2011Vol.41No.11 by AmCham Taipei

November 2011

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

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

Prospects for 2012: Slowdown Ahead 展望2012：成長趨緩

NT$150

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CONTENTS

NEWS AND VIEWS

6 Editorial Hearing from the Candidates NOVEmbEr 2011

VOlum E 41, NumbE r 11

一○○年十一月號

Publisher

Andrea Wu

發行人

吳王小珍

Editor-in-Chief

By Jane Rickards

11 Issues The U.S. Beckons Foreign Investors; Revised Patent Act Adopted; Long Wait for Sale Approval

沙蕩美術主任 /

Production Coordinator

Katia Chen Staff Writer

Jane Rickards

後製統籌

Irene Tsao

李可珍

13 Election 2012 The Two Major Candidates Speak to AmCham

曹玉佳

Translation

Zep Hu

美國積極引進國際投資；立院三讀通過專利法修正案；批准之路漫漫無期

陳國梅採訪編輯

Manager, Publications Sales & Marketing 廣告行銷經理

傾聽政見期許將來

7 Taiwan briefs

總編輯

Don Shapiro Art Director/

翻譯

By Don Shapiro

胡立宗

American Chamber of Commerce in Taipei

COVEr SECTION

129 MinSheng East Road, Section 3, 7F, Suite 706, Taipei 10596, Taiwan P.O. Box 17-277, Taipei, 10419 Taiwan Tel: 2718-8226 Fax: 2718-8182 e-mail: amcham@amcham.com.tw website: http://www.amcham.com.tw 名稱：台北市美國商會工商雜誌發行所：台北市美國商會臺北市10596民生東路三段129號七樓706室電話：2718-8226 傳真：2718-8182 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 2011 by the American Chamber of Commerce in Taipei, ROC. All rights reserved. Permission to reprint original material must be requested in writing from AmCham. Production done in-house, Printing by Farn Mei Printing Co., Ltd. 登記字號：台誌第一零九六九號印刷所：帆美印刷股份有限公司經銷商：台灣英文雜誌社台北市105敦化北路222巷19之1號1樓發行日期：中華民國一○○年十一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/ Bill Wiseman Vice Chairmen/ William E. Bryson / David Pacey Treasurer: Carl Wegner Secretary/ William J. Farrell 2010-2011 Governors: Michael Chu, Alan Eusden, Douglas R. Klein, Cindy Shueh Lin, David Pacey, Stephen Y. Tan, Lee Wood. 2011-2012 Governors: William E. Bryson, Alexander Duncan, Christopher Fay, William Farrell, Steven Lee, Neal Stovicek, Carl Wegner, Bill Wiseman. 2011 Supervisors: George Chao, Varaporn Dhamcharee, Jenny Lin, Ashvin Subramanyam, Ken Wu. COMMITTEES: Agro-Chemical/ Melody Wang; Asset Management/ Christine Jih, Winnie Yu; Banking/ Victor Kuan; Capital Markets/ William Bryson, Jane Hwang, Jimin Kao; Chemical Manufacturers/ David Price; CSR/ Lume Liao, Fupei Wang; Education & Training/ Robert Lin, William Zyzo; Greater China Business/ Helen Chou, Stephen Tan; Human Resources/ Richard Lin, Seraphim Mar, Ashvin Subramanyam; Infrastructure/ L.C. Chen, Paul Lee; Insurance/ Mark OÆDell, Dan Ting, Lee Wood; Intellectual Property & Licensing/ Jason Chen, Peter Dernbach, Jeffrey Harris, Scott Meikle; Manufacturing/ George Chao, Albert Li; Marketing & Distribution/ Christopher Fay, Wei Hsiang, Gordon Stewart; Medical Devices/ Nelson Hsu, Daniel Yu; Pharmaceutical/ David Lin, Edgard Olaizola, Jun Hong Park; Real Estate/ Peter Crowhurst, Kristy Hwang; Retail/ Prudence Jang, Douglas Klein; Sustainable Development/ Eng Leong Goh, Kenny Jeng; Tax/ Cheli Liaw, Jenny Lin, Josephine Peng; Technology/ Revital Golan, R.C. Liang, Jeanne Wang, Deborah Yen; Telecommunications & Media/ Thomas Ee, Joanne Tsai, Ken Wu; Transportation/ Michael Chu; Travel & Tourism/ Pauline Leung, David Pacey.

18 Prospects for 2012: Slowdown Ahead

展望2012：成長趨緩 Given its high degree of reliance on exports, the Taiwan economy seems sure to face tougher going next year

in the face of external challenges such as the Eurozone crisis. Slower growth in exports is also likely to mean lower private investment, as companies set aside plans to expand production. Whether consumer confidence is also affected enough to impact consumption will depend on the severity of the global downturn. Government’s ability to provide stimulus to boost economic growth may be limited by fiscal constraints, but economists urge the authorities to do more to make the market more attractive for foreign investment. By Jane Rickards 撰文／李可珍

22 A Demographic Timebomb? 28 looking for Domestic Economic Drivers By Jane Rickards

ANAlYSIS

30 Is Taiwan Too Economically Dependent on China?

While some domestic economists express concern, most seem more worried about the declining Taiwanese market share on the mainland. By Jonathan Lin

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n ov em b er 2 0 1 1 • Volu m e 4 1 n u m be r 1 1

TAIWAN BUSINESs

IN GOVERNMENT CIRCLES

42 Making Progress in Judicial Reform

The passage of new legislation is seen improving the ability of the system to select good judges and remove bad ones. By James Peng

AMCHAM EVENTS

34 What’s on (International) TV?

The viewing habits of the Taiwan audience tend to be more parochial than their counterparts in many other markets in the region. By Aimee Wong

BEHIND THE NEWS

38 All Eyes Now on Kinmen as Potential Casino Center

After the failure of a referendum in Penghu two years ago, other outlying islands are in contention to be site of integrated-resort development. By Timothy Ferry

46 2012 American Ball: “Sixty Years of Fun!” 50 AmCham Companies Through the Years

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E d i t o r i a l 傾聽政見期許將來

在

今年度的會員大會中，台北市美國商會很高興邀請到兩大政黨的總統參選人，即執政的國民黨主席馬英九，以及反對

黨民進黨主席蔡英文，親身說明他們當選後的大政擘劃。台灣在過去數十年已經發展出堅實的民主制度，而兩位參選人願意親身向商會會員說明，即為其最佳例證。商會身為商業組織，我們從不介入政治紛爭，不論是在台灣或是美國；許多會員都來自其他國家，當然也沒有台灣的投票權。但是不管是台灣人或外籍人士，商會會員都深切關切台灣的未來，以及國家未來領導人的特質，能否帶領國家因應各式各樣的挑戰。從這個角度來看，大多數會員聽完參選人的演說後，無疑都頗受鼓舞。畢竟，兩位參選人都展現了他們的豐富經驗、條理分明，以及富有國際觀的特質，當然對於重大議題也都瞭然於心。台灣能夠出現具備如此特質的領導人，讓我們深感欣慰。台灣人對於藍綠陣營之間的隔閡總是非常在意，但商會會員在兩位參選人各自的演說中，卻都感受到他們相似的觀點。雖然兩黨支持者對於許多問題看法涇渭分明，包括國家認同，以及與中國之間千絲萬縷的糾葛，然而在某些問題上，馬英九與蔡英文的基調卻是非常一致。就算是美國的民主黨以及共和黨之間都很難找到像馬蔡兩人之間如此多的共通點。例如兩位參選人都明確表示，他們會積極推動自由貿易政策，協助台灣與更多國家洽談自由貿易協定（F T A），甚至最終能加入正在形成的跨太平洋夥伴協議（TPP）。他們雖都認為必須透過吸引外資和發展綠能等新興產業來活化台灣經濟、提升競爭力，但也強調不應忽略社會福利的重要。就跨國企業所關心數項問題，他們也一致認為財政部門必須進一步自由化、改革教育體系，對於招攬海外技術人員及專業人員的政策也要更趨開放。在國際事務方面，兩位參選人都強調台美關係對於台灣經濟與安全的重要性，也誓言致力改善雙邊關係。至於兩岸關係，他們都強調要維持和平、穩定，以及相互合作的氛圍。台灣兩大主要政黨理念相同之處，其實比大多數國內政治觀察家體會到的更多，雖然兩大政黨經常使用辛辣的政治語彙，但他們在許多政策方向上的共識，正是確保台灣能夠持續穩定與繁榮的預兆。（兩位參選人更為詳細的演講內容，請參閱本期13頁。） 6

Hearing from the Candidates

t its recent annual general meeting, AmCham Taipei had the privilege of welcoming the presidential candidates of the two major political parties – incumbent Ma Ying-jeou of the ruling Kuomintang and challenger Tsai Ing-wen of the opposition Democratic Progressive Party – to present their plans for the next four years if elected. It was an inspiring example of the robust democratic system that Taiwan has created in just a few decades. AmCham takes no sides in political contests, either in Taiwan or the United States, and many of our members – as citizens of other countries – are ineligible to vote in Taiwan’s elections. But whether they are local nationals or foreigners, Chamber members are likely to care deeply about Taiwan’s well-being and the quality of leadership the country will be able to rely on as it grapples with a wide assortment of challenges for the future. From that perspective, most of the audience undoubtedly came away feeling encouraged. Both candidates showed themselves to be sophisticated, articulate, and internationally minded, as well as highly familiar with the key issues. Taiwan deserves congratulations for being able to produce leaders of that caliber. Given the frequent focus in Taiwan on the deep divide between the blue and green camps, members of the audience may also have been struck by the degree to which the two candidates, in their separate presentations, expressed similar views. Although supporters of the two parties tend to take sharply divergent stances on the question of national identity and the resulting ramifications regarding relations with China, on a number of issues Ma and Tsai were fundamentally in alignment – certainly much more so than one would find between opposing political parties in many other countries (including Democrats and Republicans in the United States). Both candidates, for example, made clear that they are ardent proponents of free-trade policies, supporting Taiwan’s negotiation of more Free Trade Agreements with other countries and its eventual entrance into the emerging Trans-Pacific Partnership (TPP) trade grouping. They both stressed the need for Taiwan to revitalize its economy and upgrade its competitiveness by promoting foreign investment and developing new industries such as green energy, and they both called for greater attention to social welfare. And on several points of concern to the international business community, they were in agreement on the need for further liberalization in the financial sector, reform of the educational system, and the increased opening of the labor market to technical and professional talent from abroad. In international affairs, the two speakers emphasized the central importance of Taiwan’s relationship with the United States, both economically and for the island’s security, and pledged to work to improve those bilateral ties. And with regard to cross-Strait affairs, they both stressed their desire to maintain an atmosphere of peace, stability, and mutual cooperation. More than most domestic political observers seem to appreciate, Taiwan’s two major political parties actually share a broad swath of common ground. Despite the often acrid political rhetoric in Taiwan, there is an underlying consensus on many policy directions that bodes well for Taiwan’s continued stability and prosperity. (For more details about the two candidates’ remarks, see the report on page 13 in this issue).

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BY JA N E R I CKA R D S

CROSS-STRAIT

MA SAYS PEACE TALKS POSSIBLE IN A DECADE President Ma Ying-jeou in mid-October caused a political stir by saying that Taiwan might sign a peace treaty with China within the next decade as part of his “Golden Decade” program for developing Taiwan’s economy, provided the proposed pact was supported by the public and scrutinized by parliament. It was the first time for the president to give a timetable for negotiating sensitive political subjects with Beijing, which still considers Taiwan a Chinese province and has not renounced the use of military force to bring the island under its rule. The idea whipped up a media frenzy, with polls showing the issue had caused the president’s popular-

ity to sag. Key portions of the electorate appeared uneasy at the prospect of engaging in political talks with Beijing. By November 10, the TVBS Poll Center revealed, Ma had lost the lead of several percentage points he enjoyed over his opponent, Democratic Progressive Party (DPP) candidate Tsai Ing-wen. Instead, she was ahead by a margin of 47.3% to 45.8%. The prospect of a pursuing a peace treaty was lambasted by the DPP, which accused Ma of steering Taiwan towards unification. The president even faced a barrage of criticism from KMT-leaning media, which claimed he was driving away Chinawary swing voters who might otherwise have supported him. Ma backtracked a few days later, tacking on several more conditions – including

Taiwan stock exchange index & value

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

8000

150

7750

140

7500

130

7250

120

7000

110

6750

100

6500

6250

6000

5750

October chart source: TwSE

Unit: NTD billion

INTO THE RACE—James Soong of the People First Party announces his candidacy for president in the January election. photo : ap/Wally Santana

approval of the initiative in a referendum – that would have to be met before such a treaty was signed. Beijing normally opposes the holding of such plebiscites in Taiwan, as it sees such polls as the prerogative of an independent state. But on October 26, a PRC spokesman welcomed the proposal, saying it was in the interests of the Chinese people. Some analysts interpreted the peace-treaty proposal as a sign that Ma’s camp was concerned about the tightness of the presidential race and wished to focus attention on crossStrait issues to divert attention away from Tsai’s popular social-welfare policies. “This is very heavy medicine,” commented Shane Lee, a political scientist at Chang Jung

University. He added that Ma may have adopted the strategy out of an expectation that it would expose the vulnerability of the DPP in terms of cross-Strait policies. Tsai’s efforts to moderate the DPP’s position on relations with China have not changed the mistrust with which she is regarded by Beijing, as she does not embrace the concept of “one China.” DOMESTIC

SOONG'S ELECTROAL BID FIRMS UP A legal hurdle to thirdparty candidate James Soong’s presidential bid was cleared in mid-November, when the Central Election Commission ruled that the People First Party chairman had qualified to enter the race by submitting 445,864

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valid signatures on his petition, almost 200,000 more than the legal threshold. Any chance of a compromise with Ma’s Kuomintang (KMT) now appears highly unlikely, and Soong in fact vowed to pursue his quest for the presidency to the end. Soong, a onetime secretary-general of the KMT before splitting with the party, receives support below 15% in opinion polls, but in such a tight race he could easily take critical votes away from Ma, splitting the “pan-blue” vote and handing a victory to Tsai.

‘OCCUPY’ MOVEMENT SPREADS TO TAIPEI 101 Chanting “No to capitalism! We are the 99%!,” a few hundred people in midOctober protested in the upmarket shopping mall on the ground floor of iconic Taipei 101, Taiwan’s tallest building. The protest was part of the “Occupy Wall Street” movement against economic inequality that has been spreading across the world through online media. The Taiwan demonstration sought to highlight a growing gap between Taiwan’s rich and poor, a theme that resonates with many voters in the run-up to Taiwan’s January 14 presidential election. According to local media reports, scuffles broke out when police and Taipei 101 security guards tried

to prevent the crowd from entering the building. The protesters then staged a sit-in, causing some luxury stores to shutter their doors, but there were no arrests.

CHEN SHUI-BIAN GETS NEW 18-YEAR TERM Former President Chen Shui-bian in mid-October received a new 18-year prison sentence, in addition to the 17 years he is already serving for corruption, along with a fine of NT$180 million (US$6 million). The High Court, overturning an acquittal handed down by the Taipei District Court, found Chen guilty of taking NT$500 million worth of bribes

from two banks in separate merger cases during his 2000-2008 presidency. Chen’s wife, Wu Shujen, was sentenced to an additional 11 years’ imprisonment in the same case, stripped of her civil rights for a further eight years, and fined NT$102 million. The Taipei District Court had ruled that the money allegedly passed to Chen could not be considered bribes, since presidential authority does not extend to approving mergers of financial institutions.

NEW LAW ALLOWS RED LIGHT DISTRICTS The Legislative Yuan in early November enacted

a law that would legalize prostitution, but limit it to special red-light districts. The amendment to the Social Order Maintenance Act would allow prostitution to take place within designated areas, but any sex-trade participants – customers as well as prostitutes – caught outside the zones can be fined up to NT$30,000, with pimps subject to fines of up to NT$50,000. Under the previous legislation, prostitutes were penalized but not their clients. As of press time, no Taiwan’s municipalities had shown interest in designating districts as red-light zones. I N T E R N AT I O N A L

HU JINTAO MEETS LIEN CHAN AT APEC

SUPPORT FROM TAIPEI—Demonstrators at Taipei 101 participate in a worldwide program of solidarity with the "Occupy Wall Street" movement in the United States.

China’s leader Hu Jintao in mid-November met with the KMT’s honorary chairman, Lien Chan, for 40 minutes on the sidelines of the Asia Pacific Cooperation Forum summit in Hawaii. Lien, a former ruling party chairman who made a landmark trip to China in 2005, initiating the first contact between the KMT and the Chinese Communists in over half a century, said his talk with Hu focused mainly on progress made in promoting closer cross-Strait economic ties. He described the meeting as an “interesting” one between “old friends,” local

photo : Chiang Ying -ying

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media reported. Lien also said the Ma administration hoped to put economics before politics when dealing with China. Taiwan still needs to consult with China on proposed agreements for investment guarantees for Taiwanese businessmen operating in China and on the avoidance of double taxation, Lien told a press conference. Lien attended the conference as President Ma’s representative, since Chinese opposition each year prevents Taiwan’s head of state from participating on his own behalf.

