2012vol.42no,10 by AmCham Taipei

CU S

Re po DU Devic rt on ST e Ind the M RY ustry edic al F

THE AMERICAN CHAMBER OF COMMERCE IN TAIPEI

Taiwan Business

Topics

Extending and Improving Basic Education 追求優質國民教育

TAIWAN BUSINESS TOPICS October 2012 | Vol. 42 | Issue 10 中華郵政北台字第號執照登記為雜誌交寄 5000 10_2012_Cover.indd 1

NT$150

October 2012 | Vol. 42 | Issue 10 www.amcham.com.tw

2012/10/25 1:42:27 PM

CONTENTS NEWS AND VIEWS

4 Editorial

A Roadmap to Prosperity

OCTObE r 2 0 1 2 vOlumE 42, NumbEr 10 一 ○一年十月號

確立方向，邁向繁榮

5 Taiwan Briefs Publisher

By Jane Rickards

發行人

Andrea Wu

9 Issues

吳王小珍

Editor-in-Chief

總編輯

Don Shapiro

Narrowing the “China Import Ban”; Putting U.S.-Taiwan Data Online; Promoting Sustainability

沙蕩美術主任 /

Art Director/ Production Coordinator

後製統籌

Katia Chen

陳國梅

Staff Writer

縮減中國製品進口禁令；台美入口網站啟用；積極推廣永續發展

採訪編輯

Jane Rickards

李可珍

Manager, Publications Sales & Marketing 廣告行銷經理

Irene Tsao

曹玉佳

Translation

翻譯

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

American Chamber of Commerce in Taipei 129 MinSheng East Road, Section 3, 7F, Suite 706, Taipei 10596, Taiwan P.O. Box 17-277, Taipei, 10419 Taiwan Tel: 2718-8226 Fax: 2718-8182 e-mail: amcham@amcham.com.tw website: http://www.amcham.com.tw 名稱：台北市美國商會工商雜誌發行所：台北市美國商會臺北市10596民生東路三段129號七樓706室電話：2718-8226 傳真：2718-8182 Taiwan Business TOPICS is a publication of the American Chamber of Commerce in Taipei, ROC. Contents are independent of and do not necessarily reflect the views of the Officers, Board of Governors, Supervisors or members. © Copyright 2012 by the American Chamber of Commerce in Taipei, ROC. All rights reserved. Permission to reprint original material must be requested in writing from AmCham. Production done in-house, Printing by Farn Mei Printing Co., Ltd. 登記字號：台誌第一零九六九號印刷所：帆美印刷股份有限公司經銷商：台灣英文雜誌社台北市108台北市萬華區長沙街二段66號發行日期：中華民國一○一年十月中華郵政北台字第5000號執照登記為雜誌交寄 ISSN 1818-1961

COVER SECTION

14 Extending and Improving Basic Education

追求優質國民教育 By Alan Patterson

Taiwan’s proposed 12-year education system is aimed at developing a wider range of student talents, especially in fostering the creativity needed for Taiwan to be competitive in today’s knowledge-based global economy. But the plan has met with controversy. Critics object that the details of the program have not been sufficiently communicated to students, parents, and teachers.

22 Taiwan Gets a Passing Grade in English Though Taiwan compares favorably with many other countries in the region, listening comprehension remains a major shortcoming.

OFFICERS: Chairman/ Bill Wiseman Vice Chairmen/ William E. Bryson / David Pacey Treasurer: Carl Wegner Secretary/ William J. Farrell 2011-2012 Governors: William E. Bryson, William Farrell, Christine Jih, Edgard Olaizola, Neal Stovicek, Carl Wegner, Bill Wiseman. 2012-2013 Governors: Richard Chang, Sean Chao, Michael Chu, Louis Ruggiere, Revital Golan, David Pacey, Lee Wood, Ken Wu. 2012 Supervisors: Agnes Ho, Douglas Klein, Richard Lin, Fupei Wang, Jon Wang.

COMMITTEES: Agro-Chemical/ Melody Wang; Asset Management/ Christine Jih, Winnie Yu; Banking/ Victor Kuan; Capital Markets/ Jane Hwang, Jimin Kao, C.P. Liu; Chemical Manufacturers/ Luke Du, John Tsai; CSR/ Lume Liao, Fupei Wang; Education & Training/ Robert Lin, William Zyzo; Greater China Business/ Helen Chou; Human Resources/ Richard Lin, Seraphim Mar; Infrastructure/ L.C. Chen, Paul Lee; Insurance/ Mark O’Dell, Dan Ting, Lee Wood; Intellectual Property & Licensing/ Jason Chen, Peter Dernbach, Jeffrey Harris, Scott Meikle; Manufacturing/ Thomas Fan; Marketing & Distribution/ Wei Hsiang, Gordon Stewart; Medical Devices/ Susan Chang, Albert Lim, Tse-Mau Ng; Pharmaceutical/ David Lin, Edgard Olaizola, Jun Hong Park; Private Equity/ William Bryson; Public Health/ Jeffrey Chen, Dennis Lin, Dan Silver; Real Estate/ Tony Chao; Retail/ Prudence Jang, Douglas Klein; Sustainable Development/ Kenny Jeng, Davis Lin; Tax/ Cheli Liaw, Jenny Lin, Josephine Peng; Technology/ Revital Golan, John Ryan, Jeanne Wang; Telecommunications & Media/ Thomas Ee, Joanne Tsai, Ken Wu; Trade/ Stephen Tan; Transportation/ Michael Chu; Travel & Tourism/ Pauline Leung, David Pacey.

