2010Vol.40No.8 by AmCham Taipei

THE AMERIC AN CHAMBER OF COMMERCE IN TAIPEI

Industry Focus A Report on the Educational Sector

August 2010

Vo l u m e 4 0 N u m b e r 8

w w w. a m c h a m . c o m . t w

Going for Green Tech 迎向綠能產業

TAIWAN BUSINESS TOPICS August 2010 • VOLUME 40 NUMBER 8 中華郵政北台字第號執照登記為雜誌交寄 5000 8_2010_Cover.indd 1

NT$150

2010/8/27 10:55:53 PM

ADVERTORIAL

he Ministry of Economic Affairs has organized seven major international investment promotion conferences from 2003 to 2010, setting core topics and discussion themes each year according to the administrative directions of the government and suggestions received from multinational enterprises. These events have become an important platform for cooperative efforts among the central government, local governments, and the private sector to promote investment and bring in capital, and the results achieved over the years have been highly impressive. The first Taiwan Business Alliance Conference of 2010 was held on May 31 and addressed the hot topic of cloud computing. In response to the signing of the cross-strait Economic Cooperation Framework Agreement (ECFA), the MOEA is organizing a second 2010 conference to be held on Sept. 21. The invited participants will include foreign enterprises, overseas Taiwanese firms, and mainland Chinese businesses, and the theme will be Taiwanâ&#x20AC;&#x2122;s positioning following the signing of ECFA and the business opportunities arising from ECFA. During the conference, the MOEA will also sign investment LOIs with some participating companies.

AGENDA Time

Subject

9:00~9:30

Registration

9:30~9:50

Opening Remarks

9:50-10:10

LOI signing ceremony with foreign enterprises Keynote Speech: Directions for Company Deployment Following ECFA Signing

10:10-10:50

Speaker Dr. Yen-Shiang Shih Minister of Economic Affairs, ROC

10:50-11:10 Coffee Break 11:10-12:10 (Including 20 min. Q&A) Panel Discussions: Taiwan in the Asia-Pacific Market Following ECFA: Opportunities and Challenges

Keynote Speaker 1: Mr. Nobuhide Hayashi Managing Executive Officer of Mizuho Corporate Bank Ltd Keynote Speaker 2: Mr. Y.T. Du, Managing Director and Chairman of Citigroup Global Markets Taiwan Limited Moderator: Francis Kuo-Hsin Liang Vice Minister of the Ministry of Economic Affairs Panelists: representatives of European Chamber of Commerce Taipei, American Chamber of Commerce in Taipei, Japanese Chamber of Commerce & Industry, Taipei, and overseas Taiwanese companies

* This agenda is subject to change without notice.

Organizer: Ministry of Economic Affairs, ROC Co-Organizer: DIGITIMES Time: September 21, 2010, Tuesday, 9:00 a.m.~12: 00 noon Venue: Taipei International Convention Center (TICC), Room 101 On-line Registration: http://www.digitimes.com.tw/seminar/edm990921/register.htm Contacts: Mr. Huang 02-87128866 ext.859, Ms.Chung 02-87128866 ext.320 Email: josie.chung@digitimes.com

august 2010 â&#x20AC;˘ taiwan business topics

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CONTENTS

NEWS AND VIEWS

6 Editorial AuguST 2010

VOlumE 40, NumbEr 8

九十九年八月號

Publisher

Andrea Wu

發行人

歡迎政府組織再造

Beyond the Political: ECFA’S International Trade Implications

沙蕩美術主任 /

Production Coordinator

Katia Chen Staff Writer

Jane Rickards

深入外籍社群；提升有線電視服務品質

14 COmmENTArY

By Jane Rickards

總編輯

Don Shapiro Art Director/

Reaching out to Foreign Residents; Enhancing Taiwan’s Cable TV Services

8 Taiwan briefs

吳王小珍

Editor-in-Chief

11 Issues

Welcoming Government Reorganization

By Stephen Kho

後製統籌

陳國梅採訪編輯

COVEr SECTION

李可珍

Manager, Publications Sales & Marketing 廣告行銷經理

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

have developed solid foundations in the export market. But some major challenges remain, including the amount of funding needed to compete against the billions that other governments and giant multinational corporations are pouring into this field. There are also questions as to whether the industry can develop in a sustainable way without the support of a strong domestic market in addition to export demand.

TOPICS is a publication of the American Chamber of Commerce in

By Timothy Ferry 撰文／李可珍

Irene Tsao

曹玉佳

Translation

Zep Hu

翻譯

胡立宗

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

Taipei, ROC. Contents are independent of and do not necessarily reflect the views of the Officers, Board of Governors, Supervisors or members. © Copyright 2010 by the American Chamber of Commerce in Taipei, ROC. All rights reserved. Permission to reprint original material must be requested in writing from AmCham. Production done in-house, Printing by Farn Mei Printing Co., Ltd. 登記字號：台誌第一零九六九號印刷所：帆美印刷股份有限公司經銷商：台灣英文雜誌社台北市105敦化北路222巷19之1號1樓發行日期：中華民國九十九年八月中華郵政北台字第5000號執照登記為雜誌交寄 ISSN 1818-1961

OFFICERS: Chairman/ Alan Eusden Vice Chairmen/ William E. Bryson / George Chao Treasurer: Carl Wegner Secretary/ Stephen Y. Tan

17 going for green Tech

強化台灣國防力量 Taiwan has identified green technology as one of the Six Emerging Industries for priority development, and its solar photovoltaic and LED lighting sectors

21 TAIPEI 101 Aims to go green 25 Electric Vehicles: Has Their Day Finally Come? Taiwanese companies are heavily involved in EV development. But some major obstacles stand in the way of creating a substantial market.

lAW

2009-2010 Governors: William E. Bryson, George Chao, Cindy Shueh Lin, Corning Painter, Gordon Stewart, Carl Wegner, Li Shin Wang. 2010-2011 Governors: Alan Eusden, Douglas R. Klein, Eunice Kuo, Lyndon Chao, David Pacey, Wei-Li Shao, Stephen Y. Tan, Lee Wood. 2010 Supervisors: Steven Lee, Dana McCarty, Charles H. McElroy, Bill Wiseman, Derek Yung. COMMITTEES: Agro-Chemical/ Mong Yang Tan; Asset Management/ Christine Jih, Derek Yung; Banking/ Carl Chien; Capital Markets/ William Bryson, Jane Hwang, Jimin Kao; Chemical Manufacturers/ Art Yen; CSR/ Lume Liao, Fupei Wang; Education & Training/ Robert Lin, William Zyzo; Greater China Business/ Helen Chou, Stephen Tan; Human Resources/ Richard Lin, Seraphim Mar; Infrastructure/ L.C. Chen, Paul Lee; Insurance/ Mark OÆDell, Dan Ting, Lee Wood; Intellectual Property & Licensing/ Jason Chen, Jeffrey Harris, Douglas Weinstein; Manufacturing/ George Chao, Albert Li; Marketing & Distribution/ Christopher Fay, Wei Hsiang, Gordon Stewart; Medical Devices/ Li Shin Wang; Pharmaceutical/ David Lin, Jaime Robledo Cadavid, Wei-Li Shao; Real Estate/ Peter Crowhurst, Kristy Hwang; Retail/ Angela Chang, Prudence Jang, Douglas Klein; Sustainable Development/ Eng Leong Goh, Kenny Jeng; Tax/ Eunice Kuo, May Lee, Josephine Peng; Technology/ Revital Golan, R.C. Liang, Jeanne Wang, Deborah Yen; Telecommunications & Media/ Ben Way, June Su, Jason Wang; Transportation/ Gary Wu; Travel & Tourism/ Pauline Leung, David Pacey.

29 The Criminalization of global regulatory Compliance or “Do It right before Someone makes You!”

U.S. Justice Department action against leading Taiwanese manufacturers of TFT-LCD panels on price-fixing charges has focused attention on the risks of non-compliance in an increasingly globalized marketplace. By Richard L. Thurston

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au g u s t 2 0 1 0 • Volu m e 4 0 n u m be r 8

INDUSTRY F

CUS

bEHIND THE NEWS

43 Non-Embassies Play a Vital role

balancing Supply and Demand

Trade offices have maintained an effective line of communication in the absence of formal diplomatic relations. By Don Shapiro with Michael Schulman

A report on the Educational Sector By Mark Y. Lock

34 raising the bar for Taiwan’s Higher Education Taiwan has more students attending more universities than ever before, but is the quality of the education they are receiving is being questioned. 37 Coming Soon: College Students from the mainland (with reporting by Jane rickards) Despite controversy, Taiwan will open its campuses to limited numbers of Chinese applicants. 40 Circumscribed role for Foreign universities Taiwan is one of the least welcoming markets in the region for overseas institutions of higher education. 42 Where the Taiwanese learn Their English

DISCOVErINg AmErICA

46 A Danish Village in a California Valley

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E d i t o r i a l 歡迎政府組織再造

Welcoming government reorganization

憲

法1947年頒布後，行政院組織架構將首度進行全面重整。現有37個部會將整併至29個，減少跨部會協

調的時間以提高效能。 2010年台灣白皮書的政經情勢總論中，台北市美國商會特別指出，2012年元旦生效的政府組織再造，將是行政體系優化與重生的關鍵。商會樂見組織再造納入公務員再訓練計畫，盼能確實強化為民服務的精神。過去數十年間，台灣六度嘗試重整行政院組織架構，但都因欠缺充分的法源基礎而功敗垂成。組織再造研議過程中，商會曾兩度公開表達立場，一次是反對國家科學委員會併入經濟建設委員會。2005年9月的《TOPICS》中，商會發表「誰來替科技說話?」一文，強調國科會應該升級擴編，而非廢除整併。政府最終決定新設科技部，商會對此深感欣慰。另一次則是催生環境資源部。商會在 2009年11月的《TOPICS》中主張，鑑於莫拉克颱風的慘痛經驗，政府應成立單一部會全權負責水資源相關問題，避免四個中央部會與地方政府各行其是的多頭馬車。商會非常高興，此一建議已經納入組織再造最終方案，新的環境資源部即將誕生。不過，成立觀光旅遊部的希望則是落空。商會認為，台灣的觀光旅遊業深具潛力，不該只由交通部觀光局負責，層級應該提升、資源也應該更多。政府官員的說法是，只有少數國家設立部會級的觀光旅遊主管機關，但《TOPICS》調查結果卻明顯不同：單以亞洲而言，印度與菲律賓設有觀光部，印尼稱為文化觀光部，中國的國家旅遊局直屬國務院，而韓國與越南則皆有文化體育觀光部。台灣此刻已經必須開始思考下一階段的政府組織再造。台灣觀光旅遊產業發展的最大挑戰，不是來自基礎建設不足，而是宣傳效能太低。解決此一問題，必需以部會級的主管單位匯集專業人才。

aiwan is getting ready to carry out the first comprehensive reorganization of the executive branch of government since the current Constitution was adopted in 1947. With the goal of achieving greater efficiency, the revamping will decrease the number of Cabinetlevel departments from the current 37 to 29, reducing the need for timeconsuming inter-agency coordination. As AmCham Taipei expressed in the Overview section of the 2010 Taiwan White Paper issued in late June, the overhaul – which will take effect from January 1, 2012 – is a welcome opportunity to streamline and reenergize the bureaucracy. The Chamber was pleased to learn of the government’s plans to combine the restructuring with a retraining program for government employees to stress the service aspect of public service. Over the years, six previous attempts were made to restructure the Executive Yuan, but each time it proved impossible to gain sufficient legislative support to enact a proposal. During the consideration of earlier drafts of the reform, AmCham twice voiced concerns about particular proposals that were being put forward. One called for elimination of the National Science Council, folding it into the Council for Economic Planning and Development. In an article called “Who Will Speak for Technology?” in the September 2005 in the Issues column of this magazine, AmCham argued that rather than being abolished, the NSC should be upgraded to ministerial level. Thankfully, that was the result in the final version of the reform plan, which creates a Ministry of Science & Technology. In a Taiwan Business TOPICS editorial last November, AmCham also pointed out the urgent need in the wake of disastrous Typhoon Morakot for a single agency that could take charge of managing water resources – consolidating the responsibilities currently handled by four centralgovernment departments as well as local-level authorities. We were pleased to find that this objective will also be accomplished in the new plan through creation of a Ministry of Environment. One change that AmCham has recommended has not been adopted, however – establishment of a Ministry of Tourism to provide this highly promising sector with enough direction and resources to meet its potential. Currently this industry comes under the Tourism Bureau, a division inside the vast Ministry of Transportation and Communications. Although government officials explained the decision by saying that few countries maintain a cabinet-level organization in charge of tourism development, TOPICS’ own research came up with a different picture. Within this region, India has a Ministry of Tourism, the Philippines (which uses American-style nomenclature) has a Department of Tourism, Indonesia has a Ministry of Culture and Tourism, China has a China National Tourism Administration directly under the State Council, and in Korea and Vietnam it is the Ministry of Culture, Sports and Tourism. Perhaps it is already time to start thinking about the next reorganization. The biggest challenges facing Taiwan’s tourism development are not questions of infrastructure but of effective promotion. That is a task for specialized professionals working in a high-level agency dedicated specifically to that objective.

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BY Ja n e R i cka R d s

MACROECONOMICS

GDP FORECASTS ROSY Several prominent institutions stated in July that Taiwan’s economic performance this year would be much better than earlier forecasts, as the landmark partial free trade pact known as the Economic Cooperation Framework Agreement or ECFA, signed by Taiwan and China on June 29, has boosted business prospects. First, in early July, the International Monetary Fund (IMF), forecast that the island’s GDP would expand by 7.7% this year, up from an April estimate of 6.5%, with an overall prediction that Asia’s developing economies will expand by 9.2%, in marked contrast to 3.3% for the United States and 1% for the European Union. Christina Liu, Minister of the Council for Economic Planning and Development (CEPD), was quoted by local media as saying the IMF’s forecast may have been in response to an increase in private investment triggered by ECFA’s prospective easing of trade barriers with China. HSBC also raised its GDP growth forecast for Taiwan to 7.3%, up from an earlier prediction of 6.4%, also citing an improving business environment,

including Taiwan’s reduction in the corporate income tax rate from 20% to 17% and the possibility of greater export competitiveness due to sweeping salary hikes in China. Then in mid-July the semi-official Chung-Hua Institution for Economic Research (CIER) raised its forecast from an earlier 4.99% to 6.94%, citing strong export growth and government programs to attract private investment. In late July, Academia Sinica upped its GDP forecast from 4.73% in December to 6.89%. and afterward the Taiwan Institute of Economic Research (TIER) raised its forecast to 5.93%, up from an April prediction of 5.11%. TIER also cited factors such as strong external trade and a sharp increase in investment, saying that fixed capital formation was likely to be a key driver of growth this year, including both private investment and government-backed fiscal stimulus projects, such as public construction works. Key economic indicators continued to be impressive. The Ministry of Finance (MOF) reported that exports in July, at US$23.9 billion, were up by 38.5% over the same month of last year, while imports – at US$21.74 billion – were up

42.7%, for a favorable trade balance at US$2.16 billion. The industrial production index, the Ministry of Economic Affairs (MOEA) said, hit a new record high of 125.71 in June, rising 24.33% from a year ago, fuelled mainly by orders for semiconductors and flat panels. The MOEA’s Investment Commission also said on July 20 that 949 foreign direct investment projects were approved in the first six months of this year. The investment value came to US$2.2 billion, an increase of 22.53% from the figure of a year earlier. This rosy picture is somewhat clouded, however, by uncertainties in the global economy due to the European debt crisis and the slowdowns being experienced by the United States and China. Beijing has said its strong

export growth in the first half of this year would give way to slow growth in the second, with the European debt crisis affecting demand. So far there are no signs that these factors will dampen economic growth here, but TIER’s survey of Taiwanese manufacturers in June found that they are responding to the international uncertainties by becoming more cautious, with the proportion of manufacturers expecting business to improve in the next six months decreasing to 30.2% from the 38.8% registered in May. “Most manufacturers surveyed are still confident, just less buoyant,” the TIER report said. Another area of concern is that not all of the public is feeling this economic success. Both CIER and TIER predicted that unem-

Taiwan sTock exchange index & value

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

8250

130

8000

120

7750

110

7500

100

7250

7000

6750

6500

6250

6000

July chart soUrce: twse

Unit: ntD billion

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ployment would remain above 5% this year. “As a lagging indicator, the unemployment figure is likely to remain austere, amid global economic recovery,” said the TIER report. Structural unemployment persists as traditional industries relocate offshore and income growth for those who do have jobs is not as fast as the rise in consumer prices, especially for housing in major metropolitan areas. CROSS-STRAIT

CHINA’S MISSILES MAY SOON NUMBER 2,000 China will have 2,000 missiles aimed at Taiwan by the year-end, a report published in the Ministry of National Defense’s navy studies periodical said. The missiles could have the potential power to destroy 90% of the island’s infrastructure, the report added.

Until now, Taiwan had estimated the number of these missiles to be between 1,000 and 1,400. As trade ties between the two sides blossom, the Ma administration has called on China to show its good will by redeploying the missiles targeting the island. DOMESTIC

MA PUSHES PLANS TO ATTRACT FDI Following up on the signing of ECFA, President Ma Ying-jeou in early July announced that his government would set up two new task forces for devising global economic policies and attracting foreign investment. Ma told a national press conference that ECFA would induce foreign companies to invest more in Taiwan to take advantage of the tariff-free export to China for many items. He

added that Taiwan could act as a China operations platform for multinationals, particularly Japanese companies. To help achieve this objective, he said, the Executive Yuan over the next few months would set up a special task force for promoting global business and attracting foreign companies, including overseas Taiwanese enterprises. The agencies participating in the task force would including the MOEA, MOF, and the Financial Supervisory Commission. In addition, Ma said he would set up a “task force on global economic strategy” under the National Security Council (NSC), to focus on areas ranging from innovation to attracting foreign investment. The NSC task force would coordinate and integrate Cabinet efforts to boost Taiwan’s role in the international economy, as well as propose its own ideas, he said.

economic indicaTors Unit: US$ Billion Current Account Balance (2010 QI) Foreign Trade Balance (Jan.-July) New Export Orders (June) New Export Orders (Jan.-June) Foreign Exchange Reserves (end July)

9.93 14.1 34.22 194.08 370.11

Year Earlier 7.47 17.7 27.84 139.96 321.09

Unemployment (June) Overnight Interest Rate (July 30) Economic Growth Rate (2010 QI) Change in Industrial Output y-on-y (June)p Change in Industrial Output y-on-y (Jan.-June) Change in Consumer Price Index y-on-y (July) Change in Consumer Price Index y-on-y (Jan.-July)p

5.16% 0.20% 13.27% 24.33% 70.08% 1.31% 1.21%

5.94% 0.10% -9.06% -10.74% 36.96% -2.33% 0.87%

note:

p: preliminary

soU rces: Moea, DGbas, cbc, boFt

ECFA RECEIVES LEGISLATIVE APPROVAL The first reading of ECFA in the legislature in July precipitated shoving matches and the hurling of objects, as opposition Democratic Progressive Party (DPP) lawmakers vented frustration at the government’s refusal to screen the ECFA article by article. They vociferously voiced objections

to the preference by the ruling Kuomintang (KMT) for a simple vote approving or rejecting the pact in its entirety. DPP lawmakers surrounded legislative speaker Wang Jin-pyng in hopes of blocking passage, and two legislators – one from the ruling party and one from the opposition – were sent to the hospital with minor injuries following the fracas. The KMT-dominated legislature later held a second extraordinary legislative session in August, in which the two parties reached a procedural compromise. Each article was screened in a marathon all-day session before lawmakers voted on the entire ECFA as a package. The DPP staged a boycott of the latter vote, and ECFA was eventually passed by the rest of the legislature – the KMT contingent plus independents – late in the evening of August 17, with 68 votes for and none against. Meanwhile, independence supporters chanted slogans outside the Legislative Yuan, charging that ECFA would cause Taiwan to lose its sovereignty and lead to massive unemployment. Some demonstrators even stripped down to their underwear, saying the gesture symbolized that Taiwan is losing everything to China.

