2010Vol.40No.10

THE AMERIC AN CHAMBER OF COMMERCE IN TAIPEI

Industry Focus A Report on the Transportation Sector

October 2010

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Vo l u m e 4 0 N u m b e r 1 0

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

Ringing in Taiwan Tourism

TAIWAN BUSINESS TOPICS

迎接觀光旅遊新契機

October 2010 • VOLUME 40 NUMBER 10 中華郵政北台字第 號執照登記為雜誌交寄 5000 10_2010_Cover.indd 1

NT$150 COVER SPONSOR

2010/10/31 2:42:47 PM

CONTENTS

NEWS AND VIEWS

6 Editorial

Vitamins: Drugs, Foods, or Dietary Supplements?; New Center Aims to Serve Investors

Time to Promote Investment OCTObEr 2010

VOlum E 40, NumbEr 10

九十九年十月號

Publisher

Andrea Wu

發行人

吳王小珍

Editor-in-Chief

促進投資 此其時矣

7 Taiwan briefs

維他命該算藥品、食品，還是膳食補充 品？；招商服務中心迎接全球商機

By Jane Rickards

11 Issues

總編輯

Don Shapiro Art Director/

沙蕩

COVEr SECTION

美術主任 /

Production Coordinator

Katia Chen Staff Writer

Jane Rickards

後製統籌

Taiwan is making an increased effort to attract tourists from elsewhere in Asia, as well as the United States, Europe, and Australia. Among the plans on the drawing board is a major expansion of the National Palace Museum. But Taiwan faces keen competition from other destinations in the region as it goes after the international traveler.

By Don Shapiro 撰文／沙蕩

陳國梅 採訪編輯

李可珍

Manager, Publications Sales & Marketing 廣告行銷經理

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

21 A Wave of New Hotel Projects

An ongoing building boom for new hotels is expected to help contribute to Taiwan’s push for increased tourism.

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 TOPICS is a publication of the American Chamber of Commerce in Taipei, ROC. Contents are independent of and do not necessarily reflect the views of the Officers, Board of Governors, Supervisors or members. © Copyright 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.

By Jane Rickards

15 ringing in Taiwan Tourism

前瞻TFT-LCD產業 The island is getting a lot more visitors these days, but most of them are from China. In the interest of diversification,

23 From Next Year, Self-guided Chinese Tourists

By Michael Jen-siu

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：中華民國九十九年十月 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 2009-2010 Governors: William E. Bryson, George Chao, Cindy Shueh Lin, Neal Stovicek, Gordon Stewart, Carl Wegner, Alexander Duncan.

2010-2011 Governors: Alan Eusden, Revital Golan, Douglas R. Klein, 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/ Daniel Yu; 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/ May Lee, Cheli Liaw, 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.

ANAlYSIS

26 reenergizing the u.S.-Taiwan Economic relationship

TIFA is being revived, but AmCham’s 2010 Doorknock team found little momentum on other issues bearing on bilateral trade ties.

By Don Shapiro C OV E R PH O TO : C O U RTES Y O F Tai wan TOU RiS m bU RE aU

4

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octob e r 2010 • Volume 40 n umbe r 10

coVer SponSor

law

32 Taking on Human Trafficking

Taiwan has improved its international reputation, but more needs to be done to protect foreign workers.

By Chris Laskowski

INDUSTRY F

CUS

Keeping taiwan moving a report on the transportation Sector

By Philip Liu

38 taoyuan airport undergoing major renovation New projects have been launched to meet both existing criticism and projected future demand.

40 Songshan converting to “capital business airport” 42 High-Speed rail looks to break even The company has made strong operational gains, but still faces the problem of huge accumulated debt.

44 boosting the etc utilization rate Far Eastern is at risk of losing its management rights unless it can induce more vehicles to use the system.

amcHam eVent

eXcellence From tHe Heart Grand Hyatt taipei celebrates th its 20 anniversary Grand Hyatt Taipei celebrated its 20th anniversary on 21 September 2010 and hosted a cocktail reception in its grand lobby on the evening of 28 September 2010. More than 1,000 local and international corporate owners, government officials, ambassadors and other honoured guests attended this event, making it truly unforgettable.

“Over the past 20 years, Grand Hyatt Taipei keeps its commitment to providing our guests with the excellence in facilities and services,” stated David Pacey, the hotel’s general manager. “On our 20th birthday, we promote ‘Excellence from the Heart’ as one of our core spirits to all employees. We will continue to create a happy working environment for our employees, as we believe that only happy employees can deliver the best quality of service, which is one of the key factors in guest satisfaction and return business.”

Since its opening, Grand Hyatt Taipei has seen various renovations and enhancements. The renovation of numerous restaurants and bars, function rooms, opening of prestige suites as well as the recent creation of Club Oasis are examples of the hotel’s commitment to providing innovative and creative concepts. Such long-term and continued renovation plans form a foundation to Grand Hyatt Taipei’s success as the market leader.

Grand Hyatt taipei 2 Song Shou Road, Taipei 11051, Taiwan TELEPHONE 02 2720 1234 FACSIMILE 02 2720 1111 taipei.grand.hyatt.com

48 2010 american ball: out of africa

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E d i t o r i a l 促進投資

多

此其時矣

項重要政策在過去兩年間逐步落實 後，國內外投資人對加碼台灣市 場的興趣已顯著增加。特別是兩

岸定期直航與經濟合作架構協議（ECFA） 的實現，已使台灣成為大中華市場的重要 據點之一。此外，營業所得稅率由25 %降 到17%，同樣大幅提高企業深耕台灣的意 願。 台北市美國商會欣見政府不只是提出積 極政策，還能以具體行動擴大企業投資－投 資增加將創造工作機會，改善人民生活。本 期《TOPICS》的焦點之一是，行政院今年 八月成立的「全球招商聯合服務中心」。中 心的目標在解決投資計畫面臨的障礙，以便 利廠商新增對台投資。商會一直希望政府能 成立層級夠高的招商服務單一窗口，提供繁 瑣行政程序之外的便捷管道，因此行政院長 吳敦義的決定值得喝采。 服務中心所提供的協助，應能增加潛在 投資人的信心，因為他們的投資申請案將能 獲得快速與有效的處理。同時，服務中心的 便捷服務，也可能促使在台廠商考慮擴大 投資。儘管中心主要是針對投資個案提供協 助，但長期解決投資障礙所累積的實務經 驗，勢必成為政府修改法規時的重要參考。 同樣重要的是，政府也瞭解到，必須以 積極海外宣傳，讓國際更為瞭解台灣的投資 優勢。行政院經建會與經濟部都持續派出招 商團前往美國與其他先進國家的主要城市， 說明重法治、保障智財權、研發能力、優質 勞工、生活品質等台灣市場的優點。 對招商說明工作來說，紐約、芝加哥、 舊金山等商業大城固然重要，但政治中心的 華府也不能忽略－除政府官員、國會議員與 助理、重要智庫，還有具影響力的商業組 織，如美國全國商會與美國製造商協會。 商會2010年敲門之旅代表團於九月訪問 華府時，各方一直都很關切ECFA及後續影 響，並希望獲得更多訊息與深入分析。中國 市場日益增強的實力往往降低台灣市場的國 際能見度，但正因如此，台灣更應該積極、 明確地宣傳ECFA，以及ECFA對台灣參與 區域經濟的幫助。ECFA是難得的契機，台 灣必須充分利用。

6

Time To PromoTe invesTmenT

S

everal significant measures adopted over the past two years have vastly improved Taiwan’s potential attractiveness for new investment, both domestic and foreign. Among them, two cross-Strait developments – the opening of regularly scheduled direct flights between Taiwan and mainland cities and the recently signed landmark Economic Cooperation Framework Agreement (ECFA) – have made it possible for Taiwan to play a key role in companies’ Greater China business plans. In addition, the reduction in the corporate income-tax rate from a steep 25% to a more competitive 17% removes a major disincentive for investors to choose to locate on the island.

AmCham Taipei commends the government not only for taking these steps, but for following up with concrete actions to capitalize on the opportunities they present to increase investment – thereby creating jobs to improve the livelihoods of the people of Taiwan. This issue of Taiwan Business TOPICS reports on the establishment this August of the InvesTaiwan Service Center under the Executive Yuan, with the aim of smoothing the way for new investment projects by helping to resolve any obstacles in their path. The Chamber has long supported the formation of such a “one-stop window” at a high enough level of government to be able to cut through bureaucratic barriers when needed, and we commend Premier Wu Dun-yih for bringing it to fruition.

The availability of assistance from the Service Center should add to the confidence of companies new to the market that investment cases will be dealt with speedily and efficiently. It should also encourage many companies already operating in Taiwan to consider undertaking additional projects here. Although the Center will focus on the case-specific problems of its “clients,” the practical experience it gathers on the difficulties faced by investors will also provide valuable reference for policymakers on necessary changes in laws and regulations.

Equally important, the authorities have recognized the need to get the word out by actively promoting Taiwan’s investment advantages overseas. Both the Council for Economic Planning & Development and the Ministry of Economic Affairs are dispatching delegations to major cities in the United States and other advanced economies to emphasize Taiwan’s strengths in terms of rule of law, IPR protection, R&D capabilities, stable workforce, quality of life, and other aspects.

While it is essential to make that understood in major U.S. business centers such as New York, Chicago, and San Francisco, it is also vital to communicate the same message in Washington, D.C. to U.S. government officials, members of Congress and their staffs, influential think tanks, and leading business organizations such as the U.S. Chamber of Commerce and the National Association of Manufacturers.

While in Washington in September, AmCham Taipei’s 2010 Doorknock delegation repeatedly heard expressions of interest in ECFA and its implications, coupled with a wish to obtain more information and deeper analysis. At a time when Taiwan’s international visibility is often obscured

by China’s growing prominence, the story of ECFA and what it can mean for Taiwan’s relevance in the regional economy needs to be told loudly and clearly. It is a rare opportunity that Taiwan must be sure to take full advantage of.

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BY Ja n e R i cka R d s

MACROECONOMICS

ANOTHER RATE HIKE When faced with the choice of preparing for slowing global growth due to the lackluster performance of the U.S. and European economies or else combating a local housing bubble, Taiwan’s Central Bank went with the latter, jacking up interest rates in late September by 12.5 basis points to 1.5%. In contrast, neighboring countries such as Korea left interest rates unchanged recently, citing global uncertainties. It was the Central Bank’s second such hike after interest rates were slashed to a record low of 1.25% over the past two years in response to the global financial crisis.

In a statement, the Bank expressed confidence in Taiwan’s strong economic growth despite “moderation” in the world economy, saying that exports, advance export orders, industrial production, and wholesale and retail sales were all performing strongly. In addition, the unemployment rate in August dropped from 5.2% to 5.17% (seasonally adjusted, it dropped to 5.11% from 5.17%).

The Bank also noted that for the first eight months of this year, Taiwan’s consumer price index rose

by 0.99% from the same period of last year. “Rising international prices of grains and other raw materials may continue to push up domestic retail prices,” the Bank said. “Taiwan’s annual CPI growth rate is expected to be 1.23% this year and 1.43% next year.”

In June the Central Bank had introduced mortgage restrictions, including a policy that loans for second homes in the Taipei metropolitan area may cover only 70% of the transaction value. The move was an attempt to curb the real estate speculation that was spurred by the low interest rates, pushing housing prices above affordable levels for wage earners. The Central Bank said that these measures would continue, adding that it would further urge local banks to tighten risk controls associated with land acquisition financing.

“Banks are urged to formulate appropriate policies and rules for vacant land mortgage lending (and) to require concrete and detailed plans for housing projects,” it said.

Taiwan’s exports have continued to climb amid steady world demand for high-tech electronics, though at a slower rate than in past months. At US$22.4 billion, exports in

Taiwan sTock exchange index & value

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

8500

160

8250

150

8000

140

7750

130

7500

120

7250

110

7000

100

6750

90

6500

80

6250

70

September chart soUrce: twse

Unit: ntD billion

September were up 17.5% over the same month of last year, in contrast to gains of 26.6% year-onyear in August. Imports for September amounted to US$20.63 billion, up by 25% over the same month of last year, making for a favorable trade balance of US$1.77 billion, the Ministry of Finance reported.

Export orders, an indicator of shipments to come, were up 23.3% in August, while the industrial production index was up 23.4% year-on-year for the same month, the Ministry of Economic Affairs said.

In new GDP forecasts for this year, the International Monetary Fund in October projected that Taiwan’s economic growth would be 9.3% this year and 4.4% next year, while the Polaris Research Insti-

tute is forecasting 8.52% for this year (up from its earlier estimate of 6.82%), with next year’s GDP growth put at 4.53%. Citigroup’s projections are 9.1% for 2010 and 4.2% for 2011, and Cathay Financial is predicting economic growth this year of 10.08%.

CROSS-STRAIT

WILL CHINA’S MISSILES GET PULLED BACK? The prospect that China might redeploy the more than 1,000 missiles along its southeastern coast aimed at Taiwan dominated political rhetoric on both sides of the Taiwan Strait throughout September and October – but so far without any concrete conclusions. While meeting with Chinese-language media in New York on

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ENOUGH ALREADY — In his National Day speech, President Ma Ying-jeou called on Beijing to show its sincerity by removing its missiles aimed at Taiwan. photo : ap/ chiang Ying -Ying

September 23 during his visit to the United Nations, Chinese Premier Wen Jiabao set off the speculation by noting that the Economic Cooperation Framework Agreement (ECFA) that Taiwan and China signed on June 29 could provide a foundation for talks on other issues, including political issues and military confidence building. In answer to a question, he said he believed that removal of the missiles “will eventually happen.” President Ma Ying-jeou, during his Double Ten National Day address, kept the issue alive by urging China to make missile removal a reality as soon as possible, 8

after which a government spokesman in Beijing said the PRC was willing to open talks with Taipei on military issues, including missile removal, at an “appropriate time.” But Taipei rebuffed the apparent overture, with Premier Wu Den-yih saying it is impossible for the two sides to build mutual trust as long as Beijing continues to insist on its “one China policy” as a precondition and persists in restricting Taiwan’s international space. Beijing seems keen to push for political and military talks with Taiwan, but a wary Taipei does not appear willing to go beyond an economic agenda in is cross-Strait dealings.

COOPERATION ON SEA RESCUE EXERCISES Taiwan and China in September completed their first formal joint sea rescue exercise. The exercise lasted more than an hour and was held in about six square kilometers of waters near the narrow passage between Kinmen island and the Chinese city of Xiamen in Fujian Province, Taiwan's Coast Guard Administration said in a statement. It featured a passenger boat and a freighter in a simulated collision, with a combined total of 14 rescue vessels, 10 patrol boats, seven support vessels, three helicopters, and 400 person-

nel taking part. Cooperation in rescue work was called for by a maritime agreement signed at the end of 2008 to facilitate direct sea transport between Taiwan and China. Deputy Minister Cheng Chang-hsiung of Taiwan’s Coast Guard Administration and Vice Minister Xu Zuyuan of China's Transport Ministry were the joint commanders of the operation. In another development, the mainland’s China News Service reported that Chen Zhimin, deputy minister of China's Public Security Bureau, or police apparatus, had visited Taiwan on an unpublicized, unofficial trip at the invitation of Taiwan’s police administration. The visit was later confirmed, although it was not disclosed whom he met or what the purpose of the trip was. Although Chen came in his capacity as head of China's police association, he was the highest-level Chinese security official ever to visit the island.

DOMESTIC

OPPOSITION SOFTENS STANCE ON ECFA Shortly after ECFA formally took effect in mid-September, the opposition Democratic Progressive Party (DPP) greatly distanced itself from its previously hard-

line opposition to the pact.

With an apparent eye to capturing middle-of-theroad voters in the year-end municipal elections, party Chairwoman Tsai Ing-wen said that if the DPP were to return to power, it would not necessarily push for a national referendum on ECFA, a policy that several months ago was one of its top demands. In remarks made to foreign correspondents as well as in an interview with the Apple Daily, Tsai said a future DPP government would respect the public’s feelings about the issue and follow democratic procedures, including processes in the Legislative Yuan. “If we do have the agreement of the legislature and enough public consensus, we would not necessarily abolish the whole (pact), but would make adjustments or modifications,” Tsai said. “We don’t have to go as far as to hold a referendum.”

Recently various commentators have noted that the DPP’s electoral campaigning is mainly focusing on quality-of-life issues, such as social welfare and the environment, rather than opposition to China.

“We don’t see them focusing so much on ECFA and its impact,” Raymond Wu, managing director of e-telligence, a political risk consultancy, told an AmCham luncheon.

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economic indicaTors Unit: US$ Billion Current Account Balance (2010 Q2) Foreign Trade Balance (Sept.)

Foreign Trade Balance (Jan.-Sept.)

New Export Orders (Sept.)

New Export Orders (Jan.-Sept.)

Foreign Exchange Reserves (end Sept.)

10.56 1.77 22.24 35.9 298.76 380.5

Year Earlier 10.29 2.56 18.2 30.8 227.7 332.24

Unemployment (Sept.)

Overnight Interest Rate (Sept. 30) Economic Growth Rate (2010 QII)p Change in Industrial Output y-on-y (Aug.)p Change in Industrial Output y-on-y (Jan.-Aug.)p Change in Consumer Price Index y-on-y (Sept.)

Change in Consumer Price Index y-on-y (Jan.-Sept.)

