Taiwan Business TOPICS Oct. 2013 by AmCham Taipei

CU S

Co A R n e DU stru por ST ctio t on RY n Se the FO ctor

THE AMERICAN CHAMBER OF COMMERCE IN TAIPEI

Taiwan Business

Topics The Future of Taiwan Agriculture

TAIWAN BUSINESS TOPICS

台灣農業的未來

October 2013 | Vol. 43 | Issue 10 中華郵政北台字第號執照登記為雜誌交寄 5000 10_2013_Cover.indd 1

NT$150

October 2013 | Vol. 43 | Issue 10 www.amcham.com.tw

2013/10/3 5:57:11 PM

CONTENTS NEWS AND VIEWS

4 Editorial

Telling the Taiwan Story

OCTObE r 2 0 1 3 vOlumE 43, NumbEr 10 一 ○二年十月號

為台灣發聲

5 Taiwan Briefs Publisher

By Jane Rickards

發行人

Andrea Wu

吳王小珍

Editor-in-Chief

總編輯

Don Shapiro

沙蕩美術主任 /

Art Director/ Production Coordinator

後製統籌

Katia Chen

陳國梅

Manager, Publications Sales & Marketing 廣告行銷經理

Irene Tsao

曹玉佳

Translation

翻譯

Yichun Chen, Frank Lin, Sonia Tsai 陳宜君, 林怡平, 蔡函岑

American Chamber of Commerce in Taipei 129 MinSheng East Road, Section 3, 7F, Suite 706, Taipei 10596, Taiwan P.O. Box 17-277, Taipei, 10419 Taiwan Tel: 2718-8226 Fax: 2718-8182 e-mail: amcham@amcham.com.tw website: 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 2013 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.

COVER SECTION

9 The Future of Taiwan Agriculture

台灣農業的未來 By Jane Rickards

14 An Interview with COA Minister Chen Bao-Ji 19 After Beef, is a Fight Over Pork Next?

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○二年十月中華郵政北台字第5000號執照登記為雜誌交寄 ISSN 1818-1961

Acting Chairman/ Thomas Fann Vice Chairmen/ Bill Wiseman / William J. Farrell Treasurer: Sean Chao Secretary: Fupei Wang 2012-2013 Governors: Richard Chang, Sean Chao, Michael Chu, Louis Ruggiere, Revital Golan, Scott Meikle, Lee Wood, Ken Wu. 2013-2014 Governors: Thomas Fann, William Farrell, Ajit Nayak, Edgard Olaizola, Stephen Tan, Fupei Wang, Bill Wiseman. 2012 Supervisors: Susan Chang, Cosmas Lu, Gordon Stewart, Carl Wegner, Julie Yang. COMMITTEES: Agro-Chemical/ Melody Wang; Asset Management/ Christine Jih; Banking/ Victor Kuan; Capital Markets/ Jane Hwang, C.P. Liu, Shirley Tsai; Chemical Manufacturers/ John Tsai; CSR/ Lume Liao, Fupei Wang; Customs & International Trade/ Stephen Tan; Education & Training/ Robert Lin, William Zyzo; Greater China Business/ Helen Chou; Human Resources/ Richard Lin, Seraphim Mar; Infrastructure/ L.C. Chen, Paul Lee; Insurance/ Dan Ting, Lee Wood; 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/ 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.

ANALYSIS

22 2013 Doorknock Team Finds More Positive Atmosphere But challenges will need to be overcome to achieve a Bilateral Investment Agreement or accession to the TPP trade bloc. By Don Shapiro

TAIWAN BuSINESS

29 Taiwan’s Unmanned Aerial Vehicle Industry Takes Off

The products of three local manufacturers have been developed for civilian use, especially by government agencies. By Jens Kastner

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o ct o b er 2 0 1 3 â&#x20AC;˘ Volu m e 4 3 n u m be r 1 0

MARKET TRENDS

32 Go Social, Go Global

Taiwan offers an ideal environment for the use of social media by business, but it is important to follow a correct strategy. By James Chard

INDuSTrY

CuS

A Report on the Construction Sector

Building Taiwan 36 Civil Engineering Firms Diversify Operations

As tight government budgets cause the public construction market to shrink, companies turn to housing and BOT projects. By Philip Liu

Business, fun, challenge and beauty come together on the Taiwan golf course. By Joe Seydewitz

AMCHAM EVENT

39 PCC Prepares to Exit from the Scene

47 Anniversary Reception

under a government restructuring plan, functions of the Public Construction Commission will be divided among various departments. By Philip Liu

LEISuRE TIME

44 Taiwan Golf Scene Pleases All

taiwan business topics â&#x20AC;˘ october 2013

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Telling the Taiwan Story

ne of the purposes of the annual AmCham Taipei Doorknock mission to Washington, D.C. is to hear the views of U.S. government officials and other experts on the current status and future prospects of U.S.-Taiwan economic relations. Another objective is to acquaint those officials and specialists with the issues faced by American companies operating in Taiwan, as elaborated on in AmCham’s annual Taiwan White Paper. (A report starting on page 22 in this issue of TOPICS covers the above two functions as evidenced in the recently completed 2013 Doorknock.) A third and equally important role of the Doorknock is to inform – or remind – influential parties in Washington about why Taiwan matters. A generation ago, many U.S. executive-branch officials dealing with Asian affairs had spent time in Taiwan in their youth studying Mandarin, but that is no longer so common. And while Taiwan still enjoys considerable support on Capitol Hill, many members of Congress are relatively new to the legislative body and may lack much background understanding about Taiwan’s importance. Even those who are more familiar with this country may be so preoccupied with the crisis of the day – during the recent Doorknock it was the turmoil in Syria and the looming deadlock over funding the U.S. government – that they rarely give much thought as to how Taiwan’s security and prosperity relate to American interests. For that reason, the Doorknock delegation makes a point of beginning each meeting in Washington by handing out a twopage, front-and-back document outlining the reasons why Taiwan deserves attention. Among the numerous pertinent facts and figures it cites are the following:

• Taiwan is the 11th largest trading partner of the United States, with total two-way trade last year of US$63.2 billion. • Taiwan’s open and democratic political system shows that it shares basic American values. • U.S. technology companies rely heavily on Taiwan suppliers for manufacturing and R&D support. • Nearly half a million Taiwanese visited the United States last year, and about 25,000 Taiwanese students are enrolled in American universities. • Growing cross-Strait ties provide an opportunity for Taiwan to have an influence on China’s future development. AmCham also emphasizes to its contacts in Washington that Taiwan remains an excellent place in which to do business. The Business Climate Survey conducted annually by the Chamber consistently shows that our member companies give Taiwan a high rating for its sound legal system with good IPR protection, well-educated and hardworking workforce, prowess in manufacturing and supply-chain management, living conditions that are among the best in Asia, and other positive attributes. When AmCham’s Taiwan White Paper points out shortcomings in Taiwan’s regulatory process, the objective is to help make a good investment environment even better – hopefully enabling the Taiwan economy to reach its full potential. At a time when both the rapid growth and internal challenges in mainland China tend to dominate the news from Asia, AmCham is pleased that it can use the annual Doorknock to help call attention to the many reasons why the U.S. relationship with Taiwan also deserves to be cherished and further cultivated.

為台灣發聲

台

北市美國商會每年皆派團前往華府進行所謂「叩門之

• 台灣開放的民主政治制度顯示其與美國有共同的基本價

旅」，目的之一是會晤美國政府官員與其他專家，並聽取他們對美台經濟關係目前狀況與未來展望的看

值。

• 美國的科技公司十分仰賴台灣的供應商提供製造與研發

法；另一個目的則是讓這些官員與專家了解在台灣營運的美國公司所面臨之各項問題，而台北市美國商會每年出版的台灣白

方面的支持

• 去年有近50萬台灣人前往美國，目前有大約2萬5000名

皮書對此亦有詳細說明。（本期工商雜誌中由第22頁開始的報導對2013年叩門之旅在此兩方面展現的作用有詳盡介紹。）

台灣學生就讀美國的大專院校。

• 台海兩岸關係增進，將讓台灣有機會影響中國的未來發

同樣重要地，叩門之旅的第三項作用在於告知或提醒華府

展。

的各方有力人物和機構：台灣為何重要。一個世代以前，美國

台北市美國商會與華府各界接觸時也強調，台灣仍是做生

行政部門許多處理亞洲事務的官員都曾在台灣待過，大多是年

意的極佳地點。美國商會每年所進行之商業景氣調查的結果持

輕時來學習中文，但如今這種情況已不再那麼常見。而且台灣

續顯示我們的會員公司給台灣打了高分，而台灣獲得肯定的原

在國會山莊雖然仍頗受支持，但國會中有許多議員還算新人，

因包括有健全的司法制度，對智慧財產權妥為保護，有受良好

對於台灣的重要性或也還欠缺足夠閱歷。即使是比較熟悉台灣

教育而工作努力的勞工，在製造與供應鏈的管理方面都表現出

的議員，也可能因為全神貫注於當前的危機—在這次叩門之旅

色，而且生活條件在亞洲地區也名列前茅。美國商會之所以在

期間，最受關注的危機莫過於敘利亞的亂局，還有美國政府預

台灣白皮書中指出台灣的管制程序有缺點，目的是要協助讓台

算問題引發的僵局—使得他們很少會多花時間思考台灣的安全

灣良好的投資環境更上層樓，並希望能讓台灣經濟充分發揮潛

與繁榮與美國利益有何關係。

力。

有鑒於此，叩門之旅代表團在華府展開每項會晤時，都會

中國大陸經濟快速成長的同時，也面臨各種內部挑戰，這

先遞出一份兩頁的雙面印說帖，列舉台灣應該受到關注的理

二者往往占據了亞洲的新聞焦點。美國商會樂於利用年度叩門

由。其中提出了許多相關的事實與數據，略如下述：

之旅，協助美方注意且多多了解美國與台灣的關係為何也值得

• 台灣是美國第11大貿易夥伴，去年雙邊貿易總額達632億

珍惜以及進一步加強。

美元。 4

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— jane ri ckards —

Economic indicators

MACROECONOMICS bOttOMinG OUt? Taiwan’s exports continued to grow for the fourth consecutive month and export orders unexpectedly rebounded after five months of contraction. Hopeful signs that the U.S. economic recovery is gaining steam, that a prolonged recession in the Eurozone is close to ending, and that a slowdown in China is bottoming out point to higher international retail demand for Taiwan’s tech products in the months ahead of the all-important Christmas season. According to Ministry of Finance data, August exports grew by 3.6% y e a r- o n - y e a r t o r e a c h U S $ 2 5 . 6 4 billion. But imports, which include materials imported by Taiwan companies for future manufacturing activity, fell 1.2% year-on-year to US$21.06 billion for a favorable trade balance of US$4.59 billion. Exports to Europe, which account for a little under 10% of total exports, increased by 4%, the highest for any region. Export growth of 2.9% was registered for both China/Hong Kong, Taiwan’s biggest market, and for ASEAN, the second largest. In addition, August’s export orders, an indication of shipments to taiwan stock ExchangE indEx & valuE

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

8500

135

8250

120

8000

105

7750

7500

7250

7000

6750

6500

6250

September Data source: twse

unit: nt$ billion

Unit: US$ billion Current Account Balance (2013 Q2) Foreign Trade Balance (Aug) Foreign Trade Balance (Jan-Aug) New Export Orders (Aug) Foreign Exchange Reserves (end Aug) Unemployment (Aug) Discount Rate (Sept) Economic Growth Rate 2013 (Q2)p Annual Change in Industrial Output (July)p Annual Change in Industrial Output (Jan-July)p Annual Change in Consumer Price Index (Aug) Annual Change in Consumer Price Index (Jan-Aug) note: p=preliM inary

come over the next few months, came to US$40.7 billion, 10.9% above a year earlier, according to the Ministry of Economic Affairs. At 4.33%, unemployment worsened in August, the Directorate General of Budget, Accounting and Statistics reported, increasing from July’s 4.25%. (Seasonally adjusted it increased from 4.18% to 4.19% over the same period.) Noting that exports were performing better than expected but that private investment was also lower than expected, as reflected in the relatively low imports of capital equipment, Cathay Financial kept its GDP growth forecast for 2013 unchanged at 2.27%. “The nation’s exports are expected to post a mild sequential increase in the second half of this year as the recovery in the U.S. and Europe will be better than expected,” Hsu Chih-chiang, a leader of Cathay Financial’s research team, was quoted as saying by local media. Cathay Financial is also predicting that private consumption this year will grow by 1.43%, less than the government’s forecast of 1.59%, noting lower sales from retailers, restaurants, and wholesalers compared with a year ago. Bank of America Merrill Lynch lowered its GDP forecast to 2.4% from an earlier 2.7%, also

13.80 4.6 22.4 40.7 409

Year Earlier 10.90 3.40 15.9 36.7 394

4.33% 1.875% 2.49% 2.07% 0.56% 0.79% 0.87%

4.40% 1.875% -0.12% -0.04% -2.57% 3.43% 1.84%

sources: Moea, DGbas, cbc, boFt

citing weakened investment. In a mid-September statement, Fitch Ratings said Taiwan’s economy had begun to pick up, with momentum likely to improve throughout 2014, underpinned by better U.S. and European growth and expanding business opportunities in China. But in a critique of Taiwan’s sluggish banking sector, Fitch said Taiwanese commercial banks are unlikely to benefit from the improved conditions. Their main challenge, the ratings agency said, arises from large existing amount of consumer debt, estimated to be 165% of GDP at the end of 2012. As nearly half of this amount represents property loans, further lending in this sector might be of poor quality, particularly as mortgage debt has risen to levels that could be vulnerable to a shift in interest rates. “At 122% of disposable income, Taiwanese households are now more indebted than all their regional peers except Korea and Japan,” the statement said. “This is a level of stress that nears that of Taiwan’s 2005-2006 credit card crisis.” Fitch also noted that government measures to curb property speculation, such as the imposition of a luxury tax, have not succeeded

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in holding down property price increases. Another challenge for the banks, it said, was the dearth of large or high-margin lending opportunities for corporates, “because large companies are able to raise their own financing, especially in the technology sector.” Banks are therefore mainly faced with the prospect of loaning to SMEs, which is less profitable.

DOMESTIC sePteMber sHaKeUP In early September, the Special Investigation Division (SID) under the Supreme Prosecutor’s Office announced it had evidence that Legislative Yuan Speaker Wang Jin-pyng, one of the Kuomintang’s most powerful politicians, and then-Justice Minister Tseng Yung-fu had colluded to pressure prosecutors not to appeal the Taiwan High Court’s acquittal of opposition chief whip Ker Chienming. President Ma Ying-jeou referred to Wang’s alleged actions as “the most serious infringement in the history of Taiwan’s judiciary.” Ker had been found guilty of embezzlement by a lower court, but the Taiwan High Court overturned the verdict. The SID’s evidence was gathered from a wiretap on Ker’s cellphone, leading to charges from the opposition Democratic Progressive Party (DPP) – and even from some in the KMT – that the evidence had been obtained illegally and the agency had overstepped its powers. DPP Chairman Su Tseng-chang accused Ma of manipulating the judiciary to purge his political rivals, but the SID insisted that the wiretap was carried out in accordance with the law. Tseng denied wrongdoing but resigned to protect the reputation of the Executive Yuan. His departure added to a string of Cabinetlevel resignations over the past year, including two defense ministers and a

MEDIA FRENZY — Legislative Speaker Wang Jin-pyng rushed back from attending his daughter's wedding in Malaysia to respond to charges of wrong-doing. photo : ap/ wally santana

premier. Tseng was later replaced by Luo Ying-shay, who holds a Master’s degree from the State University of New York. She was previously concurrenty a Minister without Portfolio, Governor of Fujian province (which has jurisdiction over the offshore islands of Kinmen and Matsu), and head of the largely nominal Mongolian and Tibetan Affairs Commission.

LeGisLatiVe sPeaKer OUsteD frOM KMt Wang’s alleged “influence peddling” in lobbying the justice minister does not constitute a criminal act under Taiwanese law, and the case was therefore referred to the watchdog Control Yuan. The KMT’s disciplinary committee also revoked Wang’s party membership in mid-September in an effort to remove him from the speaker’s post. Since Wang held his legislative seat by virtue of being on the KMT’s party slate, rather than being elected from an electoral district, he could no longer serve in the legislature

if he were no longer a party member. Wang, 72, had served as Legislative Yuan speaker since 1999. He and Ma had been bitter rivals as far back as 2005 when they both ran for the position of KMT chairman. Ma reportedly has also been irritated by Wang’s willingness to make concessions to the DPP over major bills, rather than using the KMT’s substantial parliamentary majority to force the measures through the Legislative Yuan unaltered.

wanG striKes baCK Ma may have wanted to demonstrate that he is strong enough to take on a powerful figure in an effort to clean up and reform the KMT, politic al com ment ato rs say. B ut the y note that the move backfired. Wang protested his innocence and quickly won an injunction from the Taipei District Court to retain his party membership while he contests the expulsion order. As of press time, the KMT was appealing the injunction.

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Wang, a native Taiwanese politician with a charming and diplomatic m a n n e r, a l s o w o n b r o a d s y m p a thy from the public. The KMT was divided over the expulsion, with KMT honorary chairman Lien Chan criticizing Ma’s handling of the case. With Wang staying on at least temporarily as legislative speaker, Ma’s legislative agenda will now be handled by an arch-rival he has publicly declared unfit to be in office. Wang is more than likely to be angered at Ma’s treatment of him and less willing to comply with Ma’s instructions to the legislature. And instead of winning support for fighting corruption, Ma’s popularity plummeted to a new low of 9.2%, according to the ERA Survey Research Center.

LeGisLatUre ParaLYZeD as new sessiOn OPens On the first day of the legislature’s autumn session, DPP lawmakers, dressed in black to mourn what they said was the loss of Taiwan’s parliamentary dignity, blocked Premier Jiang Yi-huah from delivering a report, in a protest against Ma’s treatment of Wang. Experts on Taiwan politics say it will now be difficult for controversial bills to pass this session. For instance, the industry publication Gambling Compliance says the turmoil could delay passage of legislation permitting the operation of integrated resorts with casinos on outlying islands. Minister Kuan Chung-ming of the Council for Economic Planning and Development was also quoted by local media as saying he unsure whether legislation relating to the proposed Free Economic Pilot Zones will be able to pass soon. The future of the fourth nuclear power plant is also unclear as the Executive Yuan previously said construction cannot continue unless a referendum is held, but a KMT lawmaker who initiated the draft version of the referendum recently withdrew the bill

from the legislative agenda, citing the current political chaos. A l t h o u g h Wa n g s t r e s s e d h i s continuing loyalty to the KMT and ruled out the possibility of forming a new political party, the infighting within the KMT and the uncertainties created by a potentially lengthy legal battle between Wang and Ma could help the pro-independence DPP do well in municipal polls next year and make a comeback in the presidential election in 2016. A DPP resurgence could raise tensions with China and revive U.S. worries about potential conflict in the Taiwan Strait.

Giant rUbber DUCK LUres biG CrOwDs Thousands of people flocked to the Kaohsiung harbor in mid-September to see a giant yellow rubber duck float into their city. The 18-meter duck created by Dutch artist Florentijn Hoffman, is a huge version of the bathtub toy and will remain in Taiwan’s southern port until October 20, when it will start visiting other locations in Taiwan. Kaohsiung officials quoted by Taiwan’s state-sponsored Central News Agency (CNA) say the duckie will bring in 3 million visitors and generate millions of dollars in revenue.