TAIWAN DIPLOMAT ARRESTED IN U.S. Federal prosecutors in Kansas City, Missouri in mid-November jailed a de facto Taiwanese diplomat on a felony labor violation involving her housekeeper. The Associated Press quoted experts as saying that such charges against a foreign official were virtually unprecedented. Jacqueline Liu, director general of the Taipei Economic and Cultural Office (TECO) in Kansas City, is accused of vastly underpaying the woman, making her work 16 to 18 hours a day, and holding her passport to control her movements. Liu, 64, was arrested and charged with fraud in foreign labor contracting, which is punishable by

worker,” it said, alleging that “this is nothing more than bonded labor and modernday slavery.” BUSINESS

MEDIATEK TO PARTNER WITH FACEBOOK

WELCOME TO HAWAII—U.S. President Barack Obama and First Lady Michelle Obama greet Taiwanese Special Envoy Lien Chan and wife Lien Fang-Yu before the APEC leaders dinner in Honolulu. photo : AP/Charles Dharapak

up to five years in federal prison. As of press time, she was in custody after a judge rejected her plea bargain, which included an admission of guilt and compensation for the housekeeper. The case ruffled feathers in Taipei, where the Ministry of Foreign Affairs argued that Liu should benefit from diplomatic immunity under an agreement signed with the United States after Washington switched recognition to China in 1979. However, the wording of the immunity agreement would appear to cover only actions related to official duties, not to a Taiwanese officer’s private life. An FBI affidavit filed in the case says TECO recruited the housekeeper in the Philippines in September 2011. According to the

woman’s visa application, her two-year employment contract called for her to be paid US$1,240 a month, work 40-hour weeks, and be entitled to overtime. Prosecutors contend the woman was actually paid US$400 to $450 a month, worked 16- to 18-hour days, and was monitored with video surveillance equipment at Liu’s home in Johnson County, Kansas. They also say Liu took the woman’s passport and was “verbally abusive.” In a statement emailed to TOPICS , the Hong Kongbased Asian Pacific Mission for Migrants criticized the foreign ministry’s attitude, saying diplomatic immunity should never be used to cover up a crime. “Nobody, not even a government official, has the right to abuse and exploit their domestic

MediaTek, a leading Taiwanese fabless semiconductor company that designs chips used in mobile phones, in early November announced a partnership with Facebook that will enable the social networking site to be embedded into MediaTek’s mobile platform solutions. The move will enable users in emerging markets to access Facebook, many for the first time, via “affordable mobile devices,” MediaTek said in a statement. The company added that a recent study by media research firm Informa Telecoms and Media found emerging markets will account for 60% of the mobile market by 2013, with 70% of mobile handsets sold in emerging markets being feature phones. Phones with Mediatek chipsets last year occupied over 40% of the Indian handset market, the company added, and the company is active in Indonesia and the Phillipines. Mobile Partnerships and Corporate Development Vice President of Facebook Vaughan Smith said: "Every phone should be

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South Korea's antitrust regulator at the end of October fined 10 Taiwanese and Korean thin-film transistor liquid-crystal display (TFTLCD) makers, including AU Optronics Corp. of Taiwan, a total of 194 billion won (US$176 million) for collusion in setting prices. The country’s Fair Trade Commission (FTC) said other major LCD makers involved in its ruling were South Korea's LG Display Co., Samsung Electronics Corp. and Taiwan's Chimei Innolux Corp. The

HON HAI TO OPEN ROBOTICS FACILITY Hon Hai Precision Industry, the world's biggest electronics component maker, will spend NT$10 billion (US$333 million) on a facility to research and build production automation equipment, including robots, in an effort to cope with rising labor costs. The facility, to be built in

Economic Indicators Unit: US$ Billion Year Earlier Current Account Balance (2011 3Q) 10.21 8.99 Foreign Trade Balance (Jan-Oct) 31.16 21.20 New Export Orders (Oct) 37.21 35.98 Foreign Exchange Reserves (end Sept) 389.17 380.50 Unemployment (Sept) 4.28% 5.05% Overnight Interest rate (Oct 31) 0.400% 0.230% Economic Growth Rate (2011 Q3) 3.48% 10.69% Change in Industrial Output y-on-y (Sept)p 1.62% 12.08% Change in Industrial Output y-on-y (Jan-Sept) 7.73% 32.7% (Jan-Aug) Change in Consumer Price Index y-on-y (Sept) 1.35% 1.35% 0.29% Change in Consumer Price Index y-on-y (Jan.-Sept) 1.35% 1.42% 0.91%% Note:

p: preliminary

SO URCES: MOEA, DGBAS, CBC, BOFT

TAIWAN'S JANUARY- october TRADE FIGURES (YEAR ON YEAR COMPARISON)

2010

21 23.6

24.72 26.5

2010

2011

2010

2011

Imports

41.99

Europe

21.68 30.76

U.S.

2011

238.52 169.68

2011

205.2 226.44

2010

TOTAL

27.78

34.2 15.32

23.5

44.38

42.9

104.94

2011

ASEAN

2010

Japan

38.47

95.01

HK/China

20.4 25.8

KOREAN REGULATOR FINES TAIWAN FIRMS

total fines, it said, were the largest sum ever imposed in an international cartel allegation case in South Korea. “The makers, which command a combined share of more than 80% of the global LCD market...harmed domestic consumers' interests by taking part in the price-fixing plot and raising LCD panel prices,” the FTC said in a statement. The commission said the companies involved had secretly agreed to fix prices and reduce output for a period of over five years, from 2001 to 2006.

30.29

social and we’re excited to be working with MediaTek to bring Facebook to more devices, in more markets around the world and helping users to connect and share anywhere, anytime. "Mediatek owns a 10% stake in India's Spice Digital, a developer of mobile value added services and internet products.

Exports

the Central Science Park in Taichung by a Hon Hai subsidiary, will make automated equipment to reduce costs in handling tasks at its plants. Shares in Hon Hai rallied at the news. Hon Hai, Apple’s main manufacturing partner for assembling iphones and ipads, has huge factories across China, but like other manufacturers there, has had to deal with rising wages and an increasing number of labor disputes. The firm also had to cope with a spate of worker suicides at its China plants that labor groups blamed on harsh working conditions.

PEPSICO BUYS STAKE IN TINGYI NOODLES PepsiCo, the world’s second largest food and beverage company, in early November said it had entered into an alliance with Taiwan-based Tingyi

2010

2011

Unit: US$BN Source: BOFT

Holding Co. Under the agreement, Tingyi's beverage subsidiary will become PepsiCo's franchise bottler in China. The subsidiary, Tingyi-Asahi Beverages, whose product offerings include ready-to-drink tea, bottled water, and juices, is one of the leading beverage manufacturers in China. Analysts said the agreement would help the U.S. company beef up its distribution in the fast-growing Chinese market. PepsiCo will transfer its existing holdings in mainland China bottling operations to Tingyi-Asahi, acquiring in return a 5% stake in the operation. PepsiCo will have the option to increase that stake to 20% by 2015. Last year, PepsiCo announced it would invest US$2.5 billion in its China business over the next few years, on top of a US$1 billion investment announced in 2008.

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Issue s

The U.S. Beckons Foreign Investors A new government agency, SelectUSA, has been tasked with attracting foreign companies to help increase employment.

he need in the United States to boost economic growth and spur job creation has led the American government to step up efforts to attract investment from around the world. In an executive order in mid-June this year, President Barack Obama created a new high-level agency called SelectUSA to take charge of investment promotion and assistance. The organization is housed in the Department of Commerce but has a direct pipeline to the White House. Its activities are coordinated by a Federal Interagency Investment Working Group consisting of senior officials from all relevant government departments and agencies. In the executive order, Obama said that SelectUSA will for the first time give the United States the kind of “centralized investment promotion infrastructure and resources to attract business investment that is often found in other industrialized countries.” Among the objectives of the organization, he said, were “better marketing our strengths, providing clear, complete, and consistent information, and removing unnecessary obstacles to investment.” Within three months of SelectUSA’s establishment, two of its top officials – Executive Director Barry E.A. Johnson and Christopher D. Clement, the Global Business Attraction manager – visited Taiwan to make initial contacts with potential investors among domestic companies. During a call at the AmCham office, they noted that Taiwan has about US$6 billion in aggregate foreign direct investment in the United States, more than that of mainland China and ranking Taiwan among the top 25 sources of investment there. Although Taiwan’s outward investment in recent years has been heavily focused on China, Johnson and Clement said they see excellent opportunities in certain sectors for increased investment flows to the United States. They cited ICT and other technology-intensive industries, logistics and distribution, energy, and food manufacturing as prime examples. SelectUSA takes over and expands on the functions of a previous arm of the Commerce Department called Invest in America. It has much greater authority than its predecessor, including a role in speeding up the approval process for investment applications. It will also coordinate closely with state, local, and regional economic development organizations, and maintain a searchable database of grants, loans, loan guarantees, and tax incentives available to businesses operating in the United States. Further, said Johnson and Clement, SelectUSA will provide assistance – “almost a consulting service” – to help foreign investors resolve any problems they face getting started or later on in their operations. Spotlighting the United States as an investment location, SelectUSA emphasizes the competitive business climate, large market size, strength in research and innovation, leadership in information technology, intellectual property protection, and highly educated and productive workforce. —– By Don Shapiro

美國積極引進國際投資美國政府推展「選擇美國」新計畫，積極對外招商，以增加國內就業機會

鑑

於振興經濟成長與創造就業機會的必要性，美國行政部門終於加速行動以吸引來自全球各地的投資。美國總統歐巴馬六月中簽署行政命令，增設「選擇美國」（SelectUSA）計畫辦公室，專門負責吸引與協助國際投資案件。值得注意的是，辦公室雖然設在聯邦商務部之下，卻是向白宮直接報告，並由相關部會資深官員組成的聯邦跨部會投資工作小組整合其下各項業務及行動。歐巴馬在行政命令中對「選擇美國」計畫辦公室的描述是，這個單位將首度為美國創造「聯邦層級統籌的招商架構與資源，運用其他工業化國家常見的方式對外招商」。歐巴馬特別說明，此單位必須要能「更充分行銷美國的優點，提供清楚、完整、一致的訊息，並消弭無謂的投資障礙」。辦公室成立不滿三個月，執行長強生（Barry E.A. J o h n s o n）與全球招商經理克里門特（Christopher D. Clement）已到訪台灣，與可能赴美投資的台灣廠商進行初步接觸。兩位代表造訪台北市美國商會時表示，台灣對美國的國際直接投資（FDI）約60億美元，高於中國、也是美國前25大FDI來源國之一。儘管台灣的對外投資近年來多數流向中國，強生與克里門特認為，美國對於某些產業仍然深具吸引力，特別是資通訊與其他技術密集產業、物流配送、能源、食品製造。美國商務部曾設立稱為「投資美國」的機構，但新的「選擇美國」計畫辦公室不僅承接、更擴大了前者的職能，包括得以加快投資申請的審批，密切協調各州、地方與地區的經濟發展組織，以及快速查詢在美企業所能獲得的獎助、貸款、擔保、稅賦優惠。強生與克里門特進一步表示，「選擇美國」辦公室會全力協助外國廠商，甚至能「提供不遜於專業顧問的服務」，解決外國投資者在開始投資或未來經營所可能碰到的任何問題。「選擇美國」辦公室正積極凸顯美國的投資魅力。他們強調美國優越的經商環境、龐大的市場、堅實的研發創新、居於領先的資訊科技，也提到美國智慧財產權制度健全，就業人口教育程度與生產力俱佳。 —撰文／沙蕩

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Issues Revised Patent Act Adopted

立院三讀通過專利法修正案

院11月底三讀通過行政院函請審議之立法《專利法》修正草案，但原先行政院希望

he Legislative Yuan this month passed an updated version of the Patent Act without the bill’s initially proposed Article 24 to enable the patenting of new varieties of plants, as is permitted in many countries of the world. As reported in this column in the August 2011 issue of Taiwan Business TOPICS, the proposal was opposed by some legislators and scholars on the grounds that Taiwan farmers could be disadvantaged if the need for licensing hampers the ability to develop certain crops. The counter-argument that including patent protection for plants would help Taiwan scientists take a leading role in international research did not win majority support. Although the full amended law has not yet been examined by AmCham’s Intellectual Property & Licensing Committee, the government’s Taiwan Intellectual Property Office circulated a list of the main revisions. They include: • Introduction of a “reinstatement of rights” mechanism whereby applicants or patent owners who lost their patent rights because they unintentionally failed to claim priority rights at the time of application or failed to pay patent annuities on time may apply for reinstatement of their patent rights. • Removal of the minimum two-year threshold for applying for the extension of patent terms for pharmaceutical and agro-chemical patents. • Amendment of requirements for applying for compulsory licenses to make “failure to reach a licensing agreement with the patentee concerned under reasonable commercial terms and conditions within a considerable period of time” a prerequisite in applying for a compulsory license for public non-commercial use or exploiting a dependent patent involving an important technical advance of considerable economic significance. • Clarification that a patentee may claim damages for patent infringement only if the infringer has acted intentionally or negligently. • Broadening of the scope of design patent protection to include partial designs, computer-generated icons and graphical user interfaces, as well as sets of articles.

Long Wait for Sale Approval

n October last year, private equity firm MBK Partners agreed to sell its Taiwan cable-TV operation, China Network Systems (CNS), to the Want Chung Group, a consortium led by the head of the Want Want conglomerate. More than a year later, the National Communications Commission (NCC) has yet to approve or disapprove the transaction. Although there is precedent in Taiwan and abroad for prolonged regulatory review in complex cases, observers of the CNS deal say they are puzzled that no decision has been rendered, even though Want Chung appears to have met all the legal requirements set out in the Cable Radio and Television Act. These include a cap on the amount of foreign investment as a proportion of the shareholding, a prohibition on investment by government entities or political parties, a limit on market share in terms of shareholders and number of systems operators, and the lack of any “adverse effect on national security, public order, or social morals.” Instead, objections to the sale raised by scholars testifying at public hearings have focused on Want Want’s business connections in China and on its existing control of other Taiwan media, such as the China Times newspaper and a television station. But proponents of the deal point out that the transaction passed review by the Fair Trade Commission in terms of anti-trust or anti-competition implications. The seller has urged the government to recognize that part of creating a favorable foreign-investment climate is the provision of a smooth and predictable process for investors to exit the market. —– By Don Shapiro 12

透過修正《專利法》第24條以開放植物專利，並與國際實務接軌的提議，並未納入此次修法範圍。2011年8月號TOPICS雜誌一篇評論提到，反對開放植物專利的民意代表與專家指出，一旦開放植物專利，將壓縮業者自由研發新種的空間，危及本地農民生計。另一方面，贊成開放植物專利的人則認為，台灣可以藉由開放植物專利提昇研發領域的國際競爭力。只是這種看法似乎沒有獲得多數人的支持。台北市美國商會智慧財產權與授權委員會尚未詳細檢視《專利法》所有修法內容，謹在此摘錄經濟部智慧財產局整理的若干修法重點： • 增訂非因故意未於申請時主張優先權，或未按時繳納專利證書費或年費致失權者，准其申請回復權利之機制。 • 放寬申請醫藥品或農藥品之專利權期間延長之規定，刪除現行規定為取得許可證無法實施發明之期間須於公告後二年以上之限制。 • 修正強制授權之事由，例如若發明或新型專利權之實施，將不可避免侵害在前之發明或新型專利權，且較該在前之發明或新型專利權具相當經濟意義之重要技術改良，而有強制授權之必要者，專利專責機關得依此申請強制授權。 • 明定專利侵權損害賠償之主觀要件，例如發明專利權人對於因故意或過失侵害其專利權者，得請求損害賠償。 • 開放部分設計、電腦圖像及圖形化使用者介面設計、成組物品設計等為設計專利。

尋求批准等待多時 B K）同意去年十月，私募基金安博凱（M 將其在台灣投資的有線電視系統中嘉（C N S），售予由旺旺集團所屬的旺中集團。一年多過去，國家通訊傳播委員會（NCC）仍未准駁這項股權移轉案。雖然在台灣和國外都有對於複雜投資案進行長期定期檢討的先例，觀察家對於中嘉案始終未有決定也感到困惑，即使旺中集團顯然已經符合有線廣播電視法訂定的所有法令要求，包括外資持股比例、禁止黨政軍投資媒體、避免市場寡占，以及無礙國家安全、公共秩序或社會道德。但專家學者在公聽會上提出反對這項交易的理由，主要集中在旺旺集團與中國的關係、旺旺已持有許多台灣媒體，包括中國時報及中天電視台。但支持此案者認為，交易案既已通過行政院公平交易委員會的審查，並未出現單一集團過大，以及排擠市場競爭的狀況。買方因此呼籲政府認知有利國際投資的環境，就必須讓投資人退出市場的程序應是合理順暢的。

—撰文／沙蕩

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E EL LEECCTTI IOONN 22 00 1 2

Presidential Candidates Speak to AmCham

Ma Ying-jeou and Tsai Ing-wen make English-language presentations at the Chamber’s Annual General Meeting. BY don shapiro

mCham Taipei’s 2011 Annual General Meeting on November 22 provided an opportunity for the audience of more than 200 Chamber members and guests to hear presentations from – and ask questions to – the candidates of Taiwan’s two major political parties in the January 14 presidential election. President Ma Ying-jeou of the ruling Kuomintang (KMT) cited his achievements in office over the past four years as giving him the experience to be even more successful if re-elected for a second term. Tsai Ing-wen, the nominee (and chairwoman) of the opposition Democratic Progressive Party (DPP), sought to show that she is pragmatic and flexible with regard to crossStrait affairs and conversant with all important public issues.