TAIWAN BUSINESS

26 Foxconn: Unwelcome Place in the Spotlight

The major Apple supplier has been in the news over its China labor practices and plan to invest in Sharp. By Debby Wu

cover photo : courtesy of Ministry of e ducation

taiwan business topics • october 2012

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o ct o b er 2 0 1 2 • Volu m e 4 2 n u m be r 1 0

ANALYSIS

INDUSTRY

30 Myanmar: Southeast Asia’s “Last Frontier” for Investment

The country’s reforms and the easing of Western sanctions are opening the way for many new business opportunities. By David DuByne

BEHIND THE NEWS

34 With Visa-free Travel, the U.S. Beckons

The travel industry is looking forward to around 40% growth visitors to the United States in the near term. By Jane Rickards

CUS

Medical Devices: A Complicated Market

38 Low Prices, Lengthy Approval Process

45 A Dream for Taiwan’s Medical Device Industry in 2020

By Stephen Su

General Director Industrial Economics and Knowledge Center (IEK) Industrial Technology Research Institute (ITRI)

Suppliers consider Taiwan one of the most difficult markets in the region.

By Don Shapiro

41 Local Industry at a Crossroads

With growing competition from China, manufacturers face pressure to upgrade technology.

By Lianna Nicole Faruolo photo : Henry Westheim

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A Roadmap to Prosperity

iven current economic conditions of flagging growth, weak export levels, stagnant incomes, and rising consumer prices – all while competition from China and other countries continues to mount – it is no wonder that many Taiwanese are increasingly apprehensive about the island’s long-term economic prospects. At this critical juncture, a prestigious U.S. think tank has issued a study that offers hope of a way out of the present morass into a vigorous future – provided Taiwan makes the right policy decisions. The report, released this month by the Washington, D.C.-based American Enterprise Institute, was co-authored by Asian affairs scholars Dan Blumenthal, Michael Mazza, Gary Schmitt, and Derek Scissors. Entitled Taiwan Inc.: A Home for Global Business, its findings were based on a survey of executives of multinational companies operating in Taiwan. The authors urge Taiwan to adopt a course of “expanded, speedier economic liberalization” for the sake of better economic growth, increased investment from U.S. and other multinational corporations, and enhanced international stature that will bolster Taiwan’s security. They see Taiwan’s existing comparative advantages – excellent location, prowess in technology manufacturing, capacity of innovation, improved IPR protection, skilled labor force, and rule of law – as making it a strong candidate for the role of regional commercial hub. But there is intense competition for that status. To be successful, the report concludes, Taiwan will need to undertake “economic reforms to reduce government interference with business and to strengthen the island’s comparative advantages.” Some of the specific actions called for in the study include: • Creating a more accessible and transparent regulatory environment, reducing regulatory barriers that effectively constitute a

tax on commerce by raising the cost of doing business. • Improving the operation of the banking system, permitting freer capital movement in and out of Taiwan, and making the Central Bank more open and accountable. • Enacting policies to make the labor market more flexible, and to permit more international participation in university education, especially to attract a world-class business school. • Identifying priorities within technology, continuing to bolster IPR, improving transport capacity, and generally focusing on accentuating strengths rather than concealing weaknesses. • Finding ways to leverage the Economic Cooperation Framework Agreement process with China. Concluding ECFA was “an important but insufficient step in securing Taiwan’s future security and prosperity.” • Enhancing efforts to market Taiwan to the rest of the world. Besides direct advertising, Taiwan can promote itself by bringing more people to the island for business, tourism, and education. The report notes that the United States could assist the liberalization process by negotiating “feasible bilateral accords that would economically and strategically benefit both parties.” But it stresses that Taiwan holds the keys to its own future prosperity. The authors concede that the road they recommend Taiwan following is likely to be “strewn with domestic obstacles in the short term,” but over the long term will lead to “greater prosperity, greater international presence, and a renewed relationship with the United States.” The group’s conclusions coincide completely with what AmCham Taipei has heard from its member companies through our Business Climate Surveys and annual Taiwan White Paper exercise. We urge the Taiwan government and opinion leaders to give Taiwan Inc. the careful attention it deserves.

確立方向，邁向繁榮

經

濟成長走弱，出口表現疲軟，收入原地踏步，消費物價日高 — 種種現象全都出現在中國與其他國家對台灣的經貿競爭持續加強之際，面對當前經濟情勢，無怪乎許多台灣人對這個島的長期經濟前景憂心忡忡。在此重要關頭，美國一家著名智庫發布報告，為台灣擺脫目前困境並邁向暢旺的未來帶來希望，但前提是台灣要做出正確的政策抉擇。華盛頓美國企業研究所本月發布的這份報告，由四位亞洲事務專家卜大年、馬明漢、施密特和史劍道共同撰稿。報告主題為「台灣公司：全球商務之家」，內容的根據是對在台營運跨國公司高級主管所作的調查。幾位撰稿學者敦促台灣，應該走「擴大與加速經濟自由化」的路線，以利改善經濟成長，增加來自美國與其他跨國企業的投資，並提升國際地位，這也將有助台灣的安全。他們認為台灣存在幾項相對優勢，包括擁有極佳位置，科技製造業的出色表現，創新的能力，對智慧財產權的保障有改善，技術純熟的勞動力，還有法治，這使得台灣能強力角逐區域商業中心的地位。不過，爭取這個地位的競爭激烈。報告指出，台灣要勝出，必須承諾推行「經濟改革，減少政府對商業活動的干預，以及強化競爭優勢」。報告中主張採取幾項具體行動，包括：．創造更為平易近人、更透明的法規環境，減少法規障礙，這類障礙會提高企業營運成本，實際上構成對商業行為增 4