CROSS-STRAIT CHina UneasY OVer staLLeD serViCes PaCt The roots of the domestic political crisis mentioned above may be traceable to the cross-Strait services agreement signed by Taiwan and China’s negotiating agencies in June. The pact, which liberalizes cross-Strait trade and investment in services ranging from banking to hairdressing, aroused concern among many small businesses worried that it would introduce unfair competition from large and rich mainland companies. Legislative Yuan Speaker Wang then agreed to an opposition demand, backed by some KMT legislators, that the articles in the agreement be voted on separately, rather than have the legislature simply approve the pact as a whole, as it had done with similar cross-Strait deals before. The Ma administration was not pleased with that decision. Analysts say that since the warming in cross-Strait relations is central to Ma’s policies, the Presidential Office worried that the delays and haggling over the issue would lead to a loss of trust by China. The possible impact on Taiwan’s ability to conclude free-trade deals

FUN WITH PHOTOGRAPHY — Posing with the giant rubber duck became a popular outdoor activity for citizens in Kaohsiung. photo : ap/ wally santana

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I N T E R N AT I O N A L DeLeGatiOn attenDs iCaO MeetinG as GUests A Taiwan delegation was able to participate in an event of the United Nations International Civil Aviation Organization (ICAO) for the first time in 40 years when ICAO Council president Roberto Kobeh Gonzalez invited the group to attend the ICAO assembly in Montreal as guests. While falling short of the observer status that Taiwan was pushing for, it was nevertheless a significant diplomatic breakthrough as Taiwan had not participated in ICAO activities since it lost its U.N. seat in 1971. The delegation, led by Civil Aeronautics Administration Director-General Jean Shen, later attended the session under the name “Chinese Taipei.” The initiative was strongly backed by the U.S. government. Congress in late June passed a law requiring the U.S. Secretary of State to develop a strategy for Taiwan to obtain ICAO observer status. In a statement, the American Institute in Taiwan (AIT) said “Taiwan’s participation at the ICAO assembly will support Taiwan authorities’ efforts to implement aviation

taiwan's JanuarY to sEptEmbEr tradE FigurEs (YEar on YEar comparison)

HK/China

Japan

TOTAL

179 201.4

2012

2013

18.6 19.1

19 18.1

Europe

2012

2013

2012

2013

Imports

38.2

2013

16.9 21.6

U.S.

2012

180.1 196.6

2013

2012

21.2 35.8

12.6

31.9

2013

12.1

2012

ASEAN

79.2

with its trading partners was another concern. A source close to the Executive Yuan says Singapore, in particular, would be unwilling to finalize a pending FTA with Taiwan until the crossStrait services pact is ratified. In mid-September, China’s Ministry of Commerce urged the Legislative Yuan to complete its review of the pact as soon as possible. Yu Zhengsheng, chairman of the Chinese People’s Political Consultative Conference, said he felt “baffled” that “some friends in Taiwan have yet to fully understand” the pact, reported CNA. Chinese and Taiwanese officials both say the services pact gives Taiwan comparatively favorable treatment.

28.9

16 21.8

76.5

28.5

Exports

safety, security, and environmental measures that are consistent with international standards and recommended practices.”

BUSINESS HtC LaYs Off staff; eXeCUtiVes arresteD Ta i w a n e s e s m a r t p h o n e m a k e r HTC saw its fortunes plummet in September. Three of its design executives were arrested on suspicion of leaking trade secrets, which sent the company’s shares tumbling. Prosecutors said that the HTC vice president for product design Thomas Chien, Research and Development Direct o r Wu C h i e n - h u n g , a n d s e n i o r manager of design and innovation Justin Huang had been arrested, with Huang eventually released on bail. They were also accused of claiming false commission fees totaling around NT$10 million. HTC went on to lay off around 20% of its approximately 150 staff in the United States. Reuters reported that as the smartphone market has become increasingly congested, HTC has seen its market share slump to below 5% from a level of 25% five years ago.

Unit: US$BN Source: BOFT

taiwan in Us$4 biLLiOn DeaL tO bUY U.s. Grain Taiwan signed a letter of intent in mid-September to buy five million tons of U.S. corn over the next two years and 500,000 tons of distillers dried grains, a byproduct of corn ethanol production used as a feed grain, according to the U.S. Grains Council. The estimated value of the deals is US$4 billion. The agreem e n t w a s s i g n e d b y t h e Ta i w a n Feed Industry Association during a Taiwanese Agricultural Goodwill Mission to the United States. The final terms of the deals will be negotiated by private grain companies. A trade delegation from Nebraska signed similar agreements with importers in Taiwan to sell US$400 million of the state’s corn, soybeans, and wheat. In addition, the North Dakota Wheat Commission said the Taiwan Flour Mills Associa tion signed an agreement to buy 1.7 million tons of wheat valued at about US$485 million over the next two years. Taiwan is the world’s third largest importer of U.S. spring wheat and among the top 10 importers of U.S. hard red winter (HRW) wheat. It is also the sixth-largest importer of U.S. corn.

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Cover story

A g r i c u lt u r e

The Future of Taiwan Agriculture 台灣農業的未來 BY JANE RICKARDS

撰文 / 李可珍

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STUDENT FARMERS — The Miaoli County program is encouraging elementary school students to grow organic vegetables that become part of their school lunches. photo : cna

The importance of agriculture as a component in Taiwan’s economy has sharply diminished over the decades, but the farming sector continues to be strong as a force in domestic politics. Agricultural issues consequently play an outsized role when initiatives to liberalize Taiwan’s trade regime are under discussion. Taiwan wishes to enter the TPP and sign FTAs with more countries, but how will it handle protectionist pressures from the farming community and its supporters? 過去數十年來，農業在台灣經濟的重要性已大幅降低，然而農業界依然擁有強大的政治實力。台灣在討論貿易自由化的問題時，農業議題的重要性往往超出它在經濟中的比重。台灣希望加入跨太平洋合作夥伴協定（TPP），與更多國家簽署自由貿易協定，然而台灣該如何面對農業選民與其支持者的保護主義壓力？

農

業曾是推動台灣經濟發展的主要力量。 1952年台灣民生困頓，成為美國經濟援助的重要對象。當時農業佔全國勞動人口的56%，產值達GDP 的32%。然而，如今農業產值大幅萎縮，僅佔台灣GDP 的1.75%（若把食品加工、觀光農園和其他相關產業計算在內，占GDP比重為12%），所雇用人力約佔勞動人口的5%。農業可說是台灣最傳統、最缺乏效率也最受到保護的產業，在來自國際社會的改革壓力之下，面臨眾多嚴峻考驗。當今許多國家積極推動雙邊或多邊自由貿易協定，而外交處於孤立的台灣至今仍被排除在外，只和中國和紐西蘭簽訂重要經貿協定；台灣如今面臨一個情景，就是除非採取步驟，讓經濟和貿易自由化，否則台灣不僅政治孤立，在經濟方面也將會邊緣化。這對如此高度仰賴出口的國家來說，會是個嚴重打擊。在開放的過程中，最敏感也最具爭議性的即是農業議題。馬英九總統已經宣布，台灣希望在2020年以前加入跨太平洋合作夥伴協定（TPP），這個目 10

griculture was once the major driving force behind Taiwan’s economic development. In 1952 when an impoverished Taiwan became a major recipient of American economic aid, the agricultural sector employed 56% of the island’s workforce and accounted for 32% of GDP. Today, however, agriculture’s contribution to Taiwan’s economy has dwindled to just 1.75% (12% if food processing, tourist farms, and other secondary industries are included) and employs roughly 5% of the working population. It is one of the most old-fashioned, inefficient, and protected sectors in Taiwan, and faces severe challenges in the face of international pressures for reforms. At a time when many other countries have been forging large numbers of bilateral and multilateral free trade agreements, diplomatically isolated Taiwan has so far been largely left out of the process, with major pacts signed only with China and New Zealand. It now faces the prospect of becoming an economic as well as political pariah – which would be a severe blow for a country that relies so heavily on exports – unless it takes steps to liberalize its economy and trade regime. In that process, agricultural issues are the most sensitive and controversial. President Ma Ying-jeou has announced that Taiwan hopes to enter the Trans-Pacific Partnership (TPP), a multilateral free-trade bloc being negotiated among 12 countries including the United States, by 2020 or earlier. This

標也獲得民主進步黨公開支持。TPP是美國等12 個國家正在協商組成的多邊自由貿易協定，由於台灣並非創始會員，無法參與協定內容的擬訂。各方目標是要讓TPP成為高標準的21世紀貿易協定，一旦協商完成，台灣只能接受已經協商完成的入會條件，幾乎沒有討價還價的空間。中華經濟研究院區域發展研究中心主任劉大年表示，台灣若想加入TPP則「必須開放農業」。要加入TPP成為新會員，各國首先必須與12個創始會員國分別解決現存的貿易爭端。對台灣而言，這就意味著要滿足其他夥伴的不同需求，例如台美之間的豬肉問題，以及加拿大牛肉與美國和越南稻米銷往台灣的問題等。甚至在準備申請加入TPP 之前，台灣要想跟東南亞的稻米出口國簽署自由貿易協定，就可能會面對類似壓力。台灣的亞熱帶氣候得天獨厚，全年都能生產稻米與蔬果。然而台灣只有1/4的土地適合耕作，其他都是山地。每一家農地平均面積僅1.1公頃（2英畝），使得生產成本居高不下。美國和澳洲的大規模農產品企業可透過規模經濟降低營運

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objective also has the stated support of the opposition Democratic Progressive Party. As Taiwan is not a founding member, it will have no power to shape the content of TPP. Once the TPP, which aims to create a “high-standard 21stcentury trade agreement,” is negotiated, Taiwan would have to accept the already agreed-upon entry conditions, with little room for bargaining. If Taiwan wants to join the TPP, says Liu Da-nien, director of the Regional Development Study Center at the Chunghua Institution for Economic Research, “we will have to open the agricultural sector.” Before being accepted into the TPP, new entrants will first need to resolve outstanding issues with each of the original 12 member countries. For Taiwan, that would presumably mean satisfying other parties on such issues as pork (the United States), beef (Canada), and rice (the United States and Vietnam). Similar pressure may arise even before Taiwan is ready to approach the TPP, as it pursues individual FTAs with Southeast Asian rice-exporting countries. Taiwan’s subtropical climate allows the production of rice, vegetables, and fruit to flourish all year round. But only one-quarter of the land is arable, with the rest covered by mountains. And the average farm size is only 1.1 hectares (2

acres), making for high production costs. Taiwan lacks the large-scale agribusiness found in countries like the United States and Australia that reduces operating costs through economies of scale. Council of Agriculture (COA) statistics show that Taiwan has 542,000 registered farmers. But only one-fifth of them – a group that tends to be elderly – work full-time at farming, according to Hsu Shih-jung, a specialist in land economics at National Chengchi University (NCCU). Tariffs on agricultural goods average 9%, more than double the 4% for industrial products, with some sensitive items such as garlic having import duties of 200% or more. In addition, the import of over 800 agricultural items from China remains banned, even after the signing of the cross-Strait Economic Cooperation Framework Agreement (ECFA), although the prohibition is inconsistent with Taiwan’s World Trade Organization (WTO) commitments In 2012, Taiwan’s agricultural exports reached US$5.08 billion, an increase of 8.8% from the year before, while imports worth US$14.7 billion were 1.2% lower than in 2011. Unlike most agricultural sectors, Taiwan’s fishing industry is highly competitive internationally, and in fact the top agricultural export is tuna, accounting for 13.4% of

成本，而台灣缺乏這樣的農業模式。政治大學地政學系土地經濟學專家徐世榮教授指出，農委會數據顯示台灣自營農牧就業人口有 542,000人，但其中只有1/5是全職務農且多半是年長的農民。農產品進口關稅平均為 9%，比工業產品 4%的稅率高出一倍以上；而且部份特殊項目（如大蒜），進口關稅更高達200% 以上。此外，兩岸簽署經濟合作架構協議（ECFA）後，仍有800多項中國農產品不能銷到台灣；而禁止這些產品進口，並不符合台灣加入世界貿易組織（WTO）的承諾。 2012年台灣農業出口額達50.8億美元，較前一年成長8.8%；進口額為147億美元，較2011年下滑1.2%。台灣農業大都不具國際競爭力，唯獨漁業具有高度競爭優勢，事實上，台灣最主要的出口農產品是鮪魚，占農業出口總額的13.4%。其次為皮革產品，占出口總額的8.7%，羽絨產品則占5%。台灣農產品主要出口市場為日本（台灣的鰻魚、鮪魚和其他魚類在日本很受歡迎），其次是中國、香港和美國。台灣政府大力補助農業，農委會1,500億元（約50 億美元）的年度預算中，有64%投入補助農業，包括

the total export value. Next are leather products at 8.7% and feather down at 5%. The top export destination is Japan, where Taiwanese eel, tuna, and other fish are popular, followed by China, Hong Kong, and the United States. The Taiwan agricultural sector is heavily subsidized. The COA devotes 64% of its NT$150 billion (US$5 billion) annual budget to such subsidies, including stipends for elderly farmers, allowances for land allowed to remain fallow, and lower-than-market prices for fertilizer and even fishing fuel. The COA consequently has scant remaining budget to implement policy changes, and critics point to inefficiencies or even outright waste in the way the subsidies are awarded.

The political element Changing the status quo would involve taking on entrenched vested interests. As is the case in many other countries, rural areas exercise political clout at election time that is greatly out of proportion to their actual share of the population. In Taiwan, that influence is exerted partly through the approximately 360 farmers’ associations around the island (also the recipients of government subsidies); the number of associa-

提供老農津貼，休耕補貼，以及用來使肥料甚至漁船燃料價格低於市價。因此，農委會可以用來推動政策變革的預算所剩無幾，批評人士指出，補助金發放的方式沒有效率，甚至根本是浪擲政府農業預算。

政治因素改變現狀意味著要挑戰根深蒂固的既得利益者。和許多國家的情況一樣，在選舉期間，台灣農村地區的政治影響力遠大於當地人口在總人口所占比例。這樣的影響力部分是透過全台約360個農會發揮出來。農會也是政府補助對象，而即使台灣務農人口已大幅降低，農會數目至今不曾減少。分析家指出，農民選票的影響力特別大，主因在於國民黨與民進黨之間政治勢力的微妙平衡。由於台灣主要農業區域分布於南部，屬於民進黨的勢力範圍；國民黨設法要吸引更多農民選票，而民進黨也想盡辦法維持南部選民的忠誠度。熟悉此議題的人士指出，其實民進黨願意支持必要的政策鬆綁，如取消進口豬肉瘦肉精（Ractopamine）零檢出的規定，這會有助於

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Cover story tions has not declined even as the agricultural population has dropped sharply. The sway of the farm vote is particularly important, analysts say, because of the delicate balance of political power between the ruling Kuomintang (KMT) and the DPP. Since the main farming regions are DPP strongholds in the south, the KMT works hard to make inroads into that support and the DPP works just as hard to retain the allegiance of those voters. According to some sources familiar with the issue, the DPP would actually support some needed liberalization measures, such as lifting the total ban on ractopamine in pork products, that would help Taiwan deepen trade ties with the United States and help pave the way for entry into the TPP (see the accompanying article). But at this juncture, with the 2016 presidential election in sight, the party is keeping silent, hoping it will be the KMT that institutes the necessary reforms and takes the political fallout. Another factor in the situation is the fear of elderly rice farmers that govern-

ment reforms would come at their expense, and that their land might even be expropriated to make way for more modern agriculture. This group is sometimes supported by anti-globalization groups and students. The government’s harsh handling of recent land-expropriation cases – for example the destruction of rice paddies in 2010 and the demolition of four homes in July this year in Dapu village in Miaoli County – led to two apparent suicides and deepened mistrust of the government’s policy toward agriculture. According to local media estimates, a protest demonstration in Taipei attracted a crowd in the tens of thousands. Farmers also worry that the Ma administration’s new policy to promote Free Economic Pilot Zones, which will liberalize restrictions on agricultural imports, will harm their livelihood. “They see their rights constantly sacrificed for a small group of industries, especially technology,” says NCCU’s Hsu Shih-jung, who is also the chairman of the activ-

台灣深化與美國的經貿關係，並為台灣加入TPP鋪路（請參閱另一篇相關報導）。然而在這重要關頭，放眼2016年總統大選，民進黨選擇默不作聲，希望由國民黨進行必要的改革，並承擔政治後果。另一項因素在於，老一輩的稻農擔心會成為政府改革措施的受害者，農地甚至可能遭到徵收，用於推廣現代化農業。這群稻農有時獲得反全球化團體及學生族群的聲援。近來政府強制徵收土地的粗暴作法 — 例如2010年六月毀壞稻田事件以及今年七月強制拆除苗栗大埔村四戶民宅等 — 已經導致兩起明顯為自殺的事件，並加深人民對政府農業政策的質疑。據媒體估計，台北的示威遊行吸引成千上萬民眾上街抗爭。農民也擔心馬政府為推動「自由經濟示範區」的新政，將放寬農業進口限制，因而損害農民生計。政治大學地政學系徐世榮教授表示：「農民認為政府為了照顧少數產業的利益，尤其是科技業，不斷犧牲他們的權益」。身兼台灣農村陣線理事長的徐世榮表示：「對農民來說，自由貿易一點也不自由」。他預期未來將有更多反對自由貿易協定的抗議活動，因為農民憂心無法和大國以大規模生產的低價農產品競爭。徐世榮等人主張，農業的價值不能純粹從經濟層面來衡量。農業在氣候變遷之際具有生態上的價值，此外還有文化價值，而且稻米種植與台灣人民性格和獨特的本土認同的形成都有關係。然而，一般認為，儲備稻米等現行協助農民的措 12

ist Taiwan Rural Front. “Free trade is not in the slightest bit free for farmers.” He foresees many more farmers’ protests against free trade agreements in the future, out of apprehension that they cannot compete against big countries with large-scale, cheaper production. Hsu is among those who argue that the value of agriculture cannot be measured in purely economic terms. It also has a cultural value, with rice farming having helped shape the national character and a unique Taiwanese identity, as well as ecological value in the face of climate change, he notes. Nevertheless, existing government measures to support farmers, such as policies for stockpiling rice, are widely considered to be inefficient and wasteful. Rice, says Tony Shih-hsun Hsu, a professor of agricultural economics at National Taiwan University, is the government’s “biggest headache.” In a system that dates back to the 1950s when the Chiang Kai-shek government saw the need to ensure food security in

施缺乏效率並導致浪費。台灣大學農業經濟學系徐世勳教授指出，稻米正是政府目前「最頭痛的問題」。這套儲糧系統可回溯至1950年代，當時蔣介石政府為預防中共攻台，認為有必要確保糧食安全。政府的稻米收購價固定為每公斤22元，並儲存在巨大的民營倉庫裡。保證收購價格使得農民偏好耕種稻米，不愛其他作物，導致稻米嚴重生產過剩。中華經濟研究院WTO及RTA中心副執行長李淳說，保證稻米收購價格的政策等同於老年農民的福利，他稱之為某種形式的「合法買票」。農業專家指出，因國民飲食習慣改變，稻米存量過多的問題更形嚴重。過去數十年來，稻米的人均消耗量已從每年90公斤降至48公斤。此外，根據台灣加入W T O的條件，台灣每年須以相對較低的關稅進口 144,720噸稻米，其中35%多半賣給民營企業，其餘則由政府買單，造成國內稻米囤積的情形更加嚴重。專家指出，儲備稻米存放幾年之後，就成為廉價甚至是免費的動物飼料，成為國軍主食，或是加工製成米酒。中華經濟研究院的李淳指出，若所有的儲備稻米都釋放到國內市場上，稻米價格將會暴跌。就目前情況來說，台灣的稻米價格據稱比國際標準高出三到四倍。

稻米問題難解台大農經系徐世勳教授說，近來有些民營的輾米廠在國產米當中加入進口米，包裝成價位較高的國產米

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case of an attack from the mainland, the government purchases rice at a set price of NT$22 per kilogram and stores it in enormous private warehouses. The guaranteed price encourages farmers to grow rice in preference to other crops, leading to massive over-production. Today, says Roy Chun Lee, deputy executive director of CIER’s Taiwan WTO and RTA Center, the program serves as welfare for elderly farmers. He refers to it as a form of “legal vote buying.” The glut of stockpiled rice has been exacerbated, say agricultural experts, by changes in eating habits. The average annual consumption of rice has dropped from 90 kilograms per person to 48 kilograms over the past few decades. Under the terms of its WTO accession, in addition, Taiwan is also obliged to import 144,720 tons of rice a year at relatively low tariff levels, with 35% of the total usually sold to the private sector and the rest purchased by the government, adding to the nation’s rice hoard. After being stored for a few years, the

PROTESTING — A resident of Maioli's Dapu Village demonstrates against the government's expropriation of farmland for the expansion of a technology park.