The two candidates made separate appearances – Ma before lunch and Tsai after. A third competitor, James Soong of the People First Party, is being invited by AmCham to speak on another occasion. His candidacy was formally approved by the Central Election Commission only after arrangements for the November 22 meeting had been set. One of President Ma’s themes was that under the previous DPP administration, tensions with China had prevented Taiwan from taking full advantage of the island’s numerous assets as a place for doing business. After taking office, he said, his first priority was to improve Taiwan’s competitiveness and reduce its isolation by opening up direct flights and navigation across the Taiwan Strait.

“What we did was not only to change Taiwan’s relations with the Chinese mainland, but also to change the economic status of Taiwan in East Asia and the world,” he stated. The President underscored some of the goals for the years ahead that he has promoted as paving the way for a “Golden Decade”: • Changing Taiwan’s economic structure “from efficiency-driven to innovation-driven,” so as to enable it to become “the innovation center of the world and the trade and investment center of East Asia.” • Accelerating trade liberalization, by concluding more free trade arrangements with other countries (including pacts now being discussed with Singapore and New

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ELECTION 2012

•

Zealand) and seeking to join the emerging Trans-Pacific Partnership (TPP) within 10 years. The need for that timeframe, he explained, is the existence of “protectionist tendencies…among our own firms,” with the result that “we have to do a lot of communication and persuasion to make people understand” the importance of joining the TPP. Assuring a “clean and competent government” by combatting corruption and raising government efficiency. As a former Justice Minister, Ma said he places special emphasis on the importance of eliminating corruption throughout the civil service. Creating a just society by putting more resources into social welfare and reducing the widening gap between the rich and poor. Building a sustainable environment. He reiterated his pledge that by the year 2020, Taiwan’s carbon emissions will be decreased to the level of 2005, saying “we want to make that commitment to the rest of the world, because after all, we are an important member of the international community.” At the same time, he promised to “make sure there is a proper balance between economic development on the one hand and environmental protection on the other.” Improving the educational system by initiating 12-year compulsory education from 2014, putting more emphasis on vocational schools to meet the needs of industry, and turning Taiwan into a “higher education center for East Asia and the Pacific” by raising the number of foreign students from the current 50,000 to 130,000 by 2020. Creating a lasting peace across the Taiwan Strait and friendly ties with the international community. “In the past, these two things were in conflict with each other, but since we took power, a virtuous cycle has been established,” he said. The goal now is institutionalization of the cross-Strait rapprochement,

he continued. A peace agreement could be considered at some point, but only if there is “approval from our people through a referendum,” he stressed. • I m p r o v i n g r e l a t i o n s w i t h t h e United States. Ma alluded to the suspension of the Trade and Investment Framework Agreement (TIFA) talks with the United States due to disputes over Taiwan’s restrictions on the import of American beef. “We hope we could do a lot of public communication with our people to let them understand the pros and cons” of liberalizing that policy, he said. “Particularly while we have such close relations with the mainland, we certainly want to do the same with the United States, which of course is a very, very old and good friend.” Summing up why people should vote for him, Ma said: “My answer is that I have changed Taiwan. I have successfully transformed and upgraded Taiwan, and I want to do more, so I want four more years.” In the Q&A session, asked about the financial sector’s growing dismay with the regulators’ “preference for control over promotion,” Ma invited Vice Premier Sean Chen, a former chairman of the Financial Supervisory Commission (FSC), to respond first. Reaffirming his longstanding respect for market forces and market discipline, Chen said that the message from the private sector concerning the recent regulatory approach had been “well received.” Ma then added that “liberalization, globalization continues to be our goal, but in the process we have to pay attention to the rights and interests of the stakeholders; we will see the way to a more liberalized economy in my second term so that Taiwan will catch up better with the rest of the world.” In response to a question about whether Taiwan will have sufficient electric power supply for its future needs, Ma said the government will allow more private participation in energy generation and put more emphasis on renewable energy sources

such as wind and solar power. In addition, he said that the fourth nuclear power plant, currently under construction, will be operated only after its safety has been assured – and that once it comes onstream, the first two nuclear plants will be decommissioned to gradually reduce Taiwan’s dependence on nuclear power. At the same time, “we will make sure there is no electricity supply problem,” he pledged.

Need for balance One of the key points in Tsai Ingwen’s remarks was that under the Ma administration, the “speed of the development between Taiwan and China has far outpaced the relationship between Taiwan and the U.S., so restoring the balance in the trilateral relationship would be one of my key tasks in managing our external relations when I am elected president.” She contended that while Ma has actively pursued trade relations with China, including last year’s signing of an Economic Cooperation Framework Agreement (ECFA), “by contrast, over the last three years Taiwan-U.S. trade relations remained at a standstill.” Tsai referred numerous times during her presentation to the need for Taiwan and the U.S. to enter into a “new strategic partnership,” building on the many decades of close and stable relations between the two countries and on their shared democratic values. She offered the following rationales for such a partnership: 1. Taiwan and the United States share common interests in and responsibility for security and stability in the East Asian region. 2. The two countries are both firmly committed to the principles of free trade, allowing “room for cooperation in working toward establishing a trading order for the region.” 3. T h e Ta i w a n - U . S . t r a d i t i o n o f business partnership – as shown particularly in the IT industry – offers opportunities for cooperation in developing new and emerging sectors such as green

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RCA and other U.S.-invested companies established the foundation for Taiwan's IT industry.

ELECTION 2012

industries, biotech, and alternative energy, and in exploring emerging markets. The current severe global economic difficulties mean that new engines for economic growth and development will have to be found, and the U.S. government is realizing the importance of “harnessing Asia’s growth and dynamism.” She went on to describe a “peaceful and stable cross-Strait relationship” as key to continuing Taiwan-U.S. relations. “When I am elected, I will place great efforts in maintaining peace and stability in the Taiwan Strait. This is my responsibility toward the 23 million people in Taiwan, and our responsibility as a partner of the other international players in the region.” Noting that some people may worry about a DPP victory in terms of China’s reaction, she said “I’ll do whatever we can, without compromising Taiwan’s fundamental interests, to ease tensions and foster an atmosphere with dialogue and interaction after the election is over.” She also stressed the need to build a domestic consensus within Taiwan. “Instead of driving a partisan wedge between different groups in Taiwan, we will not use cross-Strait relations as a campaign tool.” O n t r a d e p o l i c y, Ts a i v o w e d to “pursue free-trade policies and objectives.” She indicated that her administration would move faster than Ma’s, which she said has yet to show the “necessary determination and preparation,” to bring Taiwan into the TPP. “It is my belief that when the DPP returns to the government, it will, in the shortest time possible, prepare for joining the TPP,” she said. In the meantime, she called for “enhancing the function and operation of TIFA” and for establishing “mechanisms to facilitate regular visits between high-level officials” of the United States and Taiwan. Once back in power, she said, the DPP would make “quality communication” with the U.S. government its “highest priority.” Other points covered in the presentation and answers to questions included: • The desire to find a new and solid

MEET THE PRESS — After the event, AmCham Chairman Bill Wiseman told journalists that Chamber members were impressed with both candidates' grasp of key issues affecting the economy.

•

basis for building a serious relationship with China, instead of relying on the “fiction” of the 1992 Consensus (“one China” subject to differing interpretations) espoused by the KMT. The statement that while crossStrait relations are a crucial policy matter, other concerns are equally if not more important, including the wealth gap, jobs, and the economy. She stressed the need for industrial upgrading, including policies to treat R&D as an independent industry rather than just an arm of manufacturing. In an apparent allusion to the beef issue, a promise that “once elected, I will pro-actively manage the political complications arising from certain existing bilateral trade issues, so as to minimize the impact on our trade relationship with the U.S.” She said such issues “must be settled with the best long-term interests of the Taiwanese people in mind, which involves more open and closer trade relations with the U.S.” A vow that under a DPP administration, “AmCham’s current complaints on government efficiency would be reduced drastically – and I mean drastically.” Expression of willingness to con-

sider further financial reform, including efforts to privatize government-owned banks, as long as the “process is transparent, competitive, and fair to everybody who may want to participate in the bid.” She also stressed the need for “capacity building” among the regulators, to ensure they understand market realities and are equipped to manage market risk. • Support for eliminating administrative and legal obstacles to the flow of international talent into Taiwan, so that foreign experts can help raise the capability of local co-workers. At the same time, she proposed reforming the educational system to put more stress on professional and vocational training to meet the real needs of the market, as well as extending compulsory education from the current nine years to 12. AmCham members regarded the event as a rare opportunity to increase their understanding of the platforms of the two candidates. They were also impressed with the candidates’ English fluency. Ma holds a master’s degree in law from New York University and a doctorate in jurisprudence from Harvard, while Tsai has a master’s from Cornell Law School and a Ph.D. from the London School of Economics.

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Cover Story

COVER STORY

Prospects for 2012: Slowdown Ahead 展望2012：成長趨緩

iven its high degree of reliance on exports, the Taiwan economy seems sure to face tougher going next year in the face of external challenges such as the Eurozone crisis. Slower growth in exports is also likely to mean lower private investment, as companies set aside plans to expand production. Whether consumer confidence is also affected enough to impact consumption will depend on the severity of the global downturn. Government’s ability to provide stimulus to boost economic growth may be limited by fiscal constraints, but economists urge the authorities to do more to make the market more attractive for foreign investment.

高度依賴外銷的台灣經濟，因為歐元區國債風暴等國際危機，明年必然面臨嚴厲考驗。外銷成長趨緩也代表民間投資降低，因為企業可能擱置增產計畫。至於消費信心走低是否衝擊民間消費，則取決於全球衰退的嚴重程度。儘管財政緊繃勢必限縮經濟振興方案的力道，但經濟專家仍呼籲政府持續改善投資環境，增加台灣對國際投資的吸引力。

By JANE rICKArDS

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撰文／李可珍

2011/12/5 4:23:40 PM

economic Forecast

台

灣去年自全球金融風暴的谷底強勢反彈，創下24年來最高的10.88%經濟成長（部分原因來自2009年的比較基期較低）。今年上半年的成長力道仍強，以外銷為主的台灣經濟似乎重回軌道。然而，經濟在下半年突然走疲。行政院主計處指出，今年第一季的國內生產毛額（G D P）成長 6.16%，第二季5.02%，但第三季滑落至3.37%。由於第四季成長預估為3.87%，主計處十月下修全年經濟成長預估，由4.81%減少至4.56%。同時，2012年的成長幅度也由4.58%降至4.38%。多數國內外經濟研調機構也下修經濟成長預測，而且幅度普遍高於主計處。最為悲觀的是瑞銀投資研究部門，2011年預估成長4.1%，2012年則為2.7%。最為樂觀的台灣經濟研究院，今年推估為4.64%，明年 4.22%。此外，中華經濟研究院認為今年為4.58%，明年4.15%；花旗銀行預估今年4.5%，明年4%；渣打銀行則稱今年4.6%，明年3.2%。高盛集團十月指出，台灣2011年的經濟成長為4.4%，2012年為3.2%。花旗台灣區首席經濟學家鄭貞茂認為，「台灣是個小型經濟體，因此金融市場的波動與歐洲債信危機，必然影響投資氣氛」。渣打銀行台灣區首席經濟學家

thE UpS AND DowNS of thE pASt fEw yEArS ECoNomIC Growth By QUArtEr

5.02

201 1 201 1 Q2

201

200

9 200

200

-8.65

-7.23

-1.21

7.13

6.16

10.69

12.86

9.24

13.59

Unit: %

ast year, Taiwan’s recovery from the global financial crisis was sparkling. At 10.88%, the economic growth rate was at a 24-year high (aided by a low baseline effect after the miserable 2009 recession). Growth for the first half of this year continued to be robust, and the island’s export-dependent economy seemed to be back on track. Then things suddenly began to falter. After growth of a healthy 6.16% in the first quarter and 5.02% in the second, the economy slowed to 3.37% in the third, according to the government’s Directorate General of Budget, Accounting and Statistics. In October, DGAS then cut the projected GDP growth forecast for the year from the earlier 4.81% to 4.56%, projecting fourth-quarter growth at 3.87%. It now estimates that growth in 2012 will come to 4.38%, down from an earlier forecast of 4.58%. Most other domestic and international forecasting organizations have also made downward adjustments in their projections, generally showing an even sharper decline than do the government figures. At the low end of the scale, UBS Investment Research is predicting 2.7% growth for 2012, after 4.1% growth this year. The Taiwan Institute of Economic Research (TIER), with a forecast of 4.22% for 2012 after this year’s 4.64%, stands out as the most optimistic private institution. Meanwhile the semi-official Chung-hua Institution for Economic Research (CIER) predicts 4.58% for this year and 4.15% for 2012, Citibank 4.5% for this year and 4% for 2012 and Standard Chartered 4.6% for 2011 followed by 3.2% in 2012. In an October report, investment bank and securities firm Goldman Sachs puts Taiwan’s 2011 GDP at 4.4% and foresees 3.2% for 2012

Source: DGBAS

符銘財則表示，「我們仍然認為，負面因素高於正面因素」，「我們認為，二度衰退的機會不高。儘管風險仍高，但應該不致出現類似2008年的狀況」。成長趨緩的主因在於出口減弱，畢竟台灣14.86兆新台幣的GDP有三分之二來自出口。台灣前三大出口市場，中國、美國、歐洲，都面臨各自的經濟問題，對於台灣電子與其他產品的需求自然降低。台灣外銷導向的開放經濟特性，代表成長趨緩的問題，難以單靠國內政策解決。問題最嚴重的當屬債信風暴不斷擴大的歐元區。希臘、愛爾蘭、葡萄牙亟待國際紓困，義大利、甚至西班牙都可能出現問題，歐元區的問題可能成為下一波全球風暴的引爆點。渣打銀行的符銘財分析，「從過往經驗來看，不論是1997年亞洲金融風暴，或是 2008年美國次貸危機，只要銀行開始倒閉，遲早都會引發經濟動盪」。高盛集團認為，歐洲各國的預算緊縮措施，代表多數歐洲國家的經濟成長將比往年緩慢，歐洲整體而言應該會在第四季進入衰退，2012年也僅成長1%，勢必衝擊台灣對歐外銷。美國是台灣產品另一個主要市場，雖然多數專家不認為二次衰退可能出現，但可見的未來經濟成長都不太好。例如花旗的鄭貞茂就推估，美國2012年的GDP

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ABOUT FACE — After an adverse public reaction to their proposal to put some employees on unpaid leave, Everlight Electronics reversed course and dropped the plan. photo : cna

成長約為1.9%。鄭貞茂指出，就算是近年成長快速的中國市場，對台灣產品的需求也在逐漸降低，主因除了全球經濟疲軟，還包括官方嚴控通貨膨脹與房地產價格所導致的放款緊縮與投資減少。高盛集團日前下修中國2012年的成長預估，由9.2%降為8.6%。

訂單銳減外銷接單狀況是景氣的領先指標，而台灣廠商現階段的外銷訂單的確反映經濟動能弱化的跡象。經濟部統計發現，九月外銷訂單總額369.6億美元，較去年同期微幅成長2.72%。中華經濟研究院經濟展望中心主任劉孟俊認為，年底是耶誕節與新年假期，訂單增幅顯然偏低。不過，實際出口金額尚未出現明顯衰退的跡象。最新海關統計顯示，十月出口270.3億美元，年增 11.7%，高於九月的年增9.9%；十月進口237.1億美元，年增11.8%；進出口相抵後順差33.2億美元。當

“Taiwan is a small economy, so obviously the global turmoil in the financial market and the European debt crisis tend to bother investor sentiment,” explains Cheng Cheng-mount, Citibank Taiwan’s chief economist. “We continue to believe that the downside risk for growth still dominates the upside.” Adds Tony Phoo, economist for global market research at Standard Chartered: “We still don’t see the high possibility of a recession. The risk is very real, but we don’t see a repeat of 2008.” The reason for the weakening growth is, of course, slowing overseas sales, since exports account for around twothirds of Taiwan’s NT$14.86 trillion GDP (about US$445 billion). Taiwan’s three most important markets – Europe, the United States, and China – are all facing economic difficulties that choke their appetite for Taiwan’s electronics and other products. And Taiwan’s exportoriented open economy means that halting the slowing growth is beyond the reach of government policy options. The most serious situation is in the Eurozone, which has been facing a prolonged sovereign debt crisis. There are fears of worldwide contagion, after Greece, Ireland, and Portugal sought bailouts and it appeared that Italy and even Spain might also need rescuing. “I think the lesson we all learned from previ-

月出口總額近四成流向中國與香港，金額達105億美元，年增8.2%。此外，美國占台灣十月出口總值 11.9%，年增11.9%；歐洲佔10.5%，年增6.1%。外銷主力電子產品占10月總金額的27.3%，達73.8億美元，然而與去年同期相較僅成長1.8%。經濟專家普遍認為，表面上看來，流向大中華地區的出口金額很高，但事實上，許多出口商品只是半成品或零組件，在中國組裝後還是銷往西方國家。但專家看法分歧的是，台灣最重要的最終出口地究竟是歐洲抑或美國。高盛集團十月的報告指出，歐洲前三大經濟體，即法國、德國、英國，是台灣外銷成長的主要動力，且台灣對此三國的出口已占總額的40%，遠高於美國的15%。但渣打銀行的符銘財認為，台灣對中國的出口最終有25%至33.3%轉往歐洲，因此整體來說，美國對台灣的重要性仍高於歐洲，因此如果美國陷入衰退，對台灣的衝擊更大。符銘財表示，必須考慮的另一個變數是，相較於台歐，台美的投資與銀行往來更為緊密。他認為，台

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ous banking crises – whether the 1997 Asian financial crisis or the U.S. subprime crisis – is that when banks fail, this eventually evolves into an economic crisis,” Phoo says. At the very least, the austerity measures adopted in Europe, which according to Goldman Sachs may fall into recession this quarter before achieving 2012 growth of 1%, means that growth in much of Europe will be lower than normal, affecting Taiwanese exports. America, traditionally a large buyer of Taiwanese goods, is likely to face sluggish growth for the near future, although most economists do not expect a doubledip recession. Cheng, for example, puts next year's U.S. GDP growth at 1.9%. Even in China, which has been an international economic powerhouse in recent years, demand for Taiwan exports is gradually declining, Cheng says, affected by the global economic woes along with credit tightening and slowing investment as Beijing attempts to rein in inflation and property prices. Goldman Sachs has lowered the mainland’s GDP forecast from 9.2% to 8.6% for 2012.