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NEW ANTI-CORRUPTION COMMISSION DRAFTED In an effort to control the political fallout, President Ma announced July 20 that he would set up a

Taiwan's JanuarY-June Trade Figures (Year on Year comParison)

Japan

Imports

14.48 16.13

9.93 11.7

2009

2010

2009

141.73 155.82

2010 88.03 105.74

2009 Europe

13.97 17.26

U.S.

2009

23.68

2010

16.07

2009

TOTAL

10.06 15.32

7.8

2010

10.18

18.38

66.48 20.36

42.14

2009

ASEAN

29.4

HK/China

9.17 12.99

In Taiwan’s worst judicial scandal in a decade, three high-court judges and a prosecutor were detained incommunicado on July 14 on suspicions of taking bribes of over NT$5.5 million (over US$170,000) in exchange for a not-guilty verdict. Taipei District Court documents said former KMT legislator Ho Chih-hui, who had received a 19-year jail sentence from a lower court in 2006 for taking kickbacks related to a science park development project, used go-betweens to bribe the judges to obtain the notguilty verdict that was delivered by the appellate High Court in May. Scores of investigators directed by an anti-corruption task force raided the judges’ homes and offices on July 13, leading to their detention the following day. The judges and prosecutor face a minimum of 10 years in prison, while police are still looking for Ho, who remains on the run. On July 18, Judicial Yuan President Lai In-jaw resigned to take political responsibility for the incident.

new government commission to battle corruption and vote-buying. Its 200-strong staff members are to be awarded police powers of search and arrest. “I am determined, absolutely determined, to create a clean government,” Ma said. “Every public servant must understand that ethical principles cannot be violated or trampled on. I will not stand for a minority of corrupt officials destroying the image of government.” Officials said that before the commission can be formally set up, relevant legislation will first need to be enacted when the Legislative Yuan reconvenes in September. Ma’s announcement prompted comparisons between the planned commission and Singapore’s Corrupt Practices Investigation Bureau and Hong Kong’s Independent Commission Against Corruption. But in a critical difference, the Taiwanese commission will not report directly to the head of government, but instead will be subordinate to the Ministry of Justice. Ma argued that Taiwan’s legal system prevents it from completely copying the example of these ex-British colonies. But the proposed structure caused critics to object that the commission will just add to

12.75

THREE JUDGES HELD ON BRIBERY SUSPICIONS

2010

Unit: US$BN Source: BOFT

Exports

existing layers of bureaucracy and not be truly independent, with officials fearing to go after their superiors. “People may suspect political influence,” said Yang Tai-shuenn, professor of politics at Taipei’s Chinese Culture University. Elsa Y.J. Chen, a research fellow with the U.S.-Asia Law Institute at the New York University's School of Law, said the lack of an independent mechanism to remove unqualified judges and prosecutors “is the fundamental problem that led to this scandal.” While Taiwan’s judiciary has a personnel review committee with the power to remove or evaluate judges, she said, it consists of other judges – and one of the detained judges, Chen Jung-ho, even sat on

this committee. A Judges Act calling for creation of a more independent mechanism has long been stalled in the Legislative Yuan. The opposition DPP charges that the commission will be toothless without this legislation. I N T E R N AT I O N A L

U.S. MOVES TO SEIZE CHEN’S PROPERTIES In a reminder that the DPP has also had its fair share of corruption scandals, international reports said in mid-July that the U.S. government is seeking to take over two properties, in New York and Virginia, owned by imprisoned former President Chen Shui-bian and his wife. They were convicted in Taiwan on corruption charges last year. The U.S.

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Justice Department filed complaints in New York and Virginia alleging that part of US$6 million paid in bribes to Chen's wife, Wu Shu-chen, was used to purchase an apartment in Manhattan and a house in Keswick, Virginia. According to the complaints, Taiwan's Yuanta Securities paid the bribe to ensure that its bid to acquire additional shares in the Fuhwa Financial Holding Co. would not be blocked by the Taiwan authorities. John Morton, Homeland Security Director for Immigration and Customs Enforcement, said the complaints reflect America's determination not to allow itself to be abused by corrupt foreign officials, the Associated Press reported. BUSINESS

FORMOSA PLASTICS REFINERY HAS FIRE Formosa Petrochemicals Corp., part of the Formosa Plastics Group (FPG), was forced in late July to suspend operations at its 540,000-barrelsa-day Mailiao refinery in Yunlin County after an oil leak caused a two-day-long fire at its residual desulfurization unit. Although Formosa Petrochemicals denied the emissions contained toxic chemicals, local residents said 10

in Asia. The companies said in a joint statement that they would focus on Taiwan first, offering web storage and other services. The companies hope that the initiative will encourage more governments and business in the region to utilize cloud computing. The move is also part of a CHT plan to invest NT$40 billion (US$1.25 billion) in the next five years in providing Internet-based computing services on its INFLAMMATORY — A severe fire at the Formosa Petrochemi- network. cals refinery in Mailiao triggered rounds of protests from farmers asking compensation for damages from pollution. photo : cna

the area was exposed to seven times the average level of airborne pollutants and claimed this had seriously damaged the county’s agriculture and aquaculture. FPG eventually agreed to pay the Yunlin County government up to NT$500 million (US$15.6 million) in compensation. But in mid-August thousands of angry residents blocked three roads leading out of the giant refinery, saying the sum was not enough and instead demanding NT$1.8 billion (US$56 million). The blockade did not affect exports, which leave directly from the complex by sea, but close to 1,000 police and at least three prosecutors were dispatched to the scene, with seven people arrested for pushing through police

lines, local media reported. Formosa has since restarted two of the three crude distillation units at the plant and plans to restart the last one in October. The blaze, which caused extensive damage to property but no death or injuries, was the second fire at the Mailiao complex in July and the third this year.

CHT, QUANTA AIM AT CLOUD COMPUTING The island’s biggest telecommunications company, Chunghwa Telecom (CHT), in July signed an agreement to work with Quanta computer, the world’s largest contract laptop maker, to jointly develop cloud computing software, services, testing, certification, and hardware products aimed at markets

CAPITAL SECURITIES ACQUIRES RIVAL Taiwan’s Capital Securities in late July announced it would pay around NT$13.5 billion (US$422 million) in cash and stock for a majority stake in rival Taiwan International Securities in the latest acquisition in the crowded brokerage sector. Capital Securities said it would buy a 67% stake from major shareholders in Taiwan International Securities, including China Development Financial Holding. The company said the acquisition process would start before September 23, and that it hoped to eventually increase its stake to 100%. Once the deal is complete, Capital will become Taiwan’s fourth-largest brokerage, with about 6% of the market.

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Issue s

Reaching Out to Foreign Residents The National Immigration Agency is acting as a liaison center to help solve problems facing expatriates.

he National Immigration Agency (NIA) under the Ministry of the Interior has increasingly been taking on a role of seeking to make life in Taiwan easier and more convenient for its foreign residents. For the past four years, for example, it has been sponsoring the monthly Taiwan What’s Up newsletter, with useful news and information relevant to Taiwan’s expat community. Preparation of the newsletter, published in both printed and electronic versions, is handled for NIA by the Taiwan Institute of Economic Research. Interested parties may subscribe by going to the website http://taiwanwhatsup.immigration.gov.tw/ . Another NIA service, outsourced to Chunghwa Telecom, is the operation of a 24-hour Information for Foreigners hotline (0800024-111). With operators fluent in Chinese, English, and Japanese, the center can handle queries on such subjects as residency, education, visas, work permits, taxes, health insurance, and transportation. Recently NIA has also sought to facilitate communications between the foreign chambers of commerce in Taiwan and various government organizations to help resolve problems related to living and working on the island. This month AmCham Taipei representatives were invited to participate in a symposium chaired by NIA Director-General Hsieh Li-Kung. Also attending were various officials from the NIA, Council of Labor Affairs, Ministry of Education, and the Bureau of Consular Affairs of the Ministry of Foreign Affairs (MOFA). Among the issues raised was the four-month lag between the issuance of an Alien Residence Certificate to a newly arrived foreign professional and the time when his or her dependents can start to receive coverage under the National Health Insurance system. AmCham representatives stressed the anxieties that lack of health insurance can cause for families, and the high expenses that could be incurred in case of illness. Hsieh promised to ask the Department of Health to look into this matter. Also discussed were difficulties arising from the need to get documents such as birth certificates and marriage certificates authenticated by Taiwan’s offices in the applicant’s home country, such as the Taipei Economic and Cultural Offices (TECO) in the United States. Currently many applicants feel uneasy about dispatching the original document, and some people even make a special trip home to hand-carry it. MOFA representatives explained that recently passed legislation will enable the ministry to issue “true copies” of such documents, eliminating the need to send the originals overseas. The implementation rules for this procedure

深入外籍社群移民署成為解決外籍人士疑難雜症的中繼站

四

年以來，內政部入出國及移民署越來越能協助改善台灣生活品質、便利外籍人士長住。舉例來說，移民署贊助發行的「Taiwan What's Up 國際生活環境電子報」，就持續為外籍社群提供有用的報導及資訊。這份刊物由台灣經濟研究院負責編輯，同時發行紙本與數位版。有興趣的人可到電子報網站訂閱（http://taiwanwhatsup.immigration.gov.tw/）。移民署另一項服務則外包給中華電信，可為外國人提供24小時的諮詢服務（0800-024-111）。客服人員精通中、英、日語，居住、教育、簽證、工作許可、稅制、醫療、交通等問題，都可充分協助。移民署最近更擴大服務範圍，擔任外商商會與政府機關間的溝通橋樑，協助解決生活與工作環境的問題。台北市美國商會的代表，這個月就在移民署邀請下，參加由署長謝立功主持的一項研討會。與會的還包括其他移民署官員，以及行政院勞委會、教育部及外交部領事事務局的代表。會中提及的問題之一，外籍專業人士領到外僑居留證後，為什麼必須等四個月，才能讓家屬加入全民健保。商會代表指出，外籍人士都很擔憂這段等待期間、沒有健保的狀況下，萬一生病所必須負擔的高額費用。謝立功承諾會代為向衛生署瞭解狀況。另一個問題則是，外籍人士的出生與婚姻證明，為什麼必須經由母國的台灣駐外館處認證，

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Issues are now under preparation, and MOFA’s target is to start the new service from January 1 next year. MOFA also has a plan to simplify the process even further. Although Taiwan is not a signatory to the 1961 Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents, it is considering asking some other countries to conclude bilateral agreements that would have the same effect in mutually recognizing the validity of public documents. MOFA sources said the United States would be a logical candidate for this arrangement, because the number of U.S. documents handled in Taiwan is greater than for any other country. In addition, the NIA reminded the multinational business community that since last year a four-in-one Employment PASS Card – combining a visa, work permit, ARC, and re-entry permit – has been available for foreign professionals coming to work in Taiwan. “Foreign nationals with visa-free entry status can switch directly to this card after entering Taiwan,” notes the NIA. “In the case of foreign nationals requiring a visa to enter Taiwan, their local employer can submit an application for the card online, and after approval by the CLA, the card will be issued to the applicant by the Taiwan representative office in the applicant’s place of domicile.” Because the new system has not been heavily utilized, the government plans to make a greater effort to publicize its availability. NIA’s communication with AmCham will be ongoing, and Chamber members are encouraged to contact the Chamber office if they have problems or questions to be raised.

例如美國的台北經濟文化辦事處。外籍人士的擔憂之一，是為什麼必須將正本送交駐外館處，為了避免遺失，有些人甚至乾脆回國親自送件。外交部官員則解釋，法令修改以後，外交部已經可以核發與正本相符的副本，避免海外送件的風險。新法的施行細則已在擬定，外交部預定明年元旦起即可啟用這項新的服務。外交部也在規劃進一步簡化程序。台灣雖然不是「1961年海牙廢除外國公文立法要求公約」的締約國，但也已經爭取其他國家以雙邊協定的方式，相互承認雙邊公文書的效力。外交部官員表示，美國當然是考慮對象之一，因為美台之間的公文書數量遠高於其他國家。移民署也特別指出，外籍專業人士去年起已經可以申請「就業PASS卡」，整合居留簽證、工作許可、外僑居留證、重入國許可等四項功能。移民署表示，免簽入境的外籍人士，可在入境後直接轉換為就業PASS卡；需要簽證者，則可由國內雇主線上申請，經勞委會同意後，就業PASS卡將由申請人所在國的駐外館處發給當事人。新的申辦系統的收件數仍然偏低，因此政府正計畫強化宣導工作。移民署與商會的溝通不會中斷，因此商會會員如有問題需要轉達，可聯絡商會的辦公室。

— 撰文／沙蕩 — By Don Shapiro

Enhancing Taiwan’s Cable TV Services The foreign-owned operators have put substantial investment into their networks and upgraded the level of service.

n recent weeks, the Taiwan press – and one media group in particular – has published a spate of reports criticizing the foreign-invested players in the domestic cable television sector. The articles allege that the multinational investors make no contribution to increasing the value of the industry or improving service to consumers, but simply look to selling out their holdings after a few years to exit the market at a substantial profit. “These stories have presented a very inaccurate and onesided picture,” says June Su, counsel of Tsar & Tsai Law Firm and co-chair of AmCham’s Telecommunications and Media Committee. “In fact, it is only since foreign investment started coming in that we’ve seen any substantial infrastructure build-out

提升有線電視服務品質跨國系統商持續投入充沛資金以改善網絡、提升服務

前

幾週，台灣一家特定媒體集團曾推出國內有線電視市場的專題報導。文中批評，跨國系統商根本不在乎產業價值、也不願改善服務品質，所想的只是如何在幾年後賣掉經營權，帶著豐厚獲利退出台灣市場。常在國際法律事務所顧問、台北市美國商會電信與媒體委員會共同主席蘇瑛珣回應，相關報導非常不正確，且僅呈現單方說詞。事實是，在外商投資台灣有線電視產業後，我們才看到了大規模的基礎建設擴建，並帶動有線電視產業的成長。台灣前三大跨媒體系統商（MSO）現在全都由

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Issue s

kbro

TBC

CNS

Before invested

After invested

Before invested

After invested

Before invested

NT$680M/year

NT$1,401 M/year

NT$470M/year

NT$770M/year

N/A

NT$1,000M/year

68%

98%

66.7%

97.9%

60%

98%

Capital expenditure Penetration rate, 2-way coverage Penetration rate, 750MHz network coverage

After invested

68%

99.74%

66.1%

95.1%

98%

99.8%

19,000

108,000

18,000

40,000

N/A

20,000 added since 2009

151

120

145

Penetration rate, DTV services

1.85%

9.65%

2.78%

5.47%

N/A

No. of cable modem subscribers

No. of digital subscribers No. of digital channels

147,000

224,000

91,000

148,000

50,000

210,000

Cable modem penetration rate

14%

20%

17.33%

21%

20%

No. of fiber nodes

2,013

3,573

475

795

1,300

1,700

and development in Taiwan’s cable industry.” The three largest Multiple Service Operators (MSOs) in the Taiwan market – all of them AmCham members – are currently all under foreign ownership and management. Taiwan Broadband Communications (TBC) is owned by the Macquarie group of Australia, China Network Solutions (CNS) by the Asian-based private equity company MBK Partners, and kbro by the Carlyle Group of the United States. (A deal is now under way for the sale of kbro to investors led by the Tsai family that controls the local Fubon Group, and CNS is also entertaining proposals from prospective bidders.) At the request of the Committee, the three companies submitted data outlining their attainments in building up the industry (see the accompanying table). As the chart shows, since coming under the current ownership (in 2005 for TBC, 2006 for kbro, and 2007 for CNS), the three companies have substantially increased their rate of capital expenditure, investing to expand networks and introduce new technology (upgrading from MPEG2 to MPEG4). Since the change in ownership, all their networks have been converted to state-of-the-art two-way, high-speed, fully digitized systems. In addition, they have all actively promoted their digital services, attracting subscribers by offering more digital channels, high-definition channels, and such other features as video-on-demand (VOD), pay-per-view (PPV), personal video recorders (PVR), and electronic program guides (EPG). Customer service is now provided on a 24/7 basis instead of just during regular business hours as before. The three companies have also made available broadband service by cable modem, giving subscribers access to high bandwidth with high quality at a lower price than ADSL. And they have also engaged heavily in “remote area construction,” bringing their services to relatively less populated portions of the countryside. TBC alone this year projects spending of NT$50 million (US$1.6 million) on such remote area construction. “Instead of being criticized,” says Su, “the foreign-invested companies deserve credit for doing a lot more than their domestic counterparts have done.” — By Don Shapiro

外商擁有與經營，這三大跨媒體系統商也都是商會會員。台灣寬頻通訊屬於澳洲的麥格理集團，中嘉網路屬於亞洲私募基金安博凱，凱擘則屬於美國的凱雷集團。不過，富邦蔡家已表達意願，想買下凱擘；中嘉網路也吸引多組買家競相搶標。在電信與媒體委員會的要求下，三大跨媒體系統商已經提供相關資料，說明他們對產業發展的努力（詳見英文版附表）。三家系統商在經營權易手後（台灣寬頻通訊為2005年，凱擘為2006 年，中嘉網路為2007年），各自都大幅提升資本支出，拓展涵蓋範圍並引進新科技（自MPEG2規格提升至MPEG4）。此三家MSO自轉由外資經營後，網路均已完成雙向化建設，且已具備高速傳輸及全數位化功能。此外，三家業者都積極推廣數位服務以吸引收視戶，包括更多數位與高畫質頻道，以及隨選視訊（VOD）、計次付費(PPV) 、個人錄影機（PVR）與電子節目指南（EPG）。客戶服務也由原先的正常上班時間擴大為每週七日、24小時無休。三家業者也整合寬頻服務（cable modem），提供比ADSL更便宜的高速上網選擇。他們也積極建設偏遠地區的系統網絡，服務人口較少的鄉村與山區，如台灣寬頻通訊今年已編列5,000萬新台幣，鋪設偏遠地區網絡。蘇瑛珣指出，外商業者對有線電視產業的付出比本土業者更多，這些努力應予肯定，而非遭批判才對！

— 撰文／沙蕩

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commentary BY STEPHEN KHO

Beyond the Political: ECFA’S International Trade Implications

t the end of June, a unique moment unfolded in Chongqing, China. “Semi-official” representatives of China and Taiwan – two territories that do not formally recognize each other, and whose relationship is generally characterized by the slinging of rhetorical arrows – shook hands and committed themselves to an agreement aimed to reduce tariffs and commercial barriers between the two sides. However, the agreement, known as the Economic Cooperation Framework Agreement (ECFA), has since become mired in significant political acrimony in Taiwan. Hailed by President Ma Ying-Jeou and members of the Kuomintang (KMT) as the key to breaking out of economic isolation, ECFA has been met with strong opposition by members of the Democratic Progressive Party (DPP), which characterizes the Agreement as a blow to Taiwan’s sovereignty and has called for a nationwide referendum on ECFA. Indeed, legislative approval of the Agreement has become so contentious that a meeting of the special legislative session called to consider the Agreement devolved into a brawl between members of the two parties, with two legislators requiring medical attention, one for broken ribs, the other for a contusion after he was hit by a clock. However, putting aside the political dynamics surrounding this Agreement, it is important to consider the international trade implications of ECFA. Although not a free trade agreement in name, the intent of ECFA is essentially the same – that is, it is designed to liberalize the bilateral trading relationship between China and Taiwan. Based on the current Agreement, China will reduce tariffs on 539 Taiwanese goods worth $13.8 billion within 6 months of ECFA coming in to force, with full elimination of tariffs to take place gradually over a span of two years. Also, China will open 11 service sectors to Taiwanese service providers, including banking, accounting, audiovisual, aircraft maintenance, and insurance. For its part, Taiwan will be reducing tariffs on 267 Chinese goods, including chemicals, textiles, tires, apparel-making machines, auto parts, and electronic parts, with a value of approximately US$2.9 billion. As for services, Taiwan will open up nine sectors to Chinese service providers, including conventions, exhibitions, the film industry (10 film releases per year), sports and entertainment, banking, and research and development.