出售。泉順食品是台灣最大的輾米廠和批發商之一，卻有18次被查到在國產米當中加入外國米，遭農委會農糧署罰款新台幣 20萬元。徐世勳表示，政府不會嚴懲違法廠商，因為「政府自己沒有倉庫，需要這些輾米廠的協助配合」。他補充說，近年來除了乾榖以外，政府也開始向農民收購濕榖，然後額外付費，委託民營輾米廠將濕榖烘乾。中華經濟研究院的李淳表示，台灣稻農的平均年齡約60歲，不可能再進行轉職訓練。此外，稻作很容易遭受颱風、乾旱、或其他天氣變化的損害。李淳指出，政策制定者了解稻農所需的財務支援，並正參照南韓在1990年代實施的制度，考慮採行直接發放津貼而不要保證收購價格。直接津貼的其中一項概念是根據農地的公頃數來發放。農民可自行選擇要種植何種作物。有鑑於政府目前預算短缺，徐世勳指出問題的根本在於這些津貼的總額將有多龐大。他說：「如果政府有足夠銀彈，問題就能解決。」由於稻米議題深具敏感性，即使其他農產品貿易未來幾年將逐漸開放，稻米並未納入台灣和紐西蘭最近簽署的自由貿易協定。經濟學家表示，台灣政府正密切觀察TPP協商發展，希望跟台灣同樣面對稻農問題的日本爭取將稻米甚至其他農作物排除在協定之外。台大農經系徐世勳教授指出，日本的稻米關稅高達 777.7 %，而台灣在WTO規定進口額度之外的稻米關稅約為400%。然而，中華經濟研究院李淳認為，其他的TPP協商國，尤其是美國、馬來西亞及越南，不會同意給日本稻米特別待遇。

photo : cna

另一個問題則與所謂的「假農民」有關—亦即不從事農耕或畜牧，卻仍合法領取政府津貼的人。農地地主或承租人加入農保年資僅需六個月，就有資格享有各類老農福利，包括請領每月7,000元的老農津貼，即使他們只是休閒農夫或房地產開發商。李淳表示，主管機關已展開調查，了解哪些農民實際從事種稻，但是他也說，這是個「艱鉅而且具有政治敏感性的任務。」國庫左支右絀的窘境，更令人憂心農民生計將受到未來貿易自由化的衝擊。政府已提到，對於直接受到台灣與外國簽署自貿協定衝擊的產業，政府將直接提供紓困金，做法類似美國的「貿易調整協助計畫」。但台灣政府面臨財政緊縮的問題。根據路透社報導，政府已經通過的明年度預算為新台幣5兆4,300億元，相當於GDP的38.7%，逼近40.6%的法定上限。這表示預算不能再隨便追加。徐世勳指出，台灣在1990年代設立新台幣1,000億元的「農產品受進口損害救助基金」，用來幫助受到台灣加入WTO衝擊的民眾。他說，如果農民團體未來要求提供等額的補助，政府要籌錢會是個艱鉅的挑戰。農委會答覆 TOPICS記者提問時表示，未來簽署貿易協定後，計畫將利用1,000億元的農產品受進口損害救助基金進行紓困。然而，徐世勳說，該基金已幾乎用光。他說，儘管救助基金原本是專門用來協助直接受到農產品開放進口衝擊的農民，在立委的施壓之下，這筆基金也用作其他類型的農業紓困，例如風災過後的援助。徐世勳指出，南韓在與美國簽署KORUS

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Cover story stockpiled rice becomes cheap or free animal feed, goes to military mess halls, or is made into rice wine, experts say. If all the rice in storage were to flood the local market, Lee says, the domestic rice price would plummet. As it is, the price of rice in Taiwan is said to be three to four times higher than international benchmarks.

Grappling with rice NTU’s Hsu says private rice mills recently have been mixing imported and local rice and passing it off as the domestic product, which is more expensive. Chyan Shun Food Enterprise Co., one of the biggest rice mills and distributors, was found by investigators 18 times to have engaged in that practice, bringing it an NT$200,000 fine from the COA’s Agriculture and Food Agency. But Tony Hsu says the government will not act too harshly towards offenders as it “needs help from the millers as it doesn’t have its own warehouses.” He adds that the government in recent years has begun buying wet rice from farmers in addition

to dry rice, relying on the private mills to dry it for an extra payment. The average age of rice farmers is around 60, making it impossible to retrain them for other jobs, says CIER’s Lee. In addition, their crops are susceptible to damage from typhoons, droughts, and other weather conditions. Lee notes that policymakers recognize the farmers’ need for financial support and are considering adopting a system of direct subsidy, such as one introduced in Korea in the 1990s, rather than guaranteeing rice purchases. One idea is for the subsidies to be paid per hectare of land, with the farmers free to plant whatever crops they wish. Given current budget shortfalls, Tony Hsu says the sticking point is how much these payments would come to. “If the government had money, the problem would be solved,” he says. Reflecting the sensitivity of the rice issue, rice was excluded from the recently concluded Taiwan-New Zealand FTA, although some other Taiwanese agricultural products will be liberalized gradually over several years. Taiwan is watching the TPP negotiations closely, econ-

omists say, amid hopes that member Japan, whose rice farmers’ situation is similar to Taiwan’s, will push to carve out exclusions for rice and even other farming products. Rice tariffs in Japan stand at 777.7 %, while duties on rice outside Taiwan’s WTO quota are roughly 400%, says NTU’s Hsu. But CIER’s Lee says he doubts that other TPP negotiating parties, notably the United States, Malaysia, and Vietnam, will favor a special deal for Japan on rice. Another issue relates to so-called “fake farmers” – those who do not grow crops or raise animals, but are still legally eligible for subsidies. Taiwanese who own or lease farming land and have paid into the health insurance program for farmers for six months can be eligible to receive various benefits, including the Old Age Farmers Welfare Allowance of NT$7,000 a month, even if they are hobbyist farmers or real estate developers. Lee says government agencies are starting to conduct surveys to determine who is actually engaged in rice planting, but notes that it is “a huge and politically-sensitive job.”

AN INTERvIEw wITh COA MINISTER ChEN BAO-JI chen Bao-ji, a ph.D. in animal nutrition from cornell University and former Dean of the college of Bioresources and agriculture at national taiwan University, has headed the council of agriculture since February 2012. below are excerpts from a recent interview with Jane rickards for Taiwan Business TOPICS.

how will trade liberalization impact the future of Taiwan’s agriculture? With free trade, we will need to change our philosophy or strategy for the agricultural sector. For land and water resources, we will now have to use an interdisciplinary technique to increase production and efficiency. For example, energy efficiency is quite low in our agricultural sector. So we can use solar energy, we can use environmental controls, we can use LED techniques to provide lighting in agricultural production and even for fisheries. That will decrease the cost and increase efficiency of the use of natural resources in agricultural production. And we will have to integrate the upstream and downstream industries. For example, with the orchid industry, we need to consider the container as well as the plant. Another example is our Chinese tea. When we sell Taiwanese tea in European countries, the tea itself probably accounts for 50% of the profits and another 50% comes 14

from our tea pots. Are you also going to change the structure of the COA? Yes, hopefully it will happen next January. We will have a new department, the Agricultural Science and Technology Research Institute. This organization will be set up as a foundation, and its research will have practical applications for production. In Taiwan, the local market for technology is relatively small, so we have to help this industry internationalize. The research institute will work with corporations, including foreign companies. We already have a good example of this with the animal vaccine industry. Lohmann, the number four animal health company from Germany, is going to invest US$100 million in Taiwan to build a factory. Their market is mainly Asian countries and China. Why they picked Taiwan as their investment target is because our technical research results and our technical skills

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The sorry state of government coffers adds to concern about the plight of farmers affected by future trade liberalization. The government has spoken of providing relief funds for those directly affected by Taiwan’s potential entry into free trade deals, along the lines of the Trade Adjustment Assistance program in the United States. But Taiwan is facing tight budgetary constraints. According to a Reuters report, the government’s approved budget for next year, at NT$5.43 trillion, amounts to 38.7% of GDP, close to the legal limit of 40.6% – meaning it cannot easily be increased. Tony Hsu points out that in the 1990s Taiwan created an NT$100 billion relief fund for those heavily affected by the island’s entry into the WTO. If farmers groups expect a similar amount again, the government would be hard put to find the money, he says. In response to questions from TOPICS, the COA said that its plan is to dip into the NT$100 billion WTO fund to provide relief following future trade deals. But Tony Hsu says that this fund is nearly depleted. Although the fund was intended to be used solely to aid farm-

ers directly impacted by competition from imports, he says, pressure from legislators has caused it to be used as well for other types of farming relief, such as assistance after typhoon damage. In contrast, he notes, a similar fund set up in Korea after it signed the KORUS free trade agreement with the United States is restricted for use only to aid directly affected farmers and businesses. For example, it provides funds for agricultural training courses to help Korean farmers switch from traditional to higher value crops. “There are hardly any mechanisms here to help farmers,” says activist Hsu Shih-jung of NCCU. “The government believes the market should decide things. The voices of farmers will become louder and there will be a political problem.”

On the positive side Despite the difficult issues mentioned above, economists say, Taiwan also has certain advantages as it tries to cope with agricultural liberalization. Although Taiwanese farmers are stereotyped as being poor and vulnerable, says NTU’s

are well matured. what is the current status of Taiwan’s trade liberalization in agriculture? Our food self-sufficiency level in terms of calories is 33%, so we have already imported a lot of agricultural products. We already have liberalization in agricultural trade. Every country has its sensitive products, however. Rice is our main staple product and this product is more sensitive for farmers, for our agricultural policy. But the other products are not so serious. Right now our rice management policy is very conservative. The basic philosophy is from 40 to 50 years ago. In case of a fight with mainland China, you need food security. But right now the situation has changed. You don’t need to reserve huge amounts of rice as food security in case of war. Right now we have a ceiling for rice prices. I will try to open that ceiling to create a really free market. how will you try to cushion any adverse effects from free trade agreements in the agricultural sector? If we join the TPP, it will be our second liberalization after the WTO. One major target will to be to increase our competitiveness against foreign products. We need to strengthen our industry and internationalize. My second point is that I don’t want to see a lot of subsidies. I want to use this kind of budget to give value-added to the whole agricultural sector. Our product processing is very competitive. Our safety

Hsu, in fact there are both rich farmers (he cites chicken and hog raisers) and poor ones. “Actually agriculture is full of business opportunities, but farmers associations and others use a very narrow definition of farmers to argue for more benefits,” he says. “The real problem is too much government intervention.” Liu Da-nien of CIER notes that the agricultural sector in Taiwan can never be wholly eliminated for reasons of food security and employment. His colleague Roy Chun Lee adds that some Taiwanese agricultural products are competitive internationally and could withstand liberalization. Examples are orchid growing and deep-sea fishing, in which Taiwan is among the world leaders. The COA’s approach to the coming challenges is to further bolster these strong industries. It also wants to change the focus of agriculture from simply selling farm produce to creating supply chains with added value, such as highquality food processing. The council is also seeking to draw on Taiwan’s expertise in agricultural technology and veterinary medicine, among other fields, to

standards are pretty good, and also well-recognized by Southeast Asia and mainland China. So we will put our efforts on food processing and value-added for our agricultural products. Connected to this are our Free Economic Pilot Zones. We will try to use these as a buffer to decrease the impact of free trade on the local agricultural sector and also foster value-added for our competitive industries. We will import agricultural products as raw materials, use them for processing, and re-export to other countries. For example, with beef noodles, only the water and green onion are local products. All the rest are imported, even the seasoning. Taiwan can use these foreign materials to have excellent food processing. Many think that unless the ban on ractopamine in pork is lifted, Taiwan’s chances of getting into the TPP will be impaired. what do you say to this? The major markets for U.S. pork are Russia, Europe, and mainland China, and they all ask for certificates that pork is ractopamine free. This accounts for more than 50% of your foreign markets, so why do you ask us to accept this? We are one of your partners. We have a lot of common interests. So why do you have to keep pushing this? Our consumers and hog farmers cannot understand your philosophy. This has nothing to do with liberalization. We are not resisting American products. If the U.S. uses this to say Taiwan is not for free trade, then I don’t buy it.

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Cover story recruit young talent and develop international branding. In addition, it is promoting greater focus on LOHAS agriculture. An acronym for Lifestyles of Health and Sustainability, LOHAS relates to sustainable living and green ecological initiatives that appeal to wealthier, better-educated consumers. “We cannot compete with free-trade products on price, but we can on quality – and that’s our strategy,” says NTU’s Tony Hsu. Given that Taiwan’s agriculture relies on small-scale production, he says, “high prices and high quality are the way to go.” In accordance with these policies, the COA plans to restructure in January next year, says Minister Chen Bo-ji, provided that the Legislative Yuan gives its approval in time. One of the main changes will be to merge existing research institutes, such as the Animal Technology Institute Taiwan, into a new institution to be named the Agricultural Science and Technology Research Institute, which will

be given greater operational flexibility and encouraged to forge connections to industry. The institute’s mission will be to engage in agricultural R&D for commercialization, with an international focus. COA is also in the process of setting up a marketing agency to promote Taiwan’s agricultural products. Besides focusing on the domestic market, it will undertake international promotion along the lines that the Taiwan External Trade Development Council (TAITRA) has been following for manufactured goods. The agency will seek to strengthen Taiwan’s agricultural brands in international markets. Much of the COA’s planning falls under the umbrella of fostering “highquality agriculture,” one of six “Emerging Industries” the government has identified as pillars of the island’s future economic development. Within highquality agriculture, Minister Chen says the main focus will be on healthful agriculture (including organic and residue-

自由貿易協定後所設立的紓困基金，僅限於援助直接受害的農民與商家。例如，該基金為農業訓練課程提供經費，幫助南韓農民從傳統作物轉為種植高價作物。政大地政系的徐世榮教授表示：「反觀台灣，我們幾乎沒有任何協助農民的機制。政府認為應該遵從市場機制。但農民的不滿之聲將越來越大，終將會成為政治問題。」

好的一面經濟學家指出，雖然有上述棘手問題，台灣在農業自由化方面仍具某些優勢。台大教授徐世勳說，一般人對農民的刻板印象就是生活貧困的弱勢族群。其實，農人也有貧富之分，他指出，養雞和養豬的農民多半比較富裕。他說：「事實上，農業充滿了商機，但是農會和其他組織對農夫的定義非常狹隘，以獲取更多利益。真正的問題在於政府過度介入。」中華經濟研究院的專家劉大年指出，為顧及糧食安全與就業市場，台灣絕不能完全放棄農業。他的同事李淳補充說，台灣有些農產品深具全球競爭力，能夠承受自由化的衝擊，例如在蘭花培育和深海漁業等領域，台灣的技術在世界名列前茅。面對上述挑戰，農委會策略是要進一步加強台灣的優勢產業。此外，農委會也計畫要改變農業的走向，從單純銷售農產品，轉為創造具有附加價值的供應鍊，例如高品質的食品加工。農委會也正努力利用台灣在農業科技與獸醫等領域的專業技術，吸引年輕人才並發展國際品牌。 16

free products), animal medicine, and the development of innovative technology. He says the government will take a holistic approach to agriculture that also takes the environment, energy conservation, and efficient water usage into consideration. According to the COA, the value of “high-quality agriculture” production last year reached NT$134.5 billion, a rise of 44% since 2008. Developing LOHAS agriculture, including organic products, is seen as a suitable direction for Taiwan to take, as it involves small-scale farming and consumers willing to pay more for these products. Minister Chen says the organic market, though less than 2% of the entire agricultural market, is growing rapidly. Europe, Canada, and New Zealand are good destinations for exports, but one problem is that organic produce is more easily damaged by long-distance transportation. Asia is therefore still the best market. “Its organic market is relatively small but the people who buy them have

此外，農委會正努力推廣樂活（L O H A S）農業， LOHAS是英語Lifestyles of Health and Sustainability的縮寫，它是跟永續生存和綠色生態相關的倡議，實踐者多半是經濟寬裕、受過良好教育的消費者。台大教授徐世勳說：「我們無法在價格方面跟自由貿易產品競爭，但我們可以在品質上競爭，而這就是我們的策略。」他說，有鑒於台灣農業大都為小規模生產，「高價和高品質才是王道」。根據這樣的政策，農委會主委陳保基表示，如果立法院及時通過修法，該會計畫於明年一月進行改組。最大的變化在於將現有的不同研究機構─例如「台灣動物科技研究所」─整併成為新成立的「台灣農業科學與技術研究所」。它會有更大的運作彈性，而且要跟產業連結。該研究所的宗旨是放眼全球，推動用於商業化目的的農業研發工作。同時，農委會正在籌設推廣台灣農產品的行銷單位。除了著重內需市場行銷外，也會進行國際推廣活動，做法類似外貿協會行銷台灣製造業產品行之有年的制度。這個行銷單位將努力強化台灣農業品牌的國際地位。農委會的規劃大都在發展「優質農業」的範疇之內，這是政府所提出攸關未來經濟發展的六大「新興產業」之一。主委陳保基表示，優質農業主要將著眼於健康農業（包括有機產品與無農藥殘留的產品）、動物醫學以及創新科技的開發。他說，政府將以全面性的策略發展農業，同時考量環境、節約能源以及水資源有效利用等層面。農委會數據顯示，「優質農業」去年的總產值達1,345億元，較

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COMPETITIVE SECTORS — Deep-sea fishery and orchidgrowing are among the bright spots for Taiwan agriculture. Below are Taiwan orchids displayed at this year's Chelsea Flower Show in London. photos: cna

the capacity to spend,” says CIER’s Lee. The LOHAS market is taking off especially strongly in Japan. Minister Chen also points to a trend for organic school lunches in Taiwan. Last year, 104 schools received organic meals supplied by farmers’ markets and other channels, providing a stable source of revenue for local farmers. Another high-quality item is mangos and other fruits for export, grown to international standards such as EurepGAP, the world’s most widely implemented certification scheme for farm produce.