Slumping orders The amount of export orders currently in the hands of Taiwan’s manufacturers, a leading indicator of economic performance in the next few months, also show

signs of a pending slump. At US$36.96 billion, export orders in September showed year-on-year growth of only 2.72%, the Ministry of Economic Affairs (MOEA) reported. This level is particularly low, CIER economic forecasting director Liu Meng-chun points out, as the Christmas and New Year holiday season is fast approaching. So far, however, a drop has not shown up in the actual trade figures. The latest Customs statistics show that total exports in October, at US$27.03 billion, were up 11.7% year-on-year, a rise from September’s growth of 9.9%. Imports amounted to US$23.71 billion, up 11.8% year-on year, with the trade balance at a US$3.32 billion surplus. Almost 40% of exports – US$10.5 billion worth, an increase of 8.2% from the same month last year – went to mainland China and Hong Kong. The United States accounted for 11.9% of Taiwan’s exports and showed growth of 11.9%, while Europe took 10.5%, with growth of 6.1%. Electronics, the largest export sector at 27.3% of the total, registered US$7.38 billion in export shipments in October but showed growth of only 1.8% compared with the same month of last year. Economists generally agree that trade figures showing a high proportion of exports going to greater China can be misleading, as many of these goods are

灣不太依賴歐洲銀行的信用與貿易融資，現在的狀況可能反而有利台灣，因為台商未來經營歐洲市場時，將不致受限於放款緊縮。相同的道理，與其他國家相比，歐洲企業可能更願意與台灣打交道。花旗的鄭貞茂認為，至少就失業問題而言，台灣面對歐元區風暴還有另一層保護，因為台灣高科技業者 90%的產能都放在中國，如果全球需求嚴重衰退，最先停工的是位於中國的工廠。他說，多數台灣產製的高科技產目，就算碰到經濟衰退仍然能夠維持不墜。舉例來說，2009年金融風暴期間，雖然一般預期台灣的電子產品將首當其衝，但小筆電（netbook）的推出扭轉了趨勢，因為充分迎合消費者的省錢心態。花旗的鄭貞茂分析，「現在當然沒有人討論 n e t b o o k了，但大家還是喜歡i P a d、超輕薄筆電（ultrabook）、Kindle Fire等平價閱讀裝置。誰是這些產品的主要製造商？台灣啊，而且這些商品還會熱銷一段時間」。因此，他以謹慎但不悲觀的態度看待台灣明年的經濟表現，「我們認為2012年的電子產

semi-finished products and spare parts that are shipped off to Western countries after assembly. But they differ on whether Europe or the United States is the most important end buyer of these goods. Goldman Sachs in its October report says that Taiwan’s exposure to the three leading European economies of France, Germany, and Britain is the dominant growth driver for Taiwan’s exports, calculating Taiwan’s exposure to the three economies as about 40% compared with 15% for the United States. But Standard Chartered’s Phoo, who estimates that 25-33.3% of Taiwan’s exports to China end up in the hands of European buyers, says that overall the United States is still a relatively more important market for Taiwan than is Europe – and that it would be a much greater source of concern if the United States were in recession. Another factor to consider, Phoo says, is that Taiwan is a lot less exposed to Europe in the area of investment and banking ties than it is to the United States. As Taiwan does not depend heavily on European banks for credit and trade financing, the current situation “might actually turn out to benefit Taiwan,” he argues, as “Taiwan producers will not be strapped for credit as they continue to do business with Europe.” As a result, European companies may have more incentive to continue doing busi-

品或整體外銷大概只有個位數成長，但不至於變成負成長」。

吸引觀光除了觀光產業，馬政府的兩岸經貿政策影響有限。花旗的鄭貞茂說，「我們稱今年為兩岸談判的觀察期」。渣打銀行的符銘財則指出，中國觀光客2010 年達到160萬人，較2009年增加70%，對GDP的貢獻度約0.2%至0.5%。交通部觀光局統計，今年一至十月共有480萬人次的旅客訪台，包括140萬人次的陸客。符銘財認為，陸客今年應該可以突破180萬人次，雖然阿里山小火車事故導致陸客傷亡，以及台灣明年即將舉行總統大選，導致今年下半年的人數明顯減少。台灣今年六月開放北京、上海、廈門居民的個人自由行，但陸客總人數並未明顯成長。不過瑞銀九月的報告指出，台灣2008年開放陸客團體行後也出現過類

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Cover Story ness with Taiwan than they do with some other trading partners. C i t i b a n k ’s C h e n g c i t e s a n o t h e r potential buffer from the European crisis, at least in terms of the impact on employment. He notes that Taiwan’s high-tech companies conduct around 90% of their production in China, meaning that if global demand dries up, the mainland factories will be the first to be hit. Cheng adds that many of the high-tech items that Taiwan specializes in are still likely to perform well amid recession. During the 2009 financial crisis, for example, Taiwan’s electronics exports were widely expected to experience a significant dive, but that did not occur when Taiwan manufacturers launched the netbook – a smaller and cheaper version of a notebook computer – which found a ready market as consumers looked to economize. “Right now, nobody talks about the netbook,” says Cheng. “But everyone is talking about the ipad, the Ultrabook, the Kindle Fire – those very low-cost reading devices. Who is the major supplier for these new application products? It’s Taiwan and these products are selling quite well.” He consequently has adopted a “cautious but not pessimistic” stance

regarding Taiwan’s economic performance next year. “We think 2012 will have low single-digit growth for electronics or exports in general, but we don’t expect exports to decline.”

Bring in the tourists Aside from tourism, the impact of the Ma administration’s policies to promote cross-Strait economic relations has been limited. “We define this year as a temporary pause in cross-Strait negotiations,” Cheng says. Chinese tourists, who numbered 1.6 million last year, up 70% from the year before, are injecting money into the economy responsible for somewhere between 0.2% and 0.5% of total GDP, Phoo says. From January through October, according to Taiwan Tourism Bureau statistics, 4.8 million travelers visited Taiwan, including 1.4 million from China. Phoo says the number of mainland visitors could easily reach 1.8 million this year, although tourist arrivals from China in the second half of 2011 declined markedly due to an accident on the Alishan forest railway that killed five Chinese tourists and sensitivities concerning the Taiwanese presidential election.

The opening of Taiwan tourism this June to individual Chinese travelers from Beijing, Shanghai, and Xiamen has also been slow to take off, but as UBS notes in a September report, a similar hiccup happened in 2008 when Taiwan first opened up to Chinese group tours. Initially only one-third of the daily quota of 3,000 visitors was used due to a lack of awareness in China and cumbersome regulations. But today the Chinese tourism program is making a significant contribution to Taiwan’s retail sector. In the past, the value of Taiwan’s service exports was usually in negative figures, but the influx of Chinese tourists has evened out the gap, says Chen Miao, director of TIER’s macroeconomic forecasting center. The Economic Cooperation Framework Agreement (ECFA), the partial free trade pact that the Ma administration inked with China last year, is currently having a limited impact, economists say. To substantially boost the economy, they note, a far greater number of goods would have to be subject to preferential or tariff-free treatment. The 500-plus Taiwanese “early harvest” items currently subject to immediate or gradual liberalization are spread

A demographic timebomb?

eighing heavily on Taiwan’s future economic prospects is its rapidly aging society. Last year, the government says, Taiwan’s fertility rate was 0.9 children per woman, a record low for the island and one of the lowest figures in Asia. This is in contrast to a figure of more than 5 children in the 1950s. A little over four years from now, in addition, the proportion of the population over 65 years of age – at 13.3% – will exceed 12.6% under 15 years old, the Council for Economic Planning and Development (CEPD) projects. By 2030, only 10.7% of the population will be aged under 15, down from 15.7% in 2010, while around one-quarter of the population will be over 65. And if that sounds scary, by 2060, CEPD predicts, the senior-citizen segment will be a whopping 41.6% of the population. The elderly will require more healthcare and may need to be supported by the working population aged 15-64 (projected to be 48.9% of the total). Children under 15, at 9.4%, will be a relative rarity. Compared with Western societies, Taiwan has aged especially rapidly. The island hurtled itself into modernity at breakneck speed, developing from an agrarian peasant-run economy in 1950 to today’s sophisticated exporter of high tech. As a result, Western ideas of individualism and feminism that in

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across various industry sectors and overall have not made a major contribution to Taiwan’s GDP. Phoo notes, however, that inclusion on the early-harvest list of a few individual items – such as electrical equipment and machinery, as well as copper and steel parts – has helped Taiwan outperform Korea recently in the volume of exports to China, although both nations have seen their Chinese market share decline. Economists also lament that Taiwan has not opened up more to Chinese investment, as that could help counter sluggish economic growth. Taiwan in early March opened 25 additional sectors to Chinese investment – the fourth regulatory easing since June 30, 2009 – bringing the number of sectors approved for mainland investment to 247. Chinese investors were allowed to take up to a 10% stake in Taiwan’s high-tech companies and up to 50% in Taiwan-China high-tech joint ventures. Although Chinese investors are definitely interested in Taiwan’s prized technology companies, economists say the 10% limit is too low for them to consider the investment worthwhile. A 2009 deal in which China Mobile sought to take a 12% stake in Far EasTone Telecommunications has been blocked as illegal.

NEW SOURCE OF CONSUMPTION — Chinese tourists shopping for gifts to bring back to friends and relatives.

European countries might have taken a century or so to evolve have been imported and greeted enthusiastically by cosmopolitan Taiwanese women, while more tradition-conscious Taiwanese men have been slower to respond. Marriage and child-bearing are becoming less of a priority for young women than financial independence and a fulfilling job, experts say, and young women are gradually adopting values than run counter to the traditional Confucian idea of putting family first and producing children in a duty to their ancestors. Taiwanese women are frequently putting off marriage until their late thirties or even rejecting it altogether. Ministry of Interior figures show that Taiwan’s population has increased by some 44% since 1975, but there are now 30,000 fewer new brides per year. Single women in 2010 accounted for 37.22% of woman aged 30-34, 20.94% of those 35–39, and 14.36% of the 40–44-year-olds. Meanwhile, life in Taiwan is getting more expensive for ordinary young couples. Even married couples who do want children may limit their offspring to one or two in the face of high housing costs, a tight and competitive job market, stagnating salaries, and the escalating cost of childcare. The economic implications are serious. Taiwan may face a serious brainpower shortage in the future, affecting its economic competitiveness, and wage-earners are likely to face a heavy burden caring for – or

photo : cna

paying taxes to support – large numbers of elderly people. “This is not a good thing for Taiwan in the long run,” says Liu Meng-chun, director of the center for economic forecasting at the Chung-hua Institution for Economic Research. Liu notes that a formal program to promote immigration might help boost the numbers of young professionals available for the workforce. He also urges the government to make it a priority to find ways to raise the income of younger workers. “People here work too hard and too long, and young parents have no time to look after their children,” he says. In addition, Liu says, the government should look for ways help Taiwanese professionals work more efficiently so they do not spend so much time in the office. Raising the retirement age is also an option. Citibank economist Cheng Cheng-mount says the government should outlaw discrimination against older workers. The Ma Ying-jeou administration has also introduced various incentives to boost the fertility rate, such as maternity leave subsidies that amount to 60% of a worker’s salary for six months and financial support for preschool education for five-year-olds.

— By Jane Rickards

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Cover Story good news, as in Taiwan’s last sustained upturn in 2005-2007, retail sales only averaged 3.7% growth year-on-year. Through September, car sales were up 20.7% and department store sales 9.2%, UBS added. Whether or not consumption can hold up will depend largely on what happens in Europe over the coming year, since a crisis atmosphere would dampen the confidence of Taiwan consumers, economists say. Still, Citi’s Cheng predicts that retail sales and household consumption will be a main economic driver next year, aided by increases in nominal wages, which rose by 5% last year, 3% this year, and are likely to keep increasing.

Export-linked investment NEW ENTRANTS — Spanish fashion brand Zara, which opened its first local outlet in the Taipei 101 mall, is among new arrivals in the retail sector. photo : cna

Private consumption, on the other hand, markedly boosted by Chinese tourist arrivals, has been strong. TIER estimates that it will grow 3.48% this year, higher than Taiwan’s ten-year average, although the gloomy global outlook could drag it down to 2.94% next year, Chen Miao says. Retail sales have doing especially well, up 6-7% year-onyear in the first nine months, Phoo estimates. Taiwan has a “robust domestic market that is holding up well,” he says. Citing 5.6% growth in retail for the second quarter, a UBS report called it

似的慢溫現象：由於宣傳度不夠，加上規定繁瑣，開放初期每天來台人數只有3000個名額的三分之一，但現在的陸客團已經成為台灣零售業者的主要客源之一。台經院景氣預測中心主任陳淼指出，台灣服務業長期處於逆差，但現在已經出現順差。經濟專家表示，兩岸去年簽訂的經濟合作架構協議（ECFA）目前幫助有限，要能明顯提振經濟，優惠或零關稅的產品項目必須更多，因為早收清單納入的 500多項產品分散於多項產業，對GDP的貢獻有限。但渣打銀行的符銘財指出，電子設備與機具，以及銅、鋼製零件等產品，能夠納入早收清單，的確有助台灣對中國的出口值超越南韓（雖然台、韓對中國出口的市占率都下滑）。經濟專家也認為，台灣對中資的開放程度不夠，因此難以明顯拉抬經濟。台灣三月初再度開放中資參與 25個產業；自2009年六月卅日以來的四度開放，已使中資得以參與的產業達到247個。高科技業者的中資持股不得超過10%，兩岸合資企業則可達50%。但

Pointing to a weakness in the economic structure, the economists interviewed noted that private investment is too closely linked to the export boomand-bust cycle. In a global downturn, companies cut back sharply on new investments in plants and equipment, negatively impacting employment. UBS, for example, estimates that private investment last year shot up by 23.4% due to the stellar export performance, but now that the outlook for the tech sector is so conservative, the growth rate for fixed investment is likely to be -1.5% this year

專家認為，中國投資人固然對績效好的科技業者興趣濃厚，但過低的10%上限已影響投資意願。中國移動 2009年試圖購入遠傳電信12%的股份，最後就被認定不符法規。然而，民間消費受陸客刺激呈現活絡景象。台經院的陳淼表示，台經院預估民間消費今年成長3.48%、高於十年平均，不過明年可能因全球景氣拖累下滑至 2.94%。渣打銀行的符銘財則預估，零售業今年表現應該非常搶眼，前九個月年增6%至7%。符銘財說，「台灣國內市場表現沉穩」。瑞銀的報告指零售業第二季成長5.6%，表現甚至優於2005年至2007年景氣暢旺期的年平均成長3.7%；而且前九個月的汽車銷售年增20.7%，百貨業年增9.2%。不過經濟專家認為，消費力道能否維持，主要還是得看歐債風暴的情勢，因為危機感可能打擊消費者信心。不過，花旗的鄭貞茂仍然認為，零售與家庭消費將是明年的主要經濟動能，而且名目薪資增幅可望延續去年5%、今年3%的成長幅度。