加課稅。．改善金融體系的運作，允許資本更自由進出台灣，以及促使中央銀行更開放和負責。．制定政策讓勞動市場更具彈性，准許國外機構參與台灣的大學教育，尤應吸引世界級商學院。．確立科技發展的優先順序，持續支持智財權，改善交通運輸能量，整體上著重突出優點，而非隱藏弱點。．設法善用與中國的經濟合作架構協議（E C F A）。締訂 ECFA，「對確保台灣未來的安全與繁榮是重要的一步，但還有不足」。．加緊努力向世界行銷台灣。除了直接打廣告，台灣也可藉由吸引更多外國人士來做生意、旅遊和受教育，大力自我促銷。報告指出，美國可以協助台灣的自由化進程，方法是談判「可行的雙邊協議，讓雙方在經濟與戰略上同蒙其利」。不過，報告也強調，台灣未來繁榮的關鍵掌握在自己手裡。撰稿學者承認，他們建議台灣所走的路，可能「於短期在國內頻頻遭遇障礙」，但長期下來將使台灣「更繁榮，國際形象更強，台美關係更密切」。台北市美國商會透過進行商業景氣調查和每年發表台灣白皮書，蒐集了會員企業的觀點，這些觀點與撰寫「台灣公司」學者的結論完全相符。商會也籲請台灣政府及意見領袖重視美國企業研究所提出的「台灣公司」這份報告。

taiwan business topics • october 2012

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— BY jane ri ch ards —

CROSS-STRAIT DPP LEADER VISITS CHINA Former Democratic Progressive Party chairman Frank Hsieh in early October made a private five-day trip to China, making him the highestlevel opposition politician to visit the mainland. Officially, the reason for the visit was to attend an international bartending contest in Beijing. But Hsieh, a DPP moderate and the party’s presidential candidate in 2008, also met with various top-level Chinese officials in charge of Taiwan policy, such as chief cross-Strait negotiator Chen Yunlin (chairman of the Association for Relations Across the Taiwan Straits), and Taiwan Affairs Office director Wang Yi. He also met with Chinese state councilor Dai Bingguo. Hsieh’s visit was highly symbolic, with both the DPP and China viewing it as an icebreaker. Still, the Chinese media gave the trip barely any coverage, in sharp contrast with the pomp and pageantry afforded visiting KMT leaders when they were in opposition under the presidency of the DPP’s Chen Shui-bian. Hsieh’s journey divided the DPP, with moderates in the Taiwan stock exchange index & value

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

8000

135

7750

120

7500

105

7250

7000

6750

6500

6250

6000

5750

September chart source: TwSE

Unit: NTD billion

CONTROVERSIAL TRIP — Prominent opposition figure Frank Hsieh listens to a tour guide’s briefing at Beijing National Stadium (better known as the Bird’s Nest) during his visit to the Chinese capital. photo : cna

party supporting his trip and hardliners opposing it. George Tsai, professor of politics at Chinese Culture University, even suggests that Beijing might have facilitated the trip with the aim of splitting the DPP. Relations between Beijing and Taiwan’s largest opposition party, at least in the short term, are still likely to be cool. The DPP is increasingly willing to make incremental changes to its mainland policy, but at least for the short term is unlikely to accept Beijing’s cherished one China principle. But further contact between the two, which Hsieh’s visit heralds, is likely to lead to greater mutual trust, helpful for enhancing stability in one of Asia’s flashpoints if the DPP were to return to power. Hsieh’s trip was largely aimed at impressing Taiwanese voters, who generally think economic engagement with China is vital for their future, by showing them that some in his party are interested in engaging with China and can approach the issue with flexibility.

DOMESTIC RESHUFFLING CARRIED OUT IN SOME KEY POSITIONS President Ma Ying-jeou in late September carried out some reshuffling in key posts involving foreign policy and cross-Strait relations. He chose one of his closest allies, King Pu-tsung, a former KMT secretary general and senior advisor to the party’s international affairs department, to be the representative to the U.S., replacing Jason Yuan, who will return to become secretary-general of the National Security Council. Wang Yu-chi, a former Presidential Office spokesman, was appointed Mainland Affairs Council chairman, replacing Lai Shin-yuan, who is now Taiwan’s representative to the World Trade Organization in Geneva. Seasoned China negotiator P.K. Chiang, the Straits Exchange Foundation chairman, also offered his resignation for

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health reasons, and will be succeeded by Lin Join-sane, the KMT secretary general. Analysts described the changes as a sign that Ma is placing more importance in his second term on strengthening ties with the United States than introducing any new groundbreaking policies with China, since King is one of his most trusted lieutenants while Wang and Lin are both relatively inexperienced in China matters. However, analysts added, China relations will still stay on course, focusing on economics first and thorny political questions later. In other new appointments, career diplomat David Lin, formerly Taiwan’s representative to the European Union, has become foreign minister, replacing Timothy Yang, who was named secretary-general of the Presidential Office.