“Substantially All the Trade” While this is a good start towards a free trade agreement

between the two territories, it cannot be the end of negotiations. Under World Trade Organization (WTO) rules, as well as Article XXIV of the General Agreement on Tariffs and Trade (GATT) and Article V of the General Agreement on Trade in Services (GATS) in particular, a free trade agreement that affords the parties to the agreement better treatment than they afford to other WTO countries is only permissible if the agreement covers “substantially all the trade” between the parties. ECFA as it stands does not even come close to covering substantially all the trade between Taiwan and China. More goods and services must be covered, including those in the area of agriculture. China and Taiwan cannot stop at just a few hundred tariff lines of goods or a dozen service sectors. Furthermore, China and Taiwan should consider addressing other measures that block the liberalization of trade, including non-tariff trade barriers such as technical and safety standards as well as other regulatory barriers. Only by eliminating the non-legitimate use of these barriers will there be no question that ECFA meets the GATT Article XXIV and GATS Article V requirements of eliminating “substantially all the trade” between China and Taiwan. Short of doing so may result in other countries challenging China and Taiwan in a dispute at the WTO because they also want the better than “most-favored nation” (MFN) treatment the two are providing each other under ECFA. Indeed, ECFA explicitly recognizes this situation, as it commits both sides to negotiate further trade liberalization, specifically including the areas of non-tariff trade barriers, more service sectors, investments, and trade remedies. However, in the interim, between the time that ECFA goes into effect next year and when “substantially all the trade” is liberalized, China and Taiwan may very well be in violation of their WTO obligations due to the limited coverage of ECFA. Needless to say, further trade liberalization negotiations should be undertaken, agreed to and implemented as quickly as possible. ECFA contains a dispute settlement provision, which states that issues arising out of ECFA may be resolved through this bilateral dispute mechanism, although the Agreement has yet to set forth the exact procedures for this mechanism (the text provides that China and Taiwan will agree to these procedures within six months of implementation). This arrangement is an important component to the Agreement. In the past, China has been reluctant to bring WTO cases against Taiwan even though it was entitled to. One

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c o m m e n ta ry example has been Taiwan’s continued ban of about 2,000 products – including agricultural products – from China, despite WTO obligations on Taiwan to provide MFN treatment to all such products, including from China. But China has not challenged Taiwan in the WTO because of political reasons. For its part, Taiwan also appears to be unwilling to challenge China under the WTO for similar political reasons. Having an ECFA dispute settlement mechanism in place will give the two parties a forum for resolving trade disputes, helping ease tension that may arise from unsettled disputes. Indeed, one of the main purposes of a dispute settlement mechanism in any trading relationship is to ensure that the relationship is not hurt by any disagreements – which are inevitable in such relationships, particularly one as robust as between China and Taiwan – and will continue to remain stable and perhaps even grow, even during those times of disagreements. Given China and Taiwan’s reluctance to submit disputes between them to the WTO, this benefit will be especially true when substantially all of the trade between China and Taiwan is covered under ECFA, and so may incentivize the two parties to finalize full coverage under ECFA as soon as possible. Included in ECFA is a separate agreement on intellectual property rights (IPR). In particular, this agreement requires that China and Taiwan grant priority rights to patent applications, essentially enabling Taiwanese manufacturers who file for patent or trademark applications in Taiwan to receive priority patent or trademark protection in China for up to one year, and for Chinese manufacturers to receive similar privileges in Taiwan. The IPR agreement also grants plant breeders variety rights in each other’s territories for any new varieties they may develop. Moreover, the agreement commits both sides to coordinate enforcement efforts in the area of internet piracy and counterfeiting, well-known marks, and geographical indications, among other IPR issues. It is worth noting that while there are MFN exceptions in the area of services and goods for free trade agreements, there is no MFN exception in the area of IPR. In other words, the benefits that China and Taiwan provide to each other under ECFA for IPR must also be provided to all other countries that are members of WTO, with very limited exceptions. In the area of enforcement, for instance, China therefore cannot provide better treatment for Taiwan intellectual property when enforcing these rights than that provided to other countries’ intellectual property. It cannot enforce against internet piracy of Taiwan intellectual property and ignore internet piracy of other countries’ intellectual property. The same is true for well-known marks from other countries, not just from Taiwan. In short, both territories must be prepared to provide the necessary resources to meet the IPR obligations under ECFA, not just for each other, but for the rest of the WTO countries. One quick note of caution about trade remedy cases, particularly those in other countries. In recent years there has been an increase in anti-dumping and countervailing-duty cases brought against China and Chinese companies, as China continues to export all sorts of products in large quantities, and importing countries worry about illegal government subsidies and unfair pricing schemes. As trade barriers between

China and Taiwan are broken down by ECFA, one can expect more integrated manufacturing between the two territories. And with more integrated manufacturing, one can certainly expect more anti-dumping and countervailing-duty cases to be brought against both China and Taiwan together. Companies and governments on both sides of the Taiwan Strait will have to prepare for this eventuality. Better records will need to be kept, business and supply chain plans will have to be reevaluated, and more resources will need to be set aside to defend future investigations.

Broader Policy Implications Taiwan has been vocal about its goals for this ECFA, and its expectations for how ECFA will affect Taiwan’s trading relationship around the world, and especially with the United States. It is first and foremost concerned about being marginalized in a region that is seeing integration among the Southeast Asian countries, between these countries with China, and between China and Korea and Japan. Taiwan is being left out. If Taiwan does not make efforts to integrate itself into the region, it will suffer devastating economic consequences. And as it is no secret that the main reason for Taiwan’s inability to integrate on a trading basis with the region (and around the world) is political tension with China, it only makes sense for Taiwan to first make efforts to integrate with China. This strategy appears to be paying off, even in the short term. Indeed, many scholars believes that with ECFA in place, China will be much more willing to stand aside quietly as Taiwan seeks to negotiate free trade agreements with Singapore (which Taiwan has already announced it intends to pursue), Japan, Thailand, the Philippines, Malaysia, and perhaps even the United States. Some even speculate that China may be willing to stop blocking Taiwan’s attempts to join international organizations such as the World Health Organization and the international standards setting bodies. As for the United States, Taiwan is making it clear that it no longer needs to rely on the United States alone. It has long been perceived that the United States, believing that Taiwan has no alternatives but to lean heavily on U.S. support defensively and therefore economically as well, often tries to use Taiwan as an “example” of what it expects from the rest of the Asia region. For instance, the United States has pushed Taiwan hard in the area of IPR for many years, insisting that Taiwan show the region what changes must be made to national IPR regimes in order to meet U.S. standards. Although recently Taiwan has succeeded in resolving most of the outstanding IPR issues with the United States, to the point of being taken off the U.S. Special 301 Report, the United States continues to ignore Taiwan’s request for further trade integration (this despite the United States’ willingness to sign free trade agreements with countries that remain on the Special 301 Report). Similarly, the United States for a period stopped all trade negotiations with Taiwan over the one issue of mad cow disease (or bovine spongiform encephalopathy). Considering that the United States had the same “problem” with most of the countries in the Asian region, it had hoped to use Taiwan to

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c o m m e n ta ry build momentum to reopen the other Asian markets to U.S. beef. However, these tactics backfired when Taiwan’s Legislative Yuan wrote some import restrictions into law. In light of the ongoing regional trade integration, Taiwan has been given no choice but to reach out to other major players in the area such as China and ASEAN. Such reaching out is a good thing, even if the United States begins to feel like “odd man out” as a regional trade alignment starts to coalesce without its involvement. With ECFA, Taiwan has the opportunity to become one of the main economic hubs in the region, avoiding isolation within Asia and increasing investment from abroad. With ECFA, the United States may now feel the need to reengage Taiwan commercially. With ECFA, Taiwan may now have the leverage to negotiate further integration with the world trading community on a level playing field. For China, ECFA is part of its plan to become the center of international trade in Asia. Earlier this year China’s free trade agreement with the 10-member Association of Southeast Asian Nations came into force, and it is now actively working on potential trade arrangements with Korea and Japan. China has the economic strength to command interest and desire with its regional trading partners to develop closer economic relations. Arguably the only really difficult negotiation was with Taiwan, due to political reasons. However, ECFA essentially bridges that gap. Moreover, by bringing its regional partners together, China is lessening the commercial influence of the United States in Asia. Indeed, ECFA is further evidence of the degree to which the United States is being left behind in the region. U.S. eco-

nomic interests continue to erode as Asia draws tighter together around China without U.S. inclusion. If anything, the signing of ECFA should serve as the impetus for the United States to reengage Taiwan through the U.S.-Taiwan Trade and Investment Framework Agreement (TIFA), to implement the U.S.-Korea Free Trade Agreement, and to speed up negotiations on the Trans-Pacific Partnership Agreement. Of course, if the United States does not reengage the region, that would probably be just fine with China. China’s goal is to exert its influence in the Asian region, and decrease the United States’ influence at the same time. To accomplish this goal, it was in China’s best interest to sign ECFA, and it is in China’s best interest to continue to negotiate as quickly as possible full coverage of all substantial trade – including reducing non-tariff barriers and erecting effective dispute settlement procedures – under ECFA. Because of ECFA, the trading relationships around Asia are changing. Because of ECFA, China is continuing to exert its influence in the region. And because of ECFA, Taiwan may be able to engage the rest of the world trading community on a more level playing field. It is clear that the international trade implications of ECFA are enormous. — Stephen Kho is Senior Counsel at the Washington D.C. office of the international law firm of Akin Gump Strauss Hauer & Feld LLP, and was previously Associate General Counsel at the Office of the U.S. Trade Representative and Legal Advisor at the U.S. Mission to the World Trade Organization.

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COVER STORY

Going for Green Tech 迎向綠能產業

aiwan has identified green technology as one of the Six Emerging Industries for priority development, and its solar photovoltaic and LED lighting sectors have developed solid foundations in the export market. But some major challenges remain, including the amount of funding needed to compete against the billions that other governments and giant multinational corporations are pouring into this field. There are also questions as to whether the industry can develop in a sustainable way without the support of a strong domestic market in addition to export demand.

綠色能源產業已列入行政院的「六大新興產業」，而台灣的太陽光電及LED照明已具有堅實的外銷能力。但綠能產業並非全無隱憂，例如資金挹注就遠低於其他國家與跨國企業動輒數十億美金的投入規模。同時，綠能產業不能單靠外銷帶動，必須有穩固的內需市場才能永續發展。 BY TIMOTHY FERRY

撰文／法緹拇

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Cover STORY

Auria Solar’s standard solar model. photo : AuriA SolAr

很少

erhaps no other country has participated more intensely in the computer revolution – or benefited more widely from it – than Taiwan. Through steady technological investment, tight control of the logistics of global supply chains and a highly skilled workforce, Taiwan has mastered the manufacturing of the range of information and communication technology (ICT) products, particularly semiconductors, all the while creating one of the world’s largest and most effective ICT industries. Now Taiwan is hoping to replicate this phenomenon in “green technology” – the umbrella term for an array of new technologies deemed “green” or environmentally friendly by dint of their energysaving capabilities or ability to generate low or zero-emissions energy. The

有其他國家像台灣一樣，如此積極地投入電腦科技創新，也從此一產業獲益良多。藉由持續的技術投資、嚴格管控全球供應鏈的物流狀況、以及技術能力優秀的勞工，台灣得以專精多種資通訊（ICT）產品製造，特別是半導體，並成為全球最大、最有效的資通訊設備生產基地之一。現在，台灣希望將高科技產業的發展經驗，帶入綠能科技產業，發展一系列全新的綠色、環保科技，提高節能水準，或達到低排放／零排放目標。行政院已將綠色能源產業納入「六大新興產業」，希望為台灣未來的經濟發展開創新動能。馬英九總統的重要政策之一，即在經濟發展時不能犧牲環保。還在總統大選時，馬英九就

field has been included among the Six Emerging Industries that the government is touting as key to Taiwan’s future economic success. President Ma Ying-jeou has taken the stewarding of Taiwan’s environment while expanding its GDP as core goals of his administration. While still on the campaign trail before his election, he set lofty goals for reducing Taiwan’s carbon emissions – currently the highest per capita in Asia – and has maintained these goals even as lingering economic malaise has pushed global warming lower on much of the world’s priority list. Meanwhile, the collapse of technology markets during the 2008 recession and the ensuing plummeting of Taiwan’s export figures underscore the risks of being overly dependent on any one sector for economic growth. Backing its policy direction with a monetary commitment, the administration last November adopted the Dawning Green Energy Industry (DGEI) program, including a pledge to provide NT$37.38 billion (US$1.2 billion) between 2009 and 2012 to support promising green technologies. Through a range of programs, including tax breaks, grants towards R&D, promotional projects, and loan guarantees, the effort aims at developing seven industries considered vital to Taiwan’s greentech future. These are solar photovoltaic (PV), wind energy, biofuels, hydrogen/ fuel cells, LED lighting, electric vehicles,

表明，身為亞洲人均碳排放量最高的國家，台灣必須降低排放總量；之後，雖然金融風暴的擔憂影響國際對全球暖化的關注，但馬政府仍然堅持原先目標。此外，2008年以來的全球衰退，導致科技產品的需求大減，台灣的外銷產值也大受影響，更凸顯出單靠特定產業的風險。 2009年11月，行政院正式通過「綠色能源產業旭升方案」，給與綠能產業實質協助，包括2009年至2012年撥款373.8億新台幣（12 億美元），以協助具潛力的綠能科技。透過一系列配套，包括減稅、研發獎勵、推廣計畫、貸款擔保，政府希望扶植綠能產業的七大子產業，包括太陽光電、風力發電、生質燃料、氫能與燃料電池、LED照明、電動車輛，及能源資通訊（EICT）的智慧電網技術。

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and energy information communication “smart grid” technology. The DGEI program follows closely on the heels of passage by the Legislative Yuan in July last year of the longdelayed Renewable Energy Development Act (REDA). Among other things, this law stipulates that 8,450 megawatts of Taiwan’s electricity generation capacity – 15% of the total – should consist of nonnuclear, carbon-free renewable energy by 2025. Modeled on groundbreaking legislation in Germany, the law calls for financing these more costly energy sources with “feed-in tariffs” – multiyear contracts that guarantee high enough electricity prices to give power producers sufficient incentive to build and maintain the costly infrastructure. The REDA is considered a giant step towards developing Taiwan’s domestic renewable energy industry by ensuring that the Taiwan Power Co. (Taipower) – the state-run utility – will buy the power produced by renewable energy. This push into green tech is designed both to reduce carbon emissions and to diversify Taiwan’s portfolio of industrial technologies, and it is moving forward within the context of rapidly increasing global activity in green tech. The worldwide solar PV market, for example, is increasing annually by 21% and is projected to grow from US$26 billion in 2008 to US$100 billion by 2015, according to figures supplied by the Taiwan government. ABI Research, a New York-

based technology research institute, forecasts a rise in the global smart-grid technology market to US$45 billion by 2015, while Indian market research firm Axis Research Mind expects global biodiesel markets to reach a value of US$62 billion the same year. Taiwan already has a well-developed industrial base on which to build these new technologies. The Bureau of Energy (BOE) under the Ministry of Economic Affairs notes that along with its well-known ICT capabilities, Taiwan has strong metallurgical and composite material industries, as well as sophisticated manufacturing processes that can complement the push into green tech. In its 2010 World Competitiveness Yearbook, Switzerland’s International Institute for Management Development (IMD) ranks Taiwan sixth out of 58 nations, and second only to Japan in Asia, in green technology capacity. As a result of this background, the Taiwan government has high hopes for these new industries. BOE Deputy Director-general Wang Yun-ming has been quoted in the domestic media as forecasting steep growth in Taiwan’s greentech production value from the NT$160 billion (US$5 billion) achieved in 2009 to NT$1.15 trillion (US$36 billion) by 2015, attracting NT$200 billion (US$6.25 billion) in foreign investment and creating 110,000 jobs. And yet, despite all the pieces seeming to be in place, Taiwan industry exec-

在綠能旭升方案之前，立法院剛在2009年7月通過延宕已久的「再生能源發展條例」，規定台灣總發電量的15%，約8,450百萬瓦，在2025年前必須改用非核、無碳的再生能源。條例學習德國的前例，採行電力收購制度以鼓勵業者改用成本較高的再生能源發電；其關鍵設計在引進複數年收購合約，確保再生能源能獲得較高電價，誘導發電業者新建與維持高成本的再生能源發電系統。一般認為條例的通過，是台灣發展本土再生能源產業的重要一步，因為國營的台灣電力公司將負責收夠再生能源所產生的電力。台灣鼓勵綠能科技，不僅是為了降低碳排放，也為了增加產業多元性，同時更為了趕上其他國家快速發展綠能的腳步。舉例來說，台灣官方數據顯示，全球太陽光電市場每年成長21%，預估將從2008年的260 億美元，增加到2015年的1,000億美元。美國紐約的技術研究機構ABI Research預估，智慧電網的全球市

A Siemens onshore power-generating windmill. photo : SiemenS

utives remain dissatisfied with the progress, saying they have so far heard a lot of talk but have seen little real action on the green-tech initiative. Charles Sher, sales executive for battery-maker E-one Moli, says that while green tech may be the wave of the future, so far “everybody’s losing money” in many sectors. Batteries, as key components in everything from propelling electric vehicles to storing energy produced by wind turbines and solar panels, are crucial to the greentech revolution. Sher says that competing in this green industry requires heavy investment in infrastructure and knowhow to remain competitive – money that is not easily forthcoming from the private sector. “We really need to get funding from the government to acquire more skillful engineering to make better batter-

場至2015年將達450億美元；印度市場研究機構Axis Research Mind則認為，生質燃料的全球市場至2015年也可望達到620億美元。台灣已經具有發展新科技的良好產業基礎。經濟部能源局指出，台灣除了資通訊產業，冶金與複合材料產業也很不錯，加上先進製造能力，都能協助綠能產業發展。瑞士國際管理發展學院（IMD）的「2010年全球競爭力報告」，在綠能產業能力部分，將台灣列名58個國家中的第六，亞洲僅次於日本。綜合上述各點，也難怪政府對新興產業寄予厚望。能源局副局長王運銘在接受國內媒體訪問時曾表示，綠能產業應能快速成長，自2009年的產值1,600億新台幣，增加到2015年的1.15兆新台幣，並吸引2,000 億新台幣的國外投資，與創造11萬個工作機會。儘管看似萬事齊備，但企業主管仍不太滿意於實際進展，認為綠能發展還是說的多、做的少。電池廠能

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Cover Story ies and to expand our capacity so our costs can go down and we can compete with Chinese battery makers,” he says. But so far, he laments, the government “hasn’t taken real action.” His comments are echoed almost universally by executives from across the green-tech spectrum. They are concerned that the government is not spending enough to counter surges in investment by the United States, China and others – and that much of the money that is being made available is not being invested wisely.