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and -0.8% in 2012. “I think if there were public investment in collaboration with the private sector, it might help mitigate some of this weakness,” Phoo says. The unemployment rate in September, according to DGBAS, fell by 0.17 percentage points to reach 4.28%. Seasonally adjusted, the drop was by 0.09 percentage points to 4.27%. Phoo, like other economists, cautions that it will be very difficult for the unemployment rate to improve much further. In fact, the Central News Agency quoted the Council of Labor Affairs as saying that almost 3,000 employees had been asked to take unpaid leave as of early November, although unions say the real figure is far higher. In addition, Inventec, a contract maker for Hewlett Packard’s tablet computers, recently laid off nearly 400 employees after the U.S. firm said it was ending production of its TouchPad. Looking at the public sector, the government is under pressure to reduce spending to improve its fiscal situation. But if the world economy takes a serious turn for the much worse, the government may need to step in to offer some stimulus, economists say. Taiwan has two constraints that prevent the central government from over-spending: the value of government bonds issued may not exceed 40% of the average GNP for

the past three years, while the net bond issuance may not exceed 15% of total budget expenditures. The central government deficit is approaching the legal limit, with Goldman Sachs estimating that it will reach 37.5% of GNP in 2012. Turning to monetary policy, the Central Bank in late September ended five quarters of interest rate increases that were installed to counter excessive looseness in money supply, leaving the discount rate on 10-day loans to banks at 1.875%. Cheng and other economists say that rates are very likely to be left

出口相關投資經濟專家認為，台灣經濟結構的弱點在於，民間投資太在乎外銷景氣循環：全球景氣一回落，企業就大幅減少廠房與設備的投資，失業率當然攀高。瑞銀分析，去年外銷成長強勁，民間投資一口氣大增 23.4%，但隨著高科技業前景看淡，今年的固定投資負成長1.5%，預估明年也是負成長0.8%。渣打銀行的符銘財說，「如果能有政府投資，或許能多少改善一下狀況」。主計處公布的九月失業率，減少0.17個百分點至 4.28%。排除季節性因素後，減少0.09個百分點至 4.27%。符銘財與其他經濟專家都認為，失業情況不易改善。中央社引述行政院勞委會的說法指出，11月初就已經有3000名勞工被要求休無薪假；但工會認為實際人數還要更高。另外，惠普（H P）代工廠英業達最近裁員400人，因為HP決定不再生產平板電腦 TouchPad。

CONTINUED DEMAND — Consumer interest in the ipad and other reading devices is good news for suppliers in Taiwan’s Information Technology industry. photo : cna

固然政府必須撙節支出以維持財政穩定度，但專家主張，如果全球經濟持續惡化，政府還是得拿出救經濟的辦法。台灣的公債發行有兩道上限：第一是中央政府債務餘額不得高於前三年國民生產毛額（GNP）平均數的40%，其次是每年新增債務不得超過總預算與特別預算歲出總額的15%。台灣中央政府公債發行已接近法定上限，高盛則預期2012年將達GNP的37.5%。此外，中央銀行自去年六月起連續五季升息，但今年九月決定暫停升息，重貼現率維持1.875%。花旗的鄭貞茂與其他專家認為，低利政策最快也要2012年中才會鬆動，更可能維持到2013年，因為決策官員必須先能看清全球經濟走向。房地產價格下跌與外銷訂單減少已經舒緩通膨壓力，也減少緊縮貨幣政策的必要性。主計處十月即下調通膨預估，今年由1.59%降為 1.51%，明年由1.21%減為1.12%。經濟專家指出，台灣金融體系內仍有充足資金，就算央行降息以寬鬆貨幣供給，也不見得能夠解決眼前問題。高盛集團認為，台灣非常容易受到出口萎縮的

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Cover Story

IN THE WORKS — Construction is under way on the Taipei Main Station Redevelopment Project, which will involve twin high-rise towers for office, residential, retail, and hotel use.

flat until 2013 (or mid-2012 at the earliest) when the world economic picture becomes clearer to policymakers. Declining home prices and slowing export orders have eased inflation, weakening the case for money tightening. DGBAS in October lowered its inflation forecasts for this year from 1.59% to 1.51%, and from 1.21% to 1.12% for 2012. On the other hand, economists say, Taiwan still has far too much liquidity in its system, meaning that monetary easing in the form of more rate cuts will not provide a remedy for the current economic woes. Noting Taiwan’s vulnerability to an export downturn, Goldman Sachs says the island has “little room for monetary maneuvering and limited potential impact from further easing in economic cycles.” Since the capex cycle is linked to exports, interest rate changes do little to boost investment demand, GS says, and the Central Bank rate hikes have had no effect on local banks’ lending and deposit rates – with the lending rates of the five largest banks remaining below the rediscount rate. The situation is due in part to the excessive number of banks in Taiwan, leaving the banks with low pricing power due to intense competition. “We believe it would be crucial for the government to be aggressive in boosting near-term economic growth, especially

photo : cna

影響，貨幣政策操作空間較小，對景氣循環的影響亦有限。高盛表示，既然資本支出取決於出口狀況，升降息難以影響投資意願，而且央行升息無法改變銀行的存放款利率，證據之一就是五大銀行的放款利率仍然低於重貼現率。造成此一現象的原因之一是台灣的銀行家數過多，導致銀行必須以價格戰求生存。高盛指出，政府必須積極提振短期經濟成長，特別是因為貨幣政策似乎已經無能為力。

不動產市場台灣的房地產價格雖然已經飆漲一段時間，但未來的增幅有限，甚至可能下滑。高盛集團指出，房價在2004年至2009年間每年平均成長8%，2010年猛漲 10.8%，占全台房屋總數三成的台北與新北市，特定地區的漲幅更為驚人。房價可能回穩的原因之一是，奢侈稅六月實施後，購入一年內出售將加徵15%稅金，兩年內出售將課徵10%。而在此之前，央行去年

12月已經祭出抑制房價手段，限制第二套房貸不得高於評定價值的六成（原為七成），且以土地抵押貸款時不得超過六成五。花旗的鄭貞茂指出，大陸的台商2009年開始投資台灣房產，但其資金已經開始回流對岸。此一有利台灣房價回穩的趨勢逆轉，主因是中國開始收緊銀根，而相對於中國的高利率，台灣借款成本相對便宜。高盛集團指出， 2010年下半年開始，台灣的放款成長速度就已經高於一般水準，也高於GDP成長率。高盛認為，放款增加的主因是大型與中小企業的貸款需求，但多數貸款最後還是流向對岸。經濟專家認為的「績優股」，無非還是高科技業者，包括晶圓代工大廠台積電，以及快速竄起為全球第四大手機廠的宏達電（HTC）。中經院的劉孟俊另外指出一些「潛力股」，如線性傳動元件業者上銀科技，以及自行車界的捷安特。花旗的鄭貞茂認為，台灣必須面對的經濟挑戰之一是，如何增加自己對外資的吸引力。台灣去年的國

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Economic Forecast

when monetary policy would be likely to be deemed ineffective,” GS says.

Property market Although Taiwan has been experiencing a property boom, real estate prices are likely to plateau for a period or even cool. Property prices rose 10.8% in 2010 after average increases of 8% over the previous five years, says Goldman Sachs, with individual areas such as New Taipei City and Taipei City (together accounting for 30% of the nation’s housing) spiking more sharply. The anticipated end to the price climb is partially due to government measures such as the “luxury tax” imposed in June – a 15% tax on some residences sold within a year of purchase and a 10% levy if sold within two years. This move came after the Central Bank in December last year sought to curb speculation by capping second-home mortgages at 60% of the property’s value (down from 70%) and restricting loans using land as collateral to 65% of the real estate’s value. Citi's Cheng and others note that money from China-based Taiwanese businesspeople is starting to flow back to China, reversing a trend that emerged in 2009 when the Taishang began to invest in Taiwan property. The reason for the

shift, which should also contribute to lower property prices, is Beijing’s credit tightening. With interest rates in China now very high, it is cheaper to borrow in Taiwan. The “total loan growth has been above trend and above GDP growth since 2H2010,” GS says in its report. “In terms of sector, robust loan growth has been mainly contributed by strong credit demand from the corporate and SME sectors. Nevertheless, we believe that a significant part of the loans has been made to Taiwan corporates operating in China.” As always, the standout Taiwan industries and companies cited by economists focus on the high-tech sector, where the Taiwan Semiconductor Manufacturing Co. (TSMC) is the world’s largest contract chipmaker and smart-phone maker HTC has risen from relative obscurity to be the world’s number four company in its industry. CIER’s Liu also points to Taiwan’s precision tools and machinery sector, for example ballscrewmanufacturer Hiwin Technologies, and to bicycle maker Giant. Among the economic challenges Taiwan must face up to is how to make itself more competitive in attracting foreign investment, Citi’s Cheng says. Taiwan’s foreign direct investment (FDI) came to only US$3.8 billion last year,

外直接投資（FDI）只有38億美元，低於區域競爭對手，如南韓的129億美元，以及越南的110億美元。鄭貞茂表示，台灣現在的FDI只能說是小巫見大巫，唯有持續拓展投資貿易才是正確之道，例如台灣與日本最近剛簽訂的投資協議，就使兩國企業可在對方國家享有國民待遇，也能自由將獲利轉匯回母國。花旗的鄭貞茂指出，外資卻步的原因，過去是兩岸無法直航，但現在是全球經濟惡化。他強調，更根本性的問題在於，政策透明度不夠，以及相較於競爭對手更為嚴苛的外國人居留與就業限制。渣打銀行的符銘財認為，相較於亞洲其他國家，台灣應該強化自身做為中國市場跳板的優勢。中經院的劉孟俊則點出另一項不利國際投資的障礙，即政府缺乏跨部會協調能力，導致各部會各行其是、甚至互相矛盾。他說，國家安全會議偶爾會介入統整，但對執行面的管理能力不足。他認為應該建立跨部會統整機制，提高台灣的應變能力與行政效能以吸引更多外資。

considerably less than rival countries, for example Korea’s US$12.9 billion or Vietnam’s US$11 billion. The Taiwan level “is not much at all,” Cheng says, adding that the landmark investment pact recently signed by Taiwan and Japan – where each side receives “national treatment” when investing in each other’s territory and both governments are obligated to assure free repatriation of profits – is a step in the right direction. P r e v i o u s l y, i t w a s p r i m a r i l y t h e absence of cross-Strait direct flights that deterred foreign investment, but now the main cause is the global downturn, says Cheng. Other fundamental reasons, he notes, are the insufficient transparency of government policies and the continued existence of restrictive regulations that make it difficult for foreigners to live and work here compared with some other investment destinations. Phoo adds that Taiwan could do more to attract investors from other parts of Asia by promoting the island as a base from which to penetrate the China market. CIER’s Liu cites another impediment to attracting foreign investors – poor inter-ministerial coordination, with different ministries pursuing separate and sometimes conflicting agendas. He says the National Security Council occasionally performs such a coordinating

對於台灣未來三至五年的發展方向，經濟專家們並無共識。許多人認為進一步鬆綁兩岸經貿才能提振台灣經濟，而且如果馬英九順利連任總統，兩岸經貿談判的步調應該會遠快於民進黨執政。高盛集團認為，兩岸關係攸關台灣投資環境，持續進展將有助吸引外資、發展服務業。花旗的鄭貞茂說，官員告訴他，政府非常希望在 2013年之前落實ECFA的貨物貿易自由化承諾，「這將是台灣外銷的一大利多」。渣打銀行的符銘財則說，如果國民黨繼續執政，陸客來台人數未來三、四年可望倍增。部分經濟專家則認為，就算民進黨取而代之，兩岸經貿自由化仍將持續進行，只是步調較慢。但不論哪一黨執政，專家們都相信，兩岸談判將越來越困難。花旗的鄭貞茂指出，「早收清單就像是見面禮，貨品項目敏感性不高，對兩岸各自產業的影響也不大」。然而，一旦談判進入到實際利益與敏感產業，進展將會非常緩慢。

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Cover Story role in the Ma administration, but has not been able to exercise strong enough control. He proposes the formation of a coordinating supra-agency to boost investment by making Taiwan more flexible and efficient. As to Taiwan’s likely economic direction over the next three to five years, opinions among economists vary. Many look to further opening up to China as a way of invigorating the Taiwan economy, and if President Ma wins reelection in January, they see negotiations with China on further liberalization as occurring much faster than with a Democratic

Progressive Party (DPP) administration. “Cross-strait developments are critical in lifting Taiwan out of its sluggish investment cycle through increased foreign investments and further development in its service sectors,” GS says in its October report. Citi’s Cheng says government officials have told him they want to completely liberalize the goods trade under ECFA by 2013. “This would be a big boost to Taiwan’s exports,” he says. For his part, Standard Chartered’s Phoo says that if the Kuomintang secures another term, the number of mainland tourists would

double over the next three or four years. Even if DPP wins the election, say some of the economists, the policy of cross-Strait liberalization is likely to continue, though perhaps at a slower pace. But no matter who is elected, they generally agree, cross-Strait negotiations are going to get tougher. “The early harvest was like a free gift, based on items are not so sensitive or don’t h a v e a b i g e f f e c t o n Ta i w a n e s e o r Chinese industries,” Cheng says. Once real interests and sensitive industries are involved, the negotiating process will be long and slow.

Looking for domestic economic drivers

conomists say it is difficult for Taiwan, with a market of 23 million people, to buffer itself from global economic headwinds. “Taiwan has a certain market size domestically, but not as large as the one in Korea,” says Tony Phoo, an economist with global market research at Standard Chartered Bank. Unlike Taiwan, “Korea can grow on two engines and a weak export sector can be mitigated by a strong government and a strong domestic market.” But one thing the government can do to help when exports have been hit by global economic turmoil, experts say, is boost investment in infrastructure. Following former president Chiang Ching-kuo’s “Ten Major Construction Projects” in the 1980s, public participation in the Taiwan economy has been low over the last 20 years, Phoo says. “That actually leads to the very vibrant private sector economy in Taiwan, and although it’s one of Taiwan’s virtues, policymakers might need to do a rethink as to whether, at a time like this, they ought to fine-tune – or refine – some of these policy measures,” Phoo says. For example, he continues, the government could consider enlarging the 12 i-Taiwan infrastructure projects. Approved by the Executive Yuan in 2009, they already carry a NT$3.99 trillion (US$133 billion) pricetag, including government spending of NT$2.79 trillion and private investment of roughly NT$1.2 trillion over an eight-year period. The projects entail port facilities, flood control works, sewage system expansion, and various IT projects. Economists have called for the government to respond to the global economic gloom by accelerating public infrastructure projects in partnership with the private sector. Public-private partnerships are especially suitable in Taiwan's current economic climate, Phoo says, as interest rates are low and there is a lot of liquidity, meaning that the private sector side can obtain cheaper funding with less burden on the government budget. Good examples of this, Phoo says, are proposed build-operatetransfer projects as part of the Taoyuan Aerotropolis scheme. The plan 28

INFRASTRUCTURE — Work is underway on a 51-kilometer MRT connecting downtown Taipei and the Taoyuan Airport, as well as extension of the elevated portion of the No. 1 Freeway. photo : cna

expects to receive government investment of NT$2.4 trillion by the year 2020, and the Taoyuan Aerotropolis also hopes to attract NT$1.2 trillion in investment and create over 80,000 new jobs. Citibank Economist Cheng Cheng-mount adds that if Taiwan were allowed to participate in infrastructure projects in China’s latest round of five-year projects, it would boost Taiwan’s GDP growth, as would allowing the Chinese to invest in Taiwan’s infrastructure. “I believe it would be win-win,” he says. Phoo and Liu Meng-chun, director of the center for economic forecasting at the Chung-hua Institution for Economic Research, also point to the government’s plans to build low-cost housing, saying this could boost domestic demand if it is weakened by an export slump. Liu cites the government’s plans to build 4,384 units of affordable housing in the Fuzhou area of Banqiao. The project, together with plans for 2,451 units of affordable housing in Linkou and another 1,661 units in Taipei and New Taipei City, is part of a program to build a total of 10,000 units in order to help cool down rising property prices, the Council for Economic Planning and Development says. — By Jane Rickards

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A N A LY S I S

Is Taiwan Too Economically Dependent on China?

Photo : cna

While some domestic economists express concern, most seem more worried about the declining Taiwanese market share on the mainland. BY JONATHAN LIN

n the first half of this year, Taiwan’s exports to China (including Hong Kong) came to US$62.9 billion, accounting for a full 40.82% of the island’s total exports. China also accounts for an estimated 80% of Taiwan’s overseas direct investment. Considering that high degree of cross-Strait economic involvement, some observers have raised the question of whether Taiwan is putting too many eggs in a single basket. AmCham Taipei’s 2011 Taiwan White Paper, for example, suggested that Taiwan seek to avoid over-reliance on any one market by making a greater effort to promote trade and investment with other parts of the world, especially the United States, Europe, and ASEAN. Most of the domestic economists

and government officials contacted for this report, however, said they were relatively unworried about the proportion of exports and invest ment going to China. Several, in fact, expressed greater concern about Taiwan’s declining market share in China, and urge stepped-up efforts to sell in China so as to stay competitive with rivals South Korea and Japan. They see little possibility that other locations can provide the same kind of business opportunities as are being found in the fast-growing China market. At the same time, China’s claims to sovereignty over Taiwan complicate the economic relationship. Tung Chengyuan, a professor at National Chengchi University’s Graduate Institute of Development Studies and a former vice

chairman of the government’s Mainland Affairs Council, offers the reminder that the question of Taiwan’s degree of economic dependence on China must also be viewed from the perspective of the political implications. “Businesspeople in Taiwan might be influenced by the Chinese government to lobby for certain political changes,” he says. “This is something the Taiwanese government will need to help guard against.” Regarding the steady rise in Taiwan’s investment across the Strait – the value rose by about 16% in the first half of this year – Academia Sinica economist Hu Sheng-cheng explains that it is occurring because China is the ideal place for Taiwan companies to base their manufacturing operations. “Expanding investment in China allows

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A N A LY S I S

Taiwanese industry to develop their scale easily,” notes Hu, who served as chairman of the government’s Council for Economic Planning and Development (CEPD) when the Democratic Progressive Party was in power. He notes that most of the FDI that going into China comes from Taiwan’s ICT sector, which has benefited from the investment in terms of increased competitiveness. For Hu, the main problem with the degree of Taiwan’s investment in China is that it has led to too much concentration on one market, eroding the country’s strategic deployment on the international stage. “Taiwan used to be the number-one investor in Vietnam, but we’re now number two,” he says. “We dropped from number three in Malaysia to number five, and in the Philippines from number seven to number eight.” In terms of imports, although the situation is far less advanced than with exports, Taiwan has also been becoming increasingly more dependent on China. Imports from China now account for 16% of Taiwan’s total, making the PRC the second largest source of supply for this market and steadily closing in on the 18.6% share held by Japan, long the number-one supplier of Taiwan’s imports. With the

improvement in cross-Strait relations, China’s exports to Taiwan grew by 27% in the first 10 months of this year, compared with Japan’s much smaller 3.4% growth. Taiwan still prohibits the import of more than 2,000 items from China (the majority of them agricultural products), but the Bureau of Foreign Trade has generally been releasing at least a few commodities from the banned list each year. The Economic Cooperation Framework Agreement (ECFA) process is also expected to bring quickened liberalization in this regard. Hu cautions against over-concentration of sources of supply in one area. “We saw the problem with dependence on Japan’s imports during the earthquake this year,” he notes. “When parts from Japan could not get here, our manufacturers suffered.”