5.17% 0.22% 12.53% 23.40% 32.70% 0.29% 0.91%

6.13% 0.10% -6.85% -8.95% -20.35% -0.88% -0.74%

note:

p: preliminary

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

MORE TENSION IN THE DIAOYUTAIS Amid the worst diplomatic tensions between China and Japan in several years, triggered when a Chinese captain and his crew were taken into Japanese custody following a collision with two Japanese coastguard vessels in waters near the disputed Diaoyutai islands, Taiwanese and Japanese coast guard vessels had a standoff of their own in mid-September. A boat carrying Taiwanese activists, angered by Japan’s treatment of the Chinese captain and wishing to support Taiwan’s claim to the islands and to Taiwanese fishermen’s right to fish there, sailed close to one of the islets – accompanied by 12 Taiwanese

soU rces: Moea, Dgbas, cbc, boFt

coast guard vessels – before being forced to turn back by seven Japanese coast guard ships. No collisions were reported. Taiwan’s Ministry of Foreign Affairs protested to the Japanese government over its coast guard’s “interference”

with the vessel, which it said was operating within Taiwan’s territory. The Ministry summoned the Japanese representative in Taipei, Tadashi Mai, to reiterate Taiwan’s claim over the islets, which Japan calls the Senkakus.

BUSINESS

TAIWAN BANK SUES MORGAN STANLEY Taiwan’s China Development Industrial Bank in September announced through its lawyers that it was suing Morgan Stanley, claiming that the U.S. bank falsely portrayed a risky investment product linked to American sub-prime mortgage bonds as a safe purchase and that it was seeking to recover US$250 million in losses. Morgan

Stanley denied the allegations. The lawsuit, lodged with the New York State Supreme Court in July, marks the first time in the wake of the global financial crisis that a Taiwanese entity has sued a major Wall Street financial firm for allegedly promoting mortgage-backed securities products without adequately disclosing the risks.

ANOTHER FIRE HITS FORMOSA PLASTICS A fire in early October engulfed a synthetic paper plant owned by Nan Ya Plastics, the nation’s largest plastics maker and a subsidiary of the Formosa Plastics Group. It was the latest in a series of blazes in Formosa facilities this year. There were no casual-

WAVING THE FLAG — Activists from Taiwan, Hong Kong, and Macau get ready to set off to protest near a group of disputed East China Sea islets called the Senkakus in Japanese and Diaoyutai in Chinese. The territory is claimed by Taiwan, China, and Japan. photo : ap/ wallY santana

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AIG APPOINTS NEW HEAD FOR NANSHAN The American International Group (AIG) in early October named a new acting head for its Taiwan unit, Nan Shan Life. Local analysts quoted by Reuters interpreted the appointment as indicating that AIG will continue with its efforts to sell the company after Taiwan regulators denied permission for an earlier proposed sale to Hong Kong interests with no previous experience in the insurance industry. The new acting president of Nan Shan, Richard Bender, was previously executive vice president and chief agency officer of AIG's AIA unit in Hong Kong. AIG has been selling a number of its assets in various markets to raise money to repay loans it received from the 10

TAIWAN LOOKS AT CAP AND TRADE Premier Wu in early September urged the Environmental Protection Administration (EPA) to draw up plans for a cap-and-trade system on greenhouse gas emissions, although the United States and Australia have all but abandoned the idea for such a system. Taiwan’s program could eventually resemble the one used by the European Union. President Ma has pledged to reduce Taiwan’s emissions levels to that of 2000 by 2025. But despite his stated determination to introduce a cap-and-trade system and his ruling Kuomintang’s

Japan

TOTAL

2009 Imports

15.7

13.9

2009

2010 Exports

clear legislative majority, Ma may find strong resistance from local industries, which fear the move would threaten their competitiveness. “The government still has to convince people from industry that this is doable.

There is a lot of doubt,” said KMT lawmaker Cheng Li-wun.

Robin Winkler, managing partner of the Winkler Partners law firm and an environmental activist, said that even if a cap-andtrade system is established, Taiwan currently is prevented from trading emission credits in international markets due to its political isolation. Pressure from Beijing has excluded Taiwan from United Nations climate treaties, such as the United Nations Framework Convention on Climate Change (UNFCCC).

2010

20.9

18.9

Europe 22.9

18.3

16.9

U.S.

202.3

2009

184

2010

121.6 143.8

2009

21

14 21

30.6

38.4 13.4

25

2010

10.4

2009

ASEAN

85.39

58.6

China Airlines in late September agreed to plead guilty for its role in a conspiracy to fix the prices of air cargo shipments and pay a US$40 million criminal fine, the U.S. Department of Justice said. The Taiwanese airline will plead guilty to a single felony count in connection with its role, which ran from 2001 to 2006, the department said. The charge was filed in the U.S. District Court for the District of Columbia, which must approve the plea deal.

HK/China

26.9

CAL PLEADS GUILTY IN U.S. TO PRICE-FIXING

Taiwan's JanuarY-sepTember Trade Figures (Year on Year comparison)

12.5

U.S. government during the recent financial crisis.

17.6

ties, and the company said it was too early to assess the amount of damage at the plant, located in Chiayi.

The previous incidents include two fires in July at Formosa’s Mailiao oil refinery, Asia's fifth largest, which drew angry protests from nearby residents.

Media reports said that after the latest blaze, Chiayi County’s Environmental Protection Bureau fined the plant NT$1 million (about US$32,000) and placed it under monitoring for air pollution.

2010

2009

2010

Unit: US$BN Source: BOFT

This means Taiwanese companies would be unable to obtain internationally recognized certification for their emission inventories, he said. Government officials have said that a voluntary carbon trading platform will be set up by the year’s end. Nearly 270 companies responsible for more than half of Taiwan's greenhouse gas emissions have reportedly agreed to supply emissions data to the government to help it launch the carbon offset scheme.

Some of the participants belong to international trade associations that require disclosure of their members’ emissions.

Among the biggest emitters on the island are Taiwan Cement, Taiwan Power, and Formosa Plastics, according to the EPA.

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Issue s

Vitamins: Drugs, Foods, or Dietary Supplements?

The Taiwan FDA is introducing a new classification system that entails both advantages and shortcomings.

T

he Taiwan Food and Drug Administration (TFDA), which began operations on January 1 this year as a unit under the Department of Health (DOH), is in the process of classifying all low-dose vitamins for which there are no safety concerns – as well as some other food additives such as folic acid and nicotinic acid – into the regulatory category of general food products.

Previously these items could be classified in either the food or drug categories, but only those licensed as pharmaceuticals could claim therapeutic efficacy on their labels and in advertisements. The dual-track management led to some confusion in the marketplace, which the new system aims to resolve. The framework for the changeover was announced in October 2009, even before the TFDA was formally established, and all re-classification registrations will need to be completed by April 30, 2012. High-dosage vitamins will still be classified as drugs.

In many respects, the new policy is a boon for industry, greatly expanding market access for many products. For example, vitamin supplements that currently can only be sold at pharmacies will be broadly available at supermarkets and other stores.

But manufacturers regard the new regime as still insufficiently in line with international practice. They urge the Taiwan government to follow the increasingly common global trend of classifying vitamin products as a category unto itself, separate from both foods and drugs. In the United States, for example, the Dietary Supplement Health and Education Act of 1994 created a “dietary supplement” classification. Other jurisdictions that treat vitamin products as an individual category include Canada (which calls them “Natural Health Products”), the European Union (“Food Supplements”), and Australia (“Complementary Medicines”).

In a memo to Taiwan Business TOPICS, Jeanette Fielding, Regional Director of Public Affairs & Policy for Pfizer Asia Pacific, outlined some of industry’s continuing concerns with the proposed new system:

維他命該算藥品、 食品，還是膳食補充 品？ 台灣食品藥物管理局新的維他命管理辦 法之解析

台

灣衛生署食品藥物管理局（TFDA）今年 一月正式成立，並陸續將低劑量且安全 無虞的維他命產品，以及葉酸、菸鹼酸 等部分食品添加物，由食品及藥品雙軌管理， 改為食品單軌管理。 按照過去的雙軌制，低劑量維他命需有藥品 許可證，才可在標示及廣告中宣稱療效。但何 種維他命製劑為藥品，何種應為食品，往往造 成消費者困擾，衛生署因此在2009年十月宣 布，低劑量且安全無虞的維他命將改列食品， 以單軌制管理。改類別後的食品豋記，需於 2012年4月30日前完成。高劑量維他命則仍屬 藥品。 從許多方面來看，新作法有利產業發展，特 別是許多產品的市場能見度將大幅增加。例如 以往只能在藥局販賣，未來將可進入超市與其 他通路。

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Issues

• Quality control. Vitamin products are currently required to follow pharmaceutical-like manufacturing QC standards, but under the new system the criteria would be the less rigorous procedures applied to conventional foods. “It is our hope that DOH will continue to serve as the safety gatekeeper for the production and quality, and distribution channel system, of vitamins in the future,” said Fielding.

“Monitoring safety through pre-registration and standards for manufacturing helps ensure that consumers are protected.”

• Inconsistent treatment. The DOH regulations will govern vitamins in tablet or capsule form, but do not cover vitamins marketed in other forms, such as liquids, powders, and effervescent tablets. Defining vitamins as dietary supplements regardless of the dosage form would eliminate that problem.

• Potential impact on export markets for Taiwan-made vitamins. Some importing countries require vitamins to meet pharmaceutical standards. “Therefore, export certificates need to reflect the manufacturing quality specifications,” said Fielding. “DOH should continue issuing necessary corresponding supporting documents to meet other countries’ needs, such as a Free Sales Certificate with a Good Manufacturing Process (GMP) statement.” Otherwise, she says, export opportunities for local manufacturers may be reduced.

• Low penalties for non-compliance. The penalties for counterfeit or poor-quality products are less severe for food items than for pharmaceuticals.

• Inadequate transition period. Manufacturers have complained that the amount of time available to them to prepare before the new system comes into effect is far too short. Since the changeover affects labeling requirements, many products will need new packaging. “Without a sufficient transition period for manufacturers to change their packaging, it will cause unnecessary costs,” says Fielding.

The revised regime does not change the status of various products cited in the Taiwan White Paper by AmCham’s Retail Committee as treated as prescription drugs in Taiwan, whereas they are considered common dietary supplements in markets such as the United States. Examples are melatonin, ginkgo biloba, milk thistle, saw palmetto, and Echinacea. In addition, the co-enzyme Q10, an antioxidant controlled at 200 mg/day in the United States, is limited in Taiwan to a daily intake of 30 mg/day.

不過業界還是必須指出，新的管理方式與國 際慣例仍有落差，建議政府能參考國際上越來越 普遍的作法，將包括維他命在內的保健產品獨立 分類，與傳統食品及藥品的管理有所區隔。以美 國為例，1994年的「膳食補充劑健康暨教育法 案」新設分類「膳食補充劑」。維他命產品獨立 分類的先進國家還包括加拿大（稱為「自然健康 產品」）、歐盟（稱為「食品補充劑」）、澳洲 （稱為「補充藥品」）。 美國輝瑞藥廠亞太區公共事務暨政策主管 Jeanette Fielding博士向TOPICS雜誌說明時指出， 業界對新規定的顧慮主要有下列幾點： • 品質管控－維他命目前必須遵守藥品級產 製規範，但未來僅適用食品類較為寬鬆的 規範。Fielding博士說，業界希望衛生署繼 續扮演公共衛生安全把關者的角色，監督 維他命的產製、品管、銷售過程，而上市 前登記制與恰當的生產標準，將有助確保 消費者的使用安全。 • 差別標準－衛生署新規定只規範錠劑或膠 囊狀的維他命，忽略了液體、粉末與發泡 劑產品應有相同的管理；如能讓含維他命 產品單獨分類，各種型態都接受同樣規 範，應可解決此一落差。 • 影響在台生產的維他命產品之外銷機會－ 由於部分國家尚將維他命產品以藥品管 理，相關文件應符合藥品標準。 Fielding 主張，輸出證明必須述明藥品製造品質標 準，而非台灣在行政上的歸類。因此，衛 生署應該繼續核發必要文件，如「自由銷 售證明書(Free Sales Certificate)」應載明符 合「優良製造標準」（G M P），使出口廠 商能滿足進口國的要求，否則國內廠商可 能失去外銷市場。 • 不法偽劣食品罰則過低－ 對仿冒與劣質產 品，食品類的罰則低於藥品類。因此政府 必須小心應對，避免不肖業者趁機謀利。 • 轉換緩衝期太短－業者抱怨，轉類的作業 緩衝期太短，許多產品在轉類後都需要修 改標示做包裝的更換。因此， Fielding表 示，如果沒有足夠時間讓業界改換包裝， 將會造成業者因庫存處理而導致損失。 台北市美國商會零售委員會曾在《台灣白皮 書》中質疑，美國等市場列為膳食補充劑的維他 命產品，許多卻被台灣認定為醫師處方用藥，包 括退黑激素、銀杏、奶薊、鋸棕櫚、紫錐花等。 但這些產品尚未受惠於衛生署此波的調整。此 外，抗氧化劑「Q10輔酶」也有爭議，因為美國 規定每日攝取量上限為200毫克，但台灣只有每 日30毫克。

— Jane Rickards

— 撰文／李可珍

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Issue s

New Center Aims to Serve Investors The government has created a “one-stop service center” to help prospective or existing investors solve problems.

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he goal of the newest government organization in Taiwan is to operate with an efficiency and service mentality unlike that of any other unit of government. Even its office décor and the design of its business cards more closely resemble those of the private sector than anything from the bureaucracy.

The mandate of the InvesTaiwan Service Center, which opened its doors on August 8, is to work closely with prospective and existing investors to help them resolve problems quickly so they can get on with doing business.

As a “one-stop service center,” it will be able to approach all other units of government on behalf of its “clients.”

Reporting directly to the Executive Yuan’s Global Investment Taskforce chaired by the Premier, it will have the sway of Cabinet-level authority behind it.

In the past, assistance to investors was among the duties of the Department of Investment Services (DOIS) under the Ministry of Economic Affairs. But DOIS is also responsible for investment promotion, and so its staff had only limited time to devote to problem-solving for investors. Its position at the sub-ministry level also reduced its influence when contacting agencies belonging to other ministries.

Recently developments significantly improving Taiwan’s investment environment convinced Premier Wu Den-yih that some restructuring was in order. The signing on June 30 of the Economic Cooperation Framework Agreement (ECFA) between Taiwan and China, following the opening of direct flights and other measures to boost cross-Strait trade and investment, caught the attention of many major global corporations. So did Taiwan’s decision last year to lower the corporate income tax rate from a high 25% to a far more competitive 17%.

Given those changes, says InvesTaiwan Service Center CEO Jeff Chueng-Kuang Yen, the Taiwan government saw an opportunity to attract substantial amounts of new investment from both foreign and domestic companies. To ease their way in investment planning and implementation, Premier Wu called for creation of the Global Investment

招商服務中心迎接全 球商機 行政院成立全球招商聯合服務中心，成 為現有及潛在投資人的單一窗口服務平 台。

行

政院設立「全球招商聯合服務中心」， 以效率、專精服務，解決官僚體系長年 以來的老問題。甚至於，服務中心的裝 潢，以及工作人員的名片，都一改過去官場制式 作風，呈現更接近民間機構的風格。 八月八日掛牌運作的聯合服務中心，目標就在 迅速解決潛在與現有投資人的經商問題。身為招 商服務的單一窗口，中心將代表投資人與相關部 會進行溝通。中心由行政院全球招商專案小組負 責管理，而專案小組的召集人正是行政院長，意 謂中心將能獲得政院全力支持。 中心成立之前，投資人服務工作是由經濟部 投資業務處負責；但投資業務處同時負責招商業 務，難以提供投資人全面週到的服務。而且投資 業務處僅是部會下屬單位，執行跨部會協調也有 困難。 近期的正面發展大幅改善台灣的投資環境， 也使閣揆吳敦義相信此時應該進行組織微調。 兩岸已在六月30日簽訂經濟合作架構協議 （ECFA），兩岸定期航班與其他促進貿易投資 的措施也逐步落實，加上營業所得稅率去年已由 25%降到更具吸引力17%，在在都使大型跨國企 業更加重視台灣。 全球招商聯合服務中心執行長嚴重光表示，經 貿環境的正面發展讓政府相信，國內外企業應會 更為願意加碼投資。為便利業者投資的計畫與執 行，吳敦義決定成立全球招商專案小組專門負責 政策擬定，並設立全球招商聯合服務中心提供具 體協助。

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Taskforce to oversee policy strategy, with establishment of the Service Center to provide practical support.

In its first two months of operation, the Center has already taken on nearly 50 cases – some transferred from other central- or local-government agencies, but mostly “walk-ins” by companies that approached it directly. Some companies are eyeing entry to the market, while others are already operating here. Included are domestic Taiwanese, American, Japanese, and European investors, as well as both Taishang enterprises based on the mainland and purely Chinese companies.

According to Yen, the most common request has been for help in locating a suitable site for a factory or office (the Center maintains a database of available land for their reference). Other frequent problems involve laws and regulations, particularly regarding tax matters; procedures for applying for R&D subsidies; and difficulty in putting together project financing. The Center’s services are free of charge.

“The cases referred to us by other government agencies are inevitably the hardest,” says Yen. “If they think they can solve the problem by themselves, they won’t send it to us. For the walk-ins, the motivation is usually just to get things done faster.”

He notes that the Center is proving “custom-made” service. “Our mission isn’t to change the overall environment but to help particular companies solve particular problems.”

But he adds that as the Center accumulates data on the most typical problems faced by investors, it can provide feedback to policymakers on suggested revisions.