2008年大幅成長44%。一般認為台灣適合發展樂活農業（包括有機產品），因為此類型農業多以小型農場為主，而且它的客群是願意多花一些錢購買這些產品的消費者。陳保基說，有機農產品的市占率雖然僅有2%，但成長快速。歐洲、加拿大和紐西蘭都是不錯的出口市場，但有個問題在於有機農產品比較容易在長途運送過程中受損，因此最好的市場還是亞洲。中華經濟研究院的專家李淳說：「亞洲的有機農產品市場比較小，但會買這類產品的人有消費能力。樂活市場在日本的成長尤其可觀。」陳保基也指出台灣學校推動有機午餐的趨勢。去年有104所學校的有機午餐，是由農民市集和其他管道提供，這為地方上的農民提供了穩定的收入來源。另一項高價值作物是芒果和其他出口水果。這些水果種植過程符合EuroGAP等國際標準。EuroGAP是全世界最廣泛採用的優質農產品認證標準。

花卉和魚類荷蘭因鬱金香而聞名，而台灣也在藉著蘭花快速打開知名度。台灣去年蘭花出口成長15%，其中光是蝴蝶蘭的出口就超過一億美元。台灣蘭花產銷發展協會去年參加著名的倫敦卻爾西花展，並贏得一面金牌，就突顯出台灣蘭花業的成果。台灣在蘭花栽種、培養和長途海運技術方面都享有優勢，而農委會希望創造出更多具附加價值的蘭花相關產品，例如設計和生產高級花盆和發展蘭花旅遊。

台灣養殖觀賞魚的產業也具有國際競爭力，而且政府希望進一步推動。台灣這項產業和相關生意的產值在去年達到新台幣42億1,000萬元，是1998年產值的兩倍。台大教授徐世勳指出，台灣出口魚種有透過基因改造而能在黑暗中發光的魚，還有雲林培養出的一種高級鯉魚，賣給中國大陸客人，一條要新台幣600 萬元。他說：「這種魚非常漂亮，是紅色跟黑色的，像國畫一樣。」此外還有觀光農業，它以休閒農場為核心，提供住宿、餐飲和休閒與教育設施。這類農場服務對象主要是國內遊客，但去年也吸引了213, 857 外國觀光客─ 多數來自東南亞，比前一年增加了28%。陳保基也指出台灣在動物防疫方面的實力。世界級禽鳥疫苗大廠德國跨國企業Lohmann七月跟台灣研究機構簽署合約，要發展用於商業生產的技術。這家公司並投資一億美元，在屏東農業生物科技園區成立疫苗生產設施，計劃利用在台分公司服務亞洲市場。此外還有多項高科技計畫正在推動，包括將無線射頻辨識系統（RFID）應用於牲畜管理，讓業者能更有效追蹤牲口的成長和繁殖情況。農委會也涉足雲端運算，希望在網路上為農民提供環境、市場價格和經濟趨勢的資訊，讓他們更能掌握供需情況。例如台灣農產品安全追溯資訊網是個網路市場資訊資料庫，可以透過電腦或智慧型手機上網查詢。消費者可以透過這個資料庫查詢生產者或製造商的資訊，並針對不應繼續販售的產品提出警告並要求回收。台灣政府也希望減緩貿易自由化對本地農業的衝擊，做法是在新成立的自由經濟示範區進一步開放

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Cover story Flowers and fish Taiwan is also rapidly becoming to orchids what the Netherlands is to tulips. Exports of orchids last year grew 15%, with moth orchid exports alone exceeding US$100 million. An exhibit from the Taiwan Orchid Grower’s Association at the prestigious Chelsea Flower Show in London won a gold medal last year, highlighting the success of this industry. To add to Taiwan’s international edge in planting, cultivation, and long-distance maritime transportation of this plant, the COA wants to see Taiwan create more value-added products relating to orchids, such as designing and producing stylish orchid pots and developing orchid tourism. The ornamental fish industry is also internationally competitive, and the government hopes to promote it further. The production value for this industry and its associated businesses last year came to NT$4.21 billion, a doubling since 1998. NTU’s Hsu notes that exports of fish range from genetically modified varieties that can glow in the dark to glamorous carp cultivated in Yunlin that are bought by mainland Chinese for NT$6 million per fish. “These fish are so beautiful – red and black, like a Chinese painting,” he says. Then there’s also a growing agritourism industry built around leisure farms that may offer lodging, restaurants, and educational and recreational facilities.

Although these places appeal primarily to domestic tourists, last year 213,857 foreign tourists – mainly from Southeast Asia – patronized these facilities, an increase of 28% from the year before. Minister Chen also notes Taiwan’s prowess in the animal vaccine industry. German multinational Lohmann, a world leader in avian vaccines, in July signed cooperation contracts with Taiwanese research institutes to develop technology for commercial production. The company also invested US$100 million in a vaccine production facility in the Pingtung Agricultural Biotechnology Park. It plans to use the Taiwan subsidiary as a base to serve the Asian market. Also underway are various high-tech initiatives, including the use of Radio Frequency Identification (RFID) technology for livestock management, enabling the more efficient tracking of growth and reproduction. The COA is also venturing into cloud computing, with the aim of offering online services to farmers with information on the latest changes in the environment, market prices, and economic trends to better balance demand and supply. For example, the COA’s Taiwan Agriculture and Food Traceability System, accessible via an internet connection from a computer or smartphone, is an online databank of market information. Buyers can track agricultural products back to producers or manufacturers, and flag and request the recall of any product unfit for

consumption. The government also hopes to buffer the impact on local agriculture from trade liberalization by more widely opening the market for foreign agricultural products within the new Free Economic Pilot Zones. Foreign imports will be processed in these zones and then mainly sold overseas. For example, says Lee, the more than 800 banned agricultural items from China will be allowed into these zones, but only for food processing for export. The strategy is to use cheaper foreign raw materials, together with Taiwan’s sophisticated manufacturing techniques and advanced R&D capability, to create high value-added agricultural items for re-export overseas. By attracting foreign investment into the zones, Taiwan could expand its food manufacturing and R&D resources, which hopefully would in turn boost demand for local agricultural produce. The COA and other government agencies have plans for the production of animal vaccines, ornamental fish (and secondary industries such as aquariums), agricultural machinery, and various tearelated industries in these zones. The greatest challenge the government now faces is how to communicate effectively with the public to alleviate rising fears about the consequences of market opening. It must also find ways to compensate the losers from free-trade deals while laying out a new vision for agriculture that the majority of the public will find acceptable.

外國農產品市場。進口的外國產品會在示範區加工，然後大都銷往海外。李淳舉例說，禁止進口到台灣的800多項中國農產品將可進入示範區，但都會在加工之後再出口。台灣的策略是要利用成本較低的外國原材料，加上台灣精密的製造技術和進步的研發能力，創造出用於再出口的高附加價值農產品。藉著吸引外資進入自由經濟示範區，台灣可以擴充食品製造和研發的資源，而這又可望提高對本地農產品的需求。農委會和其他政府部門規劃在示範區成立生產動物疫苗、觀賞魚類（以及水族等相關產業）、農業機械和各種茶葉等相關產業。政府目前的最大挑戰，在於如何有效跟民眾溝通，化解他們對於市場開放效應的疑慮。政府在提出多數民眾可以接受的農業新願景的同時，也必須設法補償因為自由貿易協定而受損的民眾。

FISH IS DELISH — COA Fisheries Agency chief James Sha shows off some dishes featuring Taiwan tilapia at a promotional event. photo : cna

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AFTER BEEF, IS A FIghT OvER PORK NExT?

NO RACTOPAMINE — Pigs at a tourist farm in southern Taiwan may never be destined to wind up on a dining room table. photo : cna

estrictions in Taiwan on meat imports have long been a sticking point in its trade relations with the United States. Formal trade talks were suspended for nearly six years due to Taiwanese regulations governing American beef products. These negotiations, known as the Trade and Investment Framework Agreement (TIFA) talks, were able to resume early this year only after Taiwan revised its food safety laws to allow for imports of American beef containing a controversial feed additive known as ractopamine. Amid rowdy demonstrations from the nation’s hog farmers and pressure from opposition politicians and consumer groups, the government at the time stipulated that pork imports would remain free of the drug, which is used to promote growth and enhance leanness in livestock. But the issue remains alive. If Taiwan wants to deepen its trade relations with the United States and win U.S. support for joining the Trans-Pacific Partnership (TPP), it will almost certainly need to replace its all-out ban on ractopamine with a set maximum residue level (MRL). The U.S. government insists that the feed additive is scientifically proven to be safe. The U.S. Food and Drug Adminis-

tration approved ractopamine for use in commercially raised swine in 1999, and it is now used for most of the American hog production. Besides wanting to stand up for its pork industry, Washington views Taiwan’s reluctance to lift the ban as an example of broader concerns about Taiwan’s capacity to act as a free-trade partner. To the United States, the issue is whether Taiwan’s regulatory regime is predictable and transparent. Scientific discoveries – including new additives or compounds fed to livestock – are commercialized and enter the U.S. market all the time. The question is whether Taiwan’s government agencies have the capacity to smoothly respond to such changes with transparent and orderly procedures for import approval through science-based testing. But Agriculture Minister Chen Baoji opposes lifting the ban. He notes that while the majority of U.S. cattle ranches use ractopamine, making it difficult to arrange exports of ractopamine-free beef, a large potential export market exists for American pork without the additive, including China, Russia, and the European Union. He says he is perplexed about why the United States is coming down so hard on Taiwan when it sells ractopamine-free pork elsewhere. “You have to consider

A g r i c u lt u r e the consumers,” he says, noting the public concerns in Taiwan about the safety of pork with traces of ractopamine. Beyond the consumer concerns, exacerbated by other recent food scares in Taiwan, Taiwanese swine farmers are deeply worried about their future. Their farms are relatively small and production costs high, especially since the pigs are raised on imported grain. The large U.S. pork industry would undoubtedly be able to undercut them on price, although local consumers might still prefer the taste of the domestic product. Roy Chun Lee of the Chung-hua Institution for Economic Research notes before a foot-and-mouth disease scare in 1997, Taiwan was a major exporter of pork to Japan. But when the export market shrank, the industry did not downsize. “In the pork sector, we now have an oversupply issue,” he says, which in part explains the zeal to protect the domestic market. But Tony Hsu, a National Taiwan University professor of agricultural economics, maintains that many local hog raisers are not opposed to ractopamine per se, as they illicitly use cheap versions of the controversial additive themselves, along with other drugs smuggled from China. He adds that the pork industry is well organized, with strong connections to legislators. “The farmers think the U.S. pork is competition and want to keep it out,” he concludes. The ROC Swine Association estimates that some 9,600 farms, mostly in southern and central Taiwan, annually raise around 6.2 million pigs. In 2012, Taiwan’s livestock production value was NT$148.6 billion, with hogs accounting for NT$66.7 billion. Only about 10% of the pork consumed in Taiwan is imported, with ractopamine-free American pork taking up around 27% of the imports, registering US$14 million in sales last year. Lee says the real worry is an influx of cheap pork innards, such as kidney, heart, and liver, along with minced pork. The fresh meat market is strong enough to survive on its own, no matter how liberalized Taiwan becomes, experts say, as Taiwanese prefer to eat fresh rather than frozen pork. But prices for pork innards can be higher per piece than the price of pork meat, especially in the south. In the United States “this is all pet food and sold by the kilo,” Lee notes. – By Jane Rickards

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Ever Rich’s Remodeling of Taoyuan Airport Terminal 1 is a Tribute to Taiwan

hey say in any relationship, first impressions are vital, with longlasting implications that are difficult to undo. If that’s true, then Taoyuan International Airport (formerly Chiang-kai Shek International Airport) wasn’t helping Taiwan’s relationships with international travelers. Opened in 1979, by the late 1990s its drab and lonely single terminal, with low ceilings, linoleum floors and harsh fluorescent lighting, looked exactly like what it was: a relic from a poorer past that hardly evoked the vibrant and modern society Taiwan had become. The opening of stylish and sophisticated new airports by economic rivals Hong Kong, Thailand and Singapore, as well as the completion of a new Terminal 2 in Taoyuan, only heightened the difference. But now, Terminal 1 has been fully renovated and modernized – and the effect is transformative. Industrial blues and grays have been replaced with gold and black, while harsh fluorescent tubes have been supplanted by softer LEDs. In corridors where beams were fixed, the drop ceilings typical of the 1970s were replaced with concave ceil20

ings that not only give the impression of added height, but also allow for more windows and better views. Airport concessionaire and dutyfree shop chain Ever Rich has played a major role in bringing about the transformation. Its contribution extended well beyond the duty-free shops themselves, where an array of top-shelf whiskeys, wines, and local kaoliang is available – and where luxury goods purveyors such as Gucci and Hermes cater to the jet-setting elite beside local mainstays Taiwan Tobacco and Liquor and even Hello Kitty and Disney. Committing NT$140 million (nearly US$5 million) of its own funds to the project, Ever Rich took on the responsibility for the thorough renovation and redecoration of 14 of Terminal 1’s departure gates, utilizing artistic themes that express the many aspects of Taiwan’s vibrant culture. The company viewed its mission of helping to upgrade the airport as an opportunity to change the image of Taiwan for world travelers by promoting “the beautiful natural environment and culture” of the island. Bringing its own highly capable marketing design and even architec-

tural teams to bear, Ever Rich reached out to local artists, craftspeople and even songwriters and poets to develop creative and expressive art installations. In line with the broad themes of the “Beauty of Taiwan” and “Glory of Taiwan,” these teams collaborated on installations touching on a wide variety of topics, including Taiwan agriculture, biking, technology, textiles, mountain vistas, and many more – each expressing a different facet of the Beautiful Island. Ever Rich says that the renovations provided the chance not just to give the terminal a makeover, but to become a “storyteller of Taiwanese culture.” Some of the more noteworthy gates

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AdvertoriAl include the dramatic B6’s “Glory of High Tech.” The installation consists of a giant circle meant to represent the Earth, with Taiwan in the lower left quadrant, and in huge letters the words MADE IN TAIWAN. The installation is a mosaic, but the medium is not pieces of glass or tile, but recycled motherboards made in Taiwan. At night the installation is lit by LED lights, also made in Taiwan, symbolizing that “Taiwan’s high-tech industry is a shining star on the world stage,” says Ever Rich. The brainchild of Ever Rich’s own marketing team, the installation literally weighs a ton, and the wall it’s mounted on had to be reinforced to hold it, testament to Ever Rich’s faith in the project. “The Glory of Sports” at gate B9 highlights some of Taiwan’s most accomplished athletes, including Olympic gold medalist Ann Chen, Wimbledon finalist Rendy Lu, and the great ultra-marathoner Kevin Lin, who was on the first team of runners to cross the entire Sahara Desert. Many of the installations are whimsical and light. “Taiwan Fruit” at gate B6, for instance, blends surrealism with Asian “can-do” culture in a huge mural spanning the back wall of the gate. With a seeming nod to Yellow Submarine psychedelia, the mural features a giant persimmon staring pie-eyed at the viewer as a blue hedgehog emerges from its head. Creative Taiwan! One of the most striking creations is the “Taiwan Tea Waiting Lounge” at Gate A8. Three-dimensional clumps representing tea plants hang off the wall, with shrouded, life-sized tea-picker mannequins emerging from within the tea plants. Ever Rich staffers say the installation is a particular delight to families with small children. G a t e B 1 2 3 c e l e b r a t e s Ta i w a n ’s great success in the biking world with t h e “ M I T B i k e Wa i t i n g L o u n g e , ” while B4 nods to Taiwan’s famous orchid industry with the “Taiwan Orchid Waiting Lounge.” B8 features the “Glamorous Textile Art Waiting Lounge” and A9 is a particular favorite among local Taiwanese: the “Taiwanese Opera Waiting Lounge.” Gate A6 celebrates Taiwan’s original people in the “Taiwan Aboriginal Arts Waiting

Lounge,” while A5’s “Taiwanese Local Cuisine Waiting Lounge,” featuring a large mural showcasing Taiwan’s night market culture, has a special appeal to many who love the island’s foods. These gates and many more are delighting travelers. As a local outfit, though, Ever Rich wasn’t just thinking of first impressions for international travelers, as many of the installations speak instead to Taiwanese departing their beloved home to “take away warm and fond memories of Taiwan.” Ever Rich went so far as to commission a song from lyricist Fang Wen-shan, winner of a Golden Melody award, called “the Airport Song – On the Road.” Famous Taiwanese calligrapher Zhu Chen-nan painted the hallway with the song’s lyrics in giant characters, while Golden Melody finalist Xu Jia-ying, recorded the song as a single in tribute to the island. Through music, the song expresses love for Taiwan’s nature and culture, religions, and fine food. Fancy decorations only go so far in a facility like an airport, of course, and customer service is at least equally important. Ever Rich proudly notes the many services it now offer travelers, including 360-degree passenger service counters, mobile customer-service personnel ready to assist weary travelers, and even a Hello Kitty baby room complete with baby wipes and free diapers. To help travelers pass time on tedious layovers, the airport added shopping trolleys and strollers for the ease and convenience of families. It also installed a forest-themed “stress release” massage area where “the aches and pains of long-distance transit trav-

elers can be eased.” The airport also provides a number of prayer rooms for each of the three major religions in the region – Christian, Muslim and Buddhist – as airports tend to be places of prayer. The terminal now also holds art and cultural performances and exhibitions in the cultural gallery, says Ever Rich, “giving passengers a chance to experience Taiwan’s traditional art and culture.” The renovations are significant not just for what they say about Taiwan and how they offer comfort to the weary travelers, but also because they mark a turning point in public-private partnerships. Ever Rich provided its own NT$140 million funding for its share of the project. Ever Rich proudly notes that over the past five years, the company has far exceeded the terms of the contract licensing it to operate the terminals. For example, the original contract stipulated 10 main items and 34 places for renovation, but Ever Rich has already completely renovated 109 places under 39 main items. The project has a publicservice investment achievement rate of 351%, 1.6 times the estimated investment in 2012, and the company says that it will remain the terminal’s opera t o r, i n c l u d i n g m a i n t e n a n c e a n d management, for a long time to come. The successful financing of the project fulfills the objective of the Act for the Promotion of Private Participation in Infrastructure, as the government provided none of the funds. Ever Rich calls this outcome “a win-win-win situation for government, enterprise and passengers.” taiwan business topics • october 2013

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doorknock

2013 Doorknock Team Finds More Positive Atmosphere But challenges will need to be overcome to achieve a Bilateral Investment Agreement or accession to the TPP trade bloc.

BY DON SHAPIRO

ith the “beef imbroglio” largely resolved and the TIFA (Trade and Investment Framework Agreement) process between Taiwan and the United States now resumed, AmCham Taipei’s 2013 Doorknock delegation to Washington, D.C. last month found a more favorable environment than had been the case for some time. “It’s made a big difference that Taiwan last year acted to allow in most U.S. beef products, enabling the TIFA talks to be revived after a more than five-year disruption,” says AmCham President Andrea Wu. “Most of the people we talked to were more willing than before to look ahead to discuss how to bring the U.S.-Taiwan economic relationship to the next level.” At the same time, it was clear that moving on to major next steps – such as negotiating a Bilateral Investment Agreement (BIA) or paving the way for participation by Taiwan in the Trans-Pacific Partnership (TPP) trade bloc currently being formed – would entail surmounting some significant hurdles. Despite its key role in global trade, Taiwan was described by one knowledgeable source as the least prepared for TPP entry among the countries considered to be leading candidates to join the group when expansion later takes place beyond the current 12 members. He said a study showed that Taiwan would need to revise more than 135 laws and regulations now on the books to bring its trade regime in line with

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TPP expectations. Numerous sources in Washington stressed to AmCham the vital importance for Taiwan to begin to take action to demonstrate its strong commitment to trade liberalization so as to build support for its eventual participation in TPP. Since the organization operates by consensus, new entrants will be admitted only if all the existing negotiating parties agree. Exclusion from the trade pact would deprive Taiwan products of tariff concessions and other benefits in many important markets, including the United States, Japan, Canada, Mexico, and Australia. That isolation would threaten to freeze Taiwan out of key supply chains and discourage new investment from both domestic and foreign sources. “President Ma Ying-jeou last year declared a goal of gaining entry into TPP within eight years, but the government hasn’t yet treated the matter with the urgency it requires,” says Wu. She notes that AmCham’s 2013 Taiwan White Paper, released this June, called on the Ma administration to launch a national campaign to mobilize wide public support for the liberalization measures needed to lay the groundwork for joining TPP. A continuing serious obstacle to further strengthening the bilateral economic relationship is the Taiwan government’s reluctance to remove barriers to the import of U.S. pork as

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A N A LY S I S

it did for beef. In both cases, the issue is the use by American livestock farmers of a feed additive called ractopamine that promotes animal growth and leanness. When Taiwan last year accepted a maximum residue level (MRL) of 10 parts per billion for traces of ractopamine in beef, it left its policy of zero tolerance in place for ractopamine in pork – even though the international food safety body, the Codex Alimentarius Commission, had adopted the same standard for both. The issue is politically sensitive in Taiwan, which has a large hog industry but relatively little beef production. In addition, various consumer groups have portrayed ractopamine – often quite stridently – as unsafe for human consumption, even at 10 parts per billion. In an interview in this issue of TOPICS, Agriculture Minister Chen Bao-ji reiterated his staunch opposition to any change in Taiwan’s policy on the feed additive. But the issue is also politically sensitive in the United States, where the pork lobby has considerable influence with Congressmen from agricultural states. Further, the firm U.S. government position is that Taiwan’s blockage of pork with ractopamine is blatant protectionism, as it disregards scientific research showing that trace amounts of the material pose no risk. Almost all of the pork consumed daily by Americans is from hogs whose feed contains ractopamine.