NO-CONFIDENCE VOTE LAUNCHED BY OPPOSITION A no-confidence vote sought by the DPP and its pan-green ally the Taiwan Solidarity Union in late September in an attempt to topple the cabinet of Premier Sean Chen was defeated in the Legislative Yuan by a margin of 66 to 46. DPP lawmakers said they introduced the motion because the Taiwanese public is suffering from a worsening economy and is disap-

pointed by the government’s inability to turn the situation around. The two opposition parties got an unexpected boost from Control Yuan President Wang Chien-shien, who formerly served as finance minister and minister of economic affairs, who said the no-confidence vote was in line with public sentiment. Wang urged the government to be less bureaucratic and, according to local media reports, even said Ma would leave a legacy of incompetence. Raymond Wu, managing director of e-telligence, a political risk consulting agency, suggests that the DPP’s motivation in launching the no-confidence vote, despite its minority position in the legislature, was to dispel the public impression that it cannot handle the economy as well as the KMT and to show voters that it cares about this issue.

CLA MINISTER RESIGNS Council of Labor Affairs Minister Jennifer Wang resigned after Premier Sean Chen turned down her proposal to increase the monthly minimum wage. She had proposed an increase in the minimum wage from NT$18,780 a month to NT$19,047, a rise of 1.42%, but the proposal was strongly opposed by business groups. The premier said he agreed with the proposal in theory,

NEW LABOR MINISTER — Premier Sean Chen (right) appointed Pan Shih-Wei to head the Council of Labor Affairs following the resignation of Jennifer Wang.

but that in practice the hike will need to wait until GDP grows by more than 3% for two consecutive quarters or unemployment dips below 4%, neither of which has happened this year. The new minister is Pan Shih-Wei, previously the deputy minister.

EX-PRESIDENT CHEN HOSPITALIZED AGAIN Amid media controversy over his harsh treatment in prison, former Taiwan President Chen Shui-bian suffered urinary distress and was rushed to the Taoyuan General Hospital in mid-September, his fourth trip to the hospital this year. Several days later, the Justice Ministry said in a statement that the Taoyuan doctors suspected Chen might also have a form of vascular dementia and recommended that he be transferred to a hospital with more sophisticated facilities for further assessment. Chen was then transferred to the Taipei Veterans General Hospital, where he was still a patient as of press time. In early October Veterans General Hospital psychiatrists diagnosed Chen as having severe depression and recommended that he be transferred to yet another hospital with a specialized psychiatric department for months of treatment. The Justice Ministry has not yet responded to this recommendation. Two representatives of the Washington-based Human Rights Action C e n t e r, H a n s Wa h l a n d H a r r e l d Dinkins, who visited Chen in midSeptember, criticized some aspects of the Taipei Prison’s treatment of the former president, who has been sentenced to at least 17 years’ imprisonment on a series of corruption charges. Wahl and Dinkins said Chen’s long-term isolation from other prisoners and the lack of furniture in the cell contravene international standards. Taiwan has very stringent regulations for granting medical parole – something the DPP has been requesting for Chen – and the Justice Ministry so far

photo : cna

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has said the former president’s illnesses do not qualify him for this measure. Joining the ranks of several U.S. politicians in calling for Chen’s medical parole was U.S. Representative Howard Berman, ranking member of the House of Representatives Foreign Affairs Committee, who made the suggestion in a letter to President Ma in mid-October.

I N T E R N AT I O N A L TAIWAN, JAPAN ENGAGE IN WATER CANNON EXCHANGE In the face of mounting tension between Japan and China over a disputed island chain known to Japan as the Senkakus and to China as Diaoyu, Taiwan seemed to be keeping a low profile, despite also claiming the territory as its own. This situation changed in late September with a fierce water-cannon shootout in the East China Sea between the Japanese and Taiwanese coast guards. The Japanese side tried to turn away an intruding armada of almost 60 Taiwanese fishing vessels sailing close to the disputed islets by blasting some of them with water cannons. Taiwan’s patrol ships retaliated by briefly firing their own high-pressure hoses at the Japanese ships, while booming over loudspeakers that the islets are the sovereign territory of the Republic of China and that the Japanese coast guard vessels must leave Taiwan’s territory immediately. The fishing fleet managed to sail within three nautical miles of the disputed islands before being turned back by the Japanese side. The Taiwan navy dispatched frigates to the island’s northeast coast and the air force sent F-16 and Mirage fighters to monitor the Taiwanese armada, the Ministry of National Defense said in a statement, saying it was prepared for any eventuality. President Ma voiced support, stressing that the waters around the contested islets had been fishing

HIGH-LEVEL ENVOY — Atul Keshap, the senior U.S. official for APEC affairs, came to Taiwan at the behest of Secretary of State Hillary Clinton and spoke at an Amcham luncheon meeting. photo : amcham

grounds for Taiwan’s fishermen for over 100 years. This episode was the first foray by Taiwan into the disputed waters since the Japanese government nationalized a few of the islets in mid-September. Media reports said the Japanese government protested the incursion to the Taiwan government through the Interchange Association, Japan’s de facto embassy in Taipei. George Tsai of Chinese Culture University said Taiwan was hoping to gain leverage for negotiations with Japan slated for November over the rights of Taiwan fishermen to use waters surrounding the islets.