Exports and market share Unlike FDI and imports, Taiwan’s exports to China as a percentage of total exports have been decreasing. Some point to China taking 40.4% of Taiwan’s exports as an indication of Taiwan’s over-dependence on China, but the number in fact is down from last year’s 42.7% and is expected to continue to drop over the next five to

ten years, according to Tristan Liu, deputy director of Research Division II at the Taiwan Institute of Economic Research (TIER). That decline, he explains, has less to do with Taiwan's efforts at export diversification than it does with developments in China in “supply chain integration.” He notes that Taiwan’s exports to China have long consisted primarily of industrial materials, machinery, components, and semi-finished goods. Those upstream and intermediate products are then used to assemble finished products. In 2010, 95.4% of Taiwan products sold to China were upstream or midstream products. But China's efforts at developing domestic sources of supply for these items – the process Liu refers to as “supply chain integration” – has resulted in steadily less dependence on these imports. Contributing to that trend has been the investment by many Taiwanese parts and materials suppliers to establish production facilities in China, reducing the need for their downstream customers to bring goods in from Taiwan. Under these conditions, the China slice of Taiwan’s export pie can be expected to continue to grow, but to grow more slowly than the pie as a whole. Liu says that the localization effect,

Taiwan has stepped up participation in trade fairs in emerging markets in an attempt to diversify its exports. At left is the Taiwan pavilion at an IT exhibition in Turkey and at right a green energy exhibition in Poland. Photos: TAITRA

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A N A LY S I S Changes in Export Market Structure 2011

15.48%

Changes in Import Market Structure

2001

11.85%

2011

23%

19%

2001

16%

34.39%

10%

16.17% 40.4%

18.6%

22% 16%

10.2%

11.65%

United States

China/Hong Kong

Japan

Europe

NOTE: 2011 data based on 10-month figures

along with the rapid expansion in the overall China market, is also why Japan, South Korea, and Taiwan are all experiencing drops in market share in the PRC. Because Taiwan is the most affected by China's localization and has the smallest economy, its market share is currently the lowest among the three competitors. The ideal situation would seem to be for Taiwan’s market share in China to rise at the same time as a decline occurs in the proportion of Taiwan’s exports accounted for by cross-Strait sales. Though difficult, achieving that ideal is considered possible by trade experts – but only if Taiwan can make the transition to producing and exporting finished products with a strong brand image. Possessing that strength in finished products would make Taiwan less vulnerable to China's localization process. It would also enable Taiwan to assert itself on the international stage to many markets, not just China – and such diversification would cause the percentage of Taiwan’s exports going to China to diminish. At the same time, if Taiwan has stronger brands it would be in a position to sell more to China at the expense of competing products from Korea and Japan, enabling Taiwan to achieve the dual goals of a higher market share on the mainland even while China accounts for a lower proportion of Taiwan's exports. It would therefore be possible for Taiwan to

be less trade-dependent on China and more competitive in the China market at the same time.

What’s being done While a decline in Taiwan’s market share in China may be inevitable in the short-term, the semi-official Taiwan External Trade Development Council (TAITRA) has been working to promote Taiwan's brands to China as well as to the rest of the world. “Markets other than China are just as important and we also want to put pay attention to them,” says Tiffany Chen, head of TAITRA’s Market Research Section II. “TAITRA has organized a lot of activities to reach these markets.” By the end of the year, TAITRA will have organized Taiwan Trade Fairs in the Chinese cities of Liaoning, Tianjin, Guangzhou, Nanjing, Wuhan, Beijing, and Chongqing. In the other eight targeted major markets – Vietnam, Indonesia, India, Brazil, Russia, Turkey, South Africa, and the Middle East – TAITRA has conducted promotional activities suitable to each market's unique characteristics. Chen stresses that developed markets like the United States and Europe are also getting their share of attention. “We recently set up a Taiwan Trade Center in Los Angeles,” she notes. “That's the fifth branch office in the States. In Japan, we only have three, and in Korea, only one. Taiwan

24%

14% 14%

10.36%

10%

15.8%

17%

28%

ASEAN

Others

SOURCE: Ministry of Economic Affairs

really cares about the U.S.” In the final analysis, to avoid being economically over-dependent on China while staying competitive on the international stage, Taiwan will need to work hard to expand trade and investment with many parts of the world, including China, with an emphasis on developing finished products with a strong brand image. In addition, a Bureau of Foreign Trade (BOFT) official managing bilateral economic and trade affairs stresses that establishing free trade agreements (FTAs) with other countries can be just as important as trade promotion. “We want to sign FTAs with our main trading partners, like the European Union, the U.S., New Zealand, and ASEAN,” she says. “We are very concerned with regional integration in the world. Given that Doha negotiations have been suspended, things have really shifted to bilateral efforts.” Besides trade promotion and FTA negotiation, economists Hu and Liu both note the importance of innovation in keeping Taiwan competitive. “Taiwan's goal should be to create more innovative downstream products,” says Liu. “The government has this goal and should keep it up.” “It's not just about brand name,” adds Hu. “It's about continuing to innovate and make good final products. If we are not able to innovate, the brand value will be eroded anyway.”

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What’s on (International) TV?

Photo : StAR SPoRtS

The viewing habits of the Taiwan audience tend to be more parochial than their counterparts in many other markets in the region. BY AIMEE WONG

nternational television content in Taiwan spans the spectrum of global media from American football to Bollywood cinema. Despite challenges from industry regulations and the transition to digital technology, the Taiwan market offers quite a few surprises. In fact, in certain respects international programming here actually outshines what can be viewed elsewhere. For example, it can be difficult to view out-of-market sports teams in the United States, where most games are shown on regional sports networks based on local interest. “Actually people in Asia, especially people in Taiwan, who want to watch sports are luckier than the viewers in the States,” says Hsi Shen-lin, managing director of ESS Asian Networks Taiwan Branch

(part of ESPN STAR Sports), which operates more than 20 channels covering 24 countries in Asia. “They can watch more than 10 Major League Baseball games in a week, most of the top-level football in Europe, and also have a chance to watch the most popular local sports like Super Basketball League (SBL) on the same platform.” Though Taiwan is one of the Four Asian Tigers, the viewing behavior of its citizens differs considerably from that of audiences in Hong Kong, Singapore, and South Korea, which are more international hubs with larger expatriate communities and higher levels of English ability. News channels, for example, are one area in which foreign content providers are simply unable to gain a significant foothold in Taiwan. “The Taiwanese are very fixated on

local news,” says Jay Lin, CEO of Portico Media, a media production and distribution company that operates 12 digital channels on the island. “Taiwan news reporting is very local, and a lot of it is ‘social news’ – very soap operaish, almost like National Enquirer reports. International news that tries to break into this market is hindered by a lack of language understanding and the exorbitant localization cost. In other countries like Singapore or Malaysia, people watch a lot more international news.” The enormous variety of available content poses a major challenge for international providers here. How does one approach this market when Taiwanese viewers’ preferences vary so widely? For HBO, the answer is simply to

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broadcast the same content as across the 21 other markets in its AsiaPacific region. “HBO Asia is branded in Taiwan as a Western, Hollywood channel that brings the best and the latest Hollywood blockbusters,” said Jacelyn Kek, HBO Asia’s senior vice president for sales and marketing, in a phone interview. “Taiwan enjoys the same quality content as the rest of the Asia-Pacific region.” Sony Pictures Television Networks operates six brands across 22 countries in Asia, including AXN and Animax in Taiwan. The AXN content in Taiwan is similar to what is shown in other parts of the region, but with a stronger focus on movies and action/adventure drama series, especially ones that have storylines that conclude within each episode. Two of their more popular shows here are CSI and Hawaii 5-0. When it comes to reality shows, however, the Taiwanese preference is a bit different from other parts of the world. “Taiwanese viewers tend to be drawn more to celebrity-driven shows, while viewers in the West prefer real, everyday people to star in such reality series,” notes Calvin Wong, communications manager at Sony Pictures Television Networks-Asia. “But we do see that changing, with AXN broadcasting shows – such as WipeOut, which features ordinary people running obstacle courses – that are gaining popularity in Taiwan.” And remarkably for a country that is typically more interested in American sports like basketball and baseball than in European football and rugby, Taiwanese are particularly keen on the FIFA World Cup. Although football ratings usually hover around 0.1 (still a 10-fold growth from two years ago, when they were at 0.01), they can reach 2.5 during the tournament. “It’s hard to understand, because generally people in Taiwan don’t watch football at all, or very few of them do,” Hsi says. “But they're not actually watching the World Cups for the football,” he explains. “They’re watching something akin to a drama about an international world war happening in a remote country, and when everybody in the world is chasing

this event, it’s more than a sports event. They’re watching a news event, a world trend, a most-talked-about topic in the world – at the same time as the rest of the world.” Fox International Channels (FIC), the international multimedia arm of News Corp., offers a combined force of 24 channels in Taiwan, including the FOX, National Geographic, and STAR brands. While many of FIC’s channels are also pan-Asian in coverage, the company does occasionally purchase content specifically for Taiwan, such as a special program with Estee Lauder to promote breast cancer awareness. It may also carry content originally produced for China that may not have much appeal in most other Asian markets. But what really sets FIC apart is its local productions, many coproduced and funded by government agencies, featuring travel and culture stories in Taiwan that are subsequently syndicated and broadcast by FIC’s other branches. The Taiwan to the World mini-series, a joint venture between FIC and Taiwan’s Government Information Office (GIO) broadcast features stories about Taiwan in 168 countries and 37 languages. The series garnered prizes from Taiwan’s Golden Bell Awards, the Columbus International Film and Video Festival, and the Montana CINE International Film Festival. “I think Taiwan

to the World is something that’s quite different,” says Joanne Tsai, chief operation officer at FIC. “We see ourselves as a bridge – we bring the world to Taiwan and we bring Taiwan to the world.” In addition, FIC has been capitalizing on Taiwan’s unique combination of Chinese culture and language expertise, relatively open regulatory environment, and adequate talent pool to initiate content for the Philippines, Singapore, and North America. “We’re trying to position Taiwan as a production hub so we can package this content and then distribute it to the world. We’re already doing this for Chinese movies for STAR Chinese and providing that to North America, Singapore, and Hong Kong,” Tsai says. “Because of the talents and skills of the Taiwanese and because the market is very small, it’s more efficient in terms of talent and cost effectiveness. You can do a good show and stay within your budget.” Operating a successful international brand means having access to a global network of resources, ideas, and technology. When ESPN HD was introduced in Taiwan, it was the second high-definition channel launched worldwide, after the United States. But while foreign content providers try to stay ahead of local competitors by importing concepts and technology from their overseas operations, not all features can

Joanne Tsai, COO of Fox International Channels Taiwan and its National Geographic Channel, speaks at the Earth Day Exhibition launch of the “Polli-Boat,” a vessel made of recycled materials to raise environmental awareness. photo : national geographic

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Publicity events to promote the launch of new shows in the local market: left, HBO’s Game of Thrones, and right, AXN’s Hawaii Five-O. Photos: courtesy of HBO, AXN

be successfully transplanted to Taiwan. Limitations on the technology and capabilities of local cable operators may be constraints on the extent of localization. HBO, for example, supplies all subtitles in traditional Chinese with dual English/Chinese language text, but it doesn’t yet offer dual-language audio tracks. While dual-language options are already a feature in the company’s Singapore, Hong Kong, and Indonesia broadcasts, not all of Taiwan’s cable operators’ set-top boxes are able to handle dual-language options. Although HBO operates two HD channels in Taiwan, it has so far not been able to release HBO On-Demand, one of its signature services internationally. “It’s a question of progression,” explains Jacelyn Kek. “Once the tech capability is there, we’ll come out with the product.” She’s referring to the fact that on-demand channels are feasible only when the local television market has reached a sufficient level of network digitalization. Along with pro-

viding greater bandwidth efficiency, allowing for higher quality and greater variety in content, digitalization permits broadcasters to provide electronic program guides, multiple language options, as well as multimedia and interactivity services required for videoon-demand. Television sets with analog tuners are unable to decode digital signals without the addition of set-top converter boxes. One of the concerns for cable TV companies is the potential loss of viewership by those unwilling or unable to purchase converters and/or new televisions, resulting in decreased subscriptions and advertising revenue. For that reason, markets often require some government intervention to push the digitalization process along. By the end of this year, countries that will have completed full digitalization include Austria, Belgium, Cyprus, Denmark, Estonia, Finland, France, Germany, Israel, Latvia, Luxembourg, Malta, the Netherlands, Norway, Slo-

venia, Spain, Sweden, and Switzerland. Other countries, including the United States and Japan, have completed most of the digitalization process, but continue to operate some analog transmitters. For its part, Taiwan originally slated analog shut-off for 2012, but has pushed back this date several times. According to Jason Ho, director of the Broadcasting Contents Department of the National Communications Commission (NCC), the government is considering opening up a few more public channels and bringing more HDTV content to Taiwan before requiring 100% digitalization. He confirmed that Taiwan is now aiming for 50-75% digital viewership by 2015. The current digital viewership is only about 10-15%. “Over the last three years, Taiwan has gone from a purely analog TV infrastructure to something that’s a hybrid between analog and digital,” says Portico’s Jay Lin. “There’s a lack of rapid infrastructure development for

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the operators because the rollouts of the infrastructure for digital TV are kind of slow. Fewer people are able to subscribe to it, which means fewer marketing dollars allocated to its promotion, and there won’t be as much revenue attached to it. If the operators aren’t ready to roll out digital TV in a big way, then in turn we content providers, being subscriber-based, won’t grow that quickly.” A proposed new amendment to the Cable Radio and Television Act now under discussion would attempt to pressure cable operators to invest in digital infrastructure by making digital capability a stipulation for receiving new or renewed broadcast licenses. “The problem is that there is no incentive for cable operators to employ digital infrastructure around the island,” says ESS’s Hsi. Though cable operators will be able to create new tiered packages for digital cable offerings, the total price of those packages still cannot exceed the monthly maximum of NT$600 for cable television fees that the government set 10 years ago (and because

local governments also get involved in the process, the rate set in most localities is even lower). “The investment in digitalization would be billions of dollars, but the operators have no opportunity to increase their revenue,” says Hsi. “That’s why there’s been so little progress over 10 years.” No matter how this problem gets worked out, digital content will unquestionably play a key role in the future development of Taiwan’s cable television industry. The ease of selling content to the China market sets Taiwan apart from other countries in the region. “I think there will be more local content, more collaborations with China, and more foreign channels doing local productions like a Taiwan Top Chef,” says Jay Lin. “If the content is able to be sold into China, it changes the economics by opening up access to a much bigger market.” For the regulators, a challenge will be to find the right balance in welcoming new ideas and resources from abroad while also preserving room for local firms to flourish. “We encourage

competition so that we’ll get better shows,” says the NCC’s Ho. “We also want good foreign shows because this can encourage local shows to improve. But in addition we have to protect local shows, so a certain percentage of programming must be local.” Yet the revenue cap may in fact work against the cultivation of local products, as the creation of a show from scratch entails much higher costs than simply importing existing content with a proven popular format and applying subtitles. There is a risk that new channel operators short of revenue may find it necessary to accept more paid programs or “infomercials” than they normally would wish to do, says Hsi. “We all say standards are very important for channel operators, but when you’re doing business in less than ideal circumstances, eventually you have to follow the money. You have to change your beliefs or standards to ensure your survival, to do things you wouldn’t have done in the past – because you wanted to maintain your standards.”

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BEHIND THE NEWS

All Eyes Now on Kinmen as Potential Casino Center After the failure of a referendum in Penghu two years ago, other outlying islands are in contention to be site of integrated-resort development.