Each case is assigned a dedicated caseworker who takes responsibility for following it from beginning to end (though backed up by a larger team). The nearly 30 staff members, most of whom have technical industrial backgrounds, are encouraged to exercise creativity, flexibility, and perseverance in searching for solutions. Economic Affairs Minister Shih Yen-shiang, who serves as chairman of the Center, urges the staff to “put yourselves in the investors’ shoes and work to solve the problem as if it were your own.”

The InvesTaiwan Service Center is located at 8F, 1 Xiangyang Rd., Taipei 10046. The phone number for inquiries is 2311-2031, ext. 301.

成立兩個月以來，服務中心已處理近50件個 案，部分是由其他政府機關轉介而來，但多數是 企業直接求助。上門求助的企業，部分希望未來 進軍台灣市場，其他的則是已經在台營運；求助 者除了國內廠商，還有美資、日商、歐洲企業， 甚至也包括台商與中資企業。 嚴重光表示，最常見的狀況是希望中心協助尋 找合適的廠房或辦公地點；對此，中心已具備閒 置商辦與土地的資料庫。其他常見的問題還包括 法規，特別是稅務問題；研發補助的申請程序； 以及募集計畫資金所面臨的困難。與民間機構不 同，中心的服務完全免費。 嚴重光指出，由其他部會轉介而來的個案，無 疑一定是最為棘手的，因為如果其他部會能夠解 決，當然不必求助服務中心。至於上門求助的廠 商，則是希望更快解決問題。 嚴重光表示，中心希望提供的是客製服務， 因為他們的目標並不是改變整體環境，而是幫助 特定廠商解決特定問題。不過他也強調，中心在 為個案服務的過程中必然會持續累積常見問題的 相關資料，未來自然能夠成為政策修正的重要參 考。 每一個案件都有專人全程負責，並有完整後勤 體系提供協助。中心近30名的成員裡，多數具有 技術產業背景，且願意以創意、彈性、耐心找出 解決之道。兼任中心主任的經濟部長施顏祥鼓勵 成員，應該站在廠商的角度看問題，把廠商的問 題當成自己的問題，全力以赴。 全球招商聯合服務中心地址為台北市10046襄 陽路1號8樓，服務電話為2311-2031分機 301。

— 撰文／沙蕩 — By Don Shapiro

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COVER STORY

Ringing in Taiwan Tourism 迎接觀光旅遊新契機

Taiwan tourism received valuable exposure through outdoor advertising in Times Square, especially on New Year's Eve. photo : tourism bureau

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he island is getting a lot more visitors these days, but most of them are from China. In the interest of diversification, Taiwan is making an increased effort to attract tourists from elsewhere in Asia, as well as the United States, Europe, and Australia. Among the plans on the drawing board is a major expansion of the National Palace Museum.

But Taiwan faces keen competition from other destinations in the region as it goes after the international traveler.

光人數近期大幅增 來台觀加，但多數都是中國旅 客。為求分散客源，台灣正努力吸 引亞洲其他國家的觀光客，以及美 國、歐洲與澳洲人士。研議中的計 畫包括故宮博物院的改建。但爭取 國際觀光客的計畫，正面臨區域內 其他國家的強力挑戰。

BY Don shapiro

撰文／沙蕩

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Cover storY The Taiwan tourism message is brought to residents to Seattle on the side of their buses. photo : tourism bureau

A

s one of the Six Emerging Industries selected by the Ma Ying-jeou administration after it took office in 2008, the tourism sector is receiving increased government support and attention.

Budgets have been increased, and a Cabinet-level taskforce has been set up to help guide the industry’s development.

Tourism is being valued as the source of a large number of jobs, as an “industry without smokestacks” that is relatively kind to the environment, and as a means of diversification to prevent over-reliance on hightech electronics.

The Ma administration’s efforts to

open the door to travelers from China have been bringing tourist arrivals to new heights. With 3.6 million international visitors in the first eight months of the year, Taiwan seems on track to reach a record of 5 million or more visitors for 2010 as a whole. A full 30% of them – and more than half of all visitors traveling primarily for pleasure – are from the mainland.

But that very success in developing inbound cross-Strait travel is spurring the authorities to do more to promote tourism from other areas. There is awareness that too great an emphasis on the Chinese market could have an unhealthy impact on the industry’s long-term development. Not only

馬英九2008年就任總統後，政府開始 大力扶持「六大新興產業」，觀 光旅遊因而獲得更多政策協助與資源。除了編 列更多預算，行政院也成立專案小組負責產業 發展。 觀光旅遊不僅創造眾多工作機會，其「無煙 囪產業」特性也被視為對環境衝擊較。同時， 強化觀光旅遊產業也能降低台灣對高科技電子 業的依賴。 馬政府開放中國觀光客來台的決策的確使入 境人數大增–今年前八個月已有360萬人次， 全年更可望創歷史新高、突破500萬人次。中 國觀光客佔總入境旅客的三成，佔觀光人數的 一半以上。 不過，中國觀光客大增也提醒政府應該更積 極吸引其他國家的觀光客源，畢竟過度依賴中 國市場可能反而扭曲產業長期發展。除了中國 觀光團利潤偏低，兩岸關係一旦出現逆轉，來 台人數勢必大幅減少。

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does the mainland business tend to be less profitable than catering to other markets, but it also carries the risk of being extremely vulnerable should any disturbances occur in the crossStrait political atmosphere.

In reaching out to attract not only more Japanese, Korean, and Southeast Asian travelers, but also more Americans and Europeans, the Taiwanese government and industry recognizes the formidable challenge it faces. Currently Taiwan is enjoying modest growth in each one of these market categories, but anyone tuning in to CNN, where countries throughout the region vie to pitch their attractions, can appreciate the extent of the competition. “Taiwan just isn’t as well known as a lot of other places – and often it even got confused with Thailand,” says Ovid J.L. Tzeng, the Minister Without Portfolio tapped to head the taskforce mapping out new directions for Taiwan’s tourist development. Taiwan’s relative diplomatic

然而，不論是爭取日本、南韓、東南亞客 源，或是吸引美國與歐洲人士，政府與民間都 瞭解難度很高。固然前述地區的來台人數仍持 續增加，但只要留心CNN的廣告，就會知道區 域內其他國家莫不使盡渾身解數爭取觀光客， 台灣自然必須面對嚴苛挑戰。負責觀光旅遊產 業發展的行政院政務委員曾志朗表示，「台灣 的知名度比不過其他地方，甚至還常常跟泰國 搞混」。台灣的外交處境更限縮國際曝光機 會。 台灣的問題還包括，欠缺清楚的市場定 位。台灣最大的雄獅旅行社總經理劉文義指 出，「台灣不是峇里島或普吉島那樣的休閒渡 假勝地，也不是東京或上海那樣的超大型都 會」，「台灣是值得一遊的好地方，但如何說 服觀光客前來，必須更用心營造產品特色」。 交通部觀光局在外籍顧問協助下，正研究 如何重新包裝台灣的觀光訴求，首先就是以新 的宣傳標誌與口號替換「Taiwan Touch Your

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isolation hasn’t helped, making it harder for it to gain international exposure.

The island has also lacked a clear-cut focus for how it wishes to present itself to lure prospective visitors. “We’re not a location like Bali or Phuket for a relaxing resort vacation, and we’re not a giant metropolis like Tokyo or Shanghai,” comments Henry Liu, general manager of Lion Travel Service, Taiwan’s biggest travel agency. “There are a lot of good reasons to come to Taiwan, but we have to work harder to create the right conditions to attract those travelers.”

With the help of international consultants, Taiwan’s Tourism Bureau has been working on how to repackage the island’s appeal, starting with a new logo and new slogan to replace the current “Taiwan Touch Your Heart” – criticized by many foreigners as not even grammatical. Reportedly under consideration but not yet decided on is “Taiwan, Heart of Asia.” Like “Taiwan Touch Your Heart,” it underscores the impressively friendly spirit of the Taiwanese.

“Clearly one of Taiwan’s greatest assets is the warm, welcoming, hospitable nature of the people,” says David Pacey, general manager of the Grand Hyatt Taipei and co-chair of AmCham Taipei’s Travel & Tourism Committee.

If chosen, the new slogan would also emphasize the island’s conveniently

central location as a stopover for those en route to other locations. Henry Liu notes that travelers from North America to Southeast Asia need to make at least one transit stop, as do those heading from Australia/New Zealand to China or Europe. “We have to give them reasons to come here – instead of Bangkok or Singapore – and to stay two or three days.”

Expanding the museum In thinking about how to enhance Taiwan’s appeal for those and other tourists, the government has naturally started by considering ways to bolster the island’s existing attractions, of which the National Palace Museum – the world’s greatest collection of Chinese art and antiquities – is the most outstanding example. Ovid Tzeng disclosed that planning and environmental feasibility studies have already begun on a project – expected to be formally announced next year – to reconstruct the museum on its current site, expanding it to three times the present size. Construction would take five years to complete and entail an estimated expenditure of NT$20 billion (US$645 million).

Tzeng notes that the influx of Chinese tourists has already led to overcrowding at the facility. As long as the structure needs to be enlarged, he says, why not expand

H e a r t」–許多外國人士批評，這句口號甚至連 文法都有問題。列入考慮、但尚未最後決定的 替代方案包括「Taiwan, Heart of Asia」。如同「 Taiwan Touch Your Heart」，新口號的重點還是強 調台灣人的友善好客。台北君悅大飯店總經理、 台北市美國商會旅遊與觀光委員會共同主席斐岱 偉認為，「台灣最重要的觀光優勢之一，就是熱 情、友善、好客的民族特性」。 「Taiwan, Heart of Asia」的另一個重點，在於 點出台灣的優越位置，不論南來北往都可以中 停。雄獅旅行社的劉文義指出，北美前往東南亞 至少必須轉機一次，從紐澳到中國或歐洲一樣也 得中停，「要取代曼谷或新加坡，台灣就必須創 造足夠賣點，讓轉機旅客願意停留二至三天」。

擴建博物館

it enough to display more of the treasures currently stored in vaults built into the mountainside beside the museum and now shown only in rotation with other artworks? Taiwan is contacting some of the leading museum curators and art experts in the world, he adds, for advice on how to ensure that the new facility can meet the very highest standards.

Beyond providing Taiwan with a world-class tourist draw, another objective of the project would be to create a “cultural shrine that all Chinese, no matter where they are living in the world, would wish to make a pilgrimage to at least once in their lives,” says Tzeng. Part of the budget would come from government appropriations, some from private sponsors who would be able to name particular galleries, and some from an appeal for small donations from schoolchildren, to give them a lasting sense of having contributed to this cultural mission.

Another of Taiwan’s existing strengths is the excellence of the food – especially the many styles of regional cooking from different parts of China, but in recent years also the Western, Japanese, Thai, Indian, and other cuisines. This summer the Tourism Bureau invited a number of U.S.-based food writers and other gourmets to attend the annual Food Fair and tour the island. Several of them interviewed during their stay were enthusi-

internationaL Visitor arriVaLs Total

Tourists

2000

2,624,037

870,929

2001

2,831,035

1,021,572

2002

2,977,692

1,028,635

2003

2,248,117

695,277

2004

2,950,342

1,031,713

2005

3,378,118

1,381,713

2006

3,519,827

1,381,637

2007

3,716,063

1,648,507

2008

3,845,187

1,775,229

2009

4,395,004

2,298,334

SOURCE: TOURISM BUREAU

思考提升台灣觀光吸引力的過程中，政府很自 然地會從改善既有景點開始著手，而國立故宮博

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Cover storY astic about the prospects for developing culinary tours to appeal to the growing number of “foodies” in the United States.

In addition to plenty of eating, such tours could encompass cooking classes, lectures, visits to markets, and other experiences.

But one drawback that would have to be overcome, cautioned New York-based restaurant consultant Ed Schoenfeld, is the dearth of good English-language information on Taiwan’s restaurants and chefs and the dishes they have to offer.

Ovid Tzeng notes that the Ministry of Economic Affairs (MOEA), in cooperation with the Tourism Bureau, has been tasked with leveraging Taiwan’s “eating and drinking culture” to promote more investment in Taiwan’s food industry. One of the first projects is to assist vendors in selected night markets to upgrade their quality and improve the environment so as to appeal to more domestic and international tourists. The Tourism Bureau is also conducting a program to invite foreign chefs to visit Taiwan to help raise Taiwan’s visibility in international gourmet circles.

As with the collaboration with MOEA, one of the new strategies is to involve a larger number of government agencies in the work of tourism promotion. Chief among them is the Council of Agriculture, which is eager to help the economy of rural areas by promoting the

development of tourist farms and “homestays,” as the local version of bed-andbreakfasts is called. These are increasingly popular with domestic urban dwellers, and are starting to catch on with Japanese visitors and Western back-packers. A new wrinkle is to develop “tea villages” in various localities where teahouses and tea plantations can showcase the different types of high-quality teas that are special to Taiwan.

In addition, the Council for Hakka Affairs is actively engaged in promoting the culture and foods of the Hakka minority to lure more visitors to areas such as Miaoli and Hsinchu Counties, while the Council of Indigenous Peoples is making a similar effort in centers of aboriginal population.

Going for the “big bang” To help break through the lack of awareness about Taiwan, David Pacey suggests staging more “big bang” events in Taiwan to give it international exposure, whether major golf or tennis tournaments, musical concerts, or perhaps a Taiwan Fashion Week – especially if wellknown Taiwanese-American designer Jason Wu could be persuaded to take part. As a biking enthusiast, Pacey particularly urges the holding of even more high-profile cycling events in Taiwan,

物院理所當然成為首選，畢竟故宮已是全球最負 盛名的中華文物展出地點之一。政務委員曾志朗 透露，故宮現址改建已經開始計畫與環境可行性 評估，而這項預定明年正式宣布的計畫，可使故 宮展示空間增加三倍。改建需時五年，經費為200 億新台幣。 曾志朗指出，中國觀光客大增，使故宮常常 人滿為患。他說，既然建築結構需要擴增，為何 不一步到位，讓更多文物可以同時展出，不必像 現在一樣，長期存放庫房，久久才能輪替展出一 次。他說，台灣已經要求國際頂尖博物館及藝術 專家提供意見，協助故宮改建計畫滿足最高的硬 體標準。 曾志朗表示，改建故宮除了要為台灣增加世界 級的觀光景點，另一個目標則是創造獨一無二的 文化殿堂，讓全球各地的華人，一生都至少要「 朝聖」一次。改建經費部分將由政府撥款，另一 部分則以展覽室冠名權向民間募款，最後一部分 則是以文化參與感吸引學童小額捐款。

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featuring top international athletes. “This would provide an unmatchable opportunity to show off Taiwan’s natural beauty,” he says, as cameras follow the riders to Sun Moon Lake, the mountains of Alishan, the seashore along the eastern coast, and other scenic spots. As the center of the world’s bicycle manufacturing industry, Taiwan would be well-positioned to support such events.

On a similar note, Lion Travel’s Henry Liu encourages Taiwan to take fuller advantage of the presence here of so many leading IT companies. “We should be staging all kinds of different exhibitions, one after the other, aimed not just at people in the trade, but also at international consumers.”

So far the opening of direct crossStrait air routes has not led to any significant increase in the number of Americans or Europeans booking tours to China but adding on some extra days in Taiwan.

Tourism Bureau Director General says that Western travel agents Janice Lai have been discouraged from arranging such tours by the relatively high cost and limited quantity of seats on the crossStrait flights. But the Bureau is planning to target the many expatriates living in China with ads suggesting that they consider coming to Taiwan for their next vacation. Besides the immediate business that might develop, a fruitful word-

台灣的另一項特長則是精緻飲食–除了傳統的 中國各地菜餚，近年還有西方、日式、泰國、印 度等地的料理。觀光局今年夏季邀請一些美國美 食作家與美食家來台參加年度美食展並旅遊本島 各地。部分人士受訪時表示，台灣應該很有機會 發展美食旅遊，吸引美國越來越多的饕客一族。 除了品嚐美食，行程還可以納入烹飪教學、講解 說明、市場走訪及其他在地體驗。但來自紐約的 餐飲顧問Ed Schoenfeld指出，台灣推廣美食旅遊 必須先解決英語資訊不足的問題，否則餐廳、廚 師、料理將很難引起共鳴。 政務委員曾志朗表示，經濟部已經與觀光局合 作，宣傳台灣飲食文化以吸引外資進入餐飲業。 計畫之一是協助特定夜市的攤販提升品質、改善 環境，以吸引更多國內外觀光客。觀光局也將邀 請國外廚師訪台，以提升台灣在國際美食界的能 見度。 促進觀光產業的策略還包括，以跨部會整合推 廣觀光旅遊。例如農委會就非常希望推廣觀光農

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tourism

of-mouth effect could follow if those travelers have a positive experience and then tell their friends and relatives back home about it.

That channel would supplement the increased advertising the Bureau has doing in the United States and Europe, for example placing outdoor advertising in New York City’s Times Square (where it was widely photographed in scenes of the annual New Year’s Eve celebrations) and on taxicabs in London.

Ads promoting Taiwan tourism have also appeared in publications such as Time and the Economist.

“Taiwan is a long-haul destination, which makes it a rather expensive trip,” says Janice Lai. “Therefore we’ve concentrated on publications with a more affluent readership.”

To stretch its limited budget, the Bureau has also looked for innovative ways to help get the word out about Taiwan. One successful example was the “Best Trip in the World” contest held last year, attracting 1,100 entries from teams of two or more people proposing itineraries in Taiwan. These were then whittled down to 52 finalists who were given funds to take the trips they had devised, while reporting on their experiences through blogs, photography, and videos. The exercise resulted not only in valuable publicity, but also numerous creative ideas for attractive, economical tours.