U.S. REPESENTATIVE TO APEC VISITS TAIWAN The U.S. Asia-Pacific Economic Cooperation Senior Official Atul Keshap visited Taiwan in late September to discuss ways to broaden Taiwan’s relationship with the U.S., the American Institute in Taiwan (AIT) said in a statement. The visit was the result of a meeting between Taiwan’s APEC representative Lien Chen and U.S. Secretary of State Hillary Clinton in early September at this year’s APEC Summit in Vladivostok. Besides meeting with p r o m i n e n t Ta i w a n e s e o f f i c i a l s , Keshap gave a speech at an AmCham

Economic Indicators Current Account Balance (2012 Q2) 10.00 Foreign Trade Balance (Sept) 4.075 Foreign Trade Balance (Jan-Sept) 19.56 New Export Orders (Aug) 36.15 Foreign Exchange Reserves (end Sept) 397.95 Unemployment (Aug) 4.40% Overnight Interest Rate (Sept 28) 0.383% Economic Growth Rate (2012 Q3) p 1.99% Annual Change in Industrial Output (Aug) p 1.89% Annual Change in Industrial Output (Jan-Aug) p -1.98% Annual Change in Consumer Price Index (Sept) 3.42% Annual change in Consumer Price Index (Jan- Sept) 1.84% NOTE: P-PRELIMINARY, R-REVISED

Year Earlier 11.01 1.81 17.9 36.7 389.17 4.45% 0.396% 3.45% 4.46% 8.50% 1.34% 1.43%

SOURCES: MOEA, DGBAS, CBC, BOFT

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he was smuggled by boat into Hong Kong, is an unrelenting advocate for democracy. His media frequently criticized the Beijing government, while his television animations, with their hilarious takes on various international political and celebrity scandals, have become globally popular. In November 2009, one such animation depicting Tiger Woods arguing with his wife over extramarital affairs went viral on the internet. Next TV reportedly has lost over US$340 million since it was founded three years ago.

Taiwan from 2001 to 2006 to set prices as oversupply was pushing prices of LCD flat panels down by some 40%. AUO was the only LCD maker charged with price fixing by the U.S. prosecutors to take the case to trial. Rivals, including Chunghwa Picture Tubes, Chi Mei Optoelectronics Corp, as well as Japan’s Sharp and Korea’s LG Display Co., agreed to plead guilty and paid a total of more than US$890 million in fines.

AUO FINED US$500 MILLION IN U.S. FOR PRICE FIXING

Foxconn Technology Group, the trading name of Taiwan’s Hon Hai Precision Industry and the globe’s largest contract electronics maker, in mid-October acknowledged hiring teenagers as young as 14 in a Chinese factory, Reuters reported, violating Chinese law. The company said it found some interns in a plant in Yantai in northeastern Shandong Province who were under the legal working age of 16. The interns had worked there for three weeks. The company said in a statement that the presence of the interns was a violation of Foxconn’s own personnel policies, and that immediate steps had been taken to return the interns to their educational institutions.

FOXCONN ADMITS TO HIRING MINORS

AU Optronics Corp, the island’s second-largest maker of liquid crystal display flat panels, in late September was found guilty of a pricefixing conspiracy by a jury in a U.S. federal court in San Francisco, and was ordered to pay a fine of US$500 million, Bloomberg reported. The ruling from U.S. District Judge Susan Illston also saw the sentencing of AUO vice chairman H.B Chen and former executive Hui Hsiung to three years in prison, with each also fined US$200,000. Federal prosecutors charged that AUO executives secretly met with counterparts in hotel rooms, karaoke bars, and tearooms around

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

35.96 13.79

24.66 37.46

24.11 41.25

2011

2012

2011

2012

2011

2012

2011

2012

2011

2012

Imports

2011

2012

Europe 23.65 22.27

U.S.

TOTAL

203.9 223.55

ASEAN

Japan

214.6 232.6

HK/China

21.42 20.98

Hong Kong media giant Jimmy Lai in October announced he would sell Next Media Entertainment Services Ltd., which includes muckraking Next Magazine and tabloid Apple Daily, to a group headed by Chinatrust Financial’s former vice chairman Jeffrey Koo Jr. for NT$17.5 billion. (US$600 million.) Koo’s father is the chairman of Chinatrust Financial Holding. Next Magazine has often been critical of the KMT government; the Apple Daily, while offering racy and sensationalist entertainment stories, has also been considered to present the most politically neutral news reports among Taiwan’s newspapers. Lai, who fled the mainland at the age of 12 when

39.9

JIMMY LAI TO SELL APPLE DAILY, NEXT MEDIA

13.69

BUSINESS

17.87 24.6

luncheon meeting, where he said his colleagues and other U.S. government agencies were working to explore the next steps in bilateral economic relations, including restarting the high-level Trade and Investment Framework Agreement (TIFA) talks that have been suspended since 2007. As Keshap disclosed was in the planning, an inter-agency U.S. task force came to Taiwan the week of October 22 for discussion on a wide range of trade issues. “ Ta i w a n ’s d e v e l o p m e n t a s a vibrant, open society with a vigorous and free-spirited exchange of ideas has created an environment conducive to innovation,” Keshap said in his remarks to AmCham. “Taiwan’s prosperity has also been aided by its constructive and measured approach to sensitive issues in the broader region. For example, the transformation of long tense relations with the Mainland have yielded great prosperity and reduced tensions on both sides of the Taiwan Strait.”