Two main categories While Taiwan is known mainly for its solar cell manufacturing, Kinmac Solar produces the finished panels. photo : KINMAC SoLAR

The DGEI program divides green tech into the two broad categories of “Twin Pillars” and “Potential Growth.” The Twin Pillar industries are the already quite well-developed solar photovoltaic (PV) and light-emitting diode (LED) manufacturing sectors, in which Taiwan is one of the global leaders. The Potential Growth category consists of industries that are still under development, but in which Taiwan is considered to have good prospects and is looking to become a future industry leader. These industries include wind power, bio-energy, hydrogen/fuel cell, energy information communication “smart grid” technology (EICT), and electric vehicles (EV). DGEI pledges over NT$16 billion (US$500 million) and nearly NT$4 billion (US$125 million) to develop the

元科技的業務主管佘家棟說，綠能科技的確前景看好，但現階段大家還是處於虧損狀況。電池技術對綠能產業非常關鍵，不論是電動車的驅動，還是風力與太陽發電的電力儲存，都少不了電池。佘家棟說，進軍綠能產業必須要有雄厚資本才能發展基礎設備與生產知識，以維持競爭力不墜，但現實是，廠家很難向民間募得充足資本。他說，「電池廠商真的很需要政府提供資金，以取得先進技術、擴大產能，然後成本才能降低，讓台灣廠商有機會和中國企業競爭」。但他抱怨，政府的實際作為仍然有限。佘家棟的抱怨，在綠能產業圈內已經不是新聞。企業主管都擔心，政府增加的投資，幅度跟不上美國、中國與其他競爭對手，而可用的經費卻又沒有合理分配。

core solar and LED industries, respectively. For the Potential Growth industries, the program promises NT$1.47 billion (US$46 million) for wind power, NT$1.12 billion (US$35 million) for b i o - f ue l s , N T $2 . 3 8 b i l l i o n ( U S $ 7 4 million) for hydrogen/fuel cell technology, NT$3.02 billion (US$94.4 million) for EICT, and NT$4.58 billion (US$143 million) for EVs, according to BOE data. The critics say those numbers pale in comparison with what other nations are investing. The Obama administration has pledged at least US$50 billion to greentech sectors over the next five years as part of the 2009 stimulus package. An HSBC report observes that the EU is dedicating 105 billion euros (US$146 billion) towards green-tech development over the next four years, while China spent at least US$34 billion on developing its greentech sector in 2009 alone, and has dedicated one-third of its stimulus package to green tech-related industries. Although those are much bigger economies than Taiwan’s, HSBC also notes that Korea is earmarking 50 trillion won (US$43.5 billion) for green tech over the coming four years. It is not only the amount that worries the critics, but also how the money is being spent. While Taiwan is investing in R&D and pilot projects to get industries up and running, other countries, especially the United States and China, are lending millions directly to specific companies, a move Taiwan has thus far

兩大領域綠能旭升方案主要包括「能源光電雙雄產業」及「能源風火輪產業」。雙雄的太陽能與LED照明相對已有良好基礎，是國際重要出口國之一。風火輪則包括風力發電、生質燃料、氫能與燃料電池、能源資通訊智慧電網、電動車輛，是台灣起步較慢，但有前景看好、有機會取得領先地位的產業。能源局表示，總額度12億美元的綠能旭升方案，太陽能產業可獲得160億新台幣，LED照明則為40億新台幣。風火輪產業的撥款分別為，風力發電14.7億新台幣，生質燃料11.2億新台幣，氫能與燃料電池23.8 億新台幣、能源資通訊智慧電網30.2億新台幣，電動車輛45.8億新台幣。批評者認為，台灣的預算額度跟其他國家相比，根本是小巫見大巫。美國歐巴馬政府在2009年的經濟

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TAIPEI 101 Aims to Go Green

hen Taiwan began looking at its carbon footprint in the 1990s, the obvious targets for reductions were Taiwan’s vast industrial and power sectors. But according to Minister without Portfolio Liang Chi-Yuan, the government soon recognized that Taiwan’s building sector accounts for a significant chunk – some 25% – of Taiwan’s energy consumption, and that substantial improvements could be achieved with far less investment than in other areas. Thus began the official interest in “green building.” Green architecture entails constructing and maintaining a building in a way that has the least impact on the environment. Taiwan has its own standard, the EEWH, encompassing nine indicators falling under the four categories of Ecology, Energysaving, Waste reduction and Health. But the owners of Taiwan’s most prominent structure, TAIPEI 101, decided last year that LEED certification is the way to go. LEED – which stands for Leadership in Energy and Environmental Design – is the internationally recognized green-building rating system based in the United States. Cathy Yang, director of the Taipei Financial Corp., which owns TAIPEI 101, says the building’s status as a landmark structure means that gaining LEED certification will allow it to “promote the green-building idea not only to Taiwan or Asia, but to the world.” Another more practical reason is that EEWH covers only new buildings, while LEED also offers certification to already completed structures that meet its standards in the Existing Buildings and Maintenance (EBOM) category. Yang notes that when TAIPEI 101 was being designed and constructed in the late 1990s, green building “was not such a big issue.” Nevertheless, TAIPEI 101 does incorporate a number of green concepts into its design, including the use of doubleglazed windows to reduce UV radiation. Since the building’s opening in 2004, the management has strived to improve efficiency and reduce waste. Yang describes the aspiration to achieve LEED certification as the natural culmination of those efforts. Taipei Financial Corp. hopes to receive the highest EBOM rating: platinum. With the help of international construction consulting firm Steven Leach Associates, EchoTech International, and Siemens Ltd. Building Technologies, TAIPEI 101 is now on track to make the necessary renovations. David Pipkin, head of SL&A’s Taiwan office, says that for TAIPEI 101 to gain LEED EBOM accreditation, 100% of the irrigation for landscaping will need to come from rainwater, and the plumbing system will be made more efficient, saving an estimated 8,938,000 gallons of water per year, a 37% reduction. Lighting throughout the building will be changed to energy-efficient LED bulbs, while the air conditioning and ventilation systems will be further modified to save energy, reducing CO2 emissions by 280 tons per year. Sustainability is also being incorporated into the waste-removal system, increasing recycling and reducing the volume of waste. To satisfy requirements regarding exterior landscaping, which the building site actually lacks enough of, the company is undertaking to manage a green space in a nearby public park. The total project will take about 60 months and cost NT$60 million (US$1.88 million) to complete, but will result in annual savings of over NT$2 million (US$62,500) on the electricity bill alone. While the green-building concept has gained ground in Taiwan, it is still a long way from being fully embraced. Simon Sue, SL&A Taiwan’s director of sustainable design, notes that going green typically adds around 30% to any construction budget. Although incorporating these practices into the building can result in energy savings – and for interior spaces, improved worker productivity – these are often not a priority for Taiwanese builders. Low energy costs and low wages serve as disincentives to companies to make the changes. For TAIPEI 101’s top-shelf tenants, though, just saving money is not enough, says Cathy Yang. Doing the right thing is equally important. — By Timothy Ferry

TAIPEI 101 (above) aims to achieve LEED platinum certification. Citibank Taipei’s offices (below) received LEED gold certification after renovation.

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Cover STORY eschewed. Further, Auria Solar Chairman Tsai Chin-Yao says the typically smaller size of Taiwanese firms puts them at a competitive disadvantage against some of the huge Asian companies that are entering the green-tech field with R&D budgets in the billions of U.S. dollars at their disposal. John Jang-lin Chen, director of the Display Technology Center at Taiwan’s semi-governmental Industrial Technology Research Institute, explains that ITRI was established in 1973 precisely to offset this R&D disadvantage. “Taiwan has a lot of small enterprises, family-style companies that cannot afford to compete with major corporations like Samsung, LG, Sharp, or Sony in industrial research,” he says. “So the government, through ITRI, actively conducts much leading-edge industrial technology research.” ITRI’s success is evident in the large number of private enterprises, including some major names in Taiwan industry, that have been spun off from it. Liang Chi-Yuan, the Minister Without Portfolio charged with coordinating the government’s interagency effort in green-tech development, says this model worked very well for Taiwan in the past, and he sees little reason to change. “The success of Taiwan has always been government policy that tries to internationalize industry and liberate the energy of the private sector,” he notes. The performance of Taiwan’s solar PV industry seems to support the minis-

ter’s contention. The start of the solar PV industry – the entire green-tech field, it might be said – dates back to Germany’s groundbreaking 1999 legislation that created the financing mechanism of the feed-in tariff, by which renewable energy is granted higher rates until economies of scale develop. With this single act, an entire industry was born, dedicated to feeding Germany’s sudden appetite for windmills, solar PV panels, and other renewables. Taiwanese technology firms were quick to react. Solar PV cells are created from silicon wafers – essentially modified semiconductors – giving Taiwan a leg up on development. Auria Solar’s Tsai estimates that in Taiwan alone at least 500 firms – from major global heavyweights to SMEs – are now active in the industry, producing everything from industrial-grade silicon wafers to cells to backing substrates to PV panel housing to the actual panels. What Taiwan is not doing is installing the panels domestically – a noteworthy paradox in Taiwan’s PV industry. While Taiwan holds the number-four position as a solar supplier around the world, producing an estimated NT$105 billion (US$3.3 billion) in annual value and owning 23% of the global market share – which the administration projects as rising by 23% annually to NT$150 billion (US$4.7 billion) by 2015 – Taiwan has almost no domestic solar PV capacity. As of 2009, Taiwan had less than 10

振興方案中，共分五年提撥500億美元給綠能產業。匯豐集團的報告指出，歐盟未來四年將以1,050億歐元（1,460億美元）發展綠能，中國則單是2009年就提供了至少340億美元的經費，且經濟振興方案的經費也有1/3用於綠能相關產業。上述國家的經濟規模雖然遠大於台灣，但跟台灣類似的南韓，匯豐的報告也指出，未來4年將有50兆韓元（435億美元）的綠能發展預算。但預算額度不是唯一引起疑慮的問題，錢有沒有花在刀口上更為重要。台灣雖然資助研發與先導計畫，以協助產業奠基，但迄今仍不像其他國家，特別是美國與中國，直接撥交大筆經費給特定企業。宇通光能董事長蔡進耀表示，台灣企業規模較小，競爭力相對弱於亞洲的大型競爭對手，特別是對手往往挾數十億美元的研發經費進軍綠能產業。工業技術研究院影像顯示科技中心程章林，政府

megawatts of solar PV installed capacity for electricity generation, out of total installed capacity in the system of over 38 gigawatts. This gap is what the REDA is intended to close. To rectify this situation, Taiwan is currently offering a feed-in tariff of NT$12 per kilowatt-hour, which is 15-20% higher than the equivalent rate in Germany. This rate is so attractive that Taiwan has already received proposals for projects to develop some 1,700 megawatts of capacity, despite the government’s plan for a mere 1,000 megawatts of installed capacity by 2025. Minister Liang says that developing all 1,700 megawatts would cost Taiwan NT$260 billion (over US$8 billion) over 20 years and entail a 6% rise in electricity rates for consumers – “so of course we can’t do this.”

Questions on policy Many in Taiwan’s renewable energy field feel that the government is either unsure about how to develop the domestic market, or is deliberately dragging its feet in seeing the mandates of the REDA through to completion. Observers note that while the government has a very limited goal for installed solar capacity, it offers a very attractive feed-in tariff, yet for its more ambitious goals for offshore wind power, for example, it has set a feedin tariff too low to attract developers. Auria Solar’s Tsai notes that while the REDA calls for more than 8 gigawatts of

在1973年成立工研院的目標之一就在拉近與其他國家的研發落差。他表示，台灣以中小型或家族企業為主，研發能力很難追上三星（S a m s u n g）、樂金（LG）、夏普（Sharp）、索尼（Sony），因此政府透過工研院，專注開發尖端的產業技術。工研院的成果明顯反應在民間企業的發展上，包括由工研院扶植成立的多家科技大廠。負責綠能發展跨部會協調的行政院政務委員梁啟源認為，現有的研發模式運作良好，不見得一定要改變。他說，台灣的成功向來出自政策誘導，鼓勵產業國際化、釋放民間動能。台灣太陽光電產業的表現似乎符合梁啟源的想法。太陽光電產業（或者說整個綠能產業）的開端，來自德國1999年通過的開創性法案，藉由電力收購制度提供的財務協助，讓再生能源產業得以靠較高的電價達到經濟規模。正因為再生能源法案，整個產業開始

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installed renewable energy capacity by 2025, at the government’s current installation rate of 50 megawatts per year it would take 200 years to reach that goal. Describing this dichotomy between Taiwan’s export and domestic markets as “unfortunate,” Andy Dickinson, sales executive for Kinmac Solar, Taiwan’s largest maker of solar PV panels refers to the paradox of “a country that has such talent in manufacturing and such depth of resources in engineering, and already has two of the top 10 firms in PV – but there’s nothing here.” Tsai wonders whether selling a product to others that you reject for yourself suggests a lack of faith in the quality of that product. Minister Liang notes that for a renewable energy source to be viable, its cost must not exceed that of fossil fuels plus “external costs” paid indirectly by society as it deals with harm to the environment and public health from air and water pollution and carbon emissions. He says that while windpower meets this criterion, solar does not, which explains why the government’s targets for wind energy are three times that of solar. But he adds that the government has not unequivocally ruled out the solar option, and instead will wait to see whether solar’s costs decrease over time, something that he feels Taiwan’s efficient industries can have a part in accomplishing. Taiwan has a similar dichotomy in its LED industry. Although the industry hardly existed just a couple of years

ago, LED lighting now boasts an annual global production value of US$4.2 billion. Taiwan holds the number-one position in the market with NT$46 billion (US$1.4 billion), a level that is expected to grow by 42% annually to reach NT$150 billion (US$4.7 billion) by 2015, again almost entirely in exports. To support the local market, local media reports say, Taiwan is budgeting NT$130 million (US$3.7 million) to install around 3,000 LED streetlights and traffic signals. Online market clearinghouse LEDInside says Taiwan’s LED streetlight market has a total estimated value of NT$40-50 billion (US$1.1-1.4 billion).

大步邁進，以滿足德國對風力發電機組、太陽能面板與其他再生能源發電裝備的需求。台灣的科技業者很快就趕上腳步。太陽能發電系統的基礎既然是晶圓，台灣自然得以省下很多力氣。宇通光能的蔡進耀推估，從國際大廠到中小企業，台灣的綠能產業至少有500家業者，產品包含晶圓、電池、基板、模組、及完整的面版。但台灣太陽光電產業的弔詭之處在於，幾乎沒有國內市場。台灣雖然是全球第四大的太陽光電設備供應國，現在的年產值達1,050億新台幣、全球市佔率達 23%，而2015年前更可能每年成長23%、產值達1,500 億新台幣，但國內幾乎完全不用太陽能發電。至2009 年，台灣總發電裝置容量雖有380億瓦，但太陽能裝置容量不到1,000萬瓦。增加再生能源比例，正是再生能源發展條例的目標。台灣再生能源的收購電價為每一度新台幣12元，與

The Chroma ATE headquarters building in Linkou. photo : ChromA Ate

德國的電價及收購價相比，約高出15%至20%。由於收購價格具有競爭力，儘管政府在2025年前只規劃了 10億瓦的裝置發電量，但提案興建的總量已達到17億瓦。政務委員梁啟源表示，17億瓦的裝置量，20年間大概需要2,600億新台幣經費，並使電價增加6%，「因此可行度不高」。

政策隱憂台灣綠能產業界中，很多人都對政府的態度抱持懷疑態度，擔憂政府要不是不知道如何強化內需，就是故意避免再生能源發展條例的完全落實。觀察家認為，對太陽能發電裝置容量，政府設定非常低的目標，卻提供非常優惠的收購價格；對離岸風力發電，政府野心雖大，收購價格卻不具吸引力。宇通光能的蔡進耀指出，按照再生能源發展條例的

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Cover STORY 要求，台灣必須讓再生能源裝置容量在2025年前超過80億瓦，但以現在每年僅增加5,000萬瓦的速度，得要200年才能達到目標。台灣內需與外銷市場的落差，太陽能面板龍頭景懋光電的業務代表丁安迪以「可惜」形容，畢竟台灣已有如此的製造水準及設計能力，而且全球前十大太陽光電廠就有兩家來自台灣，但國內市場卻完全沒有開發。宇通光能的蔡進耀表示，如果台灣自己都不用自己的產品，難免讓海外客戶懷疑，是不是不相信自己產品的品質。政務委員梁啟源表示，特定再生能源是否適合開發，其成本不能超過化石燃料與外部成本的總合；社會所付出的外部成本，包括空氣、水質污染與碳排放對環境與公衛的的衝擊。他指出，政府並非絕對排除太陽能發電選項，而是希望觀察發電成本是否能降低；但他也認為，台灣產業的高效率應該有助降低成本。內需與外銷市場的落差也出現在LED照明產業。儘管LED 照明幾年前才開始發展，但全球年產值已達42億美元。台灣現居全球首位，產值達14億美元；然而儘管2015年前，台灣L E D照明產值可望每年成長42%，達到47億美元，但絕大多數的產值都靠出口。國內媒體報導，為擴大內需市場，政府計畫以1.3億新台幣換置3,000多支路燈與交通號誌；市場研究機構LEDInside則指出，台灣的LED路燈市場應該有400億到500億新台幣的規模。能源資通訊產業的發展，也讓台灣廠商前景看好，憑藉資通訊產業基礎，爭取國內外商機。再生能源發展條例與綠能產業旭升方案都已納入智慧電網技術，有助引進國際投資與合作機會。例如，西門子正在提供關鍵技術給台電，以協助26億新台幣的電網提升計畫，進一步防堵電力傳輸流失。台灣能源資通訊的年總產值為90億新台幣，主力是智慧型電表及軟體等元件的外銷。資通訊相關的綠能產業的確前景看好，但綠能旭升方案的其他產業則很可能面臨常見的挑戰–成本高，發電量低，且除了降低碳排放量外，對用戶與業者都沒有明顯好處。這些問題在台灣會特別明顯，因為能源消耗率已經算是很低的了。風力發電則是另一個例子。台灣的風力資源儘管豐富，但發電機最多只能達到發電容量的35%，而火力發電卻有 85%，核能更是100%充分利用。政務委員梁啟源對生質燃料也抱有懷疑想法，因為眾多報告認為多種燃料在技術上並不可行，主因是生產所消耗的能源，還高於燃料所能提供的能源。台灣現在所使用的生質柴油，主要將提煉後的回收植物油加入汽車燃油，儘管充分廢物利用，也可降低整體的垃圾與排放量，但總產量應該很快就會達到極限。台灣的酒精汽油則不普遍。同時，儘管工研院已經開發出不少氫能與燃料電池的技術，但或許還需要很長一段時間才能投入商用生產。最令人遺憾的是，台灣全力增加綠能產品外銷，但卻可能增加國內的整體碳排放量。事實上，台灣降低排放量最有效的方法，或許是進一步提升的生產過程的效能。改善生產過程的解決方案之一，或許是西門子的節能技術。台灣70%的半導體與TFT-LCD面板廠都已經採用西門子的自動節能方案，鋼鐵與造紙等傳統產業也有廠商使用。台灣西門子總裁韋思德表示，其中一項方案的特點是，全自動生產線的裝配線驅動馬達只在有需要時啟動。他說，「單靠這點，我們就能將各別驅動馬達的耗能減少最多60%」，「試想，如果台灣全部工廠的數千數萬驅動馬達都節能60%，能省下多少能源？」

The EICT industry also offers strong growth potential for Taiwan manufacturers – in both the domestic market and internationally – as it fits nicely into Taiwan’s ICT industry profile. Both the REDA and DGEI call for investment in smart-grid technology, offering opportunities for international investment and partnerships. For example, Siemens is supplying crucial technologies to Taipower as part of the utility’s NT$2.6 billion (US$81.3 million) grid upgrade, providing significant savings in grid power losses. Taiwan’s total current EICT production is valued at NT$9 billion (over US$280 million) a year, consisting largely of components such as smart meters and software for export. While ICT-related green tech offers much promise for future growth, others sectors covered by the DGEI will likely face the same obstacles that green-tech sectors typically face – high costs, low volume, and no obvious benefits to consumers or industry beyond reducing emissions, particularly in Taiwan where energy consumption rates are considered quite low. Wind is one example. While Taiwan has excellent wind resources, at best the turbines operate at 35% capacity, compared to 85% for coal-fired power plants, or even 100% for nuclear. Minister Liang expresses his own skepticism regarding biofuels, noting that numerous studies conclude that many are technically infeasible, since they require more energy to create than can actually be obtained from the fuel. Taiwan currently adds biodiesel created from waste vegetable oil to its automotive fuel mix, an innovative use of a waste product and one that complements an overall waste and emissions reduction strategy, but whose utilization will presumably be maxed out shortly. Taiwan has no ethanol production. Also, while ITRI is developing some exciting new products in hydrogen/fuel cell technology, none of them are yet commercially available and it may be years before they reach that stage. The ultimate irony is that while Taiwan is ramping up green-tech manufacturing for export, its own emissions may rise concurrently. In fact, Taiwan’s biggest contribution towards reducing carbon emissions may derive from more efficient manufacturing processes. Siemens is already deeply involved in the Taiwan market, supplying automated energy-saving solutions to 70% of Taiwan’s semiconductor and TFT-LCD fabricators, as well as to traditional industries such as steel and paper makers. One such solution is what Siemens Taiwan CEO Peter A. Weiss calls “fully automated lines” that turn on assembly-line motors only when they are needed. “Just by controlling this we can reduce the power consumption of an individual drive by up to 60%,” he explains. Multiply that by the thousands of drives spinning continuously throughout Taiwan’s factories and “you can save a lot of energy,” he concludes.