Going forward with TIFA One piece of good news was that pork appears unlikely to hold up the entire TIFA process as happened with beef. U.S. government officials spoke positively about the “broad and productive” discussions at the TIFA Council meeting held in Taipei this past March, and the two working groups established at that time – covering investment issues and technical barriers to trade (TBTs) respectively – are now getting down to business after delays caused largely by personnel shifts on the U.S. side. The next TIFA Council meeting is expected to convene on schedule in Washington next spring, U.S. officials said. The prevailing opinion in D.C. seems to be that the five-and-a-half-year suspension of TIFA talks over beef was a mistake, and that it is unfair to other U.S. business interests for the negotiations to be held hostage by problems affecting a single commodity. That said, it was also evident that the pork issue was not going away and would appear prominently on the TIFA agenda. Further, the Doorknock team heard the clear message that substantial progress must occur on TIFA items, including pork, before measures such as BIA and TPP could be undertaken to advance the bilateral relationship. A former U.S. negotiator cited the disappointment of the U.S. side at this year’s TIFA Council meeting that Taiwan came to the table without any specific plan for dealing with the pork issue – not even a proposal to commission a study of the health implications of ractopamine consumption. Pork aside, a number of other thorny issues remain to be discussed through TIFA and other channels. Among those mentioned during the Doorknock sessions were:

2013年叩門之旅代表團發現華府氛圍較以往正面不過仍須克服挑戰，才能達成美台雙邊投資協定（BIA）或加入跨太平洋夥伴協議（TPP）。

撰文／沙蕩

The delegation with Taiwan's Representative to the United States, King Pu-tsung, at Taiwan's Twin Oaks estate.

由

於「美牛爭議」大致解決，加上台、美如今恢復貿易暨投資架構協定（TIFA）談判，台北市美國商會的2013年叩門之旅（Doorknock）代表團上月前往華府時，發現目前情勢比起過去一段時間來得有利。本商會執行長吳王小珍說：「去年台灣開放大部分的美牛產品進口，讓情況大為改觀，中斷超過五年的TIFA談判得以恢復。」「我們接觸到的人大多比以前更樂於討論如何促使美台經濟關係更上一層樓。」與此同時，在美台雙邊投資協定（BIA）談判或為台灣加入正在成形中的跨太平洋夥伴協議（TPP）鋪路等方面繼續向前邁出大步之前，顯然需要克服一些重大障礙。一位別具洞見的消息人士指出，儘管台灣在全球貿易中扮演關鍵角色，但是未來當TPP擴展超越現有的 12個成員國規模時，在最有希望加入的主要國家中，台灣卻是最缺乏準備的候選者。他表示，研究顯示台灣須修改135項以上的既有法律和規章，才能讓貿易體制符合TPP要求。華府許多消息人士向本商會強調，為了凝聚支持台灣最終加入TPP的力量，台灣展開行動證明堅決致力於貿易自由化，極為重要。由於TPP的運作是採共識決，新成員唯有在目前正協商參加的既有各方一致同意下，才能獲准加入。若被排除在TPP之外，台灣產品會在許多重要市場（包括美、日、加拿大、墨西哥和澳洲在內）喪失關 taiwan business topics • october 2013

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Congressman Steve Chabot (R-OH) met the group in the Capitol building as he was preparing for a vote.

American Chamber of Commerce in Taipei 2013 Doorknock, Washington, D.C. september 9-13, 2013 GOVERNMENT MEETINGS National Security Council Office of the U.S. Trade Representative Department of State Department of Commerce (International Trade Administration) Department of Defense Department of Energy Department of Health & Human Services Senator Johnny Isakson. Members of Congress Ed Royce, chairman of the House Foreign Affairs Committee; Mario Diaz-Balart and John Carter, co-chairs of the Taiwan Caucus; Steve Chabot; Charles Rangel; and Adrian Smith. Offices of Senators Chuck Grassley, James Inhofe (co-chair of Senate Taiwan Caucus), Charles Schumer, and Ron Wyden. Offices of Representatives Vern Buchanan and Albio Sires. Staff from Senate Finance Committee, Senate Foreign Relations Committee, House Foreign Affairs Committee, and House Ways and Means Committee. AIT-Washington OTHER ORGANIZATIONS AdvaMed Albright Stonebridge Group American Enterprise Institute The Asia Group C&M International DPP Liaison in Washington Emergency Committee on American Trade (ECAT) Inside U.S. Trade National Pork Producers Council Nelson Report Taipei Economic & Cultural Representative Office U.S. Chamber of Commerce U.S.-Taiwan Business Council

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• The frequently opaque nature of the foreign investment approval process in Taiwan. In particular, private equity firms have encountered difficulty in gaining approval when deals involve taking listed companies private. This issue will be discussed by the investment working group. • The strong U.S. push to remove restrictions on cross-border data flows versus efforts by Taiwan’s Financial Supervisory Commission to promote data localization. • The tendency by some government agencies to adopt unique-to-Taiwan regulations that ignore standard international practice and place a heavy burden on multinational companies selling across many markets. Some such issues, including certain labeling regulations, will be taken up by the TBT working group. The group’s first meeting, set for late October, will discuss a draft regulation for chemical registration that some U.S. companies fear would impair their ability to keep proprietary information confidential. • Concern by U.S. pharmaceutical companies that proposed new National Health Insurance policies on drug reimbursement threaten to make original drugs uncompetitive in the local market. • Similar concerns by medical device manufacturers that market access is effectively being restricted for new and innovative products. • A longstanding issue regarding the inability of chiropractic doctors trained and licensed in the United States to be recognized in Taiwan as professional practitioners. The prominence of healthcare-related issues led to the participation on the Doorknock this year of representatives from three AmCham health-related committees: Pharmaceutical, Medical Devices, and Public Health. For the first time, a call on the U.S. Department of Health and Human Services was added to the Doorknock schedule. In addition, the medical device contingent visited the headquarters of AdvaMed, the industry association

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for that sector; AdvaMed’s board had just acted to include Taiwan issues in its advocacy agenda for the first time.

Getting TPP done If Taiwan previously calculated that it had plenty of time to get ready to join TPP, since negotiations among the 12 current countries would likely be a long, drawn-out affair, that notion appears to be in need of revision. Although a few skeptics could be found who doubt that negotiations can be concluded any time soon, what the delegation heard in most meetings – whether with government officials or outside analysts – is that the Obama administration is determined to wrap up negotiations by the end of this year or early next year at the latest. U.S. Trade Representative Mike Froman was said to be zealously pursuing that goal. In fact, some U.S. industry associations have been worried that the pace might be too fast, and that some of the high standards originally proclaimed for TPP might wind up being compromised for the sake of the calendar. When Japan became the 12th negotiating partner in TPP half a year ago, many assumed that its participation – while adding substantially to the organization’s heft – would slow down the process considerably, given Japan’s past reputation for protecting its home market. But the AmCham mission was told that the Abe government seems far more forthcoming on trade issues than its predecessors. As a result, the Japanese involvement in TPP has been a “game-changer” that has aroused the interest of additional countries – notably Korea, Taiwan’s main trade rival – regarding entering TPP, presumably in a second round. An expanded TPP, without Taiwan, would exacerbate the risk of economic isolation for this country. Besides the question of Taiwan’s willingness to commit to a “gold-standard” trade-liberalization regime, the other area of uncertainty regarding Taiwan’s ability to join TPP is political – whether China would attempt to stand in the way. U.S. officials have a pat response to that question, quoting Mike Froman’s remarks during his confirmation hearing in June that “TPP is open to all APEC economies – including Taiwan – that can establish their readiness to meet the high standards of the agreement.” They say PRC officials have never voiced objection to that formulation. At the same time, some Doorknock delegation sources suggested that in actual practice, Beijing might seek to pressure certain TPP member countries to keep Taiwan out. They added that Taiwan’s best defense would be to submit such an attractive offer for TPP accession that the trade benefits for existing members would outweigh the downside of irking China. And since China recently has softened its stance on TPP (which it once dismissed as a U.S. attempt to isolate it) and might one day broach its own candidacy for membership, strategically Taiwan would be far better off if it could enter the organization long before China is inside, or in the wings, able to directly obstruct or delay Taiwanese participation.

稅優惠和其它利益。一旦遭到孤立，台灣會面臨被踢出主要供應鏈，以及國內外新投資卻步的威脅。吳王小珍表示：「馬英九總統去年宣布八年內加入 TPP的目標，但政府處理此事時，尚未展現應有的急迫性。」她指出，本商會在今年六月發表的《2013年台灣白皮書》中，呼籲馬政府發起全國性運動，廣泛動員民眾支持必要的自由化措施，為加入TPP奠定基礎。進一步強化美台雙邊經濟關係的過程上一直存在一個嚴重阻礙，就是台灣政府不願像對美牛一樣消弭美豬進口障礙。在這兩起爭議中，癥結都是美國家畜養殖業者使用添加萊克多巴胺的飼料，促使動物成長時只長出肌肉（瘦肉）。去年台灣接受牛肉的萊克多巴胺最高容許殘留量為10ppb，對豬肉則採取零容忍政策：儘管國際食品安全機構「國際食品法典委員會（Codex Alimentarius Commission）」已對牛、豬採取相同標準。這在台灣是政治敏感議題：當地的養豬產業相當大，但牛肉產量相對很少。此外，許多消費者團體通常相當刺耳地將萊克多巴胺描述為：即使是10ppb，人類食用仍不安全。台灣農委會主委陳保基接受本商會本期工商雜誌《TOPICS》訪問時，重申他堅決反對台灣的飼料添加物政策出現任何改變。不過這在美國也是政治敏感議題：當地的豬肉遊說團體對來自農業州的國會議員具有可觀的影響力。再者，美國政府的堅定立場是：台灣封鎖含萊克多巴胺的豬肉，是公然施行保護主義，因為無視於科學研究顯示，萊克多巴胺的微量殘留並不會構成危險。美國人每天食用的豬肉，幾乎都來自食用含萊克多巴胺飼料的豬隻。繼續推動TIFA 本商會獲知一項好消息，就是美豬問題似乎不可能像美牛那樣阻礙整個TIFA談判過程。美國政府官員對於今年三月在台北舉行的台美貿易暨投資架構協定聯席委員會（TIFA Council）會議進行的「廣泛與收穫豐碩」討論，做出正面反應，當時會中決議成立兩個工作小組，分別負責投資議題和技術性貿易障礙（TBT），在經歷主要是因美方人事異動而有所延宕後，如今已開始運作。美國官員表示，下次TIFA Council會議預訂明年春季在華府召開。華府普遍的看法似乎是：TIFA談判因牛肉爭議中斷五年半是一場錯誤，談判因為影響單一產業的問題而遭到綁架，對美國的其它商業利益並不公平。儘管如此，美豬議題也顯然不會就此消失，而且似乎會成為TIFA的重要議題。再者，叩門之旅代表團獲知明確訊息，須讓包括美豬在內的TIFA談判項目出現重大進展，然後才進行BIA和TPP之類的談判，促進雙邊關係。一位前美國談判員指出，美方對於台灣在今年TIFA Council會議上沒有提出任何處理豬肉議題的確切計畫：連委託進行食用萊克多巴胺對健康影響的研究提案都沒有感到相當失望。除了美豬，還有一些其它棘手議題有待透過TIFA 談判和其它管道討論。叩門之旅期間曾談及的議題包括：

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Investment agreement AmCham has long looked at the negotiation of a BIA as an effective potential “building block” toward a free trade agreement between Taiwan and the United States, whether a bilateral FTA or the multilateral equivalent through TPP. For a number of years, however, the U.S. side was reluctant to actively discuss prospects for a BIA with Taiwan because of uncertainty over the legal process for approving the pact after its completion. Unlike numerous other agreements signed over the decades by the American Institute in Taiwan and the Taiwan Economic and Cultural Representative Office on behalf of their respective governments, it is believed that a BIA would need U.S. Congressional approval because of its binding nature in impacting existing U.S. law. But what form should that Congressional approval take? With most countries, such pacts are treaties, which under the U.S. Constitution go only to the Senate for ratification. In the absence of formal diplomatic relations, an agreement with Taiwan would not be regarded as a “treaty,” however, and in the opinion of some U.S. government legal advisers would require bicameral approval by both the House and Senate. The executive branch hesitates to bring an investment pact before the House, which normally lacks jurisdiction over such matters, for fear of opening the door to a slew of possibly extraneous amendments. One suggestion for getting around that obstacle has been

台灣批准外資的程序通常不透明。尤其是私募基金業者在涉及讓上市公司下市的交易中，都在申請核准的過程遭遇困難。投資工作小組將會對此問題進行討論。美國強力推動解除資料自由跨境流通的限制，但台灣金管會力促資料只限境內流通。部分政府機構傾向採取無視於標準國際慣例的台灣專有法規，對在許多市場銷售產品的跨國公司構成沉重負擔。技術性貿易障礙工作小組將處理部分這類議題，包括某些標示規定在內。該小組的首次會議訂在十月下旬舉行，將討論化學物品登記法規草案，部分美國業者擔心這會削弱他們對財產資訊的保密能力。美國製藥業者擔心，研議中的全民健保政策有關藥品給付部分，可能導致原廠藥在台灣市場失去競爭力。醫療器材製造商也有類似疑慮，全新和創新產品的市場管道實際上會受到限制。有關在美國受訓並取得執照的脊 26

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to include a U.S.-Taiwan BIA within the coverage of future Congressional legislation restoring the U.S. President’s Trade Promotion Authority (TPA). Such “fast-track authority,” which will be needed eventually to authorize U.S. participation in a completed TPP, permits Congress to vote only “yes” or “no” to the entire bill without the power to make revisions or add amendments. But most sources in Washington seemed to feel that TPA legislation would already be politically challenging enough without adding further complications. As a result, the Doorknock ended without a clear roadmap in sight for making a BIA a reality. But it was understood that further exploration of the feasibility of such an agreement would take place as part of the TIFA investment working group’s discussions. As the Doorknock week came to a close, the delegation was also heartened by the efforts underway in the U.S. government, pursuant to a law passed unanimously by Congress and signed by President Obama, to actively support Taiwan’s bid for observer status in the International Civil Aviation Organization (ICAO). Although Taiwan in the end was able to attend the ICAO Assembly in Montreal only as “guests” and not as official observers, the strong U.S. backing was an encouraging sign of continued pro-Taiwan sentiment in the United States. It followed last year’s landmark U.S. government decision to extend visa-waiver privileges to Taiwanese travelers, a striking development considering the lack of formal diplomatic relations between the two countries.

骨神經醫師在台無法被承認是專業執業醫師的長久問題。由於健保相關議題的重要性，今年參加叩門之旅的代表來自本商會的三個衛生相關委員會：製藥、醫療器材和公共衛生，而且首次將拜會美國衛生及人力資源部列入行程。此外，醫療器材小組亦走訪該產業的業界組織：先進醫療技術協會（AdvaMed）總部；該協會的理事會不久前才首度將台灣議題納入其倡導議程。加入TPP 如果台灣先前認為有充足時間準備加入T P P，是因為現有12個成員國之間的談判可能會曠日彌久，那麼這樣的想法顯然需要修正。儘管可以發現一些懷疑談判能在短期內落幕的質疑聲浪，不過代表團在華府的會談（不論是和政府官員或外來分析家）中聽到的，大多是歐巴馬政府決定在今年底前或最晚明年初完成協商。美國貿易代表傅洛曼（Mike Froman）據傳正積極執行這

個目標。事實上，美國一些產業協會擔心這樣的速度可能太快，TPP最初所公布的一些高標準最後可能會因為追求進度而有所妥協。日本在半年前成為T P P的第十二個協商夥伴時，許多人都以為日本的加入（儘管大大增加了T P P的分量）會讓協商過程的速度大幅放慢，因為日本過去以保護國內市場著稱。不過本商會的代表團獲悉，安倍政府對貿易問題似乎遠較前幾任日本政府更積極。因此日本的加入讓情勢出現變化，激發其它國家（尤其是台灣的主要貿易對手南韓）對加入TPP的興趣，推測會有第二輪入會協商。台灣若無法加入擴展後的TPP，面臨的經濟孤立風險會更加嚴重。除了台灣對於承諾達成符合「金本位」貿易自由化機制的意願問題外，台灣能否加入TPP的其它不穩定因素就是政治：中國是否會試圖從中作梗。數位美國官員對此問題都提出制式回應，引述傅洛曼六月在其任命同意權聽證會上的談話，表示「TPP對所有達到TPP高加入標準

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Largest Ever Delegation to Washington

ach year, AmCham Taipei sends a delegation to Washington, D.C. for a round of discussions 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. This year’s group, led by AmCham Chairman Alan Eusden, was the largest in the 19 years since the Chamber began conducting its own independent Doorknocks. The delegation held a total of 42 meetings between September 9 and 13, frequently splitting into two or three teams to cover more appointments. Several U.S. government agencies praised AmCham Taipei for the professionalism of its advocacy activities, including the Doorknock and the Taiwan White Paper. The official greeting the group at one high-level office said that “AmCham Taipei has the reputation as being one of the most active and effective organizations we interact with.” Besides Eusden, other members of the 2013 Doorknock delegation included AmCham president Andrea Wu; AmCham Vice Chairman Bill Wiseman of McKinsey & Co.; former chairman Paul Cassingham of the law firm of K&L Gates, chair of AmCham’s Government Relations Committee; Cosmas Lu of Barclays Bank, a member of the Chamber’s Board of Supervisors; Scott Meikle of Micron investment, co-chair of the Intellectual Property Committee;

的亞太經濟合作會議（APEC）會員經濟體開放：包括台灣在內」。他們表示，中華人民共和國的官員從未表示反對此一構想。與此同時，部分叩門之旅代表團的消息人士指出，在實際作法上，北京可能會尋求向某些TPP成員國施壓，將台灣摒除在外。他們還說，台灣的最佳防衛方式就是針對加入 TPP提出具吸引力的條件，讓既有成員國享有的貿易利益超越惹惱中國的不利後果。由於中國最近對TPP的態度軟化（之前曾駁斥美國企圖藉 TPP孤立中國），而且有朝一日可能會申請加入，台灣在策略上若能搶在中國獲准或準備加入、進而有能力直接阻撓或拖延台灣參與之前就先入會，將是較為明智的作法。投資協定本商會長久以來一直將BIA談判視為台美之間邁向自由貿易協議（不論是達成雙邊自由貿易協定，或透過TPP完成多國的同類協定）的潛在「基石」。不過這些年來，美方不

East Asian specialist Dan Blumenthal received the group at the American Enterprise Institute think tank.