32.45 87.71

19.7 27.5

94.42

34.85

Exports

Unit: US$BN Source: BOFT

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Issues

Narrowing the “China Import Ban” So far this year 17 items have been removed from the list.

hat has come to be known as the “China import ban” annually takes a prominent place on AmCham Taipei’s advocacy agenda. When Taiwan and China both acceded to the World Trade Organization in 2002, which ordinarily would have led to a complete opening of the two markets to one another, Taiwan announced that 2,411 items (out of the full customs classification of 10,725 products) would not be allowed to be imported if they were of Chinese origin. At the time, the Taiwan authorities described it as a “transitional measure reflecting the special cross-Strait situation.” The rationale was to exclude products that might pose a threat to national security or, due to their low prices, would seriously damage the interests of domestic producers. A mechanism was put in place to review the situation on a regular basis. When the Bureau of Foreign Trade (BOFT) receives an application from the private sector for an item to be released from the list, it consults with the Industrial Development Bureau or Council of Agriculture, for manufactured and farm products respectively, as well as with domestic trade associations and international business organizations such as AmCham, before rendering a decision. Now, a decade after Taiwan’s WTO accession, the number of items remaining on the list has declined, but still stands at a substantial 2,125. Another 769 items are barred under certain conditions. Over time, the ban has become increasingly frustrating for many multinational businesses selling in the Taiwan market, as China more and more is used by their parent companies as a manufacturing base to serve the Asian region. Finding alternative sources of supply has often been difficult and costly. At least until recently, the process of applying for removal of items from the banned list had also been excruciatingly onerous and slow. The Retail Committee section of AmCham Taipei’s 2012 Taiwan White Paper, which was issued in early June, reported with some disappointment that of the 21 items that the committee had cited in the previous year’s position paper, only one – “ribbons of man-made fiber” – had been successfully released from the ban. Lately, however, the progress has been more rapid. In mid-May this year when the White Paper was already about to go to press, BOFT announced that four customs categories of garments that were previously partially banned would now be fully permitted for import, and two months later it added another five apparel categories. In September, the agency followed up with additional announcements. One item, “containers of glass, of a capacity exceeding 1 liter,” was moved from the prohibited list to “permitted.” Seven others – involving paper sacks and bags, cut and coated paper, and various types of wearing apparel – went

縮減中國製品進口禁令今年至今已有17個項目自大陸物品不准輸入項目表刪除

「中

國進口禁令」每年都在台北市美國商會提出的白皮書政策議題中居於重要位置。台灣與中國於2002年雙雙加入世界貿易組織，通常這會促成兩個市場全面相互開放，但台灣當時宣布，（海關貨品分類表全部10,725項物品中）2411項物品的來源地若是中國，即不得進口。當時台灣當局表示，這是反映海峽兩岸特殊情勢的過渡措施。基本理由是要排除可能對國家安全構成威脅，或是因為低價而會嚴重損害台灣廠商利益的中國製物品。目前台灣政府設有一套機制來定期檢討實施情況。經濟部國際貿易局若接獲民間申請，要求將一個貨品項目由不准輸入項目表刪除，針對工業製品和農產品則須分別諮詢工業局或農委會，還有國內產業公協會與諸如台北市美國商會這類國際商業組織，而後再作決定。如今距台灣加入世貿組織已10年，不准輸入項目表上剩下的物品項目已經減少，但仍有2125項之多。另有769項為有條件准許輸入項目。久而久之，這項禁令使得許多在台灣市場銷售產品的跨國企業越來越感灰心，因為它們的母公司以中國為生產基地以服務亞洲地區的情況有增無減。要找尋替代供應來源往往困難而昂貴。申請將物品由不准輸入項目表剔除的程序也極其繁瑣和緩慢，至少到最近都是如此。台北市美國商會6月初發布的2012年台灣白皮書中，商會零售委員會即略表失望地提到，委員會在前一年的白皮書中提出的21個項目，只有「人造纖維製緞帶」一項成功解禁。不過，近來進展已比較快速。今年5月中白皮書已要付印時，國際貿易局宣布原本局部禁止的四個海關類別成衣項目如今完全准許進口，兩個月後，又增加另外五個紡織品類別。9月間，國貿局又有進一步宣布。「超過一公升之玻璃容

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Issues from partially banned to “permitted.” No change took place in the six categories of products that the Medical Devices Committee suggested be lifted from the control list. Whether the spate of action in reviewing the list is related to the improved cross-Strait atmosphere since the signing of the Economic Cooperation Framework Agreement (ECFA) with China or to other factors, the progress has been welcomed by the international business community. “The greater responsiveness lately has been very encouraging, and we look forward to seeing the banned list reduced even further in the months ahead,” says AmCham President Andrea Wu. “But our members also wish to know the government’s overall thinking with regard to the restriction on imports from China. Is it going to be maintained indefinitely or is there a concrete plan to phase it out completely at some point?”