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Electric Vehicles: Has Their Day Finally Come? Taiwanese companies are heavily involved in EV development. But some major obstacles stand in the way of creating a substantial market. BY TIMOTHY FERRY

電動車的春天已經來臨？台灣廠商積極投入電動車研發，但擴大需求之路仍有不少障礙。撰文／法緹拇

he day when the zero emissions electric vehicle (EV) becomes a realistic alternative to conventional automobiles seems to be like the horizon – always in sight, yet always just out of reach. Still, the promise these vehicles hold for both reducing carbon emissions and creating a lucrative new market has spurred a vigorous effort by Taiwan’s IT and machinery industries – with support from the government – to transform Taiwan into a center of EV design and production. Whether their efforts will be sufficient – or even whether EVs will live up to expectations – remains to be seen. As part of the Dawning Green Energy Technology program, passed in late 2009, the Ma Ying-Jeou administration earmarked NT$4.5 billion (US$140 million) to be spent between 2009 and 2012 on R&D and pilot projects to promote the EV industry. Complementing this program is the “Development Strategy and Action Plan for Smart Electric Vehicles,” which calls for an annual output of 60,000 electric cars, 20% of them for export, over the next five years. The plan, under the supervision of Minister without Portfolio Yiin Chii-ming, has two distinct phases. Phase 1 commits the government to purchase 3,000 EVs for use by the post office and other government agencies. Phase 2, beginning in 2013, will provide direct subsidies to consumers to buy EVs. The government has also overseen the formation of an industry organization, the Taiwan Automotive Research Consortium, to bring together those participating in EV development to brainstorm solutions, iron out standards, and share information. The group put together a delegation that traveled to Detroit this past spring to promote Taiwanese EV supply-chain capabilities to the Big Three U.S. automotive companies. “Many people in Michigan didn’t even know Taiwan has this capability,” said William

Pihsiang Chairman Donald Wu with his latest EV prototype. photo : pihSiAng

【綱要】

零

排放電動車輛足以取代傳統汽車的實現之日，似乎永遠可望而不可及。但伴隨電動車而來的產業希望，仍讓台灣政府協助科技與機械業者積極投入，試圖將台灣打造成電動車的設計與生產中心。行政院通過的「綠色能源產業旭升方案」，承諾 2009年至2012年提撥至少45億新台幣，以協助電動車的研發與先導計畫。經濟部所提的「智慧電動車發展策略與行動方案」，則希望未來五年內能將年產量提高到6萬輛，其中20%外銷。負責電動車發展的行政院政務委員尹啟銘規劃了兩階段目標：一，政府採購 3,000量電動車，供中華郵政與政府機關使用；二， 2013年起，補助消費者換購電動車。經濟部推動下，電動車業者已成立「台灣車輛研發聯盟」，合作克服問題、制訂產業標準、建立資訊分享平台。聯盟今年春季亦曾派團前往美國底特律，向三大汽車龍頭說明台灣的電動車產製能力。透過類似場合，台灣既推銷自身的電動車產業，也尋找國際合作機會。不過，部分企業主管並不滿意政府至今的實際投入程度。必翔實業的董事長伍必翔就表示，公司雖然在設計創新與性質可靠的電動車上取得耀眼成績，車輛多年來也在美國、加拿大、歐洲完成道路測試，但研發過程沒有得到政府任何資金挹注。專精鋰離子電池的能元科技，其營業處副總經理佘家棟也認為，政府說的跟實際做的有段落差。他說，中國與美國的電動車相關企業都已獲得政府實質協助，台灣也應該幫助本土廠商迎戰競爭對手。

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Cover STORY Chang, a member of the delegation who is a marketing executive for Chroma ATE Inc., a Taiwanese maker of electronics testing gear and components. Through this and other similar events around the world, Taiwan is looking to promote its EV industry and seek partnerships with global players. Other industry executives, however, say they have been less impressed with the government’s efforts thus far. Donald Wu, chairman of Pihsiang Machinery and Pihsiang Electric Vehicles, for example, says that despite the success of his firm in developing innovative and durable EVs that have already been road tested for years on American, Canadian and European roads, “I’ve not got a penny from the Taiwan government” for development. Charles Sher, sales executive with E-one Moli, a Taiwan battery maker

Pihsiang’s electric pick-up truck. photo : pihSiAng

specializing in lithium-ion batteries, also sees a disconnect between what the government declares and what actually happens on the ground. He says that Chinese and American EV-related firms enjoy substantial support from their governments, and urges the Taiwan authorities to “support your local EV makers in Taiwan to compete with other countries.” Questions about government support, however, have not stopped Taiwanese firms from jumping into the EV market headlong. As Pihsiang’s Wu says: “I’m not counting on anyone’s help.” In seeking to gain a foothold in the international EV industry, domestic companies are leveraging their strong IT and machinery-making capabilities, and already are partnering with some of the biggest names in EVs around the world to produce components. California startup Tesla Motors is one such partner. While the oil shock of 2008 and continuing worries about global warming may have helped push EVs into the public eye in the past few years, it is Tesla, founded by Internet mogul Elon Musk, that made them sexy. A far cry from the glorified golf carts of the past, the Tesla Roadster’s acceleration from 0-60 mph in 3.7 seconds places it in the top 10 fastest production cars. Crucial to this achievement are key components supplied by Taiwanese firms. Tesla’s stun-

儘管質疑政府的決心，台灣業者並未因此放棄電動車市場。必翔實業的伍必翔直言，「我不打算靠其他人幫忙」。國內廠商所憑恃的，除了堅實的科技與機械製造能力，還有與國際電動車大廠合作生產零件的伙伴關係。美國加州的Tesla Motors正是跨國伙伴之一。電動車 Tesla Roadster有足以匹敵超級跑車的性能–3.7秒加速到時速60哩、極速達每小時125哩。Tesla Roadster 的性能來自於台灣廠商的關鍵元件：富田電機的電動馬達及致茂電子的交直流電動馬達變頻器，正是優秀加速力的幕後功臣。台灣企業也是許多國外電動車廠的零件供應商。致茂電子與能元科技生產電池、變頻器，以及BMW和三菱的測試系統；MiniE、Telsa、Luxgen的電動車系統發展商AC Propulsion雖然位於美國，但台灣股東持有 80%股份。部分台灣企業則企圖打造專屬品牌，以創造更高的

ning acceleration, for example, is due to the superior power of the electric motors from Taiwan’s Fukuta Electric & Machinery Co., while Chroma ATE supplies Tesla with equally vital AC/DC electric motor inverters. Taiwanese firms are also providing components to many other EV-making firms abroad. Chroma ATE and E-One Moli Energy Corp. supply batteries, inverters, and testing systems for BMW and Mitsubishi, while U.S.-based AC Propulsion – the developer of electric-car systems for MiniE, Telsa, and Luxgen – is 80% owned by Taiwanese investors.

Going for branding While Taiwan’s IT and machinery sectors have relied chiefly on OEM/ODM business for their success over the years, with EVs Taiwanese firms are hoping to gain some brand-name recognition and the higher profit margins that entails. Yulon Motor, which became one of Taiwan’s largest automakers through its relationship with Japan’s Nissan, launched its own Luxgen brand in 2008, and unveiled its LUXGEN7 MPV EV+ at the Dubai Auto show last December. While Yulon already had a hybrid sports utility vehicle, the EV+ is the company’s first fully electric car, and incorporates parts from Chroma ATE, Fukuta, and E-one Moli. The company hopes to begin

獲利空間。裕隆汽車2008年創立自有品牌Luxgen，並在去年12月的杜拜車展中推出Luxgen7 EV+。儘管裕隆已經推出油電混合引擎的SUV，但EV+款卻是唯一的全電動車，結合致茂電子、富田電機、能元科技的關鍵元件。裕隆希望EV+款今年下半年能夠開始銷售。必翔實業自有品牌的電動車也已經進入研發最後階段，搭配自家的先進DOSBOS鋰離子電池。台灣的電動車產業雖仍在起步階段，但業者放眼的是市場潛力。正因為產業剛要上軌道，台灣很有機會成為全球的領導者。必翔實業的伍必翔甚至認為，新興小廠可能比現有大廠還更具優勢，因為電動車的設計與製造完全不同於傳統汽車。但這次並不是台灣第一次試圖建立電動車產業。 1970年代後期的媒體報導指出，台灣曾經推動Thev III研發計畫，內需市場推估為每年2萬輛。現在的發展計畫與預估銷量，與30年前非常相似。當然，電動車技術在數十年間有很大改良。T h e v III的極速為每小時75公里、行駛距離120公里、加速

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selling the EV+ later this year. Pihsiang Machinery is also in late-stage development of its own-brand EV using its advanced DOSBAS lithium-ion battery. Taiwan already has a strong presence in automotive electronics outside the specific field of EVs. According to the Ministry of Economic Affairs (MOEA), the production value of auto electronics in 2010 will reach NT$100 billion (US$3.2 billion), with output consisting mainly of automobile lights, lightemitting diode (LED) headlights, reverse parking systems, and tire-pressure monitoring systems (TPMS). By contrast, the Ministry’s Bureau of Energy (BOE) estimates the current annual production value of EV-related industries at only NT$380 million (US$11.9 million). But while Taiwan’s EV industry now pales in comparison with its general automotive electronics industry, the potential market is what Taiwan is after. MOEA foresees the global annual EV market as likely to reach NT$1 trillion (US$31.3 billion) by 2015, and by the same year President Obama has said he aims to see a million plug-in hybrids on American roads. As the market is still so new, Taiwan figures it has as good a chance as any to become a global leader. “Everyone’s standing at the beginning stage, so Taiwan has a good opportunity using its IT experience to promote

EVs to the world,” notes Chroma ATE’s William Chang. Pihsiang’s Donald Wu goes one step further, declaring that newer, smaller firms might actually have an advantage over the long-established big players. Designing and manufacturing purely electric cars is an entirely different process from conventional auto manufacturing – not just a matter of replacing the internal combustion engine with an electric system, he says. Rather, it needs an entirely different design and different materials, but the automotive giants “are still insisting on [duplicat-

至時速40公里在12秒以內，與之相比，Luxgen EV+ 的極速為每小時145公里、行駛距離350公里、加速至時速100公里僅需8.6秒。儘管電動車的技術已經進步，但穩固的電動車市場與美好前景仍面臨相同挑戰。波士頓顧問公司預測，電動車2020年的市佔率為26%，但能元科技的佘家棟說，「能有5%就夠開心了」，因為成本高、充電設施不足、安全問題仍然是主要挑戰。電動車的優點在於能源利用率比例可達60%，而傳統汽車只能利用燃料的少數能量。此外，電動車不必拉轉速就能達到最大扭力，這也解釋了Tesla Roadster的驚人加速力。Tesla Roadster 的使用成本也更低，只需要3美元的電量就可以行駛 350哩。然而，如果要避免電動車成為富人才買得起的玩具，價格必須更為平實。鋰離子電池的價格如果一直高達2萬美元，汽車零售價格自然倍增。電動車提倡者寄望於達到規模經濟以拉低電池價格，而產量也的

E-One Moli Energy’s battery production plant. photo : e- one moli

確急速增加。其他人則懷疑市場真能快速成長。電動車的充電時間過長，以及安全充電設施不足，仍將是最大的挑戰。電動車的終極夢想是五分鐘以內即能充飽的電池，同時還能維持足夠的行駛距離，讓消費者不必擔心會不會卡在半路。目前而言，這個目標仍然遙不可及。台灣電動車產業的普遍看法是，市場的新動能來自物流貨車與公共汽車，因為路線固定與行程短的特性可以降低電池的負面影響。另外，輕型的市區交通工具，如摩托車，也很有潛力。電動車的最大優點「零排放」，其實也遭專家質疑思考不夠全面。電動車在行駛過程中的確環保，但中國等高度依賴火力發電的國家，電動車的量越多，恐怕只會間接產生更多的碳排放。但台灣的電動車廠並不在意上述論點，仍將中國當成最大的潛在市場，強調對岸正大力發展綠能科技、其消費市場才剛起步，以及法規仍相當寬鬆。

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Cover Story ing] the old car of today.” He predicts that the more flexible smaller outfits will be more successful. The current round of activity is not the first time that Taiwan has sought to develop a substantial EV industry. Media reports from the late 1970s had Taiwan forecasting a likely domestic market of 20,000 vehicles a year. The subject of these reports was the Thev III, a hybrid EV produced as a joint research project between U.S. auto giant General Motors and Taiwan’s National Tsing Hua University. The vehicle was used by the post office and telephone companies as a pilot project to advance the market for fully electric vehicles. A GM vice president in 1977 predicted a viable electric car market in the United States and Taiwan in “seven to ten years.” Fast-forward 30 years, and the current plans and predictions seem strikingly similar. Will this time around do the trick? Certainly the technology supporting EVs has improved considerably over the past decades. Compared with the Thev III’s top speed of 75 kph, range of 120 km, and 0-40 kph acceleration in “under 12 seconds,” Luxgen’s EV+ boasts a top speed of 145 kph (90 mph), a range of 350 km range, and the ability to reach 100 kph (62 mph) in 8.6 seconds. But while EV technology may have improved, the challenges facing a fullfledged EV market – and the rosy predictions – remain the same. The Boston Consulting Group, for instance, forecasts general market penetration of EVs by 2020 at 26%. “We’ll be happy with 5%,” retorts E-one Moli’s Charles Sher, citing high costs, lagging infrastructure, and safety issues as the main obstacles.

Weighing the advantages EVs offer some substantial benefits over conventional internal combustion cars, which convert less than half the energy potential in their fuel into actual motion (the rest being lost as heat or through idling the engine). In contrast, EVs apply up to 60% of their energy into motion. Unlike an internal combustion engine, in addition, an electric motor can reach maximum torque instanta-

An electric motor scooter at a recent motorcycle trade show in Taipei. photo : cna

neously without the need for revving up. That explains Tesla Roadster’s phenomenal acceleration, matching the best of the super-sports cars at a fraction of the weight or horsepower. The operating economy is vastly superior as well. The Tesla can be charged up for US$3 for its 350-mile range. But saving money at the gas tank is hardly a priority for people in the market for a six-figure exotic super-sports car. If EVs are ever to become more than a whimsy of the affluent, their costs must come down. In that respect, it’s all about the batteries. Today’s lithium-ion batteries are capable of much greater energy storage and performance than earlier leadacid batteries, translating into faster vehicles with longer ranges – and much higher price tags. At up to US$20,000, the price of a lithium-ion battery essentially doubles the sticker price of the vehicle. EV advocates count on those oh-soelusive economies of scale to drive down the price of batteries, and indeed the production volume is increasing tremendously. According to Forbes magazine, over US$6 billion is currently being invested globally in battery production – US$3 billion in the United States alone. Deutsche Bank analyses say that all this new manufacturing capacity will be able to produce enough batteries to supply 15 million hybrid vehicles, or 1.5 million fully electric cars (which require

far greater battery capacity), by 2015. But skeptics doubt whether such a market will develop so quickly. The length of time needed to charge an EV battery and the lack of a sound batterycharging infrastructure remain particularly stubborn obstacles. The Holy Grail for EVs is a battery capable of being fully charged in less than five minutes – while still having sufficient range for consumers to feel confident they won’t be stuck on the side of the road. So far, that objective remains out of reach. Safety issues also trouble the industry. While EVs are generally safe, the fact is that batteries store a great deal of energy and are subject to such dangers as overheating and even explosion. “If one car explodes, the reputation and confidence in the EV product or company will be greatly affected,” observes Chroma ATE’s William Chang. Many in Taiwan’s EV industry see the market heading towards commercial fleets of delivery vans and buses – whose regular routes and shorter ranges mitigate the battery-charging issues – as well as light urban transport, such as scooters. Ultimately, even the main presumed benefit of EVs – zero emissions – is called into question by experts. James Wang, deputy director-general at the Industrial Technology Research Institute’s Mechanical and Systems Research Labs, says widespread use of EVs would likely have little positive impact on global carbon emissions, and might even make them worse. EVs provide clean transport “when they are operating,” he notes. “But is it clean to generate electricity” for their recharging? Perhaps for already developed economies, but not necessarily for others, he says, explaining that China’s high dependence on polluting coal-fired power plants means that “using more electric vehicles will actually generate more carbon emissions.” China is making headlines for its pursuit of green energy, but meanwhile continues to increase coal consumption to fuel its growing economy. This irony is generally lost on Taiwanese EV makers, who look to China as their biggest potential market, citing its “green” tech push, undeveloped consumer market, and lax regulatory environment.

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law

The Criminalization of Global Regulatory Compliance Or

“Do It Right Before Someone Makes You!” U.S. Justice Department action against leading Taiwanese manufacturers of TFT-LCD panels on price-fixing charges has focused attention on the risks of non-compliance in an increasingly globalized marketplace.

BY RICHARD L. THURSTON

lobalization is increasingly exposing Taiwan companies to new regulatory risks and potentially serious liabilities. In the event of non-compliance, significant criminal penalties and sanctions can extend extraterritorially to Taiwan corporate executives and board members alike. While expensive patentinfringement litigation has laid siege to Taiwanese companies for a number of years, a new and potentially far more costly wave of regulatory challenges – such as in the area of antitrust – is now confronting companies here head-on. Unfortunately, only the tip of the iceberg has been seen in recent antitrustrelated criminal indictments. There are likely to be more compliance challenges to come. While providing a high-level overview of some of the more serious regulatory compliance challenges, this article emphasizes the importance of

establishing and maintaining a meaningful, pro-active corporate compliance program. A plethora of laws and regulations requiring wide-ranging corporate compliance has emerged in recent years in such jurisdictions as the United States, European Union, Japan, and China, among others. And because foreign governments and courts increasingly enforce many of those laws extraterritorially (especially those discussed below), Taiwan companies face significant exposures and risks, even if they do not establish a legal presence abroad. Along with the extraterritorial expansion of laws and regulations, a major shift has occurred towards the criminalization of regulatory compliance, bringing a staggering growth in the nature and value of criminal fines and prison terms (not to mention the rise in punitive damages in civil pro-

ceedings). But the implications do not stop there. A company’s failure to comply with various laws and regulations may also result in other equally serious penalties such as ongoing intrusive monitoring of daily business activities, ongoing and embarrassing public reporting of non-compliance, denial of export privileges, suspension or debarment of stock listing and trading activities, the restatement of financial reports, etc. What this means is that unless Taiwan companies more rigorously police themselves and implement effective corporate compliance programs, they will face increased regulatory risks and the likelihood of criminal sanctions in the event of non-compliance. In fact, establishment of a solid compliance program with pro-active disclosure could, in certain countries such as the United States, result in a significant reduction of criminal sanctions.

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law

Overview of the Regulatory Environment Many foreign laws and regulations must be placed on the regulatory compliance radar screens of Taiwan companies. This article does not address all of them, and the author encourages Taiwan corporations to seek the advice and counsel of legal advisers on the law and regulations of countries in which they have a legal presence, are doing business, or have other actionable “contacts” that may expose them to the extraterritorial jurisdiction of a country’s law-enforcement agencies and courts. Instead, the focus here is placed on some of the more significant laws and regulations (excluding criminal sanctions for intellectual propertyrelated matters) that impose criminal sanctions: • Anti-bribery/foreign corrupt practices; • Antitrust/unfair trade practices; • Export control; • Financial disclosures/Internal controls; • Privacy laws; • Environmental protection; • Insider trading; • E-communication laws. Remember, criminal liability and the ability of a government to obtain criminal jurisdiction over your board members, executives, and employees is not a remote risk in 2010. It is very real and cannot be ignored.