Offsetting Taiwan’s undeniable strengths as a potential tourist destination are some significant weaknesses. Henry Liu cites the relatively poor English-language environment compared with many competing markets around the region, including the severe shortage of experienced tour guides able to speak English or other European languages.

場，以及類似歐美B&B旅館的民宿，以協助鄉村地 區改善經濟條件。觀光農場與民宿越來越受到都 市人的喜愛，連日本旅客與歐美背包客也日漸增 加。另一種新型態經營模式則是茶莊，結合飲茶 文化與採茶農莊，推銷台灣特有的茶葉種類。 客委會積極推廣客家文化與飲食，吸引觀光客 到訪苗栗與新竹地區，而原民會則是在原住民聚 居地區推動類似計畫。

重要賽事與活動 君悅飯店的斐岱偉認為，突破台灣知名度不 足的困境，可以考慮舉辦重要賽事或活動，以提 升國際能見度，不論是重要高爾夫賽、網球錦標 賽，抑或音樂會，甚至是台灣時裝週–如果能夠 請到旅美設計師吳季剛，效果應該會更好。身為 單車迷，斐岱偉特別期待台灣舉辦知名自由車賽 事，吸引頂尖選手參加。他說，「自由車賽程特 別能夠突顯台灣的自然風景」，日月潭、阿里

oriGin oF Visitors Jan.-auG. 2010

Europe 3.7%

Others 6%

North America 8.8%

China 30.2%

Korea 4.0%

ASEAN 13.5%

Japan 19.0% Hong Kong/Macau 14.8%

SOURCE: TOURISM BUREAU DATA

山、東海岸與其他景點，將能透過轉播鏡頭忠 實傳遞。此外，台灣身為全球自行車製造業的龍 頭，確實具有舉辦類似比賽的實力。 基於相同出發點，雄獅旅行社的劉文義則建議 台灣藉助高科技業的雄厚基礎，「持續舉辦各種 不同的商展，不只吸引廠商，還要吸引各國消費 者」。 兩岸定期航班開通後，歐美人士在台短暫停留 後再前往中國的人數並未明顯增加。觀光局長賴 瑟珍表示，歐美旅行社不會鼓勵客戶短期停留台 灣，因為兩岸航班票價高昂、機位又有限。但觀 光局正計畫鎖定旅中外籍人士，吸引他們將台灣 當成未來渡假的旅遊地點。除了宣傳帶來的直接 客源，如果觀光客對台灣印象良好，願意與親戚 朋友分享，口耳相傳的效應也不可小覷。 對旅中外籍人士的宣傳，可以強化觀光局在歐 美等地的宣傳效果，包括紐約時報廣場的大型戶 外廣告（常常成為跨年活動的搶眼背景），以及 倫敦的計程車廣告。行銷台灣觀光旅遊的廣告，

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Cover storY DeGree oF economic DepenDence on tourism uNit: us$biLLioN

country

GDp

ratio

14

187

7.52%

Hong Kong

13.8

207

6.65%

Thailand

15.6

245

6.35%

8.7

161

5.37%

Austria

18.9

371

5.09%

Spain

15.5

1,440

4.01%

Switzerland

12.2

427

2.85%

12

455

2.64%

Australia

22.3

909

2.45%

France

54.2

2,594

2.09%

China

37.2

3,280

1.14%

36

3,321

1.08%

Canada

15.5

1,436

1.08%

United States

96.7

13,808

0.70%

Japan

9.3

4,382

0.21%

Korea

5.8

970

0.60%

TAIWAN

5.1

383

1.34%

Malaysia

Singapore

Sweden

Germany

tourism Forex receipts

sourCe: WorLD eCoNomiC Forum, 2009

也出現在時代雜誌及經濟學人。賴瑟珍表示，「 台灣距離遙遠，旅費相對高昂」，「因此選擇讀 者群收入較高的特定媒體」。 為充分利用有限預算，觀光局也構想創新計畫 以推廣台灣。成功案例之一是去年的「Best Trip in the World」競賽，吸引1,100組兩人以上團體 提出台灣旅遊的最佳方案。進入決賽的52組獲得 新台幣2.8萬至3.5萬的旅遊基金，實際走一次他 們規劃的行程，並以部落格、照片、影音分享經 驗。「Best Trip in the World」不僅具有宣傳效 果，還為創意平價旅遊創造許多可行方案。 但台灣的旅遊魅力卻受制於部分明顯缺點。雄 獅旅行社的劉文義指出，台灣的英語環境相對不 如亞太其他旅遊市場，包括嚴重欠缺精通英文或 其他歐洲語言的資深導遊。他說，政府近年積極 鼓勵導遊培訓，但多數人經驗不足，難以單獨帶 團出遊。 面向國際觀光客的旅館與餐廳，訓練仍是個問 題；整體而言，台灣的服務品質離最高標準仍有

20

The government has been promoting the training of large numbers of guides in recent years, he says, but most of them are still too new on the job to be able to handle the demands of shepherding a tour group on their own.

Training is also a challenge for the hotels and restaurants catering to international guests, and Taiwan’s service quality is still a few notches below the highest standards.

Janice Lai says the government recognizes this problem and has been taking steps to remedy it, including the selection of 100 employees from the tourism industry each year to send abroad for training programs. But industry executives maintain that much more needs to be done to develop the sector’s human resources.

One of the themes of the Travel & Tourism Committee section of AmCham Taipei’s 2010 Taiwan White Paper was the need to elevate the government agency responsible for tourism development to ministry level, whereas currently it is a bureau under the Ministry of Transportation & Communications. In most countries in the region, the task is performed by a Cabinet-level ministry, either dedicated to tourism alone or to culture and tourism in combination.

Henry Liu considers that the lack of ministry-level authority has been of the main factors holding back tourism’s development in Taiwan. “Integrating all the resources necessary to make Taiwan to succeed as a tourism destination is a huge and complicated job,” he says. “It’s beyond the capability of a bureau-level organization.”

He urges the government authorities to listen more to the views of the industry, but also faults Taiwan’s travel industry for being too parochial. He calls on travel agency executives in particular to pay more attention to international trends and to adopt a more visionary outlook for what Taiwan can accomplish.

一段距離。觀光局長賴瑟珍指出，政府瞭解問題 所在，也採取具體改善措施，包括每年遴選一百 位旅遊業從業人員赴海外進修。不過業界主管認 為，強化人力資源的措施還遠遠不足。 美國商會旅遊與觀光委員會在2010年《台灣白 皮書》的產業優先議題中曾強調，觀光產業的主 管單位層級過低，應該由部會下屬局處，提升到 部會層級。亞太的多數國家，如果不是以單一部 會主管觀光產業，至少也是觀光與文化合併設置 部會。 雄獅旅行社的劉文義認為，欠缺部會級的觀光 主管單位，是拖累觀光旅遊發展的主因之一。他 說，「整合所有可用資源，協助台灣成為觀光旅 遊重鎮，並非易事」，「這項工作不可能靠觀光 局完成」。 劉文義雖然希望政府多聽聽業者的意見，但他 也坦承，台灣的業者往往只看眼前。他認為，業 者應該要多觀察國際趨勢，從長遠角度看待台灣 的旅遊發展。

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tourism

A Wave of New Hotel Projects An ongoing building boom for new hotels is expected to help contribute to Taiwan’s push for increased tourism.

BY JANE RICKARDS

Le Meridien in the XinYi District, which has already held its soft opening, is part of the wave of new hotels in Taipei. photo : le meridien

V

iew giraffes strolling through the grounds of the safari-style Leefoo Resort Guanshi. Or use a 24-hour “Whatever/whenever” concierge service at the funky W-Taipei hotel in the XinYi district – a service that claims to be able to do practically anything for whimsical guests, even arrange a helicopter ride over Taipei.

Tourists now have more hotel choices than ever in Taiwan.

Chen Mei-hsiu, director of the Tourism Bureau’s Hotel Travel and Training Division, says normally only three to four luxury or large tourist hotels open each year in Taiwan. But from January this year to February next year, a total of 11 luxury tourist hotels will have opened. By this month, she says, eight of the 11 were up and running, including the Palais de Chine near Taipei Station and the Hsinchu Sheraton. Altogether the new hotels offer 2,441 rooms and involve total investment of NT$14.66 billion (US$473 million).

The three additional facilities due to open by February 2011 include a very traditional Japanese inn in Beitou – the

Radium-Kagaya International Hotel – and the techno-chic W-Taipei, adding a further 752 rooms and investment of NT$4.3 billion (US$138.7 million), says Chen. In total, the 11 hotels will provide direct employment for some 3,500 people.

Calculating the indirect economic benefits, Chen says that if the 11 hotels have an average of 1.5 people per room and 70% occupancy, they will accommodate 1.22 million visitors per year. If each guest spends US$200 a day outside the hotel, that would inject US$236 million annually into the domestic economy, benefiting restaurants, tourist bus companies, department stores, and other businesses.

Chen list of eight hotels that have already opened this year did not even include the 164-room, African-themed Leefoo in Hsinchu County, which opened in February. And looking beyond February next year, she notes that four more hotels are due to open, such as the 584-room Sheraton Ilan Resort in Ilan County, which entails a NT$3.08 billion (US$99 million) investment. And still

more projects are under construction.

Pauline Leung, CEO of Compass Public Relations and co-chair of AmCham’s Travel and Tourism Committee, says the hotel building boom will be a real boost for the island’s tourist industry, as there is currently an undersupply of luxury hotel rooms. She also notes the under-representation in Taiwan of the “really top names” in hotel chains.

In addition, the influx of new talent and new ideas should spur healthy competition leading to higher quality.

“I really think it is time to improve our hotel standards,” says Leung. “For a long, long time we had just been staying at the same level.”

At a first glance, the sudden proliferation of hotels might appear to be due to the cross-Strait policies of the Ma Ying-jeou administration. After all, the president has installed regular direct flights with China and opened the door to tourists from the mainland. The change also enhances Taiwan’s attractiveness as a destination for Meetings, Incentives, Conventions and Exhibitions (MICE) activities, since some organizers

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SAFARI STYLE — The newly opened Leofoo Resort Guanshi in Hsinchu County offers African-themed room décor and a chance to mingle with giraffes and other wild animals. photo : LeoF oo r esort GuaNshi

were previously unwilling to hold their events on the island due to the difficulty that Chinese nationals would have in attending.

B u t w h i l e M a ’s p o l i c i e s a r e a n undoubted boon for tourism, the planning and construction for most of these hotels started long before his inauguration. What chiefly encouraged the hotel owners to decide to invest was seeing the steady growth in the number of visitors over the past decade – a trend that is still continuing.

W- H o t e l s , p a r t o f t h e S t a r w o o d Hotels and Resorts Worldwide group, are boutique hotels aimed at a hip younger crowd. While W-Taipei is jointly owned by the Uni-President Development Corp. and Taiwanese Times Square International Hotel Corp., W-Taipei’s marketing and communications manager

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Wina Chen stresses that management of the facility will be totally under Starwood’s control.

She also notes the “focus on design and on music” that characterizes the hotel, noting that W-Hotels employs a global music director, Michaelangelo L’aqua, and is about to release its seventh CD of W-hotels music. The 405-room Taipei facility, which is expected to open next Valentine’s Day, will be the sixth W-Hotel in the Asia-Pacific region. It will primarily focus on business travelers and the MICE sector, says Wina Chen.

In addition, the hotel will be used as a dry-run for the chain’s entrance into the China market, as Mandarin-language procedures will be honed here before W-Hotels are opened in Beijing and Guangzhou.

Another newcomer is the 160-room

Le Meridien Taipei, also in the XinYi District, which had its soft opening in late October, to be followed by the formal opening in December. Despite its gray minimalist architecture, it aims to be arty, housing a gallery of contemporary Chinese art, sculpture and installation works. Guestroom key cards were designed by Taiwanese artist Michael Lin. Although the Le Meridien brand is also owned by Starwood, the hotel is run as a franchise, says Paul Fu, the senior director of sales and marketing.

W-Hotel’s eighth floor has Taiwan’s largest pillar-less ballroom (and the largest one for W-Hotels globally), and it can be arranged to seat up to 1,000, with MICE events in mind. Leung says this is a very smart move, as Taiwan has had difficulties in the past providing dining facilities for conferences with a thousand or

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tourism

more participants.

The Japanese-style inn, the 90-room Radium-Kagaya in Beitou, which is scheduled to open at the end of the year, is also counting on increased tourism in Taiwan, both domestic and international. The hotel’s Executive Assistant Manager, Tony Liu, says he expects 80% of the guests to be Taiwanese, nostalgic for the past. The rest will be mainly Japanese visitors.

Also generating excitement in business circles in Taiwan is the nearly completed construction of the planned elite 300-room Mandarin Oriental Taipei in the heart of the capital’s financial district on DunHua North Road. The hotel, expected to open in 2012 although no inaugural date has yet been confirmed,

will constitute the core of a “luxury and lifestyle entertainment complex” that will also house over 200,000 square feet of high-end and designer-brand shops. The hotel’s website boasts that the rooms will be among the largest in Taipei, and it also promises an enormous 20,000 squarefoot spa featuring wellness, beauty, and massage treatments.

For gourmets, the hotel chain says there will be authentic Cantonese and Italian cuisine, as well as the Mandarin Oriental’s signature gourmet cake shop. The owner of the project is Mandarin Crown Hotel Corp., with the Mandarin Oriental engaged to manage the facility. According to the Tourism Bureau, the hotel will entail investment of NT$16.2 billion (US$523 million), although it has

not yet applied to the government for an operating permit.

Another noteworthy facility currently under construction near the corner of NanJing East and ZhongShan North Roads is the Hotel Okura Taipei, which is expected to open in 2012. The hotel chain’s website describes its properties as luxury hotels that blend modern amenities with Japanese tradition, and says the 208-room Taipei hotel will have seven underground stories and 18 floors.

With the addition of the newly opened or soon-to-be completed facilities, Taipei will get its first wave of major new international hotels since the Grand Hyatt, Grand Formosa Regent, Far Eastern Plaza, and Sherwood Taipei opened some two decades ago.

From next Year, self-guided Chinese tourists

BY MiChaEl JEn-siu

W

hen the boat pulls up below Hsuan Guang Temple on the shore of Sun Moon Lake, camera-wielding tourists from China have 20 minutes to hike uphill for views of the reservoir rimmed by some of Taiwan's highest mountains. Then the boat speeds over to Ita Thao, an aboriginal theme village on the lake’s eastern shore. The tour guide again sets a stopwatch to give visitors from China another time limit on their packed, pressured trip to Taiwan, a place that most of them have heard about all their lives but until two years ago never expected to see in person. By nightfall, the group gets bused off to a mid-range hotel in Taichung, 90 minutes away but far cheaper than Sun Moon Lake for lodging.

Only a limited number of Taiwan merchants are gaining from these rush-

job tours. Chinese group tours, once heralded as a savior for the island’s service economy, lack time to shop at will. And travel agencies generally rely on the same guides, coach lines, hotels, and souvenir shops every time.

Lana Ma, 33, a well-traveled whitecollar worker in Beijing, says she is keen to visit Taiwan, but not the way her parents did as part of a tour group. “It seems like they just get on and off buses, spending 15 to 30 minutes before the driver takes them to some other place,” she notes. “My parents told me the itinerary was very hurried. Sometimes they couldn’t eat dinner until after 8 p.m., and then they would set out quite early the next day.”

From next year, potential visitors from China like Ma will for the first time have the opportunity to roam Taiwan as they

please. The Taiwan government recently announced plans to liberalize the current policy, which allows entry to mainland tourists only for group travel.

The change is expected to be welcomed to many Chinese visitors, who thanks to a common language can understand Taiwan’s maps, signs, and directions without a guide. Younger urban elites in China prefer to do their own thing anyway, viewing guided tours as a fallback for their less confident elders. The new policy is also likely to be a boon for Taiwan’s tourism-dependent retail businesses, who have been complaining that the current approach has not brought much opportunity for profits. Although the number of tourist arrivals from China so far this year is approaching 1 million, the amount they have spent on shopping in Taiwan is a

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IN THE PICTURE - For most Chinese tourists, getting photographed with Taipei 101 looming in the background is an essential part of the visit. photo : cna

mere US$8 million.

Taiwan has opened its doors to guided tours since mid-2008, shortly after President Ma Ying-jeou took office. That move, made possible by the establishment of regular air routes directly across the Taiwan Strait, ended the longstanding virtual ban on Chinese travelers due to security concerns. Most Chinese tour groups over the past two years have diligently followed their set schedules, easing fears that travelers would disappear into Taiwan to take illegal jobs or conduct covert spy operations. Instead they have benefited Taiwanese travel agents and mid-range hotels skillful or well-connected enough to make money off group tours.

A l t h o u g h Ta i w a n i s e x p e r i e n c i n g r o b u s t G D P g r o w t h t h i s y e a r, much of the service sector is still hurting as concerns about broad, long-term economic issues such as wage stagnation deter Taiwanese from spending much money on luxuries. The goal of bringing the unemployment rate below 5% also remains elusive. Allowing independent Chinese travelers will help boost the potentially job-rich service sector, the Taiwan government figures.

To test the new scheme, officials

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have hinted at letting in only 300 to 500 people per day at first. They also would limit applicants to residents of China’s wealthiest cities, where incomes easily reach 8,000 to 10,000 Chinese yuan per month, so as to lessen the risk of visitors overstaying to take illegal employment in Taiwan. Travelers may also be asked to put down sizeable deposits as pledges that they will return home after their trips.