器」一個項目由不准輸入項目表剔除。另有七個項目由局部禁止改為「准許」進口，包括紙袋，裁切紙與塗布紙以及各類服裝。醫療器材委員會曾建議將六類產品由管制項目表剔除，但情況並無改變。台灣與中國簽訂經濟合作架構協議以來，海峽兩岸氣氛已有改善，檢討不准輸入項目表的連串行動不論是否與此有關，或是因為其他因素，國際商業界都樂觀其成。台北市美國商會執行長吳王小珍表示：「近來政府回應已有所改善，令人非常鼓舞，我們期待見到不准輸入項目表在今後幾個月進一步縮減。不過，本會會員也希望知道政府對於中國製品進口限制的整體思維。是否將無限期維持下去？或是有具體計畫逐步解禁，於某個時間點完全取消禁令？」

—– By Don Shapiro

—撰文／沙蕩

Putting U.S.-Taiwan Data Online A new website is designed to promote the bilateral economic relationship.

s reported in the August TOPICS, the Taiwan government recently demonstrated its desire to cement closer economic ties with the United States when its Ministry of Economic Affairs (MOEA) established a new Taiwan-USA Industrial Cooperation Promotion Office (TUSA). The program is designed to foster collaboration between companies and research organizations in the two countries in enhancing industrial innovation. This month, in another signal of increased attention to the U.S.Taiwan economic relationship, MOEA held a ceremony marking the launch of a new website called US-Taiwan Connect (www.ustaiwanconnect.org). Labeled “the Information Gateway to the U.S.-Taiwan Partnership,” the website aims to serve as an “authoritative, onestop source for news, data, events, and analysis about the dynamic” bilateral relationship. Speaking at the launch ceremony, MOEA Vice Minister Bill Cho said that when he previously served as director-general of the Bureau of Foreign Trade, he frequently received feedback from foreigners that much of the data they sought about Taiwan was available only in Chinese – and when it did appear in English, the information was often out of date. The purpose of the new site is to rectify that problem, he said, with the United States chosen as the target because of the close and longstanding connections between the two countries in the areas of trade, investment, cultural, tourism, and education. The mission of US-Taiwan Connect is described as increasing 10

台美入口網站啟用新網站的宗旨是促進兩國雙邊經貿關係

一

如本刊八月號的報導，台灣政府最近希望加強和美國發展更密切的經濟往來，由經濟部成立新的台美產業合作推動辦公室，以促進兩國企業和研究組織之間的合作，加強產業創新。另一個台灣政府加強關注台美經濟關係的跡象是，十月經濟部舉行名為「台美入口網站（www.ustaiwanconnect.org）」的新網站啟用儀式。該網站標榜是「台美夥伴關係的資訊入口」，旨在作為「針對雙邊互動關係，提供相關新聞、資料、活動與分析的最佳單一資訊窗口」。經濟部次長卓士昭在啟用儀式中致詞時表示，他過去擔任經濟部國際貿易局局長時，經常聽到外國人士反映，他們尋找的台灣相關資料，許多都只有中文版—即使以英文形式出現，資訊常常都已過時。他表示，這個新網站的目的就是要矯正此一問題，選擇美國作為對象，是因為雙方在貿易、投資、文化、觀光與教育等領域，擁有密切而長久的關係。台美入口網站的任務，被定位為增進學生、媒體、政策制定者與商業領袖對台美關係發展的了解；幫助美國公民與企業獲得貿易、投資、教育和觀光機會；以及提供線上資源，以利與台灣公民、企業和政府領袖聯繫。網站內容包括： • 逐一列出美國各州對台出口總額與種類的資料，以及貿易機會。 • 雙向投資管道資訊。 • 產業合作機會。

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Issues awareness about U.S.-Taiwan developments among students, media, policymakers, and business leaders; facilitating trade, investment, education, and tourism opportunities for U.S. citizens and businesses; and providing interactive online opportunities for connection with Taiwanese citizens, companies, and government leaders. The contents include: • State-by-state data on the amount and type of exports to Taiwan, plus trade opportunities. • Information on two-way investment channels. • Opportunities for industrial cooperation. • Cooperation projects between the United States and Taiwan under APEC. • Energy-related cooperation projects. • Tips for prospective American travelers to Taiwan. • Educational exchanges between the two countries. • The 150 sister-city relationships between U.S. and Taiwan cities and towns. • Information relevant to Americans resident in Taiwan and to Taiwanese in the United States. Construction of the website was handled for MOEA by a Washington, D.C.-based consulting company, C&M International, which sought to make the site both user-friendly and as comprehensive as possible. The next challenge will be active promotion of the site to make it known to all interested parties. AmCham President Andrea Wu says the Chamber is pleased to see the introduction of U.S.-Taiwan Connect, and in a way considers itself the “godmother” of the project. “During our Doorknock trips to Washington in recent years, we’ve become aware that while Taiwan still has many friends on Capitol Hill, there are many new Congressmen and younger staff members who are not so familiar with Taiwan,” she notes. “We therefore urged the Taiwan government to support the development of a website that would collect all the relevant information in one place and present it effectively – especially to give Congressional offices a sense of the strong economic ties between their state and Taiwan. U.S.-Taiwan Connect will serve that purpose.”