BY TIMOTHY FERRY

little more than two years ago, casino gambling in Taiwan seemed a sure bet. The ruling Kuomintang (KMT) – long supporters of casino development – had returned to power, and by early 2009 the Offshore Islands Development Act had been amended to allow for casino development as part of a larger integrated resort (IR) model that would also include international hotels, convention centers, and other tourist facilities. Inspired by Singapore’s phenomenal success in IR development, many thought the time was right for Taiwan to take its shot at Asia’s vast gambling market. Yet before the year was out, optimism had fizzled. Despite strong interest from major American gaming concerns and a base of KMT support, the offshore island of Penghu – once considered the leading contender for casino development – rejected the prospect in a referendum on September 6, 2009. Anita Chen, Taiwan’s representative for U.S.-based lobbying firm Park Strategies, says that compla-

cency and a committed effort from antigaming advocates put the kibosh on the plans for casinos on the island. “Supporters thought: this is bringing money, bringing revenues, who’s going to be against it?” she says. “They didn’t fully promote the economic benefits that this would bring to the local residents.” More troubling for casino supporters were the efforts by the opposition Democratic Progressive Party (DPP) against the introduction of the gambling industry to Penghu. Anita Chen says the DPP heavily mobilized its base to reject the proposal, under the leadership of chairwoman Tsai Ing-wen, now its presidential candidate. “Tsai Ing-wen flew to Penghu to personally lead the whole anti-gaming campaign,” says Chen, noting that Tsai participated in debates surrounding the issue and employed the DPP’s strengths in grassroots organizing to defeat the proposal. Attention has now moved to other outlying islands – especially Kinmen and Matsu, but with Tsai now neck and neck with the KMT’s Ma Ying-jeou in most polls for the upcoming presi-

dential election, supporters of casino development are left with the prospect of four more years of lost opportunity. “If the DPP wins the presidency, getting casino development started could be in jeopardy; the chance is very high,” says National Taiwan University of Science and Technology professor Liu Dayyang, an expert on casino development, Will Taiwan see casino development on one of the outlying islands – or anywhere – in the near future? Already Korea has authorized 17 casinos that mainly target Chinese gamblers, and Japan and the Philippines are also drafting proposals for casino complexes. Casino advocates worry that Taiwan will dither and ultimately miss out on what has become one of Asia’s – and the world’s – biggest economic booms. Casino operators have long been interested in Taiwan. William Bryson, a lawyer for international law firm Jones Day and an expert on gaming laws and on the specific situation in Taiwan, notes that during the boom years of Taiwan’s economy, high rollers from

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BEHIND THE NEWS

the island outnumbered those from Malaysia, Singapore, and Hong Kong combined. It is an open secret that underground gambling remains hugely popular on the island, with mahjong tables and baccarat claiming millions of dollars in revenue every day across the island, according to industry insiders. “E v e r y o n e’s a lwa ys b e e n in terested in putting a casino here because Taiwanese are well known for being willing to gamble,” says Bryson. “Putting a casino here is just putting a casino where there’s already a market.” Previous efforts at casino development began in the 1990s, but DPP rule put the issue on ice for nearly a decade. The recent efforts differ from the previous ones in explicitly not stressing the Taiwan market – but rather its proximity to the biggest gambling market in the world, mainland China. China’s rise to economic superpower status has had a tremendous impact on gambling in the region. The wealth and interest in gambling among Chinese, combined with investments from the globalized gambling industry dominated by Las Vegasbased firms like Sands and Wynns, has transformed Macau from a seedy haven for gangsters and money launderers into the world’s number-one market for casinos. The only place in China where gambling is legal, Macau is set to top US$30 billion in casino revenues this year – more than five times the level of Las Vegas. Singapore’s two casinos, Marina Bay Sands and Resorts World Sentosa, are also heavily patronized by Chinese customers. The two casinos opened only two years ago, but are already set to reach US$6.4 billion in 2011, relegating Las Vegas to third place. A traditional gambling culture long suppressed by Communist prohibitions has undoubtedly fueled this surge of Chinese gamblers willing to risk their hard-earned and undervalued yuan at casino tables and slot machines. “The people have gotten richer and richer, and have to spend their money somehow,” says Professor Liu. “And casinos are one alternative. The potential of casino gaming to accommodate

the growing economic development in this region is huge.” Gaming advocates are nearly giddy at the prospect of casinos on Taiwan’s outer islands. “I foresee that as long as you can build a nice property with local flavor – localizing the property in terms of architecture, culture, food, and natural beauty – I’m sure you’ve got some good business ahead,” says Liu. “The the market is growing and the potential is huge.”

Integrated resorts Many involved in the casino development efforts emphasize that casinos are only part of a larger program to develop the economies of the outlying islands. “We are only using casinos as a way to invite resort operators to come to Taiwan,” says George Lin of Lin and Partners, the Taipei law firm charged with drafting the legislation to regulate casino development and operations. Inspired by Singapore’s success with the integrated resorts concept, amendments to the Offshore Islands Development Act enacted in early 2009 calls for a full array of attractions – from convention centers to shopping malls to international hotels – and dedicates just a tiny proportion of the total floor space to the casino. Singa-

pore’s Marina Bay Sands, for example, contains a science museum, shopping mall, and convention center, and allocates just 3% of its total floor area to casinos. Resorts World Sentosa features a Universal Studios theme park and aquarium, and also dedicates less than 5% of its total space to casinos. But that tiny proportion dedicated to the casino floor drives nearly all of the profits at both of the Singapore properties. The Economist notes that 85-90% of both resorts’ total revenue comes from the gambling. And the profits have been so high – three times the initial projections – that Sands has already recouped its US$2-billion investment in Marina Bay Sands. Casino advocates in Taiwan are confident they could replicate such success on Taiwan’s outer islands. Taiwan has six such islands, but only three -Penghu, Kinmen, and Matsu – have ever been serious contenders for casino development due to lack of infrastructure and interest among the others. Kinmen and Matsu are located close to the mainland, right off the coasts of Xiamen and Fuzhou respectively, giving them close proximity to their likely markets, while Penghu is famous for its scenic beauty and great beaches. But despite the lure of economic development and high tax revenues,

LEARNING THE ROPES—Ocean Tech's training center in Neihu enables future dealers to get practice under close to real-life conditions. photo : Ocean Tech

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RCA and other U.S.-invested companies established the foundation for Taiwan's IT industry.

BEHIND THE NEWS

the failure of the casino referendum in Penghu highlights the obstacles surrounding the issue. Jones Day’s Bryson notes that anti-gambling activists consistently raise several “boogiemen” whenever casinos are proposed – the prospect that it will open the way to organized crime, money laundering, racketeering, prostitution, and drugs. He admits that Las Vegas has had a longstanding association with organized crime and that “Macau had a very sleazy reputation for a long time.” A staunch grassroots coalition in Taiwan of social welfare groups, religious organizations, and charities opposes casinos on the grounds that the social costs outweigh any benefits in economic development or tax revenue. Led by the DPP, in Penghu the antigambling group effectively exploited the government’s lack of regulatory framework for casinos. The Offshore Islands Development Act sets out only a barebones framework for integrated resorts, leaving much of the nuts and bolts of casino regulation to another Gaming Act that was not even in draft form at the time.

“Citizens had to vote on approving casinos without any actual understanding of what that would mean” or whether their communities would be effectively safeguarded, wrote Marcus Clinch, an associate with Taiwan-based Eiger Law, in Casino Management Enterprise magazine. Lin and Partners, according to George Lin, beat out nine international law firms for the chance to write the draft gambling legislation due to the attention it paid to protecting society from the potential harm from casinos. In 2010 the firm released a draft proposal for a Gaming Act that William Bryson says was very good at addressing the concerns of the antigambling lobby. George Lin says his firm looked at other gambling jurisdictions for ideas on best practices for ameliorating the potential harm of casino development. First, they defined casinos as coming under the category of “other financial institutions,” basically putting them on a par with banks in terms of the requirement to report suspicious transactions. Bryson says this approach

SAYING NO TO GAMBLING—A demonstrator in Penghu in 2009 expresses opposition to permitting the opening of casinos there. photo : cna

should effectively address concerns about money laundering. Further, all operators would be subject to intensive background checks, following precedents set in Australia and Nevada to root out organized crime. The process would entail casino operators providing extensive information about themselves, their employees, their major shareholders, and those who have major contracts with them. “That’s organized crime and racketeering gone,” says Bryson. Social ills caused by compulsive gambling is the main objection raised by anti-gambling advocates, and the draft law would take even more extensive measures than other jurisdictions to deal with the problem. For example, ATM machines would be prohibited in casinos. “Even Vegas has ATMs in casinos,” says Bryson. Again following international norms, the draft law provides strong “exclusion and self-exclusion” provisions, under which compulsive gamblers can be barred by their families or even themselves from losing beyond a certain limit or even from entering casinos at all. Singapore prohibits people who have recently exited bankruptcy from entering casinos, and imposes a S$100 (US$88) entrance fee to discourage its citizens from going into the casinos, while foreigners enter for free. Still, Bryson concedes that compulsive gambling is a problem that nobody really knows how to eliminate. “There’s no real best practice,” he says. For example, as several websites point out, Singapore’s entrance fee for locals, through it might reduce the frequency of visits to casinos, paradoxically could spur higher betting each time, effectively nullifying the effectiveness of the provisions. Nevertheless, Bryson sees the issue as affecting only a small number of gamblers, with the various provisions Lin and Partners have included as going as far as possible to ameliorate the problem. George Lin says his firm has been working closely with various government agencies, including the Ministry of Transportation and Communica-

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BEHIND THE NEWS

tions (MOTC), the Ministry of Justice, and the Ministry of Economic Affairs to assure that the legal provisions effectively address the concerns of society while providing for adequate revenues for both operators and government tax collectors. For example, they are proposing a Gaming Tax of 12% that – combined with Taiwan’s 17% corporate tax to make a total of 29% -- will be very competitive with Singapore’s 32% (22% for VIPs) and Macau’s 39% total tax rates. “We need to create a tax incentive to make up for the lack of infrastructure on the outlying islands,” he says. Lin says the revised draft for the Gaming Act should be delivered to the MOTC, which is responsible for tourism, within weeks. From there, it will probably be further amended either by the Ministry or the Executive Yuan before being presented to the Legislature, which is expected to pass it regardless of who wins the presidency.

More referendums Enactment of the law would set the stage for another round of local referendums in the two jurisdictions considered to be main candidates for casino development: Kinmen and Matsu. Approval of the referendum in Matsu is thought to be a shoo-in, as the island group, home to only a few thousand residents, is “desperate” for casino gambling, says Anita Chen of Park Strategies. Matsu reportedly wanted to hold its referendum as soon as possible to get a foot in the door, but was widely seen as responding to KMT pressure to hold off until after the presidential election in January. However, Matsu has significant drawbacks that might severely limit casino operators’ interest. The infrastructure is almost nonexistent for a major resort, and the area is plagued by fog and bad weather that often restrict flights. Bryson says that the situation is not hopeless, though, and predicts that several Asian operators might be interested in smaller-scale resorts there. Prospects appear brighter for

Kinmen. Located just a half-mile off the coast, it is a short ferry ride from Xiamen or an easy flight from major Chinese markets. The infrastructure would need to be enhanced, but Kinmen is somewhat developed and has been looking to expand its tourism industry. Bryson says several big-name Vegas operators – he declines to name names but the list is short – are giving the island “a good hard look.” Unlike Matsu, however, the local community is seen as largely ambivalent to casino development. Kinmen’s Kaoliang factory earns the island a reported NT$7 billion dollars (US$230 million) annually, much of which is paid out as a dividend to the local residents. One estimate is that a casino-resort in Kinmen would add another NT$2 billion to the economy, prompting a government official to ask Bryson: “Why do we need another two billion?” “They have a good life there,” says Anita Chen, noting that many of the island residents are comfortably employed as civil servants. At the same time, Kinmen differs from Penghu in not being considered a hotbed of antigambling activism. Whether the casino referendum will pass in Kinmen thus remains a wideopen question that may hinge on the size, scale, and quality of the proposal offered to its residents. On this point, the effort seems to be faltering. Ocean Tech, a Macau-based consultancy contracted by the MOTC’s Tourism Bureau to offer proposals for the island’s development, recently took a lot of flak in Taiwan’s media for the integrated-resorts plan it revealed to the islands during a recent road show. Martin Williams, a reporter for industry trade journal Gambling Compliance, says that Ocean Tech’s development concepts were so vast and outsized – and so off the charts in terms of public expectations – that people were reportedly angered by the proposals. Ocean Tech’s plan had a 40-hectare footprint that included – to the shock of many, including George Lin – a theme park. At 6.75 hectares, the size of the casino would be “larger than the top four or five casinos in

Macau – combined,” Williams says. “No one could understand what they were thinking.” Jacky Lei, Ocean Tech’s CEO, takes exception to the criticism, saying the large size is essential for attracting bigname operators to successfully propel the islands’ economy. “How can we ask them to invest US$2 billion and give them small scale?” he asks. “Nobody will want to touch it.” He adds that the theme-park idea is just one of several possible directions, and that Ocean Tech has also come up with proposals that focus on ecological tourism and convention centers. In addition, he blames lack of coordination between his firm and Lin and Partners for contributing to misunderstandings that might endanger the whole project. “The public is very confused,” he observes. He says his firm has been excluded from important meetings between the government and Lin and Partners. George Lin denies that his firm has avoided working closely with Ocean Tech, saying that Ocean Tech has been invited to attend several coordination meetings but failed to show up. These conflicting reports do little to assuage a public that remains fairly concerned over the possible effects of casino development on their way of life and whether the government is up to the task of providing sufficient regulation. Many are also worried about relying too heavily on Chinese gamblers for revenue, and fear that China could easily restrict its citizens from gambling in Taiwan. Gaming advocates call this eventuality unlikely, but industry assurances do little to dissipate such concerns. Anita Chen of Park Strategies says that casino-resorts could represent the next big wave of infrastructure development in Taiwan – but only if Taiwan acts quickly. She notes that Japan, Vietnam, and the Philippines are considering their own plans for casino development, so that long delays might cause investors to look elsewhere. “We’re not only competing for Chinese customers,” she notes. “We’re competing for investors.”

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IN GOVERNMENT CIRCLES

Making Progress in Judicial Reform

The passage of new legislation is seen improving the ability of the system to select good judges and remove bad ones.

BY JAMES PENG

series of scandals last year posed a black mark for Taiwan’s judicial system. Several High Court judges were found to have taken bribes, leading to the resignation of Judicial Yuan President Lai In-jaw, and a Supreme Court justice was charged with influence peddling when he pressed another judge for a favorable ruling in a case involving his son. In addition, some irrational verdicts aroused public indignation, such as lenient sentences given sexual abusers on the grounds that the victims – three- and six-year-old girls – had not resisted. In the end, however, these sorry episodes may have done some good. They

are widely believed to have contributed to the passage earlier this year of landmark legislation regulating the selection and disciplinary process for Taiwan’s judges – two decades after such legislation had first been proposed. “The three events completely exposed all the problems of the judicial system,’’ says Lin Feng-jeng, executive director of the private Judicial Reform Foundation, an organization founded in 1995 by members of the legal profession. “That’s why the Ma Ying-jeou administration finally took action to ensure passage of the Judges Act – to try to win back the people’s trust.’’ Upon taking over as the Judicial Yuan president in October last year,

Rai Hau-min vowed that his first task would be to assure enactment of the Judges Act so as to eliminate those bad judges. President Ma then directed the ruling Kuomintang to immediately put the bill on the priority legislative agenda, and it passed the first reading in just one and a half months and became law on June 14 this year. The Judicial Reform Foundation has praised the achievement, at the same time as noting that the legislation is still imperfect and needs improvement. Lin says while the law deserves a grade of only 50 out of 100, “after evaluation we think it’s better than nothing, and we can seek to amend it later on.’’ Although ideally the judiciary

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should operate through self-discipline, the failure of that system – shown by the existence of dishonest or incompetent judges (including what came to be known as “dinosaur judges,” totally out of touch with the needs of today’s society) – made clear the need for the proposed legislation, says Lin. The purpose of the new law is to create a system to enable the appointment of good judges and the elimination of bad ones. Regarding the selection process, the Judicial Reform Foundation had proposed ending the current method of relying on examinations, which put many “baby judges’’ in their early twenties on the bench immediately after graduation from law school and before gaining much social and professional experience. Instead, it recommended the appointment of judges from among veteran prosecutors and private attorneys. When the Judicial Yuan opposed the proposal as too drastic a change to implement easily, the Legislative Yuan sought a compromise. Although not included in the bill itself, the legislators suggested a gradual phasing out of the examinations over 10 years, with the judges chosen through exams constituting less than 20% of the total by that time. The elimination of bad judges has been a bigger concern for society. The Foundation’s position is that the review and removal process should be both transparent and supervised by an outside body – for example the Control Yuan, which has disciplinary powers over civil servants in the executive branch, or by an independent committee set up outside the Judicial Yuan specifically to handle the cases of judges accused of misfeasance or malfeasance. But the Judicial Yuan also opposed this suggestion, agreeing only to a panel that would operate within the Yuan and include judges among its members, although non-judges would constitute a majority of the membership. “The Judicial Yuan was afraid that the operation of the panel could get out of control,’’ Lin says, and “we finally compromised to accept the Judicial Yuan’s proposal.’’ The new Judges Act, which will take effect from January,

creates a disciplinary body consisting of three judges, one prosecutor, three attorneys, and four scholars. “The Judicial Yuan can choose the four scholars from among eight candidates, and that’s why we gave the law a rating of only 50, as the goal of outside supervision has been diluted.’’ “ Ta i w a n ’s j u d i c i a l s y s t e m h a s improved a lot over the years,’’ Lin says. “I would now give it a grade of 60 (out of 100), a significant improvement from the 20 to 30 a few decades ago when politics regularly intervened in judicial operations.’’ At that time, judges had to submit their proposed verdicts to their superior judges for review – a practice abolished in the mid-1990s, Lin says.