Once the new policy takes effect as early as Lunar New Year 2011, the new guests could turn up anywhere on the island. Cities that are easiest to get around in by bus or metro are expected to draw the most self-guided Chinese travelers, who usually prefer urban sights when overseas. Textbook scenic spots such as Alishan and Sun Moon Lake, both well known in China, would probably also attract a large number of individual travelers, as would Taipei’s National Palace Museum, a renowned repository of Chinese art.

Most likely to benefit are well-located sellers of only-in-Taiwan souvenirs and delicacies, such as pineapple cakes and high-mountain oolong tealeaves, which can be packed away easily and taken

through customs for gifts back home.

Glitzy department stores such as Pacific Sogo and Mitsukoshi, especially if near public transit, should draw Chinese customers curious about luxury brands made or sold in Taiwan.

Restaurants at all levels will also be patronized by the new wave of Chinese.

The same travelers who are normally picky about their food while overseas may test the limits in Taiwan, as they have undoubtedly read about specialties such as bubble tea and the deep-fried seafood sold in night markets. The familiarity of much of the Chinese cuisine in Taiwan should also reduce their fear of ordering something totally foreign.

“I believe the department store, hotel, and food and beverage sectors will all directly benefit,” says Liang Kuo-yan, president of Polaris Research Institute in Taipei. “Taiwan will open mostly to tourists with money. Most of that money will be spent in cities, on luxury goods, even international brands, and maybe watches and jewelry.”

The best of Taiwan’s 102 tourist hotels, especially those with online booking accessible from mainland China, are expected to capture the first wave of selfguided tourists, since the entry rules favor moneyed urbanites such as professionals and civil servants. “They usually stay in four-star or five-star hotels if they aren’t on a budget,” says John Lee, general manager of the Holiday Inn East Taipei.

“Individual travelers are more sophisticated” than tour groups.

But merchants are not declaring a profit on Chinese tourists just yet. Lee’s four-star hotel is unable to plan for any set number of self-guided travelers until it knows the government’s daily headcount quotas. Many other businesspeople assume that Chinese tourists will pass them up. At the ornate Hsin Hsiang Tea Shop tucked away on a small street in Taipei, co-owner Lu Chiu-yueh expects visitors from China to spend most of their money on hotels and guides, leaving little for souvenirs. “Even though we have a common language, unless they’ve got family in Taiwan, most will need to hire guides,” Lu surmises. They can also buy high-end tea in China. “So I can’t say tea sellers will get a lot out of them.”

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d o o r k n o c k

Reenergizing the U.S.-Taiwan Economic Relationship TIFA is being revived, but AmCham’s 2010 Doorknock team found little momentum on other issues bearing on bilateral trade ties.

重振美台經貿互動 美台TIFA談判可望恢復，但美國商會2010年敲門之旅卻發現，其他經貿議題仍然欠缺動能。

BY DON SHAPIRO

A

s it departed for the 2010 Doorknock, the AmCham Taipei delegation expected that its main mission in Washington this year would be to argue the merits of reviving the longstalled U.S.-Taiwan negotiation process known as the Trade and Investment Framework Agreement (TIFA).

Normally held on an annual basis, TIFA talks had not been conducted since mid-2007 due to differences between the two sides over Taiwan’s restrictions on the import of certain U.S. beef products. In the Taiwan White Paper and on other occasions, the Chamber has maintained that holding up TIFA due to problems in one sector is unfair to the broad range of U.S. businesses with issues to be discussed in that forum.

On arrival in Washington, the Doorknock mission was pleased to hear that the U.S. government had

26

come to the same conclusion, and that the TIFA process would soon be resumed, even though the beef issue has not been completely resolved. “That was extremely good news – something we’ve been waiting a long time for,” said AmCham President Andrea Wu. “It will provide a platform for the two countries to expand the trade and investment opportunities for their companies.”

Formal confirmation that TIFA was back on track came the next week through announcements released simultaneously by the two governments, along with the dispatch to Taipei of two representatives from the Office of the U.S. Trade Representative (USTR) to lay the groundwork for the talks. Although a definite schedule has not yet been set, the aim is to hold TIFA shortly before Christmas or else early next year.

USTR has welcomed AmCham’s recommendations

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regarding items to be included on the TIFA agenda, and the Chamber has responded with various specific suggestions. More generally, AmCham has expressed the hope that the agenda will not become dominated by often-contentious agricultural matters (besides the still unsettled beef question, Washington also has issues with Taiwan regarding pork imports, rice quotas, and the setting of Maximum Residue Levels on fruits and vegetables). USTR assured the Doorknock team that while ag issue will necessarily remain on the table, the agenda will be wide-ranging and balanced. In addition to market-opening measures, the topics are expected to include cooperative initiatives in such areas as green energy, collaboration among Small and Medium Enterprises, and the provision of training for Taiwan in labor mediation techniques.

Beyond TIFA, however, the Doorknock group did not find much other progress in instilling greater momentum into the bilateral economic relationship. “It appears that both Taipei and Washington are currently so focused on their trade relations with China that neither has had the time or inclination to pay more attention to their ties with each another,” said Wu. “But especially after the recent signing of ECFA [the crossStrait Economic Cooperation Framework Agreement], it’s important for both Taiwan and the U.S. to have some counterweight to China’s economic influence.”

For some time, for example, AmCham has been urging Washington to periodically send high-level officials – preferably Cabinet-department secretaries – on visits to Taipei, as was done fairly regularly during the 1990s by the Clinton administration. Such visits bring significant substantive opportunities to deepen the bilateral relationship, while also having symbolic importance in confirming continued U.S. commitment to Taiwan. Although sources in Washington agreed with that assessment, they said it has been difficult to find a Cabinet secretary willing to make the trip, since most departments are heavily engaged in cooperative projects with China that they do not want to jeopardize.

As it has done previously, AmCham also broached the idea of extending visa-waiver treatment to Taiwanese travelers to the United States. The response was that this subject is still being discussed, but a major obstacle continues to be Taiwan’s policy of issuing passports without requiring the applicant to make a personal appearance. The U.S. government is asking Taipei to adopt a more stringent application and delivery procedure to prevent the use of Taiwanese passports by mainland Chinese seeking illicit entry to the United States.

Bilateral agreements Lack of progress was further evident in the status of proposals to negotiate a Bilateral Investment Agreement

The Doorknockers pause for a photo opp in front of the White House.

A Week in Washington Each year, AmCham Taipei sends a delegation to Washington, D.C. for a round of discussions with executive branch officials dealing with U.S.Taiwan affairs, members of Congress and their staff assistants, think tanks, scholars, and other organizations interested in the bilateral relationship.

This year’s group, led by AmCham Chairman Alan T. Eusden, held a total of 33 meetings between September 20 and 24.

Other members of the 2010 Doorknock delegation included AmCham President Andrea Wu; Past Chairman Paul Cassingham, senior legal consultant at Yangming Partners; Pharmaceutical C o m m i t t e e C o - c h a i r We i - L i S h a o , G e n e r a l Manager of Eli Lilly and Co. (Taiwan); Anita Chen, Managing Director, Park Strategies Taiwan; AmCham Senior Director Don Shapiro; and AmCham Director of Government & Public Affairs Angela Yu. The trip follows publication of the Chamber’s annual Taiwan White Paper, a compendium of recommendations to both the Taiwan and U.S. governments on how the business climate for multinational companies in Taiwan could be improved.

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American Chamber of Commerce in Taipei 2010 Doorknock, Washington, D.C. Dates: September 20-24, 2010

GOVERNMENT MEETINGS Office of the U.S. Trade Representative Department of Commerce (International Trade Administration) Department of Defense Department of State Department of the Treasury Members of Congress John Culberson, Marsha Blackburn, John Tanner, and Adrian Smith.

Offices of Senators James Inhofe (co-chair of Senate Taiwan Caucus) and Jay Rockefeller.

Offices of Representatives Anna Eshoo, Scott Garrett, and Nita Lowey Staff from Senate Foreign Relations and House Foreign Affairs Committees AIT–Washington U.S.-China Economic & Security Review Commission Congressional Research Service THINK TANKS Brookings Institution Center for a New American Security (CNAS) Center for Strategic and International Studies (CSIS) Heritage Foundation Project 2049 OTHER ORGANIZATIONS C&M International East-West Center, Washington Taipei Economic & Cultural Representative Office U.S. Chamber of Commerce U.S.-Taiwan Business Council National Beef Cattlemen’s Association National Foreign Trade Council Nelson Report DPP Liaison in Washington

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Taiwan’s Representative to the United States, Jason Yuan (fourth from the right), played host to the group at a luncheon at Twin Oaks, TECRO’s landmark estate in Washington.

(BIA) and Bilateral Tax Agreement (BTA). The idea of concluding such pacts was originally suggested by the U.S. side four years ago as potential building blocks toward an eventual Free Trade Agreement (FTA). A series of digital video conferences then ensued between negotiators on the two sides, but such contacts have been suspended for some time.

A key problem in moving forward with those agreements has been the legal interpretation in the State Department that their implementation would require Congressional approval because of the impact on existing investment and tax law – and that such approval would need action by both houses of Congress, not just the Senate as would usually be the case. Given the lack of diplomatic relations between Taiwan and the United States, these agreements would not be considered “treaties,” for which the Constitution grants jurisdiction solely to the Senate. Executive-branch officials feel uncomfortable about opening international tax and investment matters to members of the House of Representatives, who would lack expertise and experience in those areas.

One high-ranking official suggested to the AmCham visitors: “Let’s make progress and then work on the procedures – take the initial step and not worry about the end game.” But that appeared to be a minority opinion. Chronically short-staffed USTR, for example, would be loath to commit the time and manpower to working on deals without the assurance that they could actually be implemented.

What’s more, the question of bicameral versus

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台

unicameral approval is not the only barrier to working on a BIA or BTA. Equally important, the current political environment in the United States is exceedingly unfavorable for consideration of such measures. Not only is “free trade” in disrepute, widely blamed for contributing to the sustained high rate of unemployment, but so is “overseas investment,” which many see as synonymous with exporting jobs. At a time of huge budget deficits, any proposal that could be viewed as reducing tax revenue for big corporations would also be controversial.

With specific reference to an investment agreement, the administration is still carrying out a lengthy review of what should be contained in the model Bilateral Investment Treaty (BIT). There are reportedly sharp differences of opinion in both the executive branch and in Congress about what a new model BIT should entail.

Until those questions are resolved, Washington appears to have little appetite for taking on any new investment treaty or agreement.

The impasse is particularly unfortunate for the tax agreement, because the benefit of a BTA for many U.S.invested companies in Taiwan seems incontrovertible.

The Doorknock team paid a call on the National Foreign Trade Council, which annually surveys its members among the largest American corporations as to which countries they would like to see the U.S. government sign a tax treaty with. Reflecting problems with withholding tax rates, transfer pricing, and permanent establishment rules, some 30-40% of respondents typically name Taiwan in their reply.

Interest in ECFA Both inside and outside of government, AmCham found strong interest in Washington in the ECFA pact

北市美國商會2010年敲門之旅代表團前往華府之前， 原以為此行的首要任務就是協助重啟「貿易暨投資架 構協定」（TIFA）下的定期談判。原本每年舉行的 TIFA談判，由於台灣限制美國牛肉部分品項進口，2007年7月 後就未再舉行。商會在《台灣白皮書》與其他各種場合都不 斷強調，因為單一產業的爭議導致TIFA談判中斷，對於想透 過TIFA尋求解決之道的其他產業並不公平。 代表團抵達華府後得知的好消息是，美國政府終於瞭解 TIFA的重要性，就算牛肉爭議尚未完全解決，也願意儘快恢 復定期談判。商會執行長吳王小珍表示，「TIFA復談真是個 好消息，大家都已經等太久了，畢竟TIFA是美台拓展貿易與 投資的重要平台。」 美台官方在一週後同步對外宣布TIFA復談的決定；美國貿 易代表署（USTR）隨後派出兩位官員前往台北，進一步敲定 談判的細節。雖然確切時程尚未敲定，但雙方的目標是在耶 誕假期之前，或明年年初。 USTR樂於採納商會對TIFA談判議題的建議，商會也提出許 多具體建議。整體而言，商會希望避免TIFA議程被農業議題 把持¬–除了尚未完全解決的牛肉問題，美台雙方對豬肉、 稻米、農藥殘留上限（MRL）也有異見。USTR向商會保證， 雖然農業議題不可能排除，但議程將會更為廣泛與平衡。可 能納入的議題，除了市場開放措施，還包括綠能交流、中小 企業合作，及對台提供勞資調解技巧的訓練。 然而，在TIFA之外，代表團並未發現足以明顯推進台美經 貿的發展。吳王小珍表示，美國與台灣現在的狀況似乎是， 雙方都太專注於發展對中國的經貿關係，以至於雙方都無暇 或不願深化經貿關係；但特別是兩岸已經簽訂經濟合作架構 協議（ECFA），台灣與美國更應該發展制衡力量以平衡中國 的經濟影響力。 商會過去一段時間持續呼籲美國政府，應該比照1990年代 柯林頓執政時期的作法，定期派遣高層官員訪問台灣，最好 是部長級官員。這類訪問除了能具體深化雙邊關係，也能在 象徵意義上彰顯美國對台灣的承諾。雖然華府人士同意上述 看法，但要找到願意訪問台灣的部長級官員並不容易，因為 多數部會都與中國密切合作，不願因此搞壞對中關係。 如同過去，商會這次也提出台灣赴美觀光客免簽證待遇的 問題。美方官員的回應是，免簽計畫仍在討論之中，但主要 障礙還是台灣的護照發放，並未要求申請人親自辦理。美國 政府的要求是，台灣改採更嚴格的申請與寄發程序，避免台 灣護照遭中國赴美偷渡客冒用。 雙邊協定 美台經貿關係缺乏進展者還包括雙邊投資協定（BIA）與雙 邊稅務協定（BTA）的商談。兩項協議最早是由美方在四年前 提議，可以成為美台自由貿易協定的基石。雖然雙方曾經舉 行多次視訊會議，但現在已經停止一段時間了。 BIA與BTA的主要障礙之一是，國務院的法律見解認為， 由於協定可能影響美國的投資與稅務法律，必須送交國會批 准；但是美台沒有正式外交關係，兩項協定無法被視為條 約，不能單由參議院批准，必須參眾兩院都進行審批。行政 部門不太願意讓眾議院處理國際稅務與投資事宜，因為眾議 員多半欠缺相關領域的專長與經驗。 一位高層官員的看法是，美台其實可以邊談邊解決程序問 題，反正船到橋頭自然直。但這樣的看法顯然並非主流。舉 例來說，長期人手不足的USTR，應該不會願意耗費時間與人 力，去弄一個不知道能不能落實的協定。 參院或參眾兩院批准並非BIA與BTA的唯一障礙：美國現 今的政治氣氛完全不利於經貿協定。不只是自由貿易受到批 評，許多人認定貿易就是高失業率的元兇，就連海外投資也 成為禁忌，因為許多人相信這只會導致工作機會外移。此 外，美國預算赤字過高，可能被視為替大公司減稅的經貿協

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The AmCham delegation called on Congressman John Tanner (second from the right).

and what opportunities it might open for U.S. companies in developing the Greater China market. Taiwan was urged to be much more active in providing information to the American business community about ECFA’s ramifications, and in general promoting Taiwan as an alternative to China as a base from which to serve the region, especially in industries where strong IPR protection and rule of law are essential.

Numerous sources encouraged t h e Ta i p e i E c o n o m i c & C u l t u r a l Representative Office (TECRO), Taiwan’s quasi-diplomatic outpost in Washington, to adopt a more ambitious agenda. Since the Kuomintang’s return to power in 2008, TECRO’s main aim has been to restore U.S. government trust, which had been eroded during the Chen Shui-bian administration by actions that Washington viewed as raising cross-Strait tensions. As a result, “no surprises” has been the main theme of TECRO’s interaction with U.S. officials.

Regarding more substantive issues, the TECRO focus has been primarily on arms sales and expanding Taiwan’s international space, as with a current drive for Taiwan to gain observer status in the International Civil Aviation Organization comparable to what was achieved in the World Health Assembly. But TECRO has been rather subdued in pushing initiatives to bolster the U.S.-Taiwan bilateral economic relationship, analysts said, whether because of its reading of the current negative atmosphere in Washington on trade issues or because policymakers in Taipei have been

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At the Office of the U.S. Trade Representative, the delegation was received by Deputy USTR Demetrios Marantis (fifth from the right). Below, AmCham Chairman Alan Eusden presents the 2010 Taiwan White Paper to Assistant USTR Claire Reade.

preoccupied with cross-Strait matters.

On the U.S. side, some government officials showed that they recognize the need to try to revitalize the trade and investment relationship to keep up with the cross-Strait advances. As one source put it: “If you compare TIFA with ECFA, it’s an incredibly modest step.”

Think tank analysts across the ideological spectrum suggested that the upcoming U.S. mid-term Congressional elections, which are expected to result in major Republican gains, could change the political landscape on trade issues, at least in part. Two years after it was elected, the Obama administration has yet to enunciate an overall trade policy, held back by the generally protectionist position of the labor unions, a vital component of the Democrats’ electoral base. Recently, however, the administration has taken action on several trade fronts, seeking passage of the stalled Korea-U.S. FTA (KORUS) before the end of the year and engaging in talks to expand and solidify the embryonic trade grouping known as the Trans-Pacific Partnership (TPP). On trade policy, though not on most other issues, the White House probably would find more support on Capitol Hill with a Republican majority in the House.

Besides holding the Doorknock this year in September instead of the usual June timing, AmCham this time put increased emphasis on contacts with the Legislative Branch.