Anti-Bribery Simply stated, companies and individuals may not use bribes, directly or through intermediaries, to obtain or retain business or a commercial “advantage.” In many countries, it is also unlawful to solicit or receive a bribe. The goals of such laws and regulations are to ensure that companies win business on the superiority of their goods or services, and to promote fairness and a level playing field in the global marketplace. These laws generally apply extraterritorially. In the United States, criminal monetary fines and up to five years in prison are imposed under the Foreign Corrupt Practices Act (FCPA). The U.S. courts also apply Federal Sentencing Guidelines that establish a uniform criminal sentencing policy for individuals and corporations convicted of Federal crimes. Recently, an executive at CCI, a California valve company, bribed officials at state-owned and private firms to win projects in Asia. The executive was arrested in Germany and extradited to the United States to face sentencing. CCI agreed to an US$18.2 million fine and three years’ probation. Among other countries with significant anti-bribery criminal penalties are Germany (criminal fines and up to five years in prison); the United Kingdom (unlimited criminal fines and up to seven years in prison), where a recently enacted Anti-Bribery Act that becomes effective in 2011 is even stricter than the FCPA; Japan (criminal fines and up to five years in prison); China (criminal fines and up to five years in prison, while the death penalty may also apply to government officials), which recently announced plans to establish laws and regulations covering offshore bribery activities, and Taiwan (criminal fines and up to life in prison). Also keep in mind that the payment of monetary fines and serving prison terms in one country will not be credited against fines or prison terms in another jurisdiction (this factor applies to all categories discussed in this article). With growing globalization and extraterritorial application, there is a very high likelihood of multiple fines

per violation. For example, Siemens recently paid fines in both the United States (US$800 million) and Germany (US$856 million). Antitrust Under antitrust laws and regulations , companie s may not w ork together to restrain trade (for example by price fixing or customer allocation). Also, an individual company may not abuse its “dominant” position in a “market” to restrain trade. Generally, the goals of such laws are to promote robust competition, strengthen consumer protection, and prohibit anticompetitive monopolies, cartels, and conspiracies. Countries with criminal sanctions include the United States (up to US$100 million for companies and US$1 million for individuals, plus up to 10 years in prison), Germany (criminal fines of at least 30% of sales of goods, and for individuals up to Euro 1 million and five years of imprisonment), the United Kingdom (up to 10% of a company’s global turnover), China (between 1% and 10% of the prior year’s sales), and Taiwan, with up to NT$100 million and three years’ imprisonment for individuals, and actual plus punitive (3x) damages for corporations. The U.S. Justice Department has taken action in the past few years against seven Korean, Japanese, and Taiwanese makers of TFT-LCD panels and 17 executives from those companies on charges of participating in a worldwide conspiracy to fix prices. Among them, Taiwan’s Chunghwa Picture Tubes (CPT) in 2009 pleaded guilty to the charge and was sentenced to pay a US$65 million criminal fine. Three CPT executives, including former president Frank Lin, were also sentenced to both prison terms and fines (in Lin’s case, seven months in prison and a US$30,000 fine). Chi Mei Optoelectronics was recently fined US$220 million, while its former president, Ho Jau-Yang, was sentenced to 14 months in prison and a US$50,000 criminal fine, while another company executive received a sentence of nine months and a US$25,000 fine. Hannstar Display in

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law

June pleaded guilty and agreed to pay a US$30 million criminal fine. Another major Taiwanese manufacturer, AU Optronics, is also facing charges, but has said it will seek to defend itself against the allegations rather than accept a settlement. Export Control Most countries impose some restrictions on the export of products and technologies. They range from sanctions and embargos against specific countries to requirements for export licenses applicable to a specific business or individual. Those countries will regulate dual-use items (including software and technologies), which can be used for both civil and military purposes. Through export control laws and regulations, countries are fundamentally seeking to protect national security and foreign policy interests by trying to reduce the military potential of adversaries or competitors, and preventing the spread of weapons of mass destruction and terrorism. Criminal sanctions for violations exist in all major countries, including the United States (up to US$1 million per violation and up to 10 years’ imprisonment, as well as loss of all export privileges), Germany (up to Euro 500,000 and up to five years’ imprisonment, Japan (up to ¥2 million per violation, but if the value of the exported product or technology exceeds ¥2 million, then a fine of five times the export value and up to five years imprisonment, with the additional possible that exports can be prohibited

for up to three years, China (unspecified criminal fines and up to three years’ imprisonment and possible death penalty for exporting “state secrets”), and Taiwan (up to NT$1.5 million in fines and up to five years’ imprisonment). As an example of this kind of case, Realtek, a Hsinchu-based integrated circuits manufacturer, exported U.S.-origin microprocessor technology without end-user assurances (as required by U.S. law at the time). The U.S. Commerce Department suspended Realtek’s export privileges. Realtek then violated the suspension order when it purchased U.S.-origin computer software, and was fined US$44,000 and received a twoyear denial of export privileges. Financial Disclosures/Internal Controls. Beginning with the ENRON fiasco and the resulting Sarbanes-Oxley (SOX) legislation in the United States, and more recently matters concerning Parmalut and Shell in Europe, a new era of complex financial-related regulatory controls and sanctions has sprung up around the world. Today, most industrialized countries require public companies, at a minimum, to ensure accurate public financial disclosure and to maintain adequate internal financial controls. Most of those regulatory regimes have established “principlesbased” codes and rely on a “complyor-explain” system (that is, companies may deviate from the code if they report the reason). The U.S. system is “rulesbased,” with strict penalties. For the most part, regulatory agencies responsible for enforcement are trying to restore and then maintain public confidence in capital markets, strengthen corporate accounting controls, and create individual liability for deception or fraud in preparing financial statements. While criminal liability is not yet as extensive as in other regulatory areas, there is a growing trend to impose criminal fines and prison terms for noncompliance. Such penalties involve fines of up to US$5 million and up to 20 years’ imprisonment for individuals in the United States; up to ¥700 million for companies and up to 10 years’

imprisonment for individuals in Japan, possible criminal liabilities in Korea, possible unlimited liability for breach of fiduciary duties by foreign directors without any “business judgment rule” criminal sanctions in China, and fines of between NT$20,000 and $100,000 in Taiwan. Privacy Laws A proliferating area of regulatory concern is that of privacy law, which regulates the transfer and protection of personal data. Additionally, companies must inform individuals how their data will be used, obtain the individual’s consent before use, and advise individuals whenever their personal information is lost or stolen. Overall, the goals of such legislation (both Federal/National and State/Provincial) are to enhance protection for citizens while preserving the usefulness of personal data for legitimate purposes. Criminal liability in this area is fairly widespread and is growing heavier. In the United States, it is up to US$12,000 per day, with possible other criminal liability, including prison time, under a variety of state laws. In the United Kingdom, the liability is up to £500,000 in fines, in Japan up to ¥300,000 in fines and up to six months’ imprisonment, in China up to one year in prison for violations of “communication freedom rights,” and in Taiwan up to NT$1 million and up to five years in prison (further regulations are yet to be promulgated under a recent legislative enactment).

In one case in this category, a decade ago the Spanish data protection agency found that Microsoft had transferred its clients’ information to the United States

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law

without first informing those clients or modifying the information so that the individuals could not be identified. The agency fined Microsoft US$60,000 for violating Spain’s data protection laws.

Department and Environmental Protection Agency charged Shintech with violating several environmental laws and ordered it to pay US$12 million in fines and to clean up its facilities.

Environmental Protection. While legislation has been around for some time, new laws are likely to emerge in response to the BP disaster in the Gulf of Mexico. Generally, companies must operate in ways that reduce the adverse impact of human activity on the environment. For example, companies are limited in the use and disposal of certain chemicals and must engage in recycling efforts. Activities are regulated through complex and interlocking bodies of treaties, conventions, statues, regulations, and common laws. Overall, the goals of regulatory agencies are to balance protecting the environment with minimizing the impact on commerce and individual liberty, and to distribute environmental costs fairly. Growing criminal liability is arising from increased citizen activism. To cite a few examples of the kinds of criminal sanctions in place, U.S. law provides that offenses such as dumping violations can be met with vessel seizure, fines of up to US$250,000 per violation, and five years in prison for individuals; in the United Kingdom, each EPA violation may bring up to £20,000 in fines and up to two years in prison; in Korea, air-preservation violators may receive fines of up to 100 million Won and up to seven years in prison, as well as facility shutdown and cancellation of permits; in China, pollution violations are dealt with by the imposition of restoration costs, administrative fines, and facility closure; and in Taiwan, airpollution violations can receive fines of NT$1 million per offense and three years in prison. These countries also apply criminal sanctions in other areas of environmental concern. Shintech Louisiana, a Japaneseinvested producer of PVC resin, was found to have failed to detect and repair refrigeration units that leaked ozonedepleting chemicals and also improperly disposed of lab waste. The U.S. Justice

Insider Trading Basically, insider trading legislation is designed to punish an individual when he or she uses material nonpublic information about a company to trade or not trade in a company’s securities. For the most part, legislatures seek to protect investors from fraudulent practices, encourage investor confidence, ensure that markets are fair and transparent, and reduce systemic risk. Violations of such statutes increasingly result in criminal fines and prison terms. As examples, penalties in the United States are up to US$2.5 million for companies and up to US$1 million for individuals, with up to 20 years’ imprisonment; in Germany, they are up to Euro 5 million and up to five years’ imprisonment; in Japan, up to ¥3 million and up to three years’ imprisonment; in China, between one and five times the benefit obtained and at least five years’ imprisonment; and in Taiwan, between NT$10 million and $200 million in fines and at least three years’ imprisonment.

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Electronic Communications. This new legal area regulates the sending of commercial electronic messages to individuals or companies. The purpose of such legislation is to try to reduce the annoyance and economic damage caused by unsolicited elec-

tronic messages (otherwise known as “spam”). In most countries, the sender of ecommunications needs the recipient’s prior consent before sending an email (“opt-in”). The United States and Korea specifically require the sender to include a notice for the recipient to refuse future emails (“opt-out”). Criminal liability is growing. In the United States, penalties are up to US$16,000 in fines per email and up to five years’ imprisonment; in Japan, up to ¥30 million in fines for companies and up to ¥1 million and up to one year in prison for individuals; and in Korea, up to 10 million Won and up to two years’ imprisonment. Today, in Taiwan, fines range between NT$500 and NT$2,000 per email.

Conclusion: Protect your company now! As recent U.S. antitrust indictments show, Taiwan companies, at a minimum, must undertake effective compliance programs to protect a company’s: • Board of Directors; • Executives; • Reputation; and • Shareholder value Why take any chances? If you get into criminal trouble, nearly all government settlements will require you to establish a compliance program. So, why wait? — Dr. Thurston is Senior Vice President and General Counsel of Taiwan Semiconductor Manufacturing Company, Ltd.

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Balancing Supply and Demand By MARk y. Lock

photo : dirk diestel

INDUSTRY F

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april 2006 â&#x20AC;˘ taiwan business topics

CUS

A Report on the Educational Sector 2010/8/27 10:36:05 PM

INDUSTRY F

CUS

A Report on the Educational Sector

Raising the Bar for Taiwan’s Higher Education Taiwan has more students attending more universities than ever before, but is the quality of the education they are receiving is being questioned.

in this survey • Raising the Bar for Taiwan’s Higher Education p.34

• Coming Soon: College Students from the Mainland p.37

• Circumscribed Role for Foreign Universities p.40 • Where the Taiwanese Learn Their English p.42

or decades, only the very brightest students in Taiwan had the chance to go on to college by passing a stiff joint entrance examination, but now more than 90% of Taiwanese high school graduates continue their studies at one of the island’s 164 institutions of higher education. The number of students attending a university, college, or junior college has risen to 1.34 million, a 22% increase from a decade ago when Taiwan had 150 tertiary-level educational institutions. With the expansion of Taiwan’s higher-education system in recent years to provide opportunities for more students, however, many commentators have questioned whether the quality of the education has become diluted in the process. In response, the government has come up with various initiatives aimed at raising the academic standards of Taiwanese universities and their reputation in the global education market. One such program was the establishment in 2002 of the Higher Education Evaluation and Accreditation Council (HEEAC) by the Ministry of Education (MOE) to raise teaching standards, in part by empowering students to evaluate their instructors (reportedly a number of “deadweight” professors opted to take early retirement rather

than face the evaluation process). The MOE also instituted a Teachers’ Excellence Program to recognize superior classroom performance. In addition to the question of educational quality, concern is also growing about how the less well-established universities will cope with the prospect of declining enrollments as Taiwan enters a period of falling population levels. With a fertility rate of only 1.02 (whereas 2.1 is required to maintain a stable population), Taiwan is beginning to see the characteristics of an ageing society. “Classrooms are being closed down in elementary schools, because there is no use for them anymore,” says Bill Allen, founder of the Zephyr English Institute, noting a trend that will in turn affect junior high schools, high schools, and then colleges. Says Deputy Minister of Education Lin Tsong-Ming: “Universities that cannot financially survive the drop in student numbers will have to either exit the market or shift to offering other services like continuing education or educational promotion.” Since few schools are likely to willingly take the option of shutting down – it is much more difficult to close a university than to establish one – the government is providing substantial support to help them reorganize. Lin cites

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A Report on the Educational Sector

INDUSTRY F

CUS

More Universities, More Enrollment 2000-2001 Academic year Tertiary institutions Universities Colleges Jr. Colleges Enrollment

2009-2010 Academic year

Total

Public

Private

Total

Public

Private

150 53 74 23 1,092,102

53 25 24 4 295,184

97 28 50 19 796,918

164 105 44 15 1,336,592

54 42 9 3 430,308

110 63 35 12 906,284

source: Ministry of education

ongoing MOE efforts to aid struggling universities in southern Taiwan to make the transition from traditional universities to centers offering other types of educational services, such as adult education or the provision of recruiting services for students and faculty. Media commentaries have frequently linked the two phenomena of low-quality education and the oversupply of places in the universities. R.C.T. Lee, a former university president and the author of a recent book on Taiwan’s educational system, agrees that the connection is at least partially valid. Due to an overly saturated market, “universities that are struggling financially will admit students of a lower quality than they would otherwise,” he notes. But at the same time, stresses Liao Chao-yang, a professor of English at National Taiwan University (NTU), “top-tier institutions like NTU are actually improving in their quality of education.” Ten years ago, only the top 40% of a high-school graduating class would gain admission to a college, junior college, or university, but now nine out of ten applicants get admitted. Consequently, today’s university students – on average – will be less competitive academically than their predecessors of a decade ago, but a larger proportion of the population is getting the chance to earn a college degree. “What really matters is that more students are able to get a university education today, whether it be a high quality or low quality education,” says Karen Chung, a professor of English at NTU. “An opportunity to get any sort of university education is better than getting no university education at all.” Some commentators have expressed

concern that with so many Taiwanese now receiving a university diploma – some with a lower level of academic prowess than others – the value of a bachelor’s degree in the job market will be eroded. Chung believes that should not be a worry. “Employers will start to distinguish between diplomas from different universities,” she says. “They won’t just look at whether you have a bachelor’s degree, but will judge the quality of your education from where you got your diploma.”

Upgraded technical institutes Besides the vast differences in educational quality among universities, another factor complicating the task of assessing the value of a bachelor’s degree is the fact that many former technical schools and junior colleges in the past decade have been upgraded to become full-scale universities. Victor Liu, chairman of the HEEAC, says that “although some technical schools and junior colleges have been upgraded to full university status in name, in practice much of what they teach is still more technically focused than with traditional universities.” The upgrading of technical schools has thus left some students in the awkward position of being awarded a bachelor’s degree but in fact receiving a narrower technical education. But like Karen Chung, Liu is relatively unconcerned about the issue since “employers can always know which university you got your diploma from and make a sound judgment from there.” For faculty members at technical schools that aspire to be transformed into universities, preparing a suitable curric-

ulum can also be a problem, as professors are often unsure how to strike a balance between practical and theoretical learning. R.C.T. Lee states in his book that: “Teachers are using teaching materials meant for university courses” rather than technical courses. “Electrical engineering professors [at technical colleges] use a difficult English-language textbook found in NTU, Tsing Hua, and Chiao Tung courses,” he wrote. “Even students in these universities have problems understanding the material. How do we expect students at technical schools to be able to understand?” The boundaries between an education at a four-year university and one for students who want specialization in technical skills requires further differentiation, Lee stresses. The MOE’s decision to upgrade certain technical colleges to full-scale universities came about in response to indications of supply shortages in the job market for higher-level employees. According to Deputy Minister Lin, the data came largely from a national human resources and labor survey that the government conducted in the 1990s. The results showed an oversupply of mid-level workers with technical and vocational certificates and an undersupply of highlevel employees. But the situation has reversed since then, as “there is now an undersupply of mid-level workers,” says Lin. “Industry leaders who depend on mid-level workers in their operations have come to the ministry to complain about this phenomenon.” The MOE is now seeking to create a learning environment suitable for training more and better mid-level workers in the future. As part of this effort, universities that face financial difficulties due to the

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A Report on the Educational Sector

shrinking student population are being given government assistance to change their focus (in some cases reverting back to their original orientation) to that of technical education. The MOE is also recommending that students in technical schools and universities gain practical experience in the industry in which they hope to work. “Taking a year off to work in the industry and then going back to school to finish one’s degree is encouraged,” says Lin. In addition, the Ministry is helping professors in those institutions to redesign their curriculums to make courses less theoretical and more technical, as well as geared to suit the needs of the specific industries that students wish to enter. While highly specific and practical training is a priority in the technical professions, a good foundation in basic subjects such as English is considered even more valuable for college students. English skills, for example, can be applied in any profession, but experts believe there is much room for improvement in the way English is taught in the Taiwanese university system. A major problem hindering students from learning English effectively is the lack of connection between the English learning materials and their daily lives. Bill Allen of the Zephyr English Institute says it is unreasonable to take textbooks written in the United States and expect the material to work effectively when it has no relevance to the thinking, culture, and lifestyle of Taiwanese students. Many English professors in Taiwan agree that to improve English learning, the instruction has to be better tailored to the local environment.

Budget constraints The ability to make improvements in English-language programs or in those of any other university departments, however, is constrained by budgetary considerations. With the exception of special projects (such as a five-year, NT$50 billion initiative aimed at raising the global competitiveness of Taiwan’s elite universities), “the Taiwan government’s budget for education has not increased at all over the last 10 years, while countries like

Japan and Hong Kong have been steadily increasing theirs,” says Lo Ching-Hua, Dean of Sciences at NTU. “The budget is the most serious problem in higher education right now.” The expenditure per student per year in Taiwan at public universities is around NT$460,000 (US$14,375), less than onefifth the level in Tokyo. NTU’s foreignlanguage department, for example, has felt the impact of the tight budget for the public university system, and plans to replace foreign-language training classes with a separate language center that focuses on English literature, says Chung. The change will involve a reduction in faculty from 80 to 30, saving cost but removing what students need most – basic language training, not literature courses. Given tight budgets and a reluctance to raise tuition levels, which remain quite low in Taiwan compared with other countries, faculty salaries have also been depressed. Some professors say they could receive double the pay in China, though the inferior living conditions and lack of academic freedom there deter most of them from making the move. But if those staying in Taiwan need to moonlight to bring in sufficient income, it may be one of the factors affecting educational quality. In response to universities’ budgetary concerns and in an effort to raise academic standards to a competitive international level, the MOE in 2005 initiated the previously mentioned five-year plan that provided an additional NT$50 billion (US$1.56 billion) to be allocated to selected universities. The MOE regards the program as having succeeded in raising the global ranking of the leading universities. NTU, Taiwan’s top-ranked university, was listed as number 95 in the London-based Times Higher Education World University Rankings for 2009, having moved up from 124th in 2008. Lo notes that “due to the additional funding, NTU’s College of Sciences has been able to bring in distinguished post-docs like John Suppe from Princeton University, for example.” Even though the five-year initiative has provided opportunities for Taiwanese universities to raise their international

competitiveness, Lo believes that the amount of financial support is still insufficient, while some professors have criticized inefficiencies resulting from inadequate planning for this project. “The five-year, 50-billion initiative only doubles the educational budget for each student, and is not enough to be competitive with a Japanese university’s budget, which is five to six times the budget in Taiwan,” says Lo. Karen Chung also questions the effectiveness of the allocation of funds in the initiative. “When we initially received this extra money, it was rained down on us, and we were forced to use it on research projects even if we didn’t want to,” she says. R.C.T. Lee, who currently teaches a t N a t i o n a l Ts i n g H u a U n i v e r s i t y, expressed concern during his interview with TOPICS about the limited duration of the initiative. “Whenever you have a project in education, it must be long term unless you are building a new building or swimming pool,” he said. “What will happen to professors’ salaries when the five-year initiative is over? Will they be reduced?” A week later, however, concerns about at least the immediate sustainability of the project were answered when President Ma pledged to continue the funding for another five years with another NT$50 billion. As the MOE and universities work together to try to raise Taiwan’s educational standards, some observers view the future for Taiwanese higher education with optimism. “There are three basic needs for an excellent education system: Accessibility, Affordability, and Accountability,” says Victor Liu of the HEEAC. He regards Taiwan’s universities as already readily accessible and affordable for students. “Now we just have to focus on accountability – raising education quality to a competitive international level,” he concludes. With Taiwan’s educational objectives and approaches now receiving more scrutiny and discussion by professors, the media, business leaders, and the general public, the chances for achieving greater excellence and relevance in the higher education system would seem to be increased.