Dan Silver of Abbott Laboratories, representing AmCham’s Medical Devices Committee; Steven Chen of Eli Lilly, as well as Daniel Brindle and Yvette Tsai of Pfizer, representing the Pharmaceutical Committee; Dennis Lin and Alex Yeh of Becton Dickinson, representing the Public Health Committee; AmCham Senior Director Don Shapiro; and AmCham Director of Government & Public Affairs Amy Chang. They were joined for some meetings by Washington-based representatives from member companies Citibank, Becton Dickinson, Eli Lilly, Medtronic, and Pfizer. The trip follows publication of the Chamber’s annual Taiwan White Paper, a compendium of recommendations to both the Taiwan and U.S. governments on how the business climate for multinational companies in Taiwan could be further improved.

願積極討論和台灣達成B I A的可能性，因為美方不確定要如何在達成協定後進行法律上的批准。不同於美國在台協會（AIT）和台北經濟文化代表處過去數十年來代表各自政府簽署的許多其它協定，BIA據信須由美國國會批准，因為它對美國既有法律的影響具有約束力。不過美國國會應採取何種形式批准？美國和大部分國家簽署這類協議和條約時，根據美國憲法，只須送交參議院批准。但美國和台灣缺乏正式外交關係，雙方簽署的協議不會被視為「條約」，依據部分美國政府法律顧問的看法，會要求須由參、眾兩院批准。美國行政部門並不希望將投資協議送到通常對這類事務並無管轄權的眾議院，因為擔心可能會有許多無關緊要的修正案隨之而來。要避免此狀況發生，有人建議可將美台雙邊投資協定列入將來美國國會恢復總統貿易推廣授權（T P A）的立法範圍內。這類「快速授權」（完成T P P談判後，最終將需要此一權力批准美國參與）允

許國會只針對「可」或「否」進行表決，而無修改或附加修正案的權力。不過華府的大部分消息人士似乎認為，T P A立法早已具有足夠的政治挑戰性，無須再弄得更複雜。因此，這次叩門之旅結束時，並未看到任何讓BIA成真的清楚途徑。不過代表團了解，針對美台達成協定可能性的進一步探討，將留待TIFA 投資工作小組討論。為期一週的叩門之旅結束時，美國政府正在進行的種種努力也令代表團振奮。美國政府根據國會無異議通過、並由歐巴馬總統簽屬生效的一項法律，積極支持台灣爭取成為國際民航組織（I C A O）的觀察員。儘管台灣最後只能以「來賓」（而非正式觀察員）身分，出席在蒙特婁舉行的國際民航組織大會，但美國的強力支持是令人鼓舞的跡象，顯示美國的親台情感持續不墜。在此之前，美國政府去年做出重大指標性決策，讓台灣旅客也享有赴美免簽證待遇。在雙方缺乏正式外交關係的情況下，此一進展令人矚目。

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TAIWAN busINess

Taiwan’s Unmanned Aerial Vehicle Industry Takes Off The products of three local manufacturers have been developed for civilian use, especially by government agencies.

BY JENS KASTNER

t the biennial Taipei Aerospace and Defense Technology Exhibition (TADTE) held in August, the Taiwan-made products that most caught the eye of visitors were the unmanned aerial vehicles (UAVs) displayed by the Taiwan military-run Chung-Shan Institute of Science and Technology (CSIST), three private local manufacturers, and a handful of Taiwanese university teams. Exhibited were fixed-wing and rotor UAVs, as well as various UAV-related services. The show provided a glimpse into a small but promising local industry that has benefited from technology transfers in connection with both the development of Taiwan’s Indigenous Defense Fighter (IDF) and the original design manufacturing (ODM) of radio-controlled model aircraft for foreign firms. This emerging industry has also been greatly helped by the strong backing of domestic academic research institutions, and by Taiwan’s well-established supply chains for specialty materials and components. Sources in the industry agree that their best business prospects are likely to come from commercial rather than military sales, as the military primarily

relies on its own development projects or procurement from abroad. The Taiwanese UAV companies’ current pool of customers is comprised solely of civilian government agencies and research institutions. But they hope for an eventual liberalization of regulations to clear air space for commercial-use UAVs, which would likely increase demand substantially. One of the Taiwan manufacturers, Carbon-Based Technology Inc., located in Taichung’s Central Taiwan Science Park, promotes its UAVs and related services under the brand name Uaver. The company was established in 2007, and aside from UAVs produces carbon fiber products such as windmill blades, motorcycle parts, and cell phone accessories. Uaver was founded by engineers who had retired from CSIST, which serves as the main research and development institution for the Ministry of National Defense's Armaments Bureau. According to Craig Wang, Uaver’s marketing chief, the key to Uaver’s successful UAV development was the technology transfer from U.S. defense industry suppliers to CSIST and the state-owned Aerospace Industrial Development Corporation (AIDC) in

the 1990s for the production of the F-CK-1 “Ching-kuo” jet fighter, also known as the IDF. The F-CK-1 program came into being after Taiwan found that pressure from China was making it difficult for it to procure advanced fighter aircraft from the United States. “Actually, Uaver’s engineers weren’t the leaders in the Ching-kuo project, but assistants,” says Wang. He adds that many of Taiwan’s aviation technology companies were effectively built on expertise gained through the project. A prime example is AIDC, which is now manufacturing landing gear doors and pressurized doors for the Boeing 737 and 747. The mainstays among Uaver's products are the “Swallow” and the “Avian,” both battery-powered fixedwing aircraft with wingspans of 100 centimeters and 160 centimeters respectively. The system set-up time is a quick 10 minutes, and both UAVs are launched with a bungee cord and recovered with a parachute. The two products can stay in the air for 40-50 minutes and 60-90 minutes respectively, with a communication range of up to 10 kilometers.

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Gasoline vs. battery power

GASOLINE-POWERED — Geosat says its UAVs are able to fly longer and farther than similar battery-powered craft. photo : geosat

The flight track is defined by just a single mouse click on a Google Earth map, a feature found only in Uaver products, Wang notes. All components except the camera are designed by the company itself, and the whole unmanned aerial system (UAS) costs in the neighborhood of US$100,000, not including training, which is another US$6,500. “Training from scratch to our ‘C’ rank certification takes three or four days, after which the pilot must first gain some experience before later returning for courses leading to Uaver ‘B’ and ‘A’ certification,” Wang explains. Uaver provides UAV services as well as products. Its customers include a number of local governments in Taiwan, which use the service mainly for surveillance after disaster emergencies. Uaver has an open contract with the Kaohsiung City government to check on infrastructure and remote villages after typhoons, when weather conditions are still too precarious for manned helicopters to take off. The firm has another such open contract with National Cheng Kung University (NCKU), which hosts an emergency response center for the Central Government. Wang says Uaver has so far conducted over 30 missions for these two clients, with the pay depending on the level of difficulty. As a rule, he says, UAV surveillance flights in Taiwan cost between NT$60,000 (US$2,000) and NT$120,000, while data analysis is 30

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charged extra. The company also has overseas customers. Malaysia, for example, bought two Uaver UAVs this year for mapping. In addition, Wang points to a growing demand for UAVs, particularly in rapidly developing China and Southeast Asia, where urban and even rural planners need to have the most up-to-date information to take into consideration the constant changes occurring on the ground, often literally overnight. A positive development for UAV providers is that mapping in many countries was previously the prerogative of the military but has recently been released to the private sector, Wang says. Another country on Uaver’s customer list is South Korea, which has also purchased two Uaver UAVs. Wang notes that the Korean government aims to digitalize all of its maps of the country, and for that purpose a fleet of GPS positioning cars has been roaming the streets of Korea, with the UAVs used to complete the visualization. In addition, Russia has recently put down a deposit for two Uaver UAVs, also intended for mapping, and Wang says sales negotiations are close to completion with another Asian country for three to six aircraft. As the narcotics control bureau of that country recently lost a helicopter with a crew of five in a crash, UAVs are considered a very attractive option to search out opium fields or drug processing plants hidden in remote areas.

Whereas Uaver products are all battery-powered, Tainan-based Geosat Informatics and Technology Co. uses gasoline engines for its fixed-wing UAV, the “Sky Arrow 55” and “Sky Arrow 100,” while also employing batterypowered rotorcraft. The advantage of gasoline power is much greater endurance (between 3.5 and four hours) and flight distance (400 kilometers), with the theoretical drawback that a crash could cause a fire. But Fred Wang, the company's Senior Assistant Vice President, says that risk is more remote than the chance of a car accident causing an inferno in nearby buildings. The “Sky Arrows” can produce images with a resolution as high as 10 centimeters per pixel, says Fred Wang. He puts the cost of a flight at about NT$80,000, including data processing, which is much cheaper than the NT$300,000 per half day typically charged for a manned helicopter, data processing excluded. “Employing a high-accuracy positioning system developed by National Cheng Kung University, we are the only Taiwanese UAV firm providing Geographic Information System (GIS) positioning services needed for accurate mapping,” Wang says. He adds that Geosat UAVs come with subsystems for azimuth accuracy and shockproofing, imperative for high-quality data monitoring. Wang emphasizes that Geosat excels at the integration of such subsystems, which after all is what the UAV business is all about. “Without such integration, the aircraft is a simple remote-controlled device, not deserving to be called a UAV,” he says. Geosat’s customer base is com prised mainly of government agencies and academic research teams, who need UAVs for land surveying and mapping. Many projects deal with urban planning, the development of industrial zones, and tourism. Wang explained that as market entry barriers and the learning threshold are high in the UAV business, Geosat’s strategy is to equip and train local

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TAIWAN busINes s

agents so that the level of their service is similar to Geosat’s own. The company is also active abroad, selling the complete UAS, as well as providing related training. “Since sales growth cannot possibly be sustained with hardware alone, we believe that our Taiwan model of focusing on the distribution of complete UAS solutions – as opposed to merely selling UAVs – is the best way to enter international markets,” Wang says. Geosat is headed by General Manager Lo Cheng-Fang, who formerly held the same position at AIDC. The company’s pool of engineers is drawn from National Formosa University’s Graduate Institute for Aeronautical and Electronic Engineering as well as from NCKU’s Department of Geomatics. Another participant in TADTE this year was Avix Technology Inc., but the Taichung-based firm is still in the process of perfecting the prototype for its helicopter UAV, the AXH-1400. Avix’s current principal business is ODM manufacturing of radio-controlled model helicopters for JR Propo, a major Japanese manufacturer of radio-controlled robots and model aircraft. But as the local engineers in the partly Japanese, partly Taiwanese team used to work at Uaver or CSIST’s UAV department, it appears that the firm sees its future in the helicopter UAV business. According to Cooper Chang, Principal Manager of Avix’s UAV program, AXH-1400’s main advantages are its

very high payload capacity – up to 10 kilograms – and the capability to take off from very limited space, making it suitable for use on ships, for example. “Operators of fishing vessels on the high seas increasingly seek UAVs for fish-spotting and have approached us, as has Japan’s national broadcaster, NHK, which needs a capable helicopter UAV for its heavy, extremely high-resolution TV cameras,” Chang says. When offered on the market, the AXH-1400 will carry a US$10,000 price tag. This price covers only the actual UAV with servos and motor, but not the data link, ground control, auto pilot system, and other features. But Chang notes that the price is just onetenth of the competing “Camcopter” from the Austrian company, Schiebel. Chang explains that Avix will be able to keep the price low because almost the entire supply chain is located nearby. Avix’s design office and R&D center are on the second floor of a non-descript two-story building in the Taichung countryside, while the precision plastic injection molding is done downstairs. The metal parts can be supplied on very short notice from CNC machining vendors in the surrounding area. Suppliers of the main material, aeronautical-grade carbon fiber, are also in the neighborhood, though for some extra-lightweight carbon fiber, Avix turns to Japan, Chang says. What Uaver, Geosat, and Avix have in common is the hope that one day

soon Taiwan’s Civil Aviation Administration will permit domestic UAV flights for purely commercial purposes. According to Uaver’s Craig Wang, a new regulation is under consideration that would make mapping compulsory before and after all construction projects valued over NT$10 million (US$330,000). Given that government maps of Taiwan’s remote areas are often several years old and thus unsuitable, implementation of such a regulation would greatly increase the demand for UAV services. Some see the recent decision by the U.S. Federal Aviation Administration (FAA) to issue operating permits for civilian UAVs to an Alaskan-based company as a positive sign, given that previously the FAA – like the European Aviation Safety Agency – had always withheld approval for any UAVs flying beyond visibility range. Unlike Alaska, however, Taiwan is a highly densely populated area, raising safety concerns. Yet even if approval for civilian-use flights doesn’t come any time soon, government demand alone is likely to keep Taiwan’s UAV providers busy. Boding well in this regard, the Environmental Protection Administration (EPA) recently gained some positive publicity when UAVs it had hired discovered illegal storage tanks at Taiwan’s sixth naphtha cracker complex. The news was likely to inspire other government agencies to explore how UAVs could help their operations.

photo : geosat

Avix technicians assemble an unmanned aerial vehicle at their Taichung plant, left, and one of Geosat's models, above.

photo : avix

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market trends

Go Social, Go Global Taiwan offers an ideal environment for the use of social media by business, but it is important to follow a correct strategy.

BY JAMES CHARD

ocial media is an entirely new breed of communication, a product of the rapid advance of technology in recent decades. Information is now accessible anywhere and everywhere, and individuals are empowered with the ability to create and consume media content in unprecedented quantities. Facebook is undoubtedly the most recognizable and most widely-used social media network on the planet (and in Taiwan), but it is important to remember that a number of other platforms make up the larger picture. Other networks like Twitter, Linkedin, and Google+, along with company sites and blogs, contribute in a major way to the social media landscape. Two-way communication is the new status quo. Whereas media was once a uni-directional function (a message was broadcast to an audience, whether it numbered in the tens or the millions), it is now multi-directional. Audiences now have the ability to respond meaningfully to brands and advertisers, and to be heard by an audience of the same magnitude – or even larger. Social media is essentially a communications force multiplier – messages and media can be picked up by anyone and relayed millions, if not billions, of times across the web. Social media platforms are more than just a broadcast channel – they can be used to send messages, but also to listen to the responses. They can be used to shape public opinion, or to develop strategies based on existing opinions. Social media is constantly evolving, and constantly in flux.

Ta i w a n i s o n e o f t h e m o s t wired (and wireless) countries in the world. Of its 23 million people, 80% are internet savvy, and cellphone penetration has long since exceeded 100%. Threefifths of the population, or 14 m i l l i o n Ta i w a n e s e , u s e F a c e book – 10 million of them on a daily basis. Ten million people in Taiwan use phones to access Facebook each month, and 7 million do it every day. In fact, Facebook’s penetration rate in Taiwan is higher than in any other country in Asia. Facebook COO Sheryl Sandberg recently spoke of the company’s hopes to tap further into the local market, and in a recent visit to Taiwan, Dan Neary, vice-president of Facebook’s Asia-Pacific Marketing team, announced plans for the company to provide more services and features for business users in the near future to extend its reach in Taiwan. Twitter is also looking to expand its operations here, and Yahoo! announced that at the end of this year it will shut down wretch.cc, Taiwan’s biggest blogging platform and its second-most-popular social media platform – leaving room for international competitors and mainstream social media networks to fill the gap. Taiwan’s politically free media environment and its extremely connected people are attractive to a number of global social media companies, Facebook and Twitter among them. The lack of censorship combined with a population that is always online and always mobile is truly the perfect combination of ingredients for a robust social media environment. There is no longer any reason not to embrace social

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media for your business. The use of traditional media is still valuable, but is no longer sufficient. We live in a world where more information is generated online in a single day than all of the data that existed before the turn of the 21st century. The planet lives and works online, and businesses can’t afford not to make the transition to digital, social, and mobile. If you produce a video commercial, post it on YouTube. If you write an article, or are covered by the local press, post about it on Twitter. If you have a job opening available, advertise it on LinkedIn. If you take a stunning photo of your product in action, post it on Facebook. Even if you’re not ready to dive into a full-blown social media campaign, everyone needs to start somewhere. Social media has been around for nearly a decade and is only going to become more prevalent and pervasive as time goes on. If your business hasn’t stepped into the game yet, now is the time. International social media brands are making their mark on the local scene, equipping you with tools to successfully garner and retain an engaged social media audience. For a newcomer, social media may appear intimidating, but it is a powerful and relevant tool that when used correctly can yield outstanding results. A well-designed social media presence can serve the functions of a complete communications platform, a content distribution tool, a customer relations management system, and much more.

Define your strategy There are hundreds of possible strategies for incorporating social and digital media into the sales and communications plans for any business. There is no one-size-fits-all method, and one of the greatest challenges in using social media for business is measuring the return on investment. The first step is to determine which strategy, or set of strategies, will be the most effective for your organization. This decision can take time, and must be based on a number of factors, including industry sector, audience, location, resources, company culture, and more. Think of your social media communications platform as a conversation. Don’t treat it as simply a message board or a channel for announcements about your business. Yes, you can and will use social media to make announcements, but using it strictly as a one-way communication channel will lead to failure and audience frustration. Several key points should be kept in mind when planning your social media strategy or business campaign. Whether you are launching a product, announcing an event, or simply sharing some information, consider these prime aspects that always apply. 1. Engagement. Make sure that the content your business publishes on social media is consistently engaging and interesting. Does it capture the attention and the emotions of your audience? Social media engagement is typically defined by the number of people that

your posts can inspire to take action. Will your audience simply scroll past your post on their news feed, or will they be interested enough to click, giving you valuable page views? Does your content have a distinct call to action that encourages your audience to click, like, follow, or share? Remember, your audience is the hero – and you should never treat them otherwise. 2. Relevance. Know your audience, but also know that everyone and anyone can see what you publish online. You won’t always be able to predict the exact demographic or psychographic that you are appealing to, so have the foresight to prepare content that has universal appeal. In doing so, you will find that you can reach audiences you didn't even know you had. 3. Visibility. Search Engine Optimization has been a popular trend on the rise for the last few years, but people are discovering that there’s a much less convoluted method for making sure your business can be found in Google searches. Instead of spending hundreds of hours trying to beat obscure search algorithms, try instead to focus on simpler things. Are the messages you send out on social media consistent? Do they all link back to your company’s main website? Is your material worth talking about? Is it worth sharing? 4. Honesty. People appreciate honesty and transparency, and in the constantly connected open forum of social media, it’s very easy for the community to tell if you are embellishing, over-selling, or simply lying. The smart approach is openness and honesty. You and your content should appeal to your audience as a respected peer, not a clueless consumer. To orchestrate an effective social media strategy, you will need to live by these guiding principles and treat social media not as a gimmick, but as a real extension of your brand and your overall communications plan. As your brand or business grows accustomed to the arena that is the social media landscape, you can begin to develop more sophisticated strategies and tactics for engaging your audience and converting them into customers. Following are some guidelines that can help fine-tune your brand’s presence online: • Social Media should not replace your website. This is a mistake made by many businesses. Once they transition to social media, they abandon their home page to live entirely on Facebook or Twitter. Instead, you should take advantage of social media’s ability to increase traffic to your website. Use your website as a home base for your content and communications material, then distribute it strategically to your various social media profiles to direct people to your products and services. • Quality over quantity, but don't neglect the quantity. Online audiences are growing more and more selective about the content they consume during their browsing. It is very important to consistently output high-quality content, or content that has high entertainment value. This is a key step to creating viral subject matter that

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MARKET TRENDS

can spread like wildfire across both the internet and mainstream media. However, maintaining an active social media presence also requires just that – your presence. If you find your social media activity is idle or inactive, it may be wise to consider waiting until you have the time or resources to commit to maintaining an active role in the social conversation. Audiences are fickle, and their lack of patience is only magnified online, where absolutely everything is dictated by speed, reliability, and accessibility. • Listen to your audience. Never forget that social media is a two-way communications platform. You can use it to speak, but you can also use it to listen. Most social media networking sites have built-in features for analyzing and observing audience trends and activity. Use these tools to your advantage to listen to and understand what your target demographic is saying about you, your products, or your competitor’s products. The same tools can also be used to collect useful data about your social media strategy itself. Be sure to analyze the success and engagement of your posts, and adjust your activity accordingly. In addition, it is important to respond to members of your audience promptly and sincerely when they reach out to you. This may seem like common sense, but a great number of businesses simply don’t treat their customers and audiences with respect. In the age of social media, that mistake can be devastating for your reputation and image. • Use your social media platforms for the right purpose. There are dozens of social media sites and tools available for free use on the web. They were each built to serve a specific purpose, and the most popular services tend to be the best at what they do. When devising your business’s social media plan, take into consideration the specific needs or requirements that you need to fill. What kind of audiences do you want to appeal 34

to? If your audience is older and more professional, focus on developing a Linkedin following. If you need to appeal to younger, trendier individuals, perhaps Pinterest or Twitter would be more appropriate. Do your research and make sure you are using the right social media networks to fulfill the right needs. Just as using a tool incorrectly can be counter-productive and even dangerous, using social media incorrectly can be highly ineffective or even damaging to your brand. Remember that today’s internet environment is ruled by speed and innovation; new social media websites, platforms, and tools pop up every day. Not all of them are useful, but one of them could be the next Facebook. It’s never a bad idea to experiment (cautiously) and be an early adopter of a new platform. If your social media campaign doesn't take off right away, don’t be discouraged. It takes time, and continuous refinement, to come up with a strategy that works for your business. If it makes sense, consider hiring a consultant, or modifying the role of your communications manager to spend more time focusing on a social media strategy. Accurately measuring the ROI of your investment in social media can be a challenge, but with careful tracking and some simple data analytics (page views, click rates, sales tracking, and more), it's a challenge that your business can easily overcome. One benefit of transitioning to an internet-based communications platform is that everything is trackable – you’ll be able to accurately observe the impact of your social and digital media activities and optimize your strategy based on the results. A final word of caution before you embark on your social media journey: Social media is a powerful tool; abusing it can have disastrous results. Online audiences can be treacherous and vicious, but only if you give them a reason to distrust you, your business, or your brand. Mistakes on the internet last forever, and you can’t truly “delete” anything that is posted online. Use social media often and adventurously, but use it with care.