Many members of Congress have a strong interest in Taiwan, though the source of that engagement may vary from distrust

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定同樣不受歡迎。 專就投資協定而言，行政部門仍在檢討制式雙邊投資條約 （BIT） 的應有內容；BIT的內容，不只是行政部門，國會也 出現尖銳對立。相關歧見化解之前，美國應該不會願意推動 新的投資協定或條約。 大環境對稅務協定的負面影響特別令人失望，因為BTA對 在台美商的好處顯而易見。代表團今年也拜訪了美國對外貿 易委員會（NFTC），因為NFTC每年都會調查所屬大型企業的 意見，瞭解它們希望推動美國與那些國家的稅務協定。考慮 到扣繳稅率、轉移定價、固定營業場所等問題，通常有三至 四成的受訪企業認為應與台灣洽談。 ECFA探詢度高

Congresswoman Marsha Blackburn (center) met the group inside the Capitol Building between roll call votes.

of Communism and concern for Taiwan’s security, to support for the island’s democratic development, recognition of its importance in the high-tech supply chain, and the presence of many Taiwanese-Americans in their district. But most Congressional offices focus only sporadically on Taiwan affairs, and need fuller and more frequent information on issues relevant to U.S. business. The Doorknockers this year met four Congressmen, as well as staff aides in two Senate offices, three House offices, and two committees.

AmCham has also continued its effort to forge stronger contacts with the government-relations executives in Washington representing the Chamber’s member corporations. U.S. government officials often note that they rarely hear from major American companies about issues relating to Taiwan. As the head of one large-scale operation in Taiwan explained, the reason is that most companies face numerous problems in dealing with China, while their activity in Taiwan tends to go much more smoothly. But AmCham has been reminding U.S. business that the silence may be misread as indifference toward the Taiwan market.

Following up on the Doorknock, AmCham has been scheduling meetings with government leaders from the Executive Yuan’s Council for Economic Planning and Development, as well as various relevant ministries.

“This is always a good opportunity to exchange ideas and share expectations,” says Andrea Wu. “We hope that what we learned on the Doorknock can contribute to making the U.S.-Taiwan economic relationship even more dynamic and productive.”

商會華府此行發現，美國政府與民間都對ECFA都有高度興 趣，希望瞭解美國企業能否爭取大中華市場更多商機。各方 也希望台灣能更積極提供ECFA相關訊息給美商社群，並使台 灣成為重視智財權保障、依賴法治的產業眼中足以替代中國 的亞太營運中心。 許多華府人士都希望，台灣駐美代表處更為主動積極。國 民黨2008年重新執政後，美處的主要任務是恢復美台互信，讓 雙邊關係走出民進黨主政時期的低潮。也因此，「零意外」 成為美處與美方官員接觸時的主軸。 具體議題上，美處重視的無非是對台軍售與國際空間，包 括成功參與世界衛生大會（WHA）後，能否參與國際民航組 織（ICAO）。但專家認為，或許因為華府現今氛圍不利貿易 議題，也可能因為台灣政府的心思都放在兩岸問題，導致美 處不甚熱衷於強化美台經貿關係。 對美國而言，部分美方官員表示，他們瞭解必須重振美 台經貿關係以跟上兩岸關係的進展。一名官員指出，TIFA與 ECFA相比，只算得上是一小步。 美國國會即將進行期中改選，共和黨席次可望明顯增加， 不論是保守或自由派智庫的專家都認為，此後就算經貿議題 的政治風向改變幅度不大，但一定還是會出現一些轉機。歐 巴馬就任總統即將屆滿兩年，但貿易政綱仍無法定案，主因 即是民主黨重要票倉的各類工會，仍以保護主義心態抵制國 際貿易。不過，行政部門近來轉趨主動，除爭取年底前通過 美國與南韓的自由貿易協定，並試圖以談判拓展、強化泛太 平洋夥伴關係（TPP）。一旦眾院改由共和黨主導，就算在其 他議題上，白宮難以爭取認同，但貿易政策卻是少數可以引 起共鳴的議題。 今年的敲門之旅，除了舉行時間由以往的六月改為九月， 商會也花更多心思與國會交換意見。不可否認，許多國會議 員都非常重視台灣–不論出發點是懷疑共產黨、關心台灣的 安危、支持台灣民主深化，抑或瞭解台灣對全球高科技產業 供給鏈的重要性，還是單純因為選區有許多台裔移民。但多 數議員只是偶爾關切一下台灣事務，有賴更為完整與迅速的 訊息管道以獲知在台美商的狀況。代表團今年共計拜訪了四 位國會議員，以及兩個參議員辦公室、三個眾議員辦公室、 與兩個委員會。 對於會員企業常駐華府的政府關係部門主管，商會也在今 年的敲門之旅中進一步強化雙邊聯繫。美國政府官員經常表 示，他們很少聽到主要企業提及與台灣有關的問題。在台營 運規模龐大的一家企業，其主管在解釋背後原因時強調，因 為大多數公司與中國打交道時，總有解決不完的問題，但在 台的營運卻非常順暢。不過商會仍不斷提醒美國企業，不提 台灣很可能被誤解為不在乎台灣市場。 結束華府訪問後，商會接下來將拜訪行政院經建會及相 關部會。吳王小珍表示，這將是交換意見、分享願景的好機 會，商會希望敲門之旅獲得的訊息，能讓美台經貿關係更具 活力及成果。

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Taking on Human Trafficking Taiwan has improved its international reputation, but more needs to be done to protect foreign workers.

BY CHRIS LASKOWSKI

O

n August 26, 2003, a group of maritime smugglers dumped their cargo into the sea off of the coast of Miaoli County as they attempted to escape the Taiwan Coast Guard. But their cargo that day included 22 Chinese women who were being trafficked into Taiwan, presumably to be forced into prostitution. Six of the women thrown overboard drowned.

In the following years, foreign observers visiting Taiwan saw how women smuggled into the country, like the survivors of the 2003 incident, were treated – held in detention centers, waiting to be repatriated because they violated the immigration law. By 2006, the U.S. State Department, in its annual report on trafficking in persons, had downgraded its assessment of Taiwan’s response to human trafficking from the highest level to nearly the lowest possible. This negative international publicity finally prompted the government to take action.

Since then, the Legislative Yuan has

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enacted new laws and the Council of Labor Affairs and the National Immigration Agency have adopted new policies aimed at preventing human trafficking, protecting foreign workers and victims of trafficking, and punishing those who violate the law. These steps allowed Taiwan to be restored to the highest level of assessment in the U.S. State Department’s 2010 report.

But as with many public policy problems, advocates fear that most of the improvements have come on paper only, and not necessarily in the lives of foreign workers and victims of sex-and labor-trafficking in Taiwan.

Human trafficking is usually defined as the recruiting, transporting, or holding of people by some coercive means – including force, fraud, or abuse of power – for the purpose of sexual or labor exploitation. Some call it a form of modern-day slavery. This definition, includes women smuggled into the country and forced into prostitution, but it also includes workers who come to Taiwan legally and end up working

long hours with no breaks and no freedom of movement – and sometimes without fair compensation.

Sex trafficking often gets the headlines, and it is easier to define. But according to government statistics, exploitation of foreign workers is actually more prevalent. Of the 156 victims of trafficking that the government identified in the first eight months of 2010, 109 held a legal employment visa and only 23 were identified as victims of sexual exploitation. In 2009, 231 of 329 identified victims entered the country with a valid work visa.

Trafficking is not a new phenomenon in Taiwan. Years ago, young aboriginal girls were frequently sold into brothels in Taiwan cities. Advocates pushed for legal reform, and in 1995 the Legislative Yuan approved the Prevention of Child and Juvenile Sexual Trafficking Law. For many years this was the only law on the books dealing with human trafficking, and it was effective in reducing underage forced prostitution. But by the early 2000s,

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advocates noticed an increasing number of women being trafficked into Taiwan from other countries – particularly from China – and issued reports calling for additional reforms.

The 2003 drowning incident brought the problem to public attention. And in 2005, a group of mostly Thai workers who were helping to build the Kaoshiung MRT and living in a dorm run by an outside contractor vented their longstanding frustrations about unfair living and working conditions – from bans on smoking and cellphone use during their personal time to unpaid overtime wages – through riots that caused an estimated NT$10 million (about US$322,000) in damages. Despite the obvious inequities and domestic calls for reform, it took outside pressure to bring change.

Every year since 2001, the U.S. Department of State has issued a Trafficking in Persons Report, an influential document often called the TIP Report.

The report assigns countries to one of three tiers based on their commitment to addressing human trafficking and exploitation. From 2001 to 2004, Taiwan was listed in the highest tier – indicating that the government was adequately responding to trafficking problems. But in 2005, partly because of concerns about the treatment of Chinese women who were smuggled into Taiwan (specifically that these women often spent long periods in detention centers before being returned to China) and partly because the 1995 law was no longer seen as adequate to address international trafficking, the United States downgraded Taiwan to Tier 2.

The 2005 TIP Report also noted that “sham marriages” were increasing at an alarming rate. These are marriages where foreign women, often Vietnamese, immigrate to Taiwan legally in order to marry a Taiwanese man, but are forced into prostitution and/or abused by their “husband” after arrival. Then in 2006 Taiwan was placed on a list of countries in danger of falling to the lowest level of trafficking response. The 2006 report added concerns about foreign workers (most of whom had entered the country

MAINLAND MEDIA TAKES INTEREST --- Chinese journalists seek to interview one of the survivors of the 2003 trafficking tragedy in a Miaoli courthouse. photo : cna

legally and were not involved in the sex industry), noting that a lack of regulations governing the recruitment of foreign workers could “lead to situations of involuntary servitude.”

Specifically, labor brokers in Taiwan and in the foreign workers’ country of origin often collect huge fees from workers, who are then forced to repay these fees once they begin working in Taiwan. In some cases, workers receive no salary once all outstanding fees are deducted from their paycheck. Because of the financial leverage employers hold over foreign workers in these circumstances, the workers are often afraid to report mistreatment.

New law in effect In response to the criticisms in the TIP Reports, the Legislative Yuan in 2009 passed an Act Preventing Trafficking in Persons, the culmination of an Action Plan for the Prevention of Trafficking in Persons that the Executive Yuan promulgated in 2006. The

law authorizes punishment for anyone using improper means to force others to work for compensation that is not commensurate with the work done; this is meant to protect foreign workers coming to Taiwan with artificially large debts. It also specifically outlaws trafficking for the sex industry, expanding the ban on child prostitution in the 1995 law.

The new law took effect in June 2009, and in 2010 Taiwan returned to the small group of Tier 1 countries in the TIP Report. In addition to the new law, the Executive Yuan set up an interagency task force to coordinate the efforts of the various agencies involved in preventing trafficking and protecting foreign workers in Taiwan – primarily the Council of Labor Affairs (CLA) and the National Immigration Agency (NIA).

In general, the response to trafficking focuses on what is often called the 3 P’s: prevention, protecting and punishing. Over the last several years many changes have been made in

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Officials must find a way to control excessive brokerage fees, and they must ensure that domestic caregivers – nearly half of the foreign workers in Taiwan – enjoy the same protections as other workers.

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these areas. NIA, the National Police Agency (NPA), and the Coast Guard Administration, for example, have stepped up their investigations into human trafficking. One eight-month investigation, in which NIA worked in conjunction with the U.S. Department of Homeland Security, led to arrests of several members of a human smuggling syndicate that was funneling young girls through Taiwan into the United States.

In January 2009, the Coast Guard began an investigation that led to the arrest of eight suspects and the rescue of 13 women who had been forced into the sex industry in Taiwan.

Because trafficking is necessarily an international issue, NIA has worked to create stronger relationships with foreign authorities – meeting with U.S. and Japanese officials and recently hosting a conference attended by officials from 15 foreign countries.

Unfortunately, despite efforts to prevent trafficking, there are still many victims in Taiwan. NIA, CLA, and NPA have hotlines that workers or the public can use to report abuses of foreign workers or victims of sex trafficking. NIA has 25 specialized operations brigades that seek out victims of trafficking and coordinate with local police to investigate complaints. CLA has 240 investigators who respond to complaints and seek out violations of all labor laws, including abuses of foreign workers.

The NPA, Coast Guard, the Ministry of Justice Investigation Bureau, and the prosecutors’ office also all have developed special task forces focusing on human trafficking. These units have been successful in identifying more victims of trafficking in Taiwan; the numbers have increased from 51 and 55 victims identified in 2007 and 2008 respectively, to 329 last year and 156 in the first eight months of 2010. There is no way to know how many victims remained unidentified, however.

One of the main obstacles to fully addressing human trafficking problems in Taiwan is a lack of public awareness and understanding. Sandy

Yeh, now a professor at the Central Police University, says that when she headed the Taipei Women’s Rescue Foundation (TWRF), she was often asked: “Why should we help foreigners and prostitutes when there are so many in Taiwan who need help?”

Regina Fuchs, a sociologist at the HOPE Workers’ Center in Jhongli, adds that at a recent NIA conference a judge admitted that many of his colleagues did not understand trafficking issues, and a prosecutor echoed this statement.

Advocates say that judges often throw out evidence because of discrepancies between victims’ testimony at trial and statements made when they were first arrested, not understanding that many victims are at first reluctant to tell the truth, fearing retaliation from their employers or abusers. Police can be reluctant to get involved in trafficking cases out of belief that if a victim came to Taiwan willingly, disputes about work conditions are a matter to be resolved between employee and employer.

Police training The government has taken several steps to combat these misconceptions. At the Central Police University, foreign affairs police officers get extensive training in issues relating to in human trafficking. NIA holds training sessions for prosecutors and police, and also invites locallevel officials to attend. NGOs also work to educate judges, prosecutors, and the public. But most educational materials, especially for public consumption, are produced abroad and so are often dismissed as irrelevant to Taiwan.

Further, many advocates report that the sentences handed down in human trafficking cases are far too light, citing this as evidence that judges and prosecutors do not truly understand trafficking and exploitation. NIA data shows that in 2009, 68% of the sentences in these cases were for less than six months. One proposed solution is to establish spe-

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cial courts to try these cases, so as to ensure that judges really understand the issues involved.

Taiwan opened its borders to foreign workers in 1989 to address labor supply shortages. Today around 90% of the foreign workers in Taiwan come from four countries: the Philippines, Indonesia, Thailand, and Vietnam. In January 2009, the CLA counted over 355,000 foreign workers in Taiwan, almost all of them either in manufacturing/construction (approximately 49%) or engaged as domestic caretakers (over 48%).

A major problem facing foreign workers in Taiwan is that existing labor protection laws generally do not cover domestic help. Although CLA is currently drafting a law to protect domestic workers, advocates worry that live-in caregivers are so numerous that it is nearly impossible to monitor their working conditions, making them particularly vulnerable to abuse.

Caring for the caregivers In a major initiative that has already benefited many trafficking victims, CLA and NIA last year started funding a total of 19 NGO-run shelt e r s a r o u n d Ta i w a n . I n t h e p a s t , victims were often arrested and placed in detention centers to await repatriation. Today, they are placed in one of the shelters, safe from exploitation.

Victims are also allowed to continue working. CLA helps those without valid work permits to obtain or extend their documentation; it also helps victims to find a new job or enroll in vocational training programs. Additionally, victims are urged to cooperate with prosecutors, with the help of translators, to bring their traffickers to justice.

The exorbitant fees – often more than US$10,000 – charged by the brokers who brought them to Taiwan is another problem facing foreign workers i n Ta i w a n . E m p l o y e r s o f t e n g a rnishee workers’ wages until the fees are repaid. In addition, workers often have to pay monthly fees to these brokers even after they are in Taiwan, some-

times reducing the effective salary to nearly zero after all the fees have been deducted.

Besides the financial burden this places on guest workers, who are often paid minimum wage, it also gives employers leverage over the employee.

Workers fear that reporting abuses by their employers will deprive them of their only chance to repay this debt, leaving relatives vulnerable to threats by brokers in their home country.

CLA recently adopted new regulations capping the monthly fees that brokers based in Taiwan can collect and banning Taiwan-based brokers from collecting fees on behalf of foreign counterparts (though many brokers and employers continue to assist foreign agents because they are a reliable source of cheap labor).

CLA has issued recommendations to foreign brokers and foreign governments stating that brokerage fees should not exceed one month’s wages for a minimum-wage worker (NT$17,280). But while CLA can threaten to revoke the license of a Taiwan-based broker, and it has concluded agreements with some foreign governments to share information and encourage direct hiring programs, it has no authority over foreign companies, and most countries have shown little interest in capping brokerage fees.

CLA also now requires that foreign workers, the employer, and brokers in the sending country and Taiwan all sign an affidavit clearly outlining the worker’s salary and expenses before the worker comes to Taiwan. This measure is only effective, however, if the workers are willing and able to report violations after they arrive in Taiwan – and many are not.

Since 2007, CLA has permitted direct-hiring services to allow foreign workers (and employers) to bypass brokers altogether. But this procedure has not been widely utilized. In 2009, less than 10% of the foreign workers entering Taiwan were hired directly.

For the program to be effective, it will need to be more widely publicized in workers’ countries of origin.

Public education remains an impor-

tant issue for those seeking to combat trafficking, including the education of foreign workers themselves. CLA has begun handing out information packets to arriving workers at the airport, but advocates say that brokers often take the materials before the workers have a chance to read them. And despite the hotlines that agencies have provided for reporting abuses, many foreign workers come from countries where the police are not to be trusted, and so are reluctant to contact the authorities.