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Coming Soon: College Students from the Mainland Despite controversy, Taiwan will open its campuses to limited numbers of Chinese applicants.

Supporting the opening to Chinese students, President Ma Ying-jeou said in August that “the issue is not about whether or not the policy is pro-China, but about making our campuses more international and turning education into an industry.” photo : cna

locks of Chinese students will be studying in Taiwan’s universities this spring – but is Taiwan ready for the change? Offering places in Taiwanese universities to mainland students has been the most controversial of the government’s many educational policies. The issue generated several months of acrimonious arguments and even heated physical tussles between lawmakers from the opposition Democratic Progressive Party (DPP) and the ruling Kuomintang (KMT),

before the Legislative Yuan on August 19 finally amended laws to recognize various Chinese educational diplomas and allow PRC students to enroll in degree-granting programs in Taiwan. The passage of these amendments will “allow students on both sides of the Taiwan Strait to understand Taiwanese democratic values, demonstrating our national ‘soft power’ of culture and education,” a statement on the Ministry of Education (MOE) web site said. “It marks a new milestone in Taiwanese

higher education.” Nevertheless, the DPP has warned that the mainland students could take jobs away from young Taiwanese and make the educational sector too dependent on China’s economy. The party also cautioned that mainland students could be handpicked by the Chinese government for their ideological purity and have an unhealthy influence on campus. In view of the sensitivity of the crossStrait relationship, “a dependency on the PRC for students may be dangerous,”

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said DPP lawmaker Kuan Bi-ling. MOE officials said the numbers of Chinese students would initially not be permitted to surpass 2,000 per year – but the figure could be increased in subsequent years if all goes well. Under pressure from DPP legislators, the opening up to Chinese university students will still face various restrictions. Chinese certificates and diplomas in medicine-related areas will not be recognized in Taiwan. Chinese students will also be banned from enrolling in tertiary institutions or even departments that deal with national security matters and defense. Chinese students will also be barred from taking civil service exams or exams for professional and technical licenses. They will also be banned from working parttime in Taiwan or taking work on the island after graduation. MOE officials said that Taiwan will welcome both post-graduates and undergraduates alike. However, they said, as Chinese undergraduate students will be admitted based on their performance in China’s annual university entrance examination, held in early June, the first batch of students to arrive in Taiwan for the spring semester would be post-graduate students interested in masters or doctoral programs, with undergraduates to be admitted in the fall semester. The DPP, which has a legislative minority and was unable to prevent the passage of the amended laws, also successfully pressured lawmakers to set other restrictions, including limiting the number of Chinese universities the Taiwan government will recognize. The government plans to recognize Chinese degrees from only 41 top Chinese colleges, MOE officials said. The DPP also demanded that relevant regulations ensure that Chinese enrollments not affect the numbers of Taiwanese enrolled at universities and that Chinese students not be eligible for scholarships. Deputy Education Minister Lin Tsongming explained in an interview that without a legal basis for official recognition by his ministry of high school diplomas or bachelor’s degree from the mainland, PRC students would be unable to use their degrees to apply for a higher-

level educational programs in Taiwan. Before the August 19 legal revisions, PRC students were allowed to enroll in Taiwanese institutions of higher learning only on a short-term basis through formal exchange programs. Given the enormous size of the Chinese population, opening up the Taiwanese higher education system to PRC students has been viewed as a way to help solve Taiwan universities’ overcapacity problem. For the short-term, Lin said the entry of 2,000 students will be too small a number to have a major impact on an education system that has a total current enrollment of 1.3 million students. But the DPP’s Kuan says the problem has to be looked at in a broader context. Because diplomas from PRC educational institutions are not currently recognized in Taiwan, she notes, many Taiwanese students have been unwilling to enroll in universities across the Strait. But now that the law is changed, she says, “the number of students leaving Taiwan will greatly outnumber those coming in from mainland China, because tuition fees are significantly lower in mainland China.” A year’s tuition, fees, and living expenses (including a roundtrip plane ticket from Taiwan) at Xiamen University is estimated to come to NT$64,470 (about US$2,000), whereas the cost to attend a comparable private university in Taiwan would be NT$99,851 (US$3,120), 55% h igher. Considering the likely two-way flow, says Kuan, “opening up Taiwanese universities to PRC students will only exacerbate the problem of an undersupply of students and an oversupply of places in the universities in Taiwan.” She believes that PRC students have little incentive to enroll in the relatively non-prestigious Taiwanese universities that have had difficulty recruiting local students and are struggling to stay in business. In addition, Kuan cautions, “the PRC could cut off its supply of students to Taiwan anytime, and some universities may have to close down in an instant if they depend on PRC students.” She also warns that the Beijing government is likely to keep its students in line by

sending guidance counselors to accompany them to Taiwan and prohibiting them from taking courses from professors it deems too liberal or anti-Communist. This heavy monitoring will leave little room for exposure to new ideas and greatly restrict how much PRC students can interact with Taiwanese students and professors, Kuan says. But Lin Chong-pin, a professor at the Tamkang University Graduate Institute of International Affairs and Strategic Studies and one of Taiwan’s foremost Chinawatchers, disagrees. He described a bright young woman from Shanghai’s Fudan University who attended one of his graduate courses and had “her own way of thinking that was sometimes at odds with the (Chinese) government line.” “I don’t think she was sent by the (Chinese) government,” he added. “I don’t think Beijing has the time and the energy to select students like this.”

Mutual understanding Despite the DPP’s misgivings about the prospective opening to Chinese students, many in Taiwan view it positively as another opportunity to enhance crossStrait understanding in the interest of promoting a peaceful relationship. Karen Chung, a U.S. citizen who has been a professor of English at National Taiwan University for 20 years, notes for example that Chinese students are likely to gain a favorable impression of the Taiwanese even if the extent of their social interactions with local people is kept limited. “Taiwanese try their best to not make you feel bad, and they are always polite,” says Chung. She views Taiwan’s culture of hospitality is a valuable asset to be shared, and has seen how many of her international exchange students have been impressed by it. The students’ experiences in Taiwan may also have an impact on the future political climate between China and Taiwan. Chung says that allowing PRC students to be immersed in the Taiwan environment for an extended period of time, gaining a deeper understanding of this society, may contribute to the reduction of political tensions between the two

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Protest demonstrations stressed the threat that opening the door to Chinese students might affect the domestic job market. photo : cna

sides over time. At the same time, says Deputy Minister Lin, Taiwanese students could benefit from exposure to the industriousness and ambitiousness prevailing among many PRC students. Over the past decade, Taiwanese university students have become more complacent and less hardworking than their counterparts a generation ago, he notes, whereas on the mainland students are extremely competitive. The presence of Chinese students on Taiwanese campuses will “raise the level of competition among students, and this will raise the standards of learning,” predicts Liao Chao-yang of the MOE’s Higher Education Evaluation and Accreditation Council. The prospective arrival of students from China is also seen as related to a wider effort to internationalize Taiwanese universities. The Ma administration has been promoting student diversity, for example by providing a NT$62 million (US$1.9 million) fund last year to support

the recruiting of more foreign students, in the hope that it will help to broaden the thinking of Taiwanese students and spur them to take a greater interest in global issues. Liao views the opening to Chinese students as part of the same diversification effort that is prompting Taiwan’s drive to recruit more students from Southeast Asia, North America, Australia, and Europe. At the same time, Liao cautions, admitting too many mainland students could work against the goal of creating more internationalized university campuses. He supports the idea of limiting their numbers, as called for in the plans set out by the MOE. “Taiwan’s universities have many unique aspects to them that should be preserved and encouraged to grow,” says Liao, citing the strong programs that have been developed in Taiwanese literature as one example. If “education in Taiwan starts looking like education in mainland China,” he notes, it might push away international students

who would otherwise be attracted to the unique qualities that Taiwan’s education has to offer. In all likelihood, Taiwan’s final policy on mainland students will evolve over time, as policymakers, legislators, and educators seek to find just the right balance – encouraging diversity and fostering better cross-Strait relations on the one hand, while preserving the unique character of Taiwan’s universities and protecting job opportunities for local employees on the other.

— with additional reporting by Jane Rickards

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Circumscribed Role for Foreign Universities Taiwan is one of the least welcoming markets in the region for overseas institutions of higher education.

s the pressures of globalization cause Taiwan to look for ways to increase its international competitiveness, one of the key issues is whether the government will take steps to make this market more welcoming for foreign educational institutions. In the past, the domestic educational system was credited with playing a crucial role in developing the human capital that enabled Taiwan to upgrade its economic base from labor-intensive to hightech industry. But now the challenge is to jump to an even higher plane, making it possible for Taiwan to keep pace with the increasingly acute competition in the international marketplace. Other countries in the Asia-Pacific region have concluded that staying competitive requires helping their young people become familiar and comfortable with international modes of thinking and behavior – and that one of the best ways to inculcate that international mindedness is to invite leading foreign universities to set up operations in their territory. In recent years, for example, Hong Kong, Singapore, China, and Malaysia have all established frameworks under which foreign institutions of higher learning can set up branches offering degree-granting programs taught by foreign faculty members. Among the prime examples are the

University of Chicago Business School program in Singapore, the National University of Singapore-UCLA joint executive MBA program, the Johns Hopkins University’s Nanjing Center in China, and the EMBA program in Shanghai run by the University of Southern California’s Marshall School of Business. In Hong Kong and Singapore, special procedures were put in place to ease the way for international universities to enter their markets. But in Taiwan, the establishment of foreign universities is governed by the same laws that apply to domestic private school – requirements that do not take the concepts of satellite campuses and branch offices into consideration. As a result, the applicable conditions in terms of number of faculty members and the minimum land area the campus must occupy are too rigid for most foreign institutions to find acceptable. These requirements have deterred such schools as USC from setting up programs that could help fill current gaps in the Taiwanese educational market. “Two years ago, USC’s School of Social Work had a desire to start a two-year program in social work that would bring faculty from the United States to Taiwan to teach and let students earn a USC degree in social work,” says Peihsuan

Chu, the USC representative in Taiwan. But because USC does not have a fullscale campus in Taiwan, it found that there was no way for it to run a program in which students could earn a foreign degree by attending classes in Taiwan taught by foreign faculty. “My guess is that this project has been cancelled, as we haven’t heard anything about it since,” says Chu. In the absence of a viable channel to create a satellite campus or branch office under Taiwanese law – and with such daunting requirements in place for establishing a full-scale campus – some foreign universities have chosen to team up with local institutions to offer joint degree programs. Baruch College of the City University of New York (CUNY) and Taiwan’s Minchuan University, for example, offer a master’s degree and professional certificate program in finance, marketing, human resources, and management/informational systems. Such a partnership requires that some courses be taught by the local university and the rest by Baruch professors who fly into Taiwan on short-term assignments. Baruch would be unable to conduct a program taught entirely by its own faculty because that would require establishing a full-scale campus. It has even been inconvenient for for-

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eign universities to operate offices in Taiwan to recruit students and promote cooperation with local universities. Because there was no regulatory framework in place to register with the Ministry of Education (MOE), USC found that the only way it could establish a presence in Taiwan was to register as a branch of a digital assets company affiliated with the university. But using that name has been a barrier to raising local awareness for USC, as the university name does not show up on the building directory and is not searchable in the Taipei phone directory. Difficulties have also arisen when the office has sought approval for internship visas for foreign students coming into Taipei, since the legal governing authority for the office is not the Ministry of Education but the Ministry of Economic Affairs, which has nothing to do with student visas.

photo : dirk diestel

Broadening perceptions A more liberalized environment for foreign educational services in Taiwan would undoubtedly provide many benefits to Taiwanese students who lack the financial resources or opportunity to go abroad to study. “Bringing in foreign universities to Taiwan will allow students to have a more global experience,” says Robert Lin of LeadChief Education Services, which represents Baruch College. In his recently published book, R.C.T. Lee Talks About Education, Lee – a former university president and frequent commentator on educational issues – laments the “lack a global perspective” in Taiwan due both to the nature of the educational system and the inadequate coverage of international news by the domestic media. Lee writes that Taiwan’s “best universities always think that what they contribute to academia is of excellent quality, surpassing other knowledge coming from outside of Taiwan’s borders.” He says that unless students adapt

a global perspective, none of their academic work can be expected to have an impact on an international scale. Besides giving local students greater exposure to the world, allowing more market access to foreign universities will also give Taiwanese students the opportunity to experience different “educational cultures,” Lee said in an interview, and that can foster creativity, a vital aspect for achieving success in scholarship or in business. Lee worries that too few Taiwanese students are willing to challenge the norm. They “worship” their teachers, he says, and if they encounter a problem in an academic paper, most of them will find ways to defend the paper rather than challenging its accuracy. Giving students the chance to interact with foreign professors may stimulate them to think critically, look on the status quo with dissatisfaction, and otherwise break ingrained cultural habits that hinder innovation, says Lee. In addition to the benefit to Taiwanese students, the presence in Taiwan

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of more foreign educational institutions would also be a way to attract more international students to Taiwan as a way of making Taiwan better known to the rest of the world. President Ma Ying-jeou has said he hopes Taiwan can double the proportion of foreign students in the university population from the current 1.3% to 2.6%. Given that goal, says USC’s Peihsuan Chu, “it makes sense to allow foreign students to be able to apply for internship visas in Taiwan and to be able to take classes held by foreign professors.” Despite the numerous advantages of liberalizing its educational market, Taiwan has been reluctant to emulate the openmarket policy of Hong Kong and Singapore, particularly when many existing domestic colleges and universities are facing financial problems due to a shortage of incoming students. Currently 1.3 million students are enrolled in Taiwan’s 166 universities, colleges, and junior colleges, but the number is expected to decline steadily in the future as Taiwan’s population ages due to a low birth rate and increasing longevity. Robert Lin notes that “although the government has been slower than those in other Asian countries to allow easier market access for foreign universities, Taiwan has made some small strides towards a more liberalized environment.” In 2006, for example, legislation was enacted to allow distance learning courses to account for up to half of all credits counted toward a student’s degree. The following year, the Private School Law was amended to allow citizens of foreign countries to serve as the chairman of a school’s board of directors, and the previous limit on the number of foreign directors permitted to serve on the board was eliminated. But these steps still leave Taiwan far behind many of its neighboring countries in the extent to which its higher-level education has been internationalized.

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Where the Taiwanese Learn Their English

phoT o : wall sTrEET insTiTUTE

Some bushibans cater to adults, while others concentrate on teaching young children.

phoTo : h appy Marian

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n Taiwan, students get most of their English education from bushibans, and what they learn in the classroom in public school is secondary,” says Nicole Lian, operations manager at Wall Street Institute, a supplementary English school for adults. “It’s the other way around in most other parts of the world.” Supplementary schools for English learning (known in Mandarin as English bushibans) make up a large portion of Taiwan’s educational services industry. Traditionally, bushibans have provided additional, supporting instruction for subjects taken at school. But when it comes to the study of English, bushibans in recent years have begun to take an increasingly dominant role due to the greater demand for English speakers in the job market as well as the public educational system’s inability to fully satisfy demand with respect to the quality of the instruction. Since 2001, the number of foreign-language bushibans in Taiwan has increased from 1,919 to 5,327. “Parents recognize that strong English skills are very important in a globalized economy in the present

and will be even more so in the future,” says Katelyn Huang, Taiwan operations manager for American Eagle English Institute. Therefore, parents are spending more and more on their children’s English education in bushibans, because “the way that English is taught in public schools is ineffective,” says Lian. In the public schools, English learning is divided into separate compartments such as pronunciation, grammar, sentence patterns, and comprehension, and is taught in a way that seems unrelated to practical application in everyday life. Lian believes that for English instruction to be effective, it needs to be treated in a much more holistic fashion, which would require a departure from the Ministry of Education’s traditional view of how English education should be structured. Bushibans have not only broken away from those traditional teaching models but have also sought to differentiate themselves from one another in a crowded market. Wall Street Institute, for instance, focuses on practical skills needed in the English-speaking business world. It teaches the language by creating an all-English environment that even the administrative staff is required to abide by. Zephyr English Institute, to cite another example, gives beginning English speakers a comfortable learning environment through team teaching, pairing a native-speaker faculty member with a bilingual local teacher in each classroom. It is no longer enough to teach English well, say professionals in the business. To stay competitive, bushibans now have to teach English in new, innovative ways. Taiwan’s low birth rate is an area of concern for any business that focuses on young children. However, childoriented bushibans such as Happy Marian and American Eagle say they have not felt the impact of the declining birth rate, as student enrollment continues to grow every year. English bushibans have also proven to be largely recession-proof because of the high priority that parents place on their children’s education. But some of the leading schools are also seeking to ensure future opportunities for expansion by entering the mainland Chinese market. These include Happy Marian (which has gone into the adult education market in Shanghai) and American Eagle. “Entering China is a good move,” says Huang, considering the mainland’s huge population base and its people’s increasing amounts of disposable income. Given the market opportunities in both China and Taiwan, says Marian Lan, general manager of Happy Marian, “we look forward to stable growth in the future” because English skills are essential for being competitive in “any job in this world economy.”