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INDUSTRY

CUS

A Report on the Construction Sector

Building Taiwan

photo : continentaL enGineerinG corp.

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INDUSTRY

CUS

Civil Engineering Firms Diversify Operations As tight government budgets cause the public construction market to shrink, companies turn to housing and BOT projects. BY PHILIP LIU

IN THIS SURVEY

• Civil Engineering Firms Diversify Operations

p36

• PCC Prepares to Exit from the Scene p38

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aced with a drastic reduction in public construction projects due to completion of major transportation projects and the government’s financial constraints, Taiwanese civil-engineering companies have been seeking to diversify their operations. Many have made forays into the housing sector, either for construction or as developers. The government budget for 2014 includes only NT$161.3 billion (US$5.4 billion) in appropriations for major public construction projects. The figure represents 8.77% of the central government’s budgeted outlay of NT$1.9 trillion (US$63.3 billion) for the year, compared with NT$190 billion (US$6.3 billion) or 9.77% for 2103. The meager budget has elicited a warning from the Council for Economic Planning and Development (CEPD), the Cabinet’s think tank, that the amount is insufficient to sustain economic growth momentum. CEPD has asked the Executive Yuan to set aside an extra NT$36 billion (US$1.2 billion) in 2014 to fund urgently needed projects, a request that is still under consideration. Even with the additional amount, the central government expenditure on public construction projects would

come to far less than the NT$300 billion to $400 billion level that was the norm in past years. In addition to the government’s financial difficulties, another major reason for the decline in the outlay for public construction projects is the completion of most of the island’s major transportation projects, traditionally the major infrastructure sector. The pace of construction for Taipei’s mass rapid transit (MRT) system, for example, has slowed down conspicuously, following its formation into a grid network. The system now consists of 10 lines totaling 115.6 kilometers in length, with a daily passenger load in July of 1.7 million riders. Following the inauguration by year-end of the 6.4-kilometer Xinyi Line, the major ongoing MRT project is the ring line, located entirely within New Taipei City and encircling the existing network. The line’s 34-kilometer first-stage section, connecting Dapinglin Station in Xindian District with the Wugu Industrial Zone Station, is scheduled to be operational by 2016. The ring or Circle Line, which will also be known as the Yellow Line, will be an elevated, medium-capacity system similar to the Wenhu

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A Report on the Construction Sector

Line. The Italian company AnsaldoBreda has won the first-stage contract for the electrical system, which will feature four-car driverless trains with steel wheels on steel rails. After the Circle Line’s first-stage project is launched in the southwestern portion of greater Taipei, work will proceed simultaneously on the second- and third-stage projects – with lengths of 14.2 and 5.6 kilometers respectively – completing the ring and intersecting with five lines of the existing MRT network. Another major current mass-rapid-transit project is the 53-kilometer Taoyuan International Airport MRT. With a total budget of NT$114 billion (US$3.8 billion), the Airport MRT is scheduled for inauguration by the end of 2015. The original schedule had called for mid-2012 completion of the elevated section between Sanchong in New Taipei City and Zhongli of Taoyuan County, and October 2014 completion for the underground section from Sanchong to the Taipei Railway Station. The delay was due mainly to problems with the electrical-mechanical system, which is being

supplied by Marubeni Corp. of Japan. The MRT will cut the traveling time from the Taipei Station to the Taoyuan Airport to only 35 minutes for direct trains. Also under construction is the 16.7kilometer green line of Taichung City’s MRT system, being built at a cost of NT$50 billion (US$1.67 billion). A medium-capacity elevated system, it will feature steel wheels on steel rails. A team consisting of Kawasaki Heavy Industries of Japan, Alstom of France, and CTCI Corp. of Taiwan is responsible for the electrical-mechanical system, while Taiwan’s Continental Engineering Corp. is taking charge of rail engineering. The line is scheduled for inauguration in the fourth quarter of 2017, two years later than originally planned, mainly due to repeated aborted biddings for the electrical-mechanical system. The north-south green line will be followed by an eastwest blue line connecting the Taichung train station with Tunghai University, as well as an orange line connecting the Shuinan economic zone and Wufeng. In Kaohsiung, with its two MRT lines already in place forming a cross shape,

the city government in June this year kicked off first-stage engineering for a ring-shaped light-rail line extending 8.7 kilometers. With a budget of NT$5.68 billion (US$189 million), the line will take advantage of existing railway tracks along the coast by Kaohsiung Harbor. It will pass through many key facilities, such as a projected multi-functional economic and trade park and the Kaohsiung Software Technology Park. CAF of Spain is responsible for the electrical-mechanical system and Taiwan’s Evergreen Construction Corp. for the engineering work. Unlike traditional light-rail systems, the line will have no overhanging electrical lines or poles on the sides, as its trains will be powered by super batteries that can be recharged in 20 minutes. The line is scheduled to become operational by 2015 and then be followed by a 22.1kilometer second-stage section. With a total budget of NT$16.5 billion (US$550 million), the light-rail line will supplement the city’s two existing lines, greatly enhancing the convenience of the MRT system and increasing the passenger load.

A portion of the Taichung elevated railway project, due to be completed next year, which utilizes the balanced cantilever method for bridge construction. photo : continentaL enGineerinG corp.

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Tougher competition Aside from those ongoing MRT projects, few other major transportation projects are underway or in the pipeline, leading to substantial shrinkage in the island’s public-construction market. The diminished demand has intensified competition, driving down gross margins for civil-engineering work on publicconstruction projects to as low as 3-4%. As a result, of the 14 publicly listed civil-engineering companies, the share prices of eight have dropped to less than their book values. The few with better performance, such as CTCI Corp. and Ruentex, which have share prices of double their book value, have benefited from other lines of business with higher margins. Civil-engineering companies that previously relied primarily on public infrastructure projects are having to turn elsewhere for business opportunities. Most of them have been focusing on the housing market – both as constructors and developers – which offer higher margins and shorter construction periods. The construction of factory buildings is another area of activity. Da Cin Construction, which in the past specialized in MRT and other public-construction projects, expects to reach NT$13 billion (US$433 million) in revenue this year, with earnings per share (EPS) of an exceptional NT$3, thanks in large part to the completion in the first quarter of sales at its “Wenhuayuan” luxury-housing project on the site of the former Magnolia Hotel on Taipei’s Duanhua North Road. Da Cin served as both the constructor and the developer. In addition, on August 28 Da Cin signed a contract with Hung Sheng Construction, a leading housing-project developer, for joint development of the “Oceanic Downtown” housing project in New Taipei City’s Danhai New Town. It also won the superficies rights for a plot of land on Xinan Street in Taipei, on which it will build a hotel. These projects are in line with the company’s strategy in recent years of diversifying its operation to sectors other than civil engineering for public construction projects. In fact, in 2012 revenue from public construction projects accounted for only 15% of the

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company’s total revenue. Another 47% came from factory buildings, 25% from housing projects, and the remainder from office buildings. BES Engineering has also been actively moving into the housing sector in recent years. Its major project in hand is the rebuilding of Agora Garden in downtown Taipei’s Xinyi planned area into a 21-story luxury-housing complex. Construction is scheduled for completion in 2015. The company has also purchased a plot of land formerly occupied by a Catholic church in Taipei’s Jiantan area for housing construction. In addition, it has set up a 20-person team to focus on urban renewal projects. These development projects will supplement the company’s civil-engineering works for public construction projects, for which it still has over NT$40 billion (US$1.3 billion) worth of contracts in hand. These include the ring line of the Taipei MRT, expressways, and part of the intercontinental container center project at Kaohsiung Harbor. Due to the injection of profits from housing projects, Continental Holdings, the parent company of Continental Engineering and Continental Construction, last year took in NT$1.147 billion (US$38 million) in after-tax net profits, for EPS of NT$1.36, on revenue of NT$28.5 billion (US$950 million). Hung Yi-chien, CEO of Continental Holdings, reports that the company this year expects to roll out housing projects worth NT$15 billion (US$500 million) in value while undertaking NT$31.5 billion (US$1.05 billion) worth of civil-engineering contracts. The company now has NT$55 billion (US$1.83 billion) worth of civil-engineering contracts in hand, mainly for MRT projects and bridges, including NT$43 billion (US$1.4 billion) in Taiwan and NT$12 billion (US$400 million) overseas. Although CTCI Corp. is also stepping into the property market, it still concentrates on civil-engineering works and factory buildings, from which it can still garner handsome profits as a result of its ability as a general contractor to cover design, construction, outsourcing, and supervision, as well as niche technologies. It currently holds NT$170 billion

(US$5.7 billion) worth of contracts, a record high, in a wide range of fields, including transportation, petrochemicals, electrical power, incinerators, and environmental engineering. In addition to the home front, the company has also made major inroads into overseas markets in recent years, mainly for petrochemical plants in such Middle Eastern countries as Saudi Arabia and Qatar, as well as petrochemical facilities, power plants, and MRT lines in Southeast Asia. In addition, it has gained a solid foothold in Beijing for petrochemical plants, and in Shanghai for hi-tech factories, commercial buildings, and hospitals. It is now setting its sights on natural gas and oil shale projects in overseas markets. The company recorded 2012 revenue of NT$60.7 billion (US$2 billion), up 8%, with EPS reaching NT$3.32.

More BOT activity Some civil-engineering firms have even sought to undertake BOT (build-operate-transfer) projects, despite the heavy investments and slow returns involved. BES Engineering, for instance, is in active talks with the Taipei city government about taking over the twin-tower buildings near the Taipei Railway Station – one of 56 stories and the other 76 stories. BES was the runner-up in the initial bidding for the NT$35.7 billion (US$1.2 billion) project, but now has a second chance following the default of the original winning bidder. Due to the central government’s financial straits, BOT has emerged as the preferred method for public construction projects. The total scale of BOT projects this year is expected to hit NT$150 billion (US$5 billion), compared with NT$142 billion (US$4.7 billion) in 2012 and NT$40 billion (US$1.3 billion) in 2011, according to the Public Construction Commission (PCC). In a reversal of the previous situation, BOT projects organized by municipal governments now account for 70% of the total, leaving only 30% for the central government. The huge potential of the BOT market has even attracted the participation of foreign investors. In July this

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A Report on the Construction Sector

year, for instance, Mitsui Fudosan Co., a major Japanese realty developer, signed a 50-year BOT contract with the New Taipei City government to build a largescale outlet park on 6.74 hectares of municipal government-owned land in Linkou. The NT$5.5 billion (US$183 million) facility will accommodate outlets for branded products, a supermarket, restaurants, and movie theaters. It is situated near a station of the Airport MRT and a freeway ramp. After its inauguration, scheduled for June 2017, it is expected to generate 2,000 job opportunities. BOT projects now cover a wide range, including some unconventional undertakings. For instance, Radium Life Tech, a realty developer noted for buildings above Taipei MRT stations, is constructing a sewerage system for Taoyuan County on a BOT basis. With an expected investment of NT$20 billion (US$666 million) and a 35-year franchise, the project will be carried out in four stages and is scheduled for completion in 19 years. At that time the system will serve 250,000 households, or 670,000 people, boosting the penetration rate of the sewerage system in the county to 51.18%. For the company, the facility will generate steady income, enhancing its cash flow. With their huge amounts of funds to invest, life insurance firms are major

undertakers of BOT projects. In October 2012, Nan Shan Life Insurance inked a BOT contract with the Taipei city government to construct two tower buildings, 40-50 stories high, on a 1.8-hectare (over 4 acres) plot of land on the existing site of the second exhibition hall of the Taipei World Trade Center near Taipei 101. The twin buildings will serve as corporate offices, shopping centers, and museums. In addition to NT$27 billion (US$900 million) for the 50-year franchise fee, Nan Shan will invest NT$40 billion (US$1.3 billion) in the project, scheduled for completion in seven years. The facility is expected to generate 9,000 jobs when it is operational. Last December, Cathay Life Insurance, the island’s leading life insurer, signed a BOT contract with the Bureau of High Speed Rail under the Ministry of Transportation and Communications to develop a 22-hectare plot near the Taoyuan High-Speed Rail Station. Among other functions, the NT$20 billion (US$666 million) facility will accommodate outlets of branded products. It is expected to generate 2,700 employment opportunities, attract 7 million visitors a year, and create NT$10 billion (US$333 million) in annual revenue. Cathay will pay the government NT$4.3 billion (US$143 million) for the

50-year franchise. The prevalence of BOT projects may contribute to improving the quality of public construction projects, freeing contractors from the considerable rigidities and red tape that accompany government projects. The tendency of the government to award contracts by lowest bid has also been the subject of criticism. Former PCC Minister Chen Chen-chuan notes that the selection of winning bids according to the lowest offer often leads to substandard quality for public construction projects and discourages the use of innovative civil-engineering technologies. As a result, the PCC has been promoting the “optimal bid” system, under which a screening panel will take the qualifications and track records of bidders as a major consideration in determining the winning bid. Li Si-chuan, deputy mayor of New Taiwan City, supports the optimal-bid practice, saying that “When you decide the contract constructor, you decide the quality of a public-construction project.” However, most government agencies still prefer the lowest-bid practice, as optimal bids entail a complicated screening process and often lead to losing bidders charging government officials with favoritism towards the winning bidders.

PCC Prepares to Exit from the Scene Under a government restructuring plan, functions of the Public Construction Commission will be divided among various departments. BY PHILIP LIU photo : continentaL enGineerinG corp.

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s part of a comprehensive restructuring of Taiwan’s central government, the Cabinet-level Public Construction Commission (PCC) will soon cease to exist. Its functions will be divided into three parts and incorporated into the Ministry of Transportation and Construction (MOTC), Ministry of Finance (MOF), and a new National Development Commission (NDC) respectively. PCC pledges to maintain seamless service during the transition period and to continue to contribute to Taiwan’s living environment, civil-engineering industry, and economic development under the new structure. The restructuring of departments under the Executive Yuan is being carried out in accordance with legislation passed in January 2010, 23 years after a plan was first proposed to downsize and streamline the government structure. The revised law calls for reducing the number of first-tier (ministry-level) agencies under the Executive Yuan to 22, down from the previous 37, and decreasing the number of central government employees from 190,200 to 173,000. The initiative embraces the concept of “corporate-type” government, allowing for more flexibility in such areas as personnel administration in order to augment government efficacy, national competitiveness, and convenience for the public in using government services. Following a twoyear grace period, the Executive Yuan began to implement the restructuring from January 1, 2012. As part of the program, the PCC will be dismantled, with its operations divided into three parts and transferred to other agencies. The review of engineering technologies and budgets, as well as responsibility for auditing the quality of public-construction works, will be taken over by the NDC, a new agency to be created by merging the Council for Economic Planning and Development (CEPD) and the Research, Development and Evaluation Commission (RDEC). Government procurement and private participation in public construction, or build-operatetransfer (BOT), will be the purview of the MOF. The remaining functions, including oversight over the construction engineering profession, supervision of engineering technology consulting companies, and responsibility for the database of public-works costs, will be incorporated into the Ministry of Transportation and Communications, which will be renamed the Ministry of Transportation and Construction. MOTC will in fact take over the bulk of PCC’s existing units, including the Department of Planning, Department of Technology, Department of Construction Management, Legal Affairs Committee, Administrative Appeal Review Committee, Complaint Review Board for Government Procurement, Engineering Technique Corroboration Committee, Professional Engineering Disciplinary Retrial Committee, and Central Procurement Supervision Unit. Regulation of BOT business was already transferred to the MOF at the beginning of this year, following enactment of a revised organizational law for the ministry in February 2012. The revised organizational laws of both the MOTC and NDC are still awaiting approval by the Legislative Yuan, but in a reversal of the original plan, the Construction and Planning Agency will remain under the jurisdiction of the Ministry of the Interior (MOI). During deliberation last November by the judi-

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cial committee of the Legislative Yuan, it was decided that the Construction and Planning Agency, whose authority includes the construction of urban roads, should remain as part of the MOI so as not to jeopardize the ministry’s ability to execute urban development planning. The PCC was established in 1995 to take charge of the planning, review, coordination, and supervision of public-construction works, following steady expansion in the scale and budget for national infrastructure projects. Over the years, its authority has been extended to include affairs related to the Government Procurement Law, Civil Engineering Technician Law, Law for Private Participation in Public Works, and Statute for Management of Civil-Engineering Consulting Companies. Its mission was enlarged from that of supervision and review of the public construction market to fostering the development of that market. In recent years, the PCC is considered to have made significant achievements in improving the quality of public construction works, cracking down on irregularities in those projects, and assisting the development of the civil engineering industry. For instance, to remedy the negative effect of the lowest bid system on the quality of public-construction works, the PCC has been promoting the use of optimal bids and general contractors, especially for the procurement of technical services. As a result, as of June this year the share of optimal bids in the procurement of technical services had reached 84.4% in terms of the number of projects and 93.1% in terms of value. In early 2012, those figures were 63.2% and 70.9%, respectively. In addition, the Commission has intensified efforts to crack down on public construction works with substandard quality. With its assistance, central-government agencies and municipal governments have set up 49 engineering inspection panels to check the quality of public construction works under their jurisdiction. Since 2004, as a result, 1,268 government staff members were dismissed and 276 public construction works dismantled for reconstruction. During the final three months of 2012, the

The 3,392-meter tunnel of the Taipei MRT's Tucheng Line, constructed using the shield tunneling and cut-and-cover methods. photo : continentaL enGineerinG corp.