Advocates and government officials agree that Taiwan’s unique political status is also an obstacle. Successfully combating trafficking nearly always involves international cooperation, and since Taiwan cannot participate in most international organizations, it is shut out from many channels of cooperation with other countries. The lack of extradition agreements with many countries also makes it difficult to apprehend human-trafficking suspects when they are abroad.

Substantial progress has been made, but some of the biggest tasks remain.

First, Taiwan must see that the new laws put in place are enforced effectively. Officials must find a way to control excessive brokerage fees, and they must ensure that domestic caregivers –nearly half of the foreign workers in Taiwan – enjoy the same protections as other workers. The government has put promising ideas into place. Now it must live up to the goals it has set for itself.

— Chris Laskowksi, a graduate of The George Washington University Law School, is a member of the Maryland bar.

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photo : thsrc

photo : fetc

Keeping Taiwan Moving

BY PHILIP LIU

photo : taoyuan a irport

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Taoyuan Airport Undergoing Major Renovation New projects have been launched to answer existing criticism and meet projected future demand.

photo : taoyuan airport

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in this survey • Taoyuan Airport Undergoing Major Renovation p.38

• High-Speed Rail Looks to Break Even p.42

• Boosting the ETC Utilization Rate p.44

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hirty-one years after its inaug u r a t i o n i n 1 9 7 9 , Ta o y u a n International Airport is undergoing an overhaul in both software and hardware as the government seeks to transform it into a modern international airport on a par with its Asian peers. The Ministry of Transportation and Communications (MOTC) set up a task force in July to oversee the improvement project.

A spate of negative publicity in the first half of the year underscored the need to revitalize the airport. First came criticism of the price and quality of the food being offered at the airport’s restaurants, seriously tarnishing the nation’s image among international travelers. The controversy was sparked by a column in February by food writer Han Liang-lu in the Chinese-language United Daily News that cited the NT$250 (US$7.80) cost of a substandard bowl of beef noodles.

The next controversy centered on widespread complaints about the airport’s shortage of luggage carts – and the poor condition of those in service, which would squeak incessantly when moving.

TV producer Wang Wei-chung harped on the problem several times in his column in a local magazine, and it was later disclosed that this was the most frequent

complaint about airport service received last year in an online survey of travelers conducted by the MOTC’s Civil Aeronautics Administration (CAA).

In July, safety concerns arose when a Ukrainian cargo plane barely escaped colliding with a Singapore Airlines aircraft after erroneously taxiing onto a runway due to misinterpreting the instruction of an air traffic controller, who failed to catch the mistake when the pilot repeated the instruction to confirm it. The controller, a novice with only one-year service, was immediately suspended from duty and later resigned from the position.

Further damaging the airport’s reputation were the breakdown of an air bridge, news reports of staff members from the airport’s central control center engaging in late-night drinking sessions in the office with contractors while on duty, the flooding by backed-up sewage of the floor in the second passenger terminal, and a failure for several days in the automatic baggage-handeling system.

Faced with a barrage of criticism, MOTC replaced the CAA director general and his two deputies. It also summoned a group of experts and scholars to form a taskforce, headed by Chang Yu-heng, dean of National Cheng

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Kung University’s College of Management, to review the airport’s operations with regard to flight safety, engineering management, workflow, operations and services, and human resources.

To help it determine where to concentrate its effort, the taskforce in August carried out a survey of 700 domestic and foreign travelers. Of the 16 major complaints pinpointed by the poll as deserving immediate improvement, the top three were high food prices, insufficient meal options, and inadequate landscaping of the surroundings. Other items dealt with the lack of a mass transportation system connecting to the airport (more on that below), poor signage on outside roads linking to the airport, interior signage for transit passengers and other travelers, long delays for luggage collection, and water leakage from the ceilings of terminals and air bridges after rainstorms.

With the survey having exposed the major problems, Chang notes, the challenge to improving the airport’s operations hinges on execution. The taskforce has pledged to elevate Taoyuan Airport’s international ranking to the top-10 list within three years. Last year it fell to 27th place for service quality, out of the total of 118 airports evaluated by the Airports Council International (ACI), from 18th place in 2008.

MOTC Minister Mao Chih-kuo has stated that as the national gateway, Taoyuan Airport, should provide a positive first impression to international visitors. He has therefore instructed the airport administration to set up a regular schedule for the replacement of light fixtures, faucets, and other devices, instead of waiting for them to malfunction. He has also called for an overhaul of the signage system within the airport.

Deputy MOTC Minister Yeh Kuangshih, who is overseeing the airport improvement project, notes that the core of the airport’s problems lies in its complicated manpower outsourcing system.

In an interview with the United Daily News in August, Yeh said that over the past 20 years, the number of regular employees at the airport has remained frozen at 400, including 160 firemen, while the number of travelers has grown

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The duty-free shopping area of Terminal Two. The current renovation of Terminal One aims to raise it to the same standard. photo : taoyuan airport

10-fold. To meet the demand, the airport has outsourced more than 1,000 jobs to over 40 contractors.

The quality of many of those contractors is dubious, however, as contracts tend to be awarded on the basis of the lowest bid in order to avoid accusations of favoritism. Some contractors further farm out the work to subcontractors, making management of the entire process an impossible task. An example of the problem was disclosure that some women in their seventies were being employed to clean restrooms.

Change in management Yeh said the personnel problem will be greatly alleviated in November after management of the airport is transferred from the government bureaucracy to a newly established state-owned company, the Taoyuan International Airport Corp. Ltd. (TIAC). Although the size of its workforce has been set at only 430440, the company will be able to set up various subsidiaries to make up for the insufficiency.

Even before the company begins operating, in addition, MOTC has instructed the CAA to form two project construc-

tion management teams to assist the airport with engineering design, construction, engineering supervision, and the overseeing of outsourced contractors.

CAA has already also asked the airport authority use a most-favorable bid process instead of taking the lowest bids in the selection of contractors.

The Taoyuan Airport’s problems have been exacerbated by the loss of experienced personnel in recent years as plans were unveiled for the state-run airport firm. Many employees have been unwilling to continue in their positions as that entailed loss of their status as public functionaries and the associated privileges. But Yeh Kuang-shih says he is confident that TAIC can recruit and train new blood, revitalizing the operation of the airport, and that the company will be able to call back resigned or retired airport staffers to help with the training.

The airport has also started making improvements in various services in response to the wave of criticisms. A food contest among airport restaurants was held recently to encourage their progress, and an MOTC official disclosed that after its formation, TAIC will require airport restaurants to hold prices to the same level as their Taipei outlets or food

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SongShan Converting to “Capital BuSineSS airport”

The air force has turned over a military hangar at Songshan Airport to the Civil Aeronautics Administration for creation of a private aviation center. photo : cna

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ollowing the inauguration of its direct link with Shanghai’s Hongqiao Airport in June, Taipei Songshan Airport will witness the takeoff of the first direct flight to Tokyo’s Haneda Airport on October 31. That will constitute another major step in its conversion from a domestic airport to a “capital business airport,” focusing on cross-Taiwan Strait routes and flights to other capitals in Northeast Asia.

The Haneda flights will enable passengers to land directly in downtown Tokyo, rather than at Narita Airport far in the outskirts of the city, allowing business travelers to save considerable transportation time on the ground. Four airlines – two Taiwanese carriers and two Japanese – will serve the route, offering eight flights a day in each direction.

The air link follows the kickoff of direct flights between Taipei Songshan Airport and Shanghai’s Hongqiao Airport on June 14. The route has quickly caught on among Taiwanese passengers, especially business travelers, since Hongqiao is only 13 kilometers from downtown Shanghai, whereas coming into the city from Pudong Airport normally takes around one hour. The flight makes it easier for Taiwanese businesspeople to take an early flight to Shanghai and return to Taipei for dinner in the evening.

In the next step, the Civil Aeronautics Administration (CAA) under the Ministry of Transportation and Communications intends to talk with its Korean counterpart about the establishment of direct flights between Songshan

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Airport and Seoul’s Gimpo Airport. Opening that route would further President Ma Ying-jeou’s objective of creating a “golden flight circle” in East Asia, spurring closer commercial, financial, technological, and cultural interaction among the four metropolises of Taipei, Shanghai, Tokyo, and Seoul.

In addition, Songshan Airport is setting sights on the business aviation market, primarily serving ranking business executives, in the belief that its convenient location will be a major advantage for it to develop into a regional or even international center for privately-owned business aircraft.

For that purpose, Taiwanese representatives will discuss the idea of initiating direct cross-Strait private flights with their Chinese counterparts during the next cross-Strait aviation talks in October.

To meet the expected growth in air traffic, Songshan Airport is undergoing a major renovation project, scheduled for completion this month, which will enable the airport to accommodate A330 aircraft capable of holding 250-280 passengers. That compares with the 150-passenger capacity for the planes, such as Boeing 737s, servicing the route at present. In addition, the airport’s second terminal will be closed for renovation from October 31 until September or October next year. After its reopening, it will be dedicated to domestic flights, leaving all service for international flights to terminal one.

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stands at downtown department stores.

Further, the airport administration has purchased 5,200 new luggage carts, and a budget of NT$323 million (US$10 million) has been earmarked to renovate the 90 restrooms over a period of three years.

Several large construction projects are also in the works, or under advanced planning, to upgrade the airport infrastructure. The Taoyuan International Airport Access MRT System, for example, is progressing at full speed. The line, which is projected to cost NT$93 billion (US$2.9 billion) to build, will extend 51.5 kilometers from Taipei Main Station to the airport’s second terminal – and then southward beyond that to Jhongli in Taoyuan County, with a stop in between at the Taoyuan Station of the Taiwan High Speed Rail in Chingpu. The train will travel at 100 kilometers an hour, enabling passengers to reach the airport in 33 minutes from Taipei Main Station, less than half the time currently needed.

The first-stage elevated section, from Sanchong in Taipei County to Jhongli, is due to start operations in June 2012, followed by inauguration of the underground section between Sanchong and Taipei Main Station in October 2014.

Passengers heading to the airport to catch a flight will be able to complete boarding procedures and luggage checkin before getting on the train; it will be the fourth such service available in Asia, following Kuala Lumpur, Hong Kong, and Bangkok. At present, the service is already available for high-speed rail passengers at Qingpu station in Taoyuan.

Meanwhile, the Executive Yuan has approved an NT$10 billion (US$322 million) project for renovating the airport’s two runways, which have been in use for 31 and 26 years respectively. The runways will be upgraded to a level capable of accommodating A380 aircraft, and the problem of bumpy surfaces caused by repair work – the source of frequent pilot complaints – will be eliminated. At the same time, the width of both runways will be extended from the current 60 meters to 75, and the southern runway will be lengthened to 3,800 meters from 3,350 meters currently. New air-navigation facilities will also be installed to enable landings and takeoffs in less-favor-

able weather conditions. Construction is scheduled to start early next year and be completed in May 2014.

First terminal renovation In another project, engineering work started in August to renovate the airport’s already 30-year-old first terminal, upgrading the interior decoration to an international level while doubling the floor space through additions on both sides. A wavy glass rooftop will be installed, making a visual impact on travelers walking below, especially on sunny days when they will be able to look up at blue skies. Outside, separate roadways leading to dedicated parking lots will be put in place for cars and buses.

The renovation will also considerably expand the number of check-in counters and the size of the boarding areas, so as to efficiently accommodate the large number of passengers carried by large modern aircraft. The terminal’s shopping area will be enlarged significantly as well.

When completed, the terminal building will be surrounded by reinforced glass walls with a greater distance between pillars, making for a bright and cheerful interior, and indirect lighting will be used to create a cozy aura. In addition,

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an automated luggage-handling system will be installed.

The project, with a budget of NT$3.2 billion (US$100 million), is scheduled for completion by August 2011, more than a one year ahead of the original schedule, following the Executive Yuan’s request that the facility to ready for the 100th anniversary celebrations of the Republic of China.

Hardly had the construction work begun, however, than a major dispute occurred between MOTC and the Japanese architect on the project, Norihiko Dan. The argument focused on whether Dan’s plans to remove the rain shelters now surrounding the building, which would entail truncating the pre-stressed beams at the two ends, would cause any safety concerns. The architect insisted that no safety issues were involved, and that the overall aesthetics of the design would be compromised if the rain shelters remained in place. In a compromise, it was agreed to first cut one pre-stressed beam as a test before deciding whether to continue.

In yet another major project, MOTC has announced plans to construction a third terminal at the airport. The building would be part of the government’s “Framework Plan for the Development of Taoyuan International Airport

An artist’s rendering of what Terminal One will look like after the renovation project is competed. photo : taoyuan airport

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Park,” which also includes construction of a third runway, expansion of the free-trade port area, and construction of office buildings. MOTC submitted the framework plan to the Executive Yuan in September for approval.

The third terminal, with a construction budget of NT$60 billion (US$1.9 billion), will be designed to accommodate 43 million passengers a year, more than the combined existing capacity of 32 million for the first two terminals. The project is

scheduled for inauguration in 2018.

The third runway will be 4,000 meters long, capable of accommodating A380 jumbo airliners. Along with the third terminal, that will enable the airport to handle 80-90 takeoffs/landings per hour, compared with 50 now. The third-runway project will cost up to NT$80 billion (US$2.6 billion) for land acquisition alone and is scheduled for completion in 2020. At that time, Taoyuan Airport’s cargo-handling capacity will jump to 6

million metric tons a year, up from the current 2-3 million.

MOTC emphasizes that the development plan is necessary to meet the projected growth in traffic at the airport following the thaw in cross-Strait relations. The number of travelers passing through the airport is expected to jump 20% this year to reach 24.2 million persons, and MOTC predicts that both passenger and freight volumes will double in 10 years.

High-Speed Rail Looks to Break Even The company has made strong operational gains, but still faces the problem of huge accumulated debt.

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ollowing its government-engineered reorganization last year, the Taiwan High-Speed Rail Corp.

(THSRC) is now operating smoothly, prompting Chairman Ou Chin-teh to predict that the company will reach the break-even point on current operations in another three years.

Thanks to increased travel while school was out this summer, THSRC enjoyed a busy month in July, taking in revenue of NT$2.47 billion (US$77 million) – NT$350 million (US$10.9 million) more than the level in June. That created a record surplus of NT$250 million after deducting all outlays, including salary and interest payments. In fact, without factoring in the cost of depreciation, the company has operated in the black for most of this year, with NT$19 million (US$593,000) in profits in February rising to NT$80 million (US$2.5 million) in April.

In 2009, its third year of operation,

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the company suffered an after-tax net loss of NT$4.79 billion (US$149.7 million), equal NT$1.03 per share. Although still in red ink, that performance was a major improvement over 2008’s after-tax net loss of NT$25 billion (US$781 million), or NT$4.58 per share.

A major reason for the improved financial situation is the sharp decline in the company’s interest burden, due to last year’s drop in interest rates, followed by even lower rates this year after THSRC negotiated refinancing arrangements with its lenders. In view of the enormous size of the company’s loans, the interest cuts have made a huge difference. Last year, the company spent NT$10.78 billion (US$337 million) on interest payments; together with NT$8.22 billion (US$257 million) for depreciation, that accounted for 66.1% of the company’s total expenditures.

Another favorable development is that the passenger load factor has been rising

steadily as growing numbers of people have come to depend on the high-speed rail as an indispensable factor in their life and work. In February this year, monthly traffic volume on the system surpassed the 3 million passenger-trip mark for the first time (although February has only 28 days, it included the Chinese New Year period). At present, the system is recording around 120,000 passenger-trips on weekends and holidays and 80,00090,000 on weekdays, for a daily average of 95,000-100,000 compared with 88,600 year ago.

At THSRC’s 2010 shareholders’ meeting on June 23, Ou forecast that the transport volume will exceed 180,000 passenger-trips daily in three years, exceeding the break-even point of 145,000.

The high-speed rail has been transforming western Taiwan into a “one-day life cycle” zone, for example enabling Taipei residents to attend evening con-

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The number of riders using the high-speed rail system has been steadily increasing. photo : thsrc

certs in Taichung by catching the highspeed train after work and then returning home before bedtime.

Those based in Taipei or Kaohsiung can now also zip conveniently to the other end of the island to conduct business or attend meetings during the day while still getting back in time to have dinner with their families.

The high-speed rail has even facilitated long-distance romance. In appreciation, “many people have made marriage proposals or held their wedding ceremonies on the train,” says Chia Hsien-teh, vice president and spokesman of THSRC. The great majority of high-speed rail passengers are frequent customers, including many who make the daily commute to work on the system. A THSRC survey has found that 70% of its passengers take the train eight times or more a month.

Based on the passenger structure, THSRC on July 1 introduced two kinds of 30-day preferential tickets for frequent passengers – commuter passes and multi-tickets, both in the form of electronic certificates. The multi-ticket, which provides a 15% discount from standard rates, allows passengers to make eight one-way trips between two specified stations during a 30-day period. The commuter pass, offering a 52% discount, covers an unlimited number of such trips.

A one-month commuter pass between Taipei and Taoyuan, for instance, costs NT$4,555 (US$142).

Following the rollout of these new products on July 1, THSRC had sold 42,563 multi-tickets and 3,389 commuter passes as of September 30. An average of 5,427 passengers used such tickets daily, accounting for 5.7% of the total passenger traffic – and usage is increasing at the rate of 18% a month, according to the company.

Also from July 1, THSRC eliminated its “blue” and “orange” preferential tickets, which offered 15% and 35% discounts respectively for all passengers on trains traveling at off-peak hours. Chia Hsien-teh explains that these tickets were in fact too successful, distorting the traffic pattern by leading to more passengers taking trains during off hours than peak hours.