Additional goals Judicial Yuan President Rai says that more still needs to be done, as a survey conducted by the Yuan shows that fewer than 50% of citizens feel confident about the fairness of Taiwan’s judicial system. “I am determined to win back the full trust of the people,’’ he said in an interview. Rai identifies the system’s main problems as the quality of the verdicts rendered, and the efficiency, integrity, and attitude of judges. “We want all judges to be clean and considerate, and our operation to be transparent and efficient.” The new president is insisting on punctuality and a polite demeanor by judges – a reaction to previous conditions in which court proceedings frequently did not start on time and judges often scolded parties to the trial. Rai says he regularly sits in on trials in different courts, dressed casually in hopes of not being noticed, and afterwards offers suggestions on what should be improved. Beginning this July, the Judicial Yuan has made it possible to check the progress of cases on its website and also to pay relevant fees online. In mid-October it added the service of providing notices about trial schedules and other matters via email. The Yuan has also used the Internet as means of engaging in public education about

the legal system and the judiciary, and throughout 2011 Rai has held programs in all 17 of Taiwan’s district courts to meet with members of the public, listen to their comments, and inform them about the Yuan’s judicial reforms. Among the reform plans, the idea of introducing a modified jury system in some trials has gained the most public attention. Under the plan, five adult citizens would be selected by drawing lots to accompany a panel of three judges in hearing some major criminal cases that could result in a sentence of death or life imprisonment. The Judicial Yuan plans to submit a draft to the Legislative Yuan for deliberation early next year, in hope that the modified jury system can start in 2013 According the Lin of the Judicial Reform Foundation, the Yuan’s proposed arrangement differs from a pure jury system in that it still leaves

Judicial Yuan President Rai Hau-min took passage of the Judges Act as his first priority after taking office. photo : Courtesy of Judicial Yuan

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RCA and other U.S.-invested companies established the foundation for Taiwan's IT industry.

IN GOVERNMENT CIRCLES

EXPRESSING DISPLEASURE---Demonstrating in front of the Judicial Yuan last year, representatives of labor organizations argue that Taiwan's judges do not sufficiently understand labor relations and usually hand out verdicts favorable to management in labor rights cases. photo : cna

the final judgment in the hands of the judges. But the jury has the opportunity to express its opinion, and if the three-judge panel does not accept that opinion, it has to explain the reasons. Lin has doubts about the value of the innovation. “If the proposed jury system is merely allowing people to observe the process of reaching a verdict, then why waste the time” to go through the exercise, he asks. Judicial Yuan President Rai explains that the Executive Yuan opposed the idea of adopting a foreign-style jury system, as Taiwan’s constitution states that only judges can render verdicts. As revising the constitution could take many years, Rai says he adopted the “public trial-observation system” as a compromise. He cites the benefits of the observation system: increasing transparency to give people more confidence in the judicial system, making it more likely that verdicts will match

the expectations of the general public, serving as a form of public education to help people better understand the judicial system, shortening the length of trials to raise efficiency, and bringing the judicial system closer to the people. “I want to emphasize that the public trial-observation system is just the beginning, not the end, of inviting citizens to participate in the judicial process,’’ Rai says. Another frequent public complaint has been the long delay in the completion of many trials. The Judicial Reform Foundation found more than 200 cases in which it had taken over 10 years to reach a final decision by the Supreme Court, including one case that was reviewed more than 10 times by various courts over a span of nearly 30 years. “When we made report of our investigation public, it gave the Judicial Yuan a lot of pressure and forced it to introduce a Speedy Verdict Act,’’

Lin says. The law, enacted in April 2010 just eight months after its submission, requires that suspects may not be detained for more than eight years, whereas no limit was imposed in the past. The act also restricts the ability of prosecutors to file an appeal. Rai says the Judicial Yuan has set a target of completing cases before the Supreme Court within two years. In an October 21 statement, the Yuan said the number of pending cases in the Supreme Court had dropped to 3,883 from 6,133 at the end of May 2008, while the number of cases in the Supreme Administrative Court had fallen from 3,810 to 1,367 in the same period. In addition, the Judicial Yuan is working toward reaching full compliance with international human rights conventions, Rai says. It plans to amend the Code of Criminal Procedure to add a clause requiring the reading to offenders of their constitutional rights

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at the time of arrest, and to remove the regulation allowing for the filing of motions for retrial against the interests of defendants. It will also seek to amend provisions of the Juvenile Delinquency Act to ensure greater protection of juveniles’ human rights. Further, the Yuan is proposing a separation of the court and prosecution systems. Currently judges and prosecutors go through basically the same form of training, and both are considered to be part of the judiciary (whereas in most countries, prosecutors belong to the executive branch of government).

Martial law legacy Lin says the lack of trust in Taiwan’s judicial system can be traced back to the period of authoritarian political rule when justice was not regarded as an important issue and little effort was made to educate the public about law and justice. Since the abolition of martial law in 1987, the situation has been improving, but the previous negative image of the judicial system has not been completely eradicated, he says. During the martial law period, Lin notes, some 50 to 100 new judges were created per year through the examination system, but only 10 to 20-some lawyers were annually able to pass the bar exam. “How can a country only need such few attorneys? We can see the government didn’t want too many people studying law” for fear it would undermine its ability to maintain cont r o l , h e s a y s . To m a k e u p f o r t h e shortage of lawyers, it allowed military judges to practice law after retirement from the military. Now the pass rate for the bar exam is about 10.8%, compared with less than 1% before 1987, Lin says. Each year, about 8,000 to 9,000 students take the bar exam, enabling more than 800 of them to be certified as lawyers. Since 1989, private attorneys have started to run for the board of the Taipei Bar Association, which previously was occupied by the military judges-turned-attorneys. But as the Bar Association is set up

to represent the interests of lawyers, a group of attorneys in 1995 founded the Judicial Reform Foundation to take a broader view of the promotion of justice in Taiwan. Its members also include some judges, prosecutors, and scholars. To maintain its independence, the Foundation does not seek any subsidies from the government, but instead is funded through private donations. It has eight employees and the annual budget comes to less than NT$15 million (US$500,000). The Foundation drafts its own versions of proposed legislation such as the Judges Act, as reference for the Judicial Yuan and lawmakers. And it sends volunteers – chiefly law stude nts unde r the guidanc e of the ir professors – to observe trials in various parts of the island, a program that it believes has helped improve judges’ performance. In 1996, the Foundation began publishing evaluation reports on judges. The practice was later suspended for seven years, but it was resumed in October last year after the

notorious instances of misbehavior became public knowledge. The report even named what the Foundation considered to be the country’s five worst judges. A similar evaluation of prosecutors is due to be issued by the end of this year. The Foundation also lends assistance in certain individual cases where it sees principles of justice at stake, and it contributes to the judicial education of the general public through its magazine, website, and seminars. “Our judicial system has improved gradually, and actually there are a lot of good judges,” says Lin. “Taiwan’s judicial system is very good compared with mainland China, but if compared with Hong Kong, Singapore, and Japan, we are still lagging far behind.’’ Judicial Yuan President Rai stresses that judicial reform is “a long-term process that will never end.’’ He says the key is the mindset of judges. “If judges can engage in some deep introspection based on the principle that our function is to serve the people, then all kinds of reforms can be achieved.’’

DEMANDING CHANGE---The White Rose Movement, which started earlier this year after judges handed down lenient sentences against sexual abusers of young children, called on the Legislative Yuan to change the way judges are selected. photo : cna

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ounding out the year-long celebration of its 60th anniversary, AmCham Taipei adopted “Sixty Years of Fun!” as the theme of the 2011 American Ball, held November 5 in the Grand Ballroom of The Regent Taipei, sponsored jointly by the American Institute in Taiwan. The more than 300 attendees enjoyed 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 delivered on behalf of the sponsoring organizations by AmCham Chairman Bill Wiseman and AIT Deputy Director Eric Madison. Reprising his role as emcee, an energetic Chris Fay took the audience on a sentimental journey back through the decades as performances highlighted music from Elvis Presley, Donna Summer, Michael Jackson, and Lady Gaga. After a welcome drink of Jacob’s Creek Sparkling Wine, diners supped on a magnificent meal featuring “Mille Feuille” Ham with Potato and Tomato Jelly, Chestnut Soup, a choice of braised Short Rib with Mustard Sauce or Sea Bass Roll and Yellow Zucchini, and New York Cheesecake. The dinner was accompanied by Jacob’s Creek Shiraz Cabernet, Jacob’s Creek Chardonnay, and The Glenlivet 12-year-old Single Malt Scotch Whisky. Available at the bar were cocktails made with Absolute Vodka, Beefeater, Dita, Kahlua, Malibu, and Ballantine’s. The Ball was made possible due to the generosity of a number of sponsoring companies. These included Grand Prix Sponsor United Airlines, Wine & Liquor Sponsor Pernod Ricard Taiwan, Gold Sponsors HSBC, Mercedes-Benz, Standard Chartered Bank, and the Tobacco Institute of the ROC, Silver Sponsors Air Products, Alcatel-Lucent, Capital Machinery, Corning, JTI, and Lion Travel. The raffle grand prize, provided by United Airlines, was two round-trip business-class tickets from Taipei to any destination served by the carrier. The other gift sponsors were the Macau Government Tourist Office, Landis Hotels and Resorts, The Sherwood Taipei, Novotel Taipei, 3M Taiwan, the Howard Plaza Hotel Taipei, The Regent Taipei, The Westin Taipei, Shangri-La’s Far Eastern Plaza Hotel, Procter & Gamble, Le Meridien Taipei, Nokia, Fleur de Chine (Sun Moon Lake), Palais de Chine, Hotel Eclat Taipei, Hotel Royal Taipei, Grand Hyatt Taipei, NOESA, and Mercedes-Benz Taiwan Ltd.

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Soothe Your Body And Lift Your Spirits In Taiwan’s Hot Springs

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

ineral-enriched waters w a r m e d b y t h e E a r t h ’s geothermal heat rise to the surface at more than 120 locations around Taiwan. As the heat of summer gives way to fall’s cool breezes, the thoughts of many people turn to these hot springs. Luxurious hotels have been built at some hot-springs locations, allowing devotees to stay overnight and soak in the comfort of private suites. Others, by contrast, remain entirely undeveloped. Taiwan’s hot springs are amazing for their sheer variety. In terms of temperature, mineral content, and

scenic setting, no two are alike. Taipei residents are fortunate in having the springs of Xinbeitou on their doorsteps. The large number of soaking options there – together with the convenience of the capital’s MRT rapid-transit rail system – means that on chilly winter evenings, many people choose to go for a soothing dip on the way home from work. Xinbeitou has many reminders of the Japanese colonial period, which lasted from 1895 to 1945. When the Japanese took control of Taiwan, they brought with them a well-developed hot-springs culture that continues to thrive and evolve. From international tourists’ perspective, Taiwan’s hot springs have certain advantages over their Japanese counterparts. Whereas nudity and segregation by gender are standard (and required) at Japan’s famous onsen, swimsuits are worn at the majority of public hot-spring pools in Taiwan. Families can splash and soak together in these places, many of which are open-air and set against a backdrop of mountains and forest. As in Japan, each hot-spring guest is expected to wash his or her body thoroughly before getting in the water. In many s pr ings , the t emperat ure exceeds 45 degrees Celsius, so before getting fully immersed, you should gradually acclimatize your body to the temperature by scooping water and pouring it over yourself, then slowly lowering yourself in, one limb at a time. Many first-timers are surprised when told that after indulging in a hot spring, they shouldn’t shower before dressing, but rather let their skin benefit from the trace quantities of sulfur, sodium carbonate, and other minerals in the water. Luxuriating in a hot spring isn’t the only fun thing to do in Taiwan in wintertime. Because crisp, dry weather is the norm, November to March also happens to be prime hiking season in Taiwan’s low- and mid-elevation mountains. It’s an activity that naturally meshes with hot springs, and visitors staying in Xinbeitou or Wulai are spoiled for choice when it comes to trails. For those heading to Guanzi-

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s e e i n g ta i w a n ling in Tainan, there’s no better way of working up a pre-soak sweat than tackling Mount Dadong, the top of which is 1,241 meters above sea level. Guanziling also happens to be where, on October 15, the ROC Tourism Bureau launched the 2011 Taiwan Hot Spring Fine-Cuisine Carnival with Director-General Janice Lai in attendance. Now in its fifth year, the carnival is promoting 17 hot-springs resorts around Taiwan between now and January 15, 2012. Five – including Xinbeitou and Wulai – are in the northern part of the island. Another five are in the central and western parts of Taiwan. Three, among them Guanziling, are in the south, while the other four are in the eastern counties of Yilan, Hualien, and Taitung. The Tourism Bureau has put together a website (www.taiwanhotspring.net) with introductions to all 17 resorts and details of 120 participating businesses. Except at places popular with day-trippers, such as Samaoshan and Jinshan, the majority offer well-appointed accommodations for overnight guests. The website also has mouth-watering photos of delectable dishes that await visitors to these areas. These include Hakka specialties in Miaoli’s Nanzhuang, healthy dishes based on locally-grown plums in Dongpu, and Japanese-style cuisine in Xinbeitou. T h e To u r i s m B u r e a u h a s a l s o issued a 140-page booklet called the

2011 Taiwan Hot Spring Fine-Cuisine Carnival Passport. Free of charge and available from tourist-information counters around the ROC, the passport introduces scenic spots near each resort, as well as establishments where one can soak, enjoy an excellent repast, and then spend the night. F o r J i n s h a n a n d Wa n l i – h o t springs townships next to each other on Taiwan’s north coast – suggested diversions include the Juming Museum and the Yeliu Geopark. The former showcases the sculptures and personal collection of one of Taiwan’s bestknown artists; the latter preserves and presents a peninsula famous for its beautiful and bizarre rock formations. For that region, the fine-cuisine recommendation is Jinshan’s renowned duck meat. The passport includes QR barcodes, which smart-phone users can scan and use to access maps and other information. All sorts of travelers – be they tech-savvy or more traditional – will recognize and appreciate another feature of the booklet: discount coupons. There are 20 in all, and each entitles the second member of a pair to enter and enjoy a hot spring for just NT$100, anytime between Monday and Thursday. A total of 41 establishments are participating in this promotion, and in many cases the coupons offer substantial savings. The Spring City Resort in Xinbeitou, for instance, normally charges individual bathers

NT$560 on weekdays. Visitors should not limit themselves to businesses featured in this year’s carnival. Longnai Tang, less than 500 meters from the Xinbeitou MRT Station, is a prime example. Housed in a 70-year-old bungalow, it offers a thoroughly traditional, Japanese-style hot-springs experience. Far from the capital, there are some very special – albeit hard to reach – places. Visitors should not overlook wild and remote springs like the one at Lisong in Taitung County, the soothing waters of which are available only to those willing to drive deep into the mountains and then hike down a steep trail to the banks of the Xinwulu River. Seekers of unique experiences should also head to Green Island off Taiwan’s southeastern coast. This island of just 2,700 inhabitants has one of the world’s three saltwater hot springs. Soaking in sulfurous brine while waves break just a few meters away is an unforgettable way to greet the dawn. The 2011 Taiwan Hot Spring FineCuisine Carnival also embraces musical, puppetry, and dance performances. For details in Chinese, English, Japanese, or Korean, visit the carnival’s website (www.taiwanhotspring.net). For additional information about visiting Taiwan, please contact the tourism hotline at 0800- 011-765, or go to the ROC Tourism Bureau’s website (www. taiwan.net.tw).

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AmCham Companies through the Years As AmCham Taipei turns back the clock during this anniversary year to review its six decades of service, it is also asking its member companies to share photo remembrances of their early presence in Taiwan.

The 1999 opening ceremony for the Taipei MRT's ChunghoHsintien Line, which was equipped and serviced by Siemens. Among the dignitaries taking part were then Taipei Mayor Chen Shui-bian, then Premier Vincent Siew, then Minister of Transportation & Communications Lin Feng-cheng, and former Taipei Mayor Huang Ta-chou.

Microsoft Chairman Bill Gates delivering a presentation on the "Digital Nervous System" at a conference at the Taipei International Convention Center in June 1998.

The banner says it all: this was the Taiwan inaugural flight for United Parcel Service (UPS) on March 6, 1994 at what was then called the Chiang Kai-shek International Airport.

For the opening of the new Tienmu campus of the Taipei American School in 1989, the cafeteria staff baked a cake in the shape of the school's new building.

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