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Behind the news

Non-Embassies Play a Vital Role Trade offices have maintained an effective line of communication in the absence of formal diplomatic relations. BY DON SHAPIRO

hen a significant event occurs affecting Taiwan – such as the recent signing of the cross-Strait Economic Cooperation Framework Agreement (ECFA) – Taipei-based foreign-service officers from countries around the world are tasked with sending reports back to their governments analyzing the prospective impact. But in a situation unique to Taiwan, the great majority of those officers are not working out of a fully accredited diplomatic mission with the appellation of “embassy.” Due to political pressures exerted by China, only 23 relatively small nations still maintain formal diplomatic relations with Taiwan. With 48 other countries (plus the European Union), Taiwan has responded to adversity by writing a new page in diplomatic history – conducting active economic, cultural, travel, and other relations through “unofficial” organizations. In most foreign capitals, the Taiwan mission is known as the “Taipei Economic and Cultural Office” or some variation thereof. In Taipei, the foreign representative offices go by many different names, including “institute,” “trade office,” “economic and cultural office,” and others. Instead of having the title of Ambassador, the heads of these missions are usually known as the Representative or Director. Over the years as many countries switched formal diplomatic recogni-

tion from Taipei to Beijing, Taiwan’s importance in international trade and its cultural vitality were key factors in convincing most of those governments to maintain a strong non-official connection with the island. For Taiwan, it was a bittersweet development – the loss of a certain degree of international prestige, but at the same time an opportunity to avoid isolation and marginalization. The non-official model later also provided a means of establishing substantive ties with additional countries with which it had never enjoyed diplomatic relations. Through these offices, other countries have been able to issue visas to prospective Taiwanese travelers, promote trade and investment with the island, carry out cultural and academic exchanges, and provide various services for their citizens resident in or visiting Taiwan. The earliest example of an unofficial diplomatic outpost was Japan’s Interchange Association, established in 1972 just months after Tokyo closed its embassy in Taipei following the establishment of diplomatic ties with China. The Interchange Association created a precedent that was later followed to a greater or lesser degree by many other countries, including the United States, which set up the American Institute in Taiwan in 1979 (for more details on AIT, see “Getting to Know AIT” in the September 2008 issue of TOPICS). Among some of the more recent arrivals

were the missions from various Eastern European countries in the 1990s and the European Economic and Trade Office, representing the European Union, in 2003. Recalling the history of his country’s relations with Taiwan, Juraj Koudelka, the Czech Republic’s Representative in Taiwan, notes that when the Czech Republic “switched from a planned economy into a market economy and pluralistic democracy after the Velvet Revolution in 1989, the Czech Republic had many more possibilities to look around the world.” Seeing that Taiwan was embarking on a similar path of building an open economy and nascent democracy, Prague concluded that “there was a sound basis to jointly develop trade, cultural, and academic exchanges,” he notes. In the case of Canada, a gap of 16 years occurred between “derecognition” in 1970 and establishment of the Canadian Trade Office (CTO) in Taipei in 1986. During the interim, explains CTO Executive Director Scott Fraser, a key role in keeping bilateral cultural relations in tact was played by a private organization, the Canadian Society. Gradually the Society also began to represent the interests of Canadian individuals and companies, says Fraser, even engaging in “very low-key consular work for individual Canadians and some business dealings on the side.” Later those functions were taken over

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Foreign Representative Offices in Taiwan Country

Office

Year Est'd

Argentina Australia Austria Belgium Bolivia Brazil Brunei Canada Chile Czech Republic Denmark European Union Fiji Finland France Germany Hungary India Indonesia Ireland Israel Italy Japan Jordan Korea Luxembourg Malaysia Mexico Mongolia Netherlands New Zealand Nigeria Oman Peru Philippines Poland Russia Saudi Arabia Singapore Slovakia South Africa Spain Sweden Switzerland Thailand Turkey United Kingdom United States Vietnam

Argentina Trade & Cultural Office Australian Commerce & Industry Office Austrian Trade Delegation Belgain Office Taipei Bolivian Commercial Financial Representation Brazil Business Center Brunei Darassalam Trade & Tourism Office Canadian Trade Office in Taipei Chilean Trade Office Czech Economic & Cultural Office Trade Commission of Denmark, Taipei European Economic & Trade Office Fiji Trade & Tourism Representative Office Finland Trade Center French Institute in Taipei German Institute Taipei/ German Trade Center Hungarian Trade Office India Taipei Association Indonesian Economic & Trade Office to Taipei Ireland Institute for Trade & Investment Israel Economic & Cultural Office Italian Economic, Trade & Cultural Promotion Office Interchange Association Jordanian Commercial Office Korean Mission in Taipei Luxembourg Trade & Investment Office, Taipei Malaysian Friendship & Trade Center Mexican Trade Office Ulaanbataar Trade & Economic Representative Office in Taipei Netherlands Trade & Investment Office New Zealand Commerce & Industry Office Nigeria Trade Office in Taiwan Oman Commercial Office Commercial Office of Peru Manila Economic & Cultual Office Warsaw Trade Office Moscow-Taipei Economic & Cultrual Coordination Committee Saudi Arabian Trade Office Singapore Trade Office Slovak Economic & Cultural Office South Africa Liaison Office Spanish Chamber of Commerce Swedish Trade Council Trade Office of Swiss Industries Thailand Trade & Economic Office Turkish Trade Office British Trade & Cultural Office American Institute in Taiwan Vietnam Economic & Cultural Office

1992 1981 1980 1979 1992 1995 2002 1986 1989 1993 1983 2003 1997 1992 1980 2000/1981 1998 1995 1971 1990 1993 1995 1972 1992 1993 2009 1987 1991 1993 1982 1988 1992 1991 1994 1975 1995 1993 1991 1979 2003 1998 1982 1991 1982 1992 1993 1993 1979 1993

by the Canadian Chamber of Commerce in recognition of the “increasing demands from Canadian companies for some representation here in Taiwan,” and eventually the CTO was established to provide a more substantial structure. Fraser credits the exchange of trade offices with making possible “a steady flow not only of people and goods, but also intangibles such as ideas and opportunities,” and says the “strategy has most certainly borne fruit for Taiwan, as well as proven mutually beneficial for its foreign trade partners.” One of the representatives with a longterm perspective is Hugues Mignot, who has lived in Taiwan for 24 years and is undoubtedly the only person to have represented more than one country here (a few years after retiring as head of the office for Belgium, he was invited by neighboring Luxembourg to open its mission). He recalls how Taiwan’s success in establishing itself as one of the “Asian Tigers” beginning in the 1980s, followed by its drive to become a world leader in Information Technology, caught the attention and imagination of the business world. The resulting opportunities for trade and investment encouraged many other countries to establish a permanent presence in Taiwan, and those opportunities increased in the 1990s as Taiwan prepared to accede to the World Trade Organization (WTO) by lowering tariffs and removing various barriers to imports. Mignot notes that negotiating agreements to eliminate double taxation was commonly one of the first priorities of the new trade offices, in the interest of facilitating unimpeded commercial activity. At first, most of the offices maintained a very low profile for political reasons. Frequently any government connection was hidden or played down, and the offices were structured to look like privatesector business associations. They also concentrated primarily on economic cooperation and cultural exchanges, only later beginning to offer consular services.

Waiving visa requirements But the addition of a visa-issuing function was a natural development when the volume of travel expanded in conjunction with the growth of trade and the boom in outbound tourism after Taiwan loosened

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Behind the news

clusions drawn during one period its previous restrictions on its citof time may also undergo review izens’ going abroad on pleasure and revision as situations change. trips. The travel connection has Ta i w a n i s c u r r e n t l y g o i n g reached a new stage in the past through a period in which its interfew years, with more and more national relationships may take on countries waiving the visa requireeven more importance. Following ment for Taiwanese travelers. the signing of ECFA, it is hoping Britain, for example, took to attract increased amounts of t h a t s t e p l a s t y e a r f o r Ta i foreign direct investment based wanese visitors staying in the on both the expanded trading United Kingdom for less than opportunities with China and the six months. According to David Swiss musician Eliana Burki plays the alphorn at the anniversary reception of the Trade Office of Swiss overall easing of cross-Strait tenCampbell, director of the British Industries in Taipei. photo : tosi sions. Taiwan will also be seeking Trade and Cultural Office, the to negotiate free trade agreements number of Taiwanese visitors to with other countries, especially those in were especially recruited from the priBritain has jumped 36% since then and Southeast Asia, starting with Singapore. vate sector. But in many cases they “Taiwanese airlines have also reacted by And it hopes to build on the model in had a long-held interest in Taiwan or increasing the amount of flights between which it gained observer status at the in Asian culture, as well as a strong Taiwan and Britain.” Campbell says the World Health Assembly to achieve commitment to maintaining close visa-waiver program has also caused similar access to other international ties between Taiwan and their home more Taiwanese companies to consider organizations such as the International country under difficult circumstances. choosing Britain as their base of operaCivil Aviation Organization (ICAO). Among those circumstances is that tions in Europe, and it has also helped Citing the Ma administration’s policy their governments maintain formal to raise Taiwan’s profile in the United of engaging in “flexible diplomacy,” diplomatic relations with the People’s Kingdom as increased numbers of stuDirector-General Henry J.M. Chen of Republic of China and therefore subdents and tourists pay visits due to the the Department of Information and scribe to a “One China Policy” in one improved ease of travel. Cultural Affairs at the Ministry of Forform or another. As Raphael Gamzou While many of the offices are large eign Affairs explains that this approach explained before the recent completion enough and cover enough functions entails “qualitatively improving as well of his tenure as the Israeli represento be considered “embassies in all but as promoting substantive relations tative: “It is true that when you have name,” as some media reports have with important non-diplomatic counrelations with the PRC, you are comcalled them, there is always a conscioustries” as well as “engaging in meaningful mitted to the One China Policy. I ness of protocol on their part and by participation in the UN specialized agendon’t see any contradiction, however, Taiwan’s foreign ministry to maintain cies.” He adds that these goals cannot between a commitment to that policy a clear distinction between their status be achieved without effective channels and one’s commitment to Taiwan with and that of officially recognized diploof communication with the rest of the its free society and membership in the matic missions. Nevertheless, Taiwan world, whether “official or semi-official family of democracies. I believe the extends certain special privileges to the channels.” expression of this commitment [to foreign representatives as a courtesy, Taiwan’s positive engagement with Taiwan] should be expressed through including tax exemptions, visa priviChina, the administration believes, will the further development of business and leges, and special license plates (though give other countries more confidence cultural exchanges for mutual benefit.” instead of diplomatic plates beginning that enhancing relations with Taiwan Given the complex nature of with the Chinese character 使, they have will not trigger sharp objections from cross-Strait relations, other countries plates with the designation 外). Beijing. As the foreign trade offices in frequently have to engage in a deliWhen first established, the offices Taipei closely watch the development cate balancing act as they carry out were largely sailing in uncharted of cross-Strait relations and report back their official contacts with Beijing, couwaters, and it took time to work out on their observations, Taiwan’s opporpled with their informal contacts with the parameters not only for how to tunities for greater interaction with Taiwan. Generally, over time each deal with the Taiwanese authorities other governments – while still within country arrives at its own equilibrium but often also how to interact their the context of a “non-official” relationpoint as to what is appropriate and own government agencies back home. ship – may be able to grow. what might be provocative. Each counObservers credit the highly talented reptry’s equilibrium point is likely to be resentatives dispatched by a number of — With reporting by different depending on the nature of governments with easing that transiMichael Schulman its relationships with Taiwan and with tion. Some were transferred from their China. Far from being static, the concountry’s diplomatic corps while others

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A Danish Village in a California Valley

TexT & phoTos : c our T esy o f so lva ng c o nf er enc e a nd v i si To r s B ur eau

“S

olvang…A spotless Danish village that blooms like a r o s e i n C a l i f o r n i a ’s c h a r m i n g S a n t a Y n e z Va l l e y. O l d country charm and customs have been successfully fused with the American way of life. Nowadays, the quaint village is busy living up to its affectionate name, ‘Little Denmark’” – 1947 Saturday Evening Post (so accurate it could have been written today). Solvang feels like northern Europe, yet in the center of California. Discover why Solvang was named by Orbitz Worldwide Travel as one of the “Top 5 Domestic Destinations with International Flair.” Just as it does

in Copenhagen, Denmark’s national symbol, the “Little Mermaid” bronze sculpture, welcomes visitors to Solvang at the intersection of Mission Drive (Highway 246) and the Alisal Road. Solvang’s rich heritage dates back to 1911 when adventurous Danish-Americans from the Midwest traversed the plains to establish a settlement in the golden state of California. They purchased 9,000 sun-drenched acres of the former Rancho San Carlos de Jonata and situated their new community adjacent to the historic 1804 Old Mission Santa Ines. To preserve and promote Danish culture, the founders constructed a Danish folk school and church (the

building now houses Bit O’Denmark Restaurant, 473 Alisal Road), then built Attending College, which opened in 1914 and educated students through 1970 (now the site of Solvang Lutheran Home, 636 Atterdag Road). As the 20th century progressed and Solvang’s population grew, more buildings began to reflect the Danish farmstyle architecture – the cross-beamed bindingsvaerk (timbers framing either brick or stucco), handsomely carved eaves and doorways, and roofing of blue-green copper or thatch made of wood shingles cut jagged at the edges. Bethania Evangelical Lutheran Church, dedicated in 1928, was built in the

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architectural style of Denmark’s Bishop Grundtvig churches and features a wooden ship hanging from the nave. The public is welcome inside for tours and worships (603 Atterdag Road). The Danish Day annual festival emerged in 1936 (the first one conducted entirely in the native language) and it continues to commemorate Solvang’s heritage during the third weekend of every September. Festivals and celebrations are traditional parts of Solvang’s charm, from the Taste of Solvang Food & Wine Festival every March to the Old Mission Santa Ines Fiesta each August and Julefest during December. Be drawn into Scandinavian culture as you stroll the flower-lined streets or step into authentic bakeries, more than 150 unique shops and art galleries, restaurants, and over a dozen wine-tasting rooms. Windmills of all sizes catch the first and last light throughout the village. Danish tradition holds that the presence of a stork on a rooftop wards off lightning and brings good luck. Good fortune continues to smile on Solvang and all its visitors today.

Solvang arts and culture The aptly named city of Solvang – meaning “sunny field” in Danish – has so much to see and do that it’s wise to plan for an extra day or two in the “Danish Capital of America.” To appreciate Solvang’s Danish heritage, visit the Elverhoj Museum of History & Art, which occupies an original Danish-style home on a quiet street

two blocks from downtown. Its rooms are filled with historic Solvang photographs, artifacts, and Danish arts, crafts, and period pieces. Friendly docents periodically dress in authentic Danish costumes to create living history. Rotating traditional and contemporary art exhibitions, craft classes, and special events are offered throughout the year (1624 Elverhoy Way). Hans Christian Andersen Museum, honoring the multi-talented Danish father of the modern fairy tale, is filled to its rafters with copies of Andersen’s books, sketches, paper cutouts, silhouettes, and collages. His April 2 birthday is celebrated with a party each year (1680 Mission Drive). The National Historic Landmark Old Mission Santa Ines is 19th in the chain of 21 Catholic missions built along the coast of California. Tours of the 1804 mission facilities, featuring Spanish artifacts as well as arrowheads, pottery, and pestles and mortars used by the region’s native Chumash Indians, weave a tapestry of the history of this active parish church (1760 Mission Drive). The Solvang Vintage Motorcycle Museum displays a revolving collection of classic and rare motorcycles, as well as European race bikes, collected by founder Dr. Virgil Elings, noted physicist/inventor/philanthropist. Open weekends and by appointment (320 Alisal Road).

Santa Ynez Valley Itineraries Day One – Stroll the Europeanstyle streets, hop aboard the historic horse-drawn trolley for a tour, or rent a “sunny cycle” to roll around the village

of Solvang. Sample the Danish baked goods and other foods, and shop for art and antiques. Learn about history at the Elverhoj Musuem of History of Art or the 1804 old Mission Santa Ines. Yearround entertainment happens nearby at the Chumash Casino Resort in Santa Ynez, offering 24/7 gaming and weekly top-name concerts and live entertainment in the Samala Showroom. Day Two – Do some wine touring and tasting throughout the Valley. Go on your own or sign up for a limo, van, or even a jeep tour with professional area guides. Have a picnic lunch in a vineyard or next to a waterfall. Choose from dozens of dining options from wine country-inspired or international cuisine.

Day Three – Absorb local lore at the Santa Ynez Valley Historical Museum & Carriage House in Santa Ynez. Then meander through the wine-tasting rooms, boutiques, and art galleries of Los Olivos, plus the latest exhibits at Wilding Art Museum. Check out collectables and Western history in Los Alamos and have lunch in a café/art gallery. Day Four – Bicycle country roads or take a short hike to Nojoqui Falls Country Park. Enjoy a guided nature cruise on Cachuma Lakes or angle for fish from the dock. Relax and enjoy the sunset. For more information, visit the Solvang-Danish Village website at www.solvang.com

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Tours into Tea Country

t o u r i s m B u r e a u , r e p. o f C h i n a

aiwan is known as a nation that exports top-quality products around the world. But before computers and other high-tech products, before Tour-deFrance-winning bicycles, even before shoes and umbrellas, this reputation was founded on tea. Today, Taiwan’s teas continue to win international awards, a tradition started over a century ago when one of its oolong varieties won a Gold Medal at the Universal Exposition in Paris in 1900. In the early decades of the 20th century, Formosa teahouses were a common sight at expos in Europe and North America, where fashionable folk tasted the best the island had to offer. Back then, Formosa – as the island was better known in the West – was renowned for pouchong (包種) from the Pinglin region of northern Taiwan; tieguanyin (鐵觀音; “Iron Goddess”) from higher altitudes; and dongfang meiren (東方美人; “Oriental Beauty”), said to be favored by England’s Queen Victoria, from the Hakka-inhabited foothills of the northwest. These are still among the nation’s best known tea exports – as well, indeed, among Ta i w a n e s e c i t i z e n s ’ o w n favorite brews – but they have been joined by more recently developed varieties, including Assam black teas from Yuchi in Nantou County; Dongding (凍頂) from the mountain of the same name, also in Nantou; organic “honeyf l a v o r e d r e d t e a ” (蜜香紅

茶) from Hualien County; the “rediscovery” of lei cha (擂茶; “pounded tea”); and even cold water-infused teas for quenching summer thirsts. As the above introduction indicates, the arcane world of tea growing, manufacturing, and drinking can be a minefield of technical terms, marketing names, and geographic locations. Fortunately, help is at hand. First, most Taiwanese are as knowledgeable about tea as the French are about wine (though similarly opinionated and therefore unable to agree on what the best brew might be). Second, the Tourism Bureau has teamed up with local tour operators to sponsor an autumnal tea event introducing Taiwan Tea Roads. These forays will take tea-drinking enthusiasts into the heart of tea-growing areas of Taiwan, where they can chat with pickers in the fields (with the help of interpreters if needed) and visit tea factories (usually little more than a roadside hall) where the leaves are dried, rolled, baked, and packaged. And they will be able to come to grips with the differences between “minimally fermented” (or more correctly “oxidized,” as the process is physical and chemical but not biological) green teas, partially fermented oolongs (烏龍), and strongly fermented black teas, which are actually called hongcha (紅茶, “red teas”) in Chinese. Naturally they will also be able to taste both the classic infusions as well as the

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s e e i n g ta i w a n

recent innovations, and learn about the etiquette and art of drinking tea according to Taiwanese traditions. There are even tea museums with introductions to the history of tea in Taiwan and China, displays of tea-related arts and crafts, and explanations of the latest theories about tea’s health benefits in terms of anti-oxidant activity and anti-mutagenic properties. The Tourism Bureau has devised five Tea Road itineraries, each tailored specifically to the tea customs and interests of visitors from Asia, Australia, Europe, and North America. Places are limited to 100 people for each of the routes, and the tours will take place on September 9 and 10 (except for the Yuchi Tea Road tour, which will be September 7 and 8). In addition to tasting representative teas and visiting the geographic locations in which they are grown, travelers will be the guests of the Bureau for a meal prepared according to authentic local culinary practice, with entertainment by top-quality performers. North American and Australian visitors, for example, are being offered a trip to Ruisui in Hualien County’s East Rift Valley. It was here that growers

going organic discovered that infestation by green leafhoppers, usually regarded as an unwanted pest, actually gave the dried tea an attractive honeylike taste. In keeping with the origins of the region’s honey-flavored black teas, visitors will be treated to an organic meal of local food. They will be further entertained by a song performance by Aborigines from the Hualien-Taitung area of eastern Taiwan. Japanese participants will meanwhile enjoy a traditional Aboriginal meal during their visit to Yuchi in Nantou County. They may also look forward to dancing by the world-renowned Cloud Gate Dance Theatre, but for tea aficionados, the highlight is sure to be the local Assam black tea. The other three Tea Road trips are to areas known for their oolong teas. Korean and European travelers, for example, will head to the Wenshan district of Taipei for the pouchong brews that first helped put Taiwan on the map. Indeed, it was the lure of local leaf tea that attracted many foreign traders to northern Taiwan in the 19th century. While their presence has largely vanished, Taiwanese companies exporting tea can still be found in the Dadaocheng district of the city. Refreshed with innovative Taiwanese cuisine, these visitors will enjoy a drum show by U Theatre, which is also based in the foothills of southern Taipei. Taiwanese opera and traditional Taiwanese cuisine are on the menu for Malaysian and Singaporean visitors who make their way to the higher altitudes of Chiayi County’s Alishan

Township. Gaoshan (高山; “high mountain”) nowadays is a mark of quality to local tea drinkers, since the slowergrown leaves have more flavor and can be infused more times. But until access roads were built into the mountains just a few decades ago, this tea was available in only limited quantities. Finally, tourists from Hong Kong and Macao will be brought to the traditional Hakka village of Beipu (北埔) in the foothills of Hsinchu County. In addition to a meal of Hakka specialties and a performance of beiguan music by the Chen family of nearby Miaoli, the visitors will drink traditional “Oriental Beauty” tea (whose distinctive flavor derives from oxidation initiated by the bite of a small cricket) and the “pounded tea” – a blend of tea, seeds, and nuts – said to resemble the original soup-like way in which tea was consumed before becoming the popular drink it is today.

With Taiwan’s rich background in tea culture, it is not surprising that a growing number of tourists make their way to Taiwan specifically to sample the delights of this simple beverage while simultaneously enjoying the island’s beautiful upland landscapes.

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