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A Report on the Construction Sector

PCC carried out spot checks of 44 public construction works by means of concrete drilling. Five projects failed the check and were torn down for rebuilding. The PCC has also been promoting a system of defining the lifespan for public construction works. The policy, which won the support of the cross-ministerial meeting for supervision of public construction works this June, is designed to provide an objective quality target for government agencies in charge of a project, as well as for the design engineers and constructors. It also serves as guidance in carrying out responsibilities for repair and maintenance. Another PCC initiative is to establish a mechanism for performance evaluation of public construction works after their completion. The evaluation will serve as reference for government agencies in selecting contractors in the future, thereby encouraging contractors to strive to achieve a good quality record. To crack down on corruption related to public construction, the PCC has joined hands with the Ministry of Justice in establishing a “platform for joint auditing of government procurement.” The effort takes advantage of the PCC’s various information systems on public construction works to identify potential irregularities. Meanwhile, the PCC has been seeking to assist civil-engineering firms in undertaking public infrastructure projects. For instance, this June it took the initiative to run a check on overdue payments for public construction work. As of July 19, it had helped contractor firms collect NT$613 million in outstanding payments. As part of the Executive Yuan’s program to try to revitalize

the sluggish economy, the PCC in early June began to actively help government agencies overcome difficulties that had stalled public construction projects. In less than two months, it had restarted projects worth NT$2.24 billion, such as the NT$230 million water-pressure augmenting station Bali District of New Taipei City, which is designed to provide households in the area with a more stable water supply. Moreover, the PCC has been actively mediating disputes arising from the performance of contracts for public construction works, to help contractors avoid the protracted arbitration process or even lawsuits. The PCC has also been helping the civil-engineering industry tap the global market, including mainland China. Among other things, it has arranged for the government to permit civil-engineering firms to obtain low-interest loans for major overseas projects by accessing the NT$10 billion special fund provided by the National Development Fund for the export of green-energy and industrial equipment. In addition, it is assisting several large domestic civil-engineering consulting firms in setting up a joint-venture company for bidding on overseas civil-engineering projects. The firm, which is still on the drawing board, will be headquartered abroad. Further, it has been offering guidance to domestic enterprises in undertaking BOT projects. Under its promotion and assistance, 99 BOT contracts valued at NT$142 billion were signed in 2012. That was 3.5 times the value of NT$40.1 billion in 2011 and well above the average of NT$50 billion in previous years. As it prepares to turn over its functions to other agencies, the PCC is generally regarded by Taiwan’s civil-engineering industry as having created a favorable environment for its development.

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s e e i n g ta i w a n

2013 Taiwan Cycling Festival phot os : court es y of ta iwa n KoM

ew countries offer cyclists as m u c h a s Ta i w a n d o e s . T h e island is gorgeously scenic and distances are seldom great, even if the mountain inclines some cyclists take on are extremely challenging. It is a modern, welcoming society which bicycle riders can explore in safety and comfort. Local drivers are used to sharing city streets and highways with two-wheelers. And such is the importance Taiwanese attach to good food that finding sustenance or refreshment is never difficult, whether you crave beef noodles or a latte. Government initiatives have made Taiwan an even better place for bicycles. Taking bikes on trains has gotten easier in recent years, so even those on short visits to Taiwan can enjoy cycling in places like Hualien and Taitung on the east coast, both far from international airports. Assisting cyclists, with tea and drinking water as well as directions, has been added to the police’s mission statement. In Taipei and Kaohsiung, cyclists can take their bikes on certain mass rapid-transit trains, open-

ing up those metropolises and their hinterlands for exploration. A number of the island’s prettiest towns, among them Guanshan in Taitung County and Meinong in Kaohsiung City, have laid out bike paths linking sites of cultural and ecological importance. Taiwan’s summers are hot and often wet, but the fall-to-spring period offers prime cycling conditions. The weather, especially in Taiwan’s south, is reliably dry and sunny. It is no surprise then that the 2013 Taiwan Cycling Festival will be held in November, when the skies are generally blue and daytime temperatures seldom rise above the low 20s Celsius (the low 70s Fahrenheit). The festival is designed to raise Taiwan’s international profile as a destination for cyclists, and also promote the sport among the island’s 23 million people. The festival thus includes various kinds of events, but there is no doubt which is the blue ribbon: The Taiwan KOM Challenge, scheduled for November 9. Unlike the “king of the mountains” titles awarded to hill-hopping cyclists in long-distance races such as the Tour de France, the Taiwan KOM Challenge

is a one-day, 105km-long stand-alone event. But no one should make light of it. Competitors start just above sea level at Qixingtan, on the coast near Hualien City in Taiwan’s rugged east. They then proceed through the world-famous canyon of Taroko Gorge and into the uplands beyond. Riders struggle not just because of wind or heat, but because they must assail gradients that in several spots exceed 20%. Competitors able to take a few moments to enjoy their stunning surroundings will notice that as they climb, they pass through four distinct climate zones. At the start, the vegetation around them is more tropical,

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but by the top of the gorge they have entered a sub-tropical zone. Beyond the gorge, the environment turns temperate and then, once over 3,000m above sea level, frigid. The finish line at Wuling near Hehuan Mountain (famous for snowfall around the Chinese Lunar New Year) is at an altitude of slightly over two miles. To join the KOM, riders must be at least 16 years old and capable of finishing the route in six and a half hours. No more than 400 entrants will be allowed to sign up, and among them will be some renowned professionals chasing prizes of up to NT$100,000. Last year’s winner was John Ebsen of Denmark. New Zealand cyclist Daniel Carruthers also took part in last year’s Taiwan KOM Challenge and raved about it on the Australian website CyclingTips: “There are many epic hill climb challenges dotted around the world that capture the imagination of riders, but there is, perhaps, one hill climb challenge that surpasses them all – the toughest, the most beautiful, with the highest elevation gain on a paved twisting road that snakes its way through a jaw-dropping Taroko Gorge, through some dense forests and eventually up to one of the highest points in Taiwan, at an elevation of 3,275m!... It is possible that this is the longest and most varied beautiful climb in the world.” Lee Rodgers, a Taiwan-based Briton who placed fourth in the 2011 Taiwan KOM Challenge, said: “Riding to the top is like a pilgrimage... breathtakingly beautiful and yet incredibly tough.” The official website of the Taiwan

KOM Challenge (www.taiwankom.org) has videos and articles about the event. The day after the KOM Challenge, cyclists will gather at one of Taiwan’s premier tourist attractions for the Sun Moon Lake “Come! BikeDay” activities. The two main events, a 30km “Challenge” and a 12km “Escape,” are aimed at the general public. Even individuals who lack suitable bicycles can take part. When registering, it is possible to arrange to rent a quality set of wheels. Registration fees include insurance. Those who complete the course will get a certificate and can enter a lucky draw for cycling-related prizes. Thanks to purpose-built bike trails and a range of bicycle-rental options, cycling around Sun Moon Lake is a pleasure any day of the year. The “Formosa 900” event lasts nine days starting November 9. Formosa is in fact an old name for Taiwan, a word of Portuguese origin that means “beautiful.” It is a fitting name for this activity as the participants will enjoy some of the island’s finest natural scenery during their multi-day rides. Twelve teams representing different civic organizations will set off from four different locations: one each in Taiwan’s north, central area, south, and east. Also in November, four of Taiwan’s national scenic areas are lending a hand to the Cycling Festival by organizing local activities. Especially enticing is a series of two-day, one-night tours that combine cycling to aboriginal villages in East Taiwan with whitewater rafting

on the Xiuguluan River. For details, see the website of the East Coast National Scenic Area Administration (www.eastcoast-nsa.gov.tw). On November 9, the scenic beauty of the Baguashan segment of the TriMountain National Scenic Area (www. trimt-nsa.gov.tw) will be the venue for the Merida Cup & Bike Festival. Road 139, which runs north-south through the scenic area, has emerged as a popular cycling spot on account of its good views, short climbs, and light traffic. Merida is a leading Taiwan bike brand, sold in more than 70 countries. Other festival events are to be held in Tainan’s Siraya National Scenic Area, Taitung, Hualien, and Taichung. Full details can be found on the Taiwan Cycling Festival’s official website (http://taiwanbike.tw). For general travel information about Taiwan, visit the website of Taiwan's Tourism Bureau (www.taiwan.net.tw), or call the 24-hour tourist information hotline 0800-011-765 (toll free within Taiwan). Bike enthusiasts may wish to contact some of the non-government entities that promote cycling in Taiwan, such as the Chinese-Taipei Cycling Association (www.cycling.org.tw Tel: +886-7-3556978 Email: tourdetw@ms35.hinet.net); the Taiwan Cyclist Federation (www. cyclist.org.tw Tel: +886-2-8919-3595 Email: service@cyclist.org.tw); and the Cycling-Lifestyle Foundation (www. cycling-lifestyle.org.tw). The last is backed by Giant, Taiwan’s best-known bicycle maker.

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LEISURE TIME

Taiwan Golf Scene Pleases All Business, fun, challenge and beauty come together on the Taiwan golf course.

BY JOE SEYDEWITZ

aiwan’s unique, mountainous terrain provides seasoned golfers and novices alike with challenges and natural beauty. From mango tree-lined fairways at the Tainan Golf Club in the south to fantastic ocean views at the North Bay Golf & Country Club near Keelung in the north, Taiwan’s many courses offer players a wide variety. For nearly 100 years Taiwan has been developing impressive golf courses around the island, as the popularity of the sport increased. Well-known courses like Sunrise Golf & Country Club and Miramar Golf & Country Club, for example, were designed by world-renowned architect/players Trent Jones Jr. and Jack Nicholas, respectively. Sunrise is the official golf course of the 2011-2013 LPGA Taiwan Championship. “Golf has grown in popularity around Taiwan,” says Ketchum Public Relations Senior Editor Terry Yu, whose clients include the Golf Association of the Republic of China (GAROC). “It’s certainly up there with regards to participation and spectatorship with the likes of basketball and baseball. For example, in 2011 as many as 20,000 people attended the LPGA tournament at Sunrise Golf & Country Club to see Yani Tseng compete.” Golf Magazine estimates that between 300,000 and 500,000 Taiwanese golfers frequently play 18 holes, while GAROC suggests that more than a million people play casually on weekends and at driving ranges. The Japanese brought golf to Taiwan around the turn of the 20th century when the island was a colony of Japan’s.

“The country’s oldest club, the Taiwan Golf & Country Club in Danshui, dates back to 1918, howe ve r,” note s t he 100 Top Golf Courses of the World website. “Taiwanese professional golfers didn’t arrive on the international stage until Liang-Huan Lu battled Lee Trevino in the 1971 Open Championship at United Kingdom’s Royal Birkdale. Lu eventually finished in second place, one shot behind Trevino. Today there are around 70 golf courses in Taiwan and golf is one of the most popular Taiwanese sports.” Modern-day players like Yani Tseng have helped bolster this popularity. In 2011, Tseng won five major titles, making her – at 22 – the youngest player, male or female, ever to win five major championships. Interest in playing and watching golf truly blossomed around Taiwan; spectators crowded to watch Yani play, and parents began shuttling their kids to area driving ranges. “The novice weekend golfer segment keeps growing,” says Yu, “in large part due to golf’s availability.” Yet while golf is for the most part accessible to everyone in Taiwan, it does tend to be slightly more costly than many average Taiwanese enthusiasts can afford. A typical day on the course may cost more than NT$3,000 (US$100). Therefore courses are typically used by the business community and the slightly more affluent. “The business golfer market, however, is slightly diluted,” continues Yu, “because many businesspeople are playing more frequently in China where business often takes them.” This situation may not be the best news for Taiwan’s

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LEISURE TIME

many golf and country club operators, but it is good news for golf-playing businesspeople who routinely visit Taiwan. Fewer people vying for tee times translates into better opportunities to secure time on the course. Among Taiwan’s many courses are numerous noteworthy spots that will provide players with a variety of great challenges and/or natural beauty (see the sidebar).

Golf equipment business Even many aficionados of the sport who play golf in Taiwan regularly may not realize that the island is a major production center for golf equipment, since the great majority of the manufacturing is done under contract to leading foreign brands. “The country produces around 80% of the iron heads, metal woods, and putters for the world’s famous brands on an OEM or ODM basis,” says Walter Yeh, Executive Vice President of the semi-official Taiwan External Trade Development Council (TAITRA). “Over the past decade, however, much of the production has shifted to the PRC, even though it is still largely Taiwan managed.” “Taiwanese customers generally prefer Japanese equipment,” says Chen Li-hua, chairman of Eagle Golf, “due in large part to the influence Japan has had on Taiwan golf over the years, as well as an overall positive quality perception that many have towards Japanese products.” Yet American brands are becoming more and more popular. “Young people who studied abroad are more frequently choosing American equipment,” Chen adds. TAITRA helps promote golf equipment and other Taiwan sporting goods through the exhibitions it sponsors. “TAITRA has been organizing the Taipei International Sporting Goods Show (TaiSPO) since 1974,” says Yeh. “It includes manufacturers of everything golf from golf nails, balls, clubs, and putters to shoes, bags, gloves, umbrella, carts, target trainers and related accessories.” The 2013 edition of the show attracted a record 362 exhibitors, occupying 1,750 booths, and 3,151 international visitors. The next TaiSPO will be held March 5-8, 2014 at the Taipei World Trade Center Halls 1 and 3. On behalf of GAROC, Ketchum Public Relations has been heavily involved in promoting golf tournaments around the island. “We engage in intense planning and execution to effectively bring golf to a larger audience,” says General Manager Marian Ma. “We create soft stories that may interest visitors. We do the ‘paper golf’ stuff that helps build expectations, while helping disseminate accurate tournament information from organizations like the LPGA (Ladies Professional Golf Association.” Through these kinds of promotional efforts, Yani Tseng’s impressive accomplishments, and numerous great courses peppered around the island, golf has risen to become a very popular sport in Taiwan. Taiwanese sporting goods manufacturers continue to supply players around the world with precision equipment, while organizations like TAITRA provide the platform for buyers to find the latest products.

2013 AmCham Golf Tournament The 58 participants were blessed with lovely weather for this year’s AmCham Golf Tournament, held at the Formosa First Country Club in Taoyuan on September 27. Of the 15 competing teams, first place went to ACE Tempest Life Reinsurance, second place to Cabot Microelectronics, and third place to JT Tobacco International (JTI).

AmCham expresses its thanks to Hole-in-One sponsor Ford Lio Ho Motor Co., Longest-drive sponsor Aon Taiwan, On-the-green Challenge sponsors Swire Coca-Cola and Corning Display Technologies, and Nearest-to-the-Pin sponsor JTI.

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LEISURE TIME

Some Great Courses to Play in Taiwan Taiwan has more than 70 golf courses around the island. Some were designed by golf royalty, while others simply exploit Taiwan’s natural splendor. All provide golfers with a memorable experience. We’ve compiled a short list of courses that will please those looking for a challenge, as well as those seeking a glimpse of Taiwan’s natural beauty. Sunrise Golf & Country Club 256 Yang sheng road, Yangmei city taoyuan county tel: 886-3478-0099 http://www.sunrise-golf.com.tw/sunrise/ “The course at Sunrise Golf & Country Club,” writes James Spence in The Finest Golf Courses of Asia and Australasia, “circulates around one of the higher hills in Northern Taiwan, providing the architect with natural elevation changes which have been worked into many of the holes. The elevation also exposes the fairways to some persistent breezes.” Spence adds that “golf is often played into a one or two club breeze here, sometimes even more. In addition to these natural elements, Trent Jones Jr. has deployed the full panoply of man-made hazards. The course has a fair claim to be the toughest in Taiwan.” “The 10th is a good example of the kind of test that Trent Jones has set. From an elevated tee the golfer can see every aspect of the hole below as the fairway sweeps round a crescent. A lake lies between the golfer and any shot he or she cares to make, so that the safest possible shot will entail playing left of the water followed by a carry, whereas the heroic shot is going to entail carry all the way. Bunkers lie on the far side of the fairway to punish the over-cautious or the player who hooks to a hole that clearly calls for a fade.”

Miramar Golf & Country Club 9 Xia-fu road, Linkou District new taipei city tel: 886-2-2606-1482 http://golfweb.myweb.hinet.net/ m_miramar.html “Designed by Jack Nicklaus in 1994,” notes the Top 100 Golf Course of the World website, “the 36-hole golf facility at Miramar comprises four 9-hole loops – named North, South, East and West – with championships contested over the North and West nines. “The 410-yard 9th on the north circuit is the second toughest hole on the card, even though it’s of modest length. Water runs the full length of the hole to the right of the fairway (a regular Nicklaus closing hole feature), putting pressure on both the tee shot and the approach.” “The 500-yard 9th on the West nine features a bunker in the middle of the fairway at the 270-yard mark, so smart golfers aim to either side of the fairway with the right flank offering the best line to the green. As the fairway plays slightly uphill, many will lay up in two shots short of the greenside bunker, then attempt to pitch and putt for a birdie.” Orient Golf & Country Club 16-11 east chou-lou-kong Guishan, taoyuan county tel: 886-3350-1212 http://www.orientgolf.com.tw/

“At the Orient,” writes Spence, “the back nine has a little more feature and character than the front and is a stiffer test – featuring two par fours that measure 460 yards from the back tees. The 14th is roomy from the tee, but then the approach is played into a green that is only 23 yards across and canted at a diagonal angle to the center of the fairway. The 17th requires a drive that is kept left of a water hazard and then a second that must fly into a green which is tapered at the front of a narrow neck. The last hole is a stirring finale with bunkers arranged around all the landing areas for the first, second and third shots.” North Bay Golf & Country Club (NBGC) 5 tsao pu wei, tsao Li Village shihmen District, new taipei city tel: 886-2-2638-2930 http://www.northbaygolf.com.tw/ Located on the northeast tip of Taiwan, nestled between mountains and the Pacific Ocean, NBGC provides golfers with numerous spectacular views. Considered by many to be one of Taiwan’s most beautiful courses, it offers palm trees, rolling mountains, and impressive ocean-bluff views. A day at NBGC is guaranteed to leave you visually satisfied. Keep in mind, though, that the ocean and neighboring bluffs can be home to very stiff winds, particularly in the winter months.

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AmCham has a Happy Anniversary

mid the elegant surroundings of Taipei’s most luxurious residential building, “The Palace” on Ren Ai Road, AmCham Taipei held a gala reception on September 17 to celebrate the 62nd anniversary of the organization’s founding. In his first official capacity as the Chamber’s Acting Chairman, Thomas Fann spoke to the gathering about AmCham’s steady growth and development since its establishment by five charter member companies in 1951. He especially stressed the achievements of the past year, including membership that stands at the highest level in many years (980 individuals from 525 different companies). 2013 also saw AmCham Taipei play host to a highly successful conference in March of the Asia-Pacific Council of American Chambers (APCAC), the first time in 20 years that the meeting was held in Taipei. And the recently concluded 2013 Washington “Doorknock” was undertaken by the largest delegation (20 representatives) in the nearly two decades of such missions to the U.S. capital. Fann is filling out the unexpired portion of the term of previous Chairman Alan Eusden, who has returned to the United States. American Institute in Taiwan Director Christopher Marut added remarks congratulating AmCham and praising its contributions to fostering U.S.-Taiwan economic relations. Patron Spirits was the alcohol sponsor for the event, which was catered by The Sherwood Taipei.

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