Ghost Month celebrations. In recent decades, the Keelung Mid-Summer Ghost Festival has become a joyous, raucous festival that encompasses parades and folk-art performances, blending Halloween-style tomfoolery with somber Buddhist rites. Keelung is less than an hour from Taipei by bus or train, and the festival goes on until August 25.

By the end of September, the heat of summer will be abating, and Taiwan will be entering the glorious fall season. The Sanyi International Woodcarving Art Festival (September 27 to October 12) will bring together renowned artists in Taiwan’s foremost wood arts center. The town of Sanyi is set in gorgeous hill country, surrounded by forests from which generations of carvers and sculp-tors have sourced their raw materials.

The splendor of Taiwanese culture can be experienced at any time of year. For a full rundown of forthcoming events, see the official “Time For Cele-bration” website (www.eventaiwan.tw). General travel information about Taiwan can be obtained from the website of Taiwan's Tourism Bureau (www.taiwan.net.tw), or by calling the 24-hour tourist information hotline 0800-011-765 (toll free within Taiwan).

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Taiwan business TOPICS August 2014: Taoyuan Steps Up