Impact for infrequent riders The change has had a major impact for occasional riders. The biggest discount they can now obtain is the 3% on tickets without specified seating in the three “free-seat” special cars on each train. A “free-seat” ticket for travel between Taipei and Kaohsiung costs NT$1,445 (US$45), nearly NT$500 (US$15.60) more than the previous NT$965 (US$30) for an “orange” ticket for a similar ride. A round trip between Taipei and Kaohsiung for a family of four therefore now requires an outlay of more than NT$10,000 (US$312).

Despite complaints from infrequent passengers about the ticket prices, the

change is not expected to affect the profitability of the high-speed rail system by driving passengers to other means of transportation – in large part because those alternatives have been greatly weakened in recent years by the strong competition from the high-speed rail.

Domestic airlines serving routes along Taiwan’s western corridor have been forced to drop their flights one after another. Only Mandarin Airlines, with just three flights a day on weekends and none on weekdays, had continued to fly the Taipei-Kaohsiung route until TransAsia Airways resumed service on the route in April, mainly to transport southern-Taiwan passengers to Songshan Airport to catch direct cross-Strait flights to China. Hsu Cheng-chuan, PR director of Mandarin Airlines, says domestic airlines will not benefit from THSRC’s recent pricing changes, since consumers’ main consideration is convenience rather than price, and the airlines are handicapped by the limited number of flights.

Fan Chih-ku, chief of the Taiwan Railway Administration, which operates the conventional railway network, notes that the TRA will continue to focus its operations on eastern Taiwan instead of trying to compete head-on with the highspeed rail along the western corridor, where the two modes of transportation appeal to entirely different market sectors.

Pai Tsun-teh, president of UBUS, a long-distance bus company, agrees that the higher fares adopted by the high-speed rail will cause only a limited shift in passenger traffic, since the high-speed rail has gained a large and faithful customer base.

T h e h i g h - s p e e d r a i l ’s a p p e a l i s expected to be further strengthened after the inauguration of the Taoyuan International Airport Access MRT System in 2012. High-speed rail passengers from southern Taiwan will then be able to get to the international airport by transferring at the Taoyuan HSR station in Chingpu to the new MRT line. For travelers, that option will be far faster and more conve-

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nient than the current system of shuttle buses between Chingpu and the airport.

Moreover, THSRC has started building three new stations – in Miaoli, Changhua, and Yunlin – at a total cost of NT$10.4 billion (US$325 million). After their completion, scheduled for 2015, they will enable even more people to enjoy the convenience of high-speed rail service.

Despite all the improvements in its operation, however, THSRC is still confronted with the challenge of digging itself out of its formidable financial hole.

As of the end of 2009, the company had incurred an accumulated loss of NT$72.4 billion (US$2.3 billion), amounting to 68.7% of its paid-in capital of NT$105.3 billion (NT$3.3 billion).

The company’s financial plight derives mainly from inherent problems in its investment structure. Despite the huge amount of capital needed for the project, the five original shareholders contributed only about NT$30 billion (US$968 million), relying on loans from a banking consortium for NT$300 billion (US$9.7 billion) and leaving it with a heavy interest burden. In addition, the company has had to bear substantial annual depreciation costs on its equipment.

To alleviate the financial plight, the government arranged an NT$382 billion (US$12.3 billion) refinancing contract between THSRC and the banking consortium in January this year. The agreement, lowering the interest rates and extending

the tenure for repayment, has helped the company avoid the risk of insolvency. The new loan, the largest in Taiwan banking industry, carries an average interest of only 1.83% per annum, compared with the original 2.6-2.8%, with terms ranging from seven to 22 years.

Management control of the company was also shifted to the government in September last year when Ou Chinteh, a former deputy mayor of Taipei who was then president of the company, was appointed chairman. He replaced Nita Ing, chairperson of Continental Engineering, a founding shareholder of the company. Ou has urged the government to extend the depreciation period for the facilities, which now last only 25 years.

Boosting the ETC Utilization Rate Far Eastern is at risk of losing its management rights unless it can induce more vehicles to use the system.

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ver the more than four and half a years since its inauguration in February 2006, the electronic toll collection (ETC) system on Taiwan’s freeways has consistently lagged behind schedule in popularizing its usage among local motorists. In order to meet the targets and thereby retain its management rights for the system, the Far Eastern Electronic Toll Collection Co. (FETC) is adopting a variety of measures to stimulate usage.

As of the end of June, the ETC utilization rate – the proportion of vehicles on the freeway that go through the electronic tollbooths – had reached only 37%. That level is far below the 45% required under the BOT (build-operate-transfer) contract

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between FETC and the Ministry of Transportation and Communications (MOTC).

The Ministry has granted FETC a oneyear grace period to remedy the situation, but the company will still be required to reach 42% by year-end and then to hit the originally mandated 60% by the end of next June. Should FETC fall short of meeting the requirement, MOTC could fine the company or even take back the management rights for the system.

Among the usage-stimulating measures FETC has introduced are a 14% reduction in the cost of the OBU (onboard unit) – the device that needs to be installed inside the vehicle to record the automatic toll payments – from the original NT$1,199 (US$37.50) to NT$1,039

(US$32.50), as well as a 5% discount on tolls successfully collected via the ETC system. The latter measure lowers the toll for sedans to NT$38, from original NT$40, and that for buses/trucks and tractor-trailers to NT$47 and NT$61 respectively, down from NT$50 and NT$65. The discount is not applied in cases of failed payment due to the negligence of the motorist, such as insufficient value stored on the ETC card, exhaustion of the OBU’s battery power, or failure to insert the ETC card into the OBU. Previously the 5% discount was available only to those who added NT$4,000 or more of stored value to their ETC cards.

FETC also plans to roll out a mod-

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Future models of the OBU will be designed to be attached to the rearview mirror or GPS. photo : fetc

ified OBU that can be attached to the rearview mirror or global positioning system (GPS), in answer to complaints by many motorists that the existing device is unattractive and obstructs vision when placing on the dashboard.

In addition, FETC will launch a one-year program for trial ETC usage, starting October 31, enabling motorists without OBUs to drive through ETC lanes at toll stations after registering with FETC and putting down an NT$500 deposit. After deducting the toll (without the 5% discount) from the deposit, FETC will mail a receipt to the motorist, along with a photo as proof of the ETC passage, with the assistance of a license-plate identification system. If car owners decide to install an OBU at the end of the program, they will receive one bonus point for each time the vehicle passed through the system; for each point they will be able to deduct NT$3 from the cost of the device. Vehicles that pass through ETC lanes under the trial program will not be included in the calculation of the ETC utilization rate; the objective is only to encourage more drivers to install an OBU after seeing the benefits of ETC usage.

The new trial system comes on top of an existing program that allows motorists to utilize the ETC system by renting an OBU for an NT$200 annual fee plus NT$888 refundable deposit. In the case of the rented devices, the 5% discount on tolls is applied.

Further, FETC plans to convert the

ETC card into an “e-certificate” by yearend, good for paying train and bus fares, as well as for small shopping transactions.

It all comes down to cost A major factor contributing to the low ETC utilization rate is considered to be the cost of the OBU, which appears to be too high for many of the island’s 6 million drivers, especially the more than 4 million who drive on the freeway only occasionally. It was not until July 14 this year that the number of cars with OBUs broke the 1 million mark, representing only 16% of the total.

Many people, including some MOTC officials, have urged FETC to provide OBUs to motorists free of charge in order to boost the utilization rate. But FETC spokesperson Lang Ya-ling says that would be financially impossible, as the company has already incurred a cumulative loss of NT$3.3 billion (US$103 million), equal to 87% of its paid-in capital of NT$3.8 billion (US$119 million).

NT$1 billion (US$31.3 million) of the loss comes from rebating the cost of the OBU to motorists who utilized the ETC system 100 or more times in the first two years following the inauguration of the service. Lang adds that the original price of NT$1,199 for the OBU was already lower than the production cost of NT$1,250 (US$39). As an alternative to providing free OBUs, she urges MOTC to offer ETC motorists a 20% discount on

tolls, similar to the discount enjoyed by Easy Card holders when taking the Taipei MRT system.

To further increase the efficiency of the ETC system and thus its appeal to motorists, MOTC’s Taiwan Area National Freeway Bureau, which oversees the system, increased the number of ETC lanes at the Taishan toll station in Taipei County from two to three in each direction from May 6 this year, reducing the number of ordinary lanes to five. After that change, the share of ETC traffic at Taishan surpassed the 40% mark.

Another plan in the works is to increase the speed limit for ETC lanes to 70 kilometers per hour by year-end, up from the current 50 kph, after widening the lanes. The move will boost each lane's capacity to 1,800 cars per hour, up from 1,600 now. That compares with 900 vehicles an hour for ticket-taking lanes and 600 for lanes that accept cash and give change.

Increasing the OBU installation rate will be critical for success of MOTC’s plan to convert the ETC system’s basis for calculating tolls to the length of distance traveled, similar to the practice in most other countries, including China.

Under the new system, which the Bureau hopes to implement from December 22, 2012, every vehicle using the freeway will have to pay at least some toll. It will no longer be possible to avoid any charge by driving on a stretch of the freeway between toll stations.

The change is expected to have an impact on traffic patterns around the island’s three main urban centers of Taipei, Kaohsiung, and Taichung, as half the motorists currently using the freeway in those locations are doing so for short distances within the metropolitan area, without passing any toll station. In the future, many of those drivers are likely to return to city streets, overstraining the road systems unless traffic engineers are able to come up with means of relieving the congestion

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ITF Caters to both Consumers and Professionals

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

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n overseas tour is like a stage show: the audience sees only the highlights and soaks up the entertainment, while the hard work that happens behind the scenes goes unnoticed. The tourist enjoys a seamless selection of attractions such as museums, beaches, city tours, amusement parks, and fine dining, and the plane tickets, hotel rooms, and tour guides and buses all appear on cue. But those pieces of the travel puzzle did not materialize by magic. They were put together, piece by piece, by professionals – and for residents of Taiwan, many of those tours are assembled at the annual Taiwan International Travel Fair (ITF), which will be held this year from November 5 to 8 at the Taipei World Trade Center.

Happily, the ITF does not cater only to professionals. Travelers themselves are a big part of the event. For the four days of the show, the convention center transforms itself into a place where tourists can dream, gaze at colorful posters, browse glossy brochures, and plan visits to beaches, mountains, and cities around the world. It is a place where would-be tourists can pick up new ideas – Health spas? Culinary tours? Rain-forest walks? Cycling trips? – and dream of travel to distant lands.

Vis itor s c an als o abs o rb t he ent ertainment presented at the Center Stage Performance Area, where dancers and musicians add an unexpected jolt of energy to the normally subdued convention center.

The stage shows are a key highlight for the usual audience of almost a quarter million people, and some of the concerts have been so enthusiastically attended that they create a pop-star atmosphere. Aside from lending energy and entertainment to the ITF, the musicians and dancers draw attention to their respective homelands, which in the past have included Panama, Thailand, Korea, and China.

So the ITF is a two-for-one treat – it is one of Asia’s top gatherings of travel professionals, providing business opportunities to the travel agents, airlines, hotels, resorts, tour bus operators, and various attractions that provide the nuts and bolts of the travel experience. But at the same time, it is a consumer show that features spectator-friendly pizzazz, with performers from around the world, plus images of faraway places and information about those places. Visitors are encouraged to talk to the national, city, and county tourism organizations, as well as the commercial operators who are on hand to help. Adding

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s e e i n g ta i w a n to the consumer appeal are vouchers, discounts, and other travel incentives offered by select hotels, airlines, and dining outlets.

The Travel Mart, which takes place on November 4, is for professionals only. At the Mart, many of Taiwan’s top hotels and resorts, transportation companies, recreation areas, amusement parks, and airlines market their products to overseas buyers, who then put together tour packages based on the deals they make. At the same time, overseas sellers of the same kinds of products market their wares to Taiwan buyers, mostly travel agents and tour companies who put together tour packages for outbound Taiwanese travelers.

This year’s ITF also includes a Travel Forum, where speakers and participants discuss the latest developments in the industry, including visas, customer safety, the latest market trends, and other timely topics.

Last year, 58 countries were represented at the ITF by more than 800 organizations exhibiting at over 1,200 booths. The largest group of participants came from national or regional tourism organizations, followed by hotels and resorts.

Airlines, tour operators, travel agents, amusement parks, and cruise lines were also well represented.

Underlying the success of the show is Taiwan’s resurgent tourism industry.

Residents of the island have always had a strong appetite for overseas travel, and that – combined with Taiwan’s increasing appeal as a destination for international tourists – makes the ITF one of the most popular shows on the annual convention calendar.

The local love of overseas travel is well documented. In 2009, according to the Taiwan Tourism Bureau, 17.5% of the people in Taiwan traveled overseas, a much higher proportion than in

almost any other country in Asia. Altogether, they made a total of 8.1 million trips, remained abroad for an average of 10 nights per trip, and spent an average of US$1,370 per person on each trip.

Ta i w a n a l s o e n j o y s a g r o w i n g status as a tourist destination, especially among visitors from China, another development that has boosted the popularity of the ITF. In the first eight months of 2010, according to the Taiwan Tourism Bureau, a total of 3,602,000 people visited Taiwan, an increase of 27% over the same period of 2009. Overseas Chinese tourism, a broad category that includes visitors from mainland China as well as ethnic Chinese from elsewhere, jumped nearly 45% to more than 1.5 million in the same time period. In 2009, 4,395,000 people visited Taiwan, a growth of 14.3% compared with the previous year. The arrivals spent an average of US$216 per day and stayed an average of seven nights.

Traditionally, the ITF is also a reliable indicator of current trends and developments in the tourism industry.

The hot topic this year is the imminent advent of visa-free travel to Europe for Taiwan passport-holders for stays up to 90 days. In July 2010, the European Commission approved visa-free entry

for Taiwanese travelers to the 25 European countries that are members of the Schengen Group, along with the three other countries of Romania, Bulgaria, and Cyprus. The proposal awaits approval by the European Parliament and the European Council of Ministers, and those formalities are expected to occur by the end of the year.

Vi s a - f r e e p r i v i l e g e s , w h i c h a r e expected to boost travel from Taiwan to Europe by as much as 30%, are a welcome development that will greatly enhance Europe’s appeal for Taiwanese residents. By comparison, after the U.K. began granting visa-free access to Taiwan passport holders in March 2009, tourism from Taiwan to the U.K. jumped 40% year-on-year.

The Taiwan government is an enthusiastic supporter of ITF and also a strong believer in the travel industry in general. Last year, for the first time ever, the president of Taiwan, Ma Yingjeou, delivered the keynote speech at the ITF. The address stressed that Taiwan’s government regards tourism is a flagship industry, as well as a “green” business with a bright future. Judging by the ongoing popularity of the ITF and of travel in Taiwan in general, President Ma is correct that the future of Taiwan tourism seems to be assured.

The ITF is organized by the Taiwan Visitors Association, under the guidance of the Taiwan Tourism Bureau. See www.taipeiitf.org.tw/index_e.aspx for more information.

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Out of Africa – Into AmCham

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he pulsating rhythms and vibrant colors of the African continent contributed to making the 2010 American Ball – sponsored by AmCham Taipei jointly with the American Institute in Taiwan – a resounding success. More than 430 revelers packed the ballroom of the Grand Hyatt Taipei on October 9 for an evening of fine food and drink, dancing to the music selected by DJ Frankie, entertainment by the lovely VMJ dancers, and a host of attractive raffle prizes. Brief remarks were made by the heads of the two sponsoring organizations – Chairman Alan T. Eusden on behalf of AmCham and Director William Stanton for AIT. In line with the theme “Out of Africa,” Master of Ceremonies Chris Fay guided the audience on an exotic tour that extended from Morocco in the continent’s northwest all the way to South Africa, with stops in mystic Egypt, Nairobi, and Madagascar – with vivid dance performances highlighting each destination. Meanwhile, attendees were dining on a sumptuous six-course meal prepared by the Grand Hyatt kitchen and featuring a main course of Marinated Beef Sosaties with Apricots, Geelrys, Raisins, Onions, and Peppers.

Diners also enjoyed a welcome drink of Jacob’s Creek Sparkling Rose, followed by Jacob’s Creek Shiraz Cabernet, Jacob’s Creek Chardonnay, and Glenlivet 12YO Single Malt Scotch Whisky served to accompany the meal. Available from the bar were drinks made with Absolut Vodka, Beefeater, Dita, Kahlua, Malibu, and Ballantine’s, while Anchor Steam Bear sponsored the availability of Anchor Steam, Liberty Ale, Anchor Porter, and Old Foghorn Barleywine Ale. The generosity of a number of sponsoring companies helped make the Ball possible. These included Grand Prix Sponsor United Airlines; Wine & Liquor Sponsor Pernod Ricard Taiwan; Gold Sponsors Corning, DHL, HSBC, and Standard Chartered; and Silver Sponsors Air Products, Amko Solara, Capital Machinery, Grand Hyatt Taipei, Lion Travel, and McDonald’s.

The raffle grand prize, provided by United Airlines, was two round-trip business-class from Taipei to any destination served by the carrier. The other gift sponsors were Aman Resorts International, Macau Government Tourist Office, 3M Taiwan, Hotel Eclat, Fleur de Chine (Sun Moon Lake), Grand Hyatt Taipei, Howard Plaza Hotel Taipei, HTC, Landis Taipei Hotel, Le Meridien Taipei, Novotel Taipei, Palais de Chine, Grand Formosa Regent Taipei, Rise of Legends 2011, Hotel Royal Taipei, Shangri-La’s Far Eastern Plaza Hotel, The Sherwood Taipei, and The Westin Taipei.

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relaxation

relaxation