—– By Don Shapiro

• 台美雙方在亞太經濟合作會議（APEC）中的合作計畫。 • 能源相關合作計畫。 • 針對計畫旅遊的美國人士提供來台相關資訊。 • 雙方的教育交流。 • 台美城鎮之間的150個姊妹市相關資料。 • 提供和在台美國僑民與旅美台胞有關的資訊。該網站由經濟部委託美國華府C&M International顧問公司處理建構，希望讓該網站既便於使用，又能盡量包羅萬象。接下來的挑戰將是積極推廣該網站，讓有興趣的各方都能知道。台北市美國商會執行長吳王小珍表示，商會很高興看到台美入口網站的推出，而且在某種程度上商會的一些行動也促成了這項計畫。她指出：「商會最近幾年前往華府進行叩門之旅期間，獲悉儘管台灣在國會山莊仍有許多友人，但許多新科國會議員和較年輕的政策幕僚對台灣並不那麼熟悉。因此我們敦促台灣政府支持開發一個網站，在單一入口網羅所有相關資訊，並以有效的方式呈現，尤其必須讓美國國會各議員辦公室體認到，他們自己的州和台灣有密切的經濟往來。台美入口網站將達成這個目的。」

—撰文／沙蕩

Promoting Sustainability AmCham co-organized a recent conference focusing on green opportunities.

mCham Taipei has been a strong proponent of conserving energy resources and improving the environment, as demonstrated by the establishment in 2010 of the Sustainable Development Committee. In addition, the Chamber has sponsored several forums on green energy and green technology. The latest event took place on October 8 at the Nangang Exhibition Hall. The “Sustainable Development Conference – Pathways to a Better Future” was co-organized by AmCham, the American Institaiwan business topics • october 2012

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Issues 積極推廣永續發展台北市美國商會最近參與主辦一項聚焦綠色商機的會議

tute in Taiwan (AIT), Bureau of Energy, Environmental Protection Administration, CTCI Foundation, and Taiwan External Trade Development Council (TAITRA). In his opening remarks, AIT Director Christopher Marut introduced the environmentally friendly features being incorporated in the new AIT compound under construction in Neihu and due to be completed in 2015. The project, which aims to qualify for silver or higher certification in the world-recognized U.S. Green Building Council rating known as Leadership in Energy and Environmental design (LEED), will maintain much of the existing native vegetation, use innovative rainwater harvesting strategies, have a photovoltaic array generating 300KW of solar power, use LED perimeter lighting, and install “next-generation” elevators that are gearless and extremely energy efficient. Representing AmCham, Vice Chairman David Pacey reiterated the organization’s Taiwan White Paper positions regarding the need to assure energy security and adopt measures to better the living and working environment. A presentation by Jennivine Kwan, vice president of international operations at the U.S. Green Building Council, explained the LEED rating tool and praised Taipei 101, which qualified for the LEED for Existing Buildings designation, as one of the most environmentally friendly structures in the world. Delta Electronics Yancey Hai introduced the numerous green buildings the company has been involved in constructing both in Taiwan and in such farflung locations as India and Slovakia. A representative of the Parsons Transportation Group from the United States described the energy- and water-saving innovations that have gone into the building of “green” airports around the world in recent years. (The third terminal that Taiwan proposes to erect at the Taoyuan International Airport will presumably utilize many of these features). Fu Yun-Chang of WRC Pacific Ltd. emphasized the importance of recycling for green buildings, the opportunities to use sludge from hazardous-waste treatment as a feedstock for manufacturing, and the noteworthy environmental features incorporated in WRC’s LEED-certified waste-treatment facility in Kaohsiung. The conference also provided an opportunity to introduce green U.S. building products available in the Taiwan market, such as LEED-certified floor coverings from Shaw Industries. Their nylon carpets, for example, not only utilize recycled content but feature “cradle-to-cradle” production in which used carpets are broken down into the raw material employed to make new carpets once again. —– By Don Shapiro 12

台

北市美國商會向來全力支持珍惜能源資源與加強環保，2010年商會成立永續發展委員會就是一個證明。此外，商會曾贊助數場綠能與綠色科技論壇。最新參與的活動「美台永續發展研討會—邁向美好未來」10月8日在南港展覽館舉行，由台北市美國商會、美國在台協會、經濟部能源局、環保署、財團法人中技社，以及中華民國外貿協會共同籌辦。美國在台協會台北辦事處處長馬啟思在開幕致詞中介紹，該協會興建中的內湖新館具備多項環保特色，預定2015年完工。這項計畫的目標是要在全球認可的美國綠建築協會（U.S. Green Building Council）領先能源與環境設計（LEED）評等中，取得銀級或以上的認證資格，將保留大部分的既有原生植被，採用創新的雨水收集策略，擁有能產生300千瓦太陽能的太陽光電板陣列，使用LED周邊照明，以及安裝無齒輪、極為節能的「新一代」電梯。台北市美國商會副會長裴岱偉重申商會「台灣白皮書」提出的永續發展觀點，表達了商會針對確保能源安全，以及以不同永續作法改善生活、工作環境的立場。美國綠建築協會國際營運部副總裁關芷芸在演說中說明LEED評比工具，並讚揚獲得LEED既有建築類認證的台北101大樓是全世界最環保的建築物之一。台達電董事長海英俊則介紹該公司在台灣與印度、斯洛伐克等地區參與興建的眾多綠建築。美國帕森斯運輸集團的一位代表，說明近年來世界各地興建「綠」機場所採用的節約能源與用水創新發明。台灣計畫在桃園國際機場興建的第三航廈，將可能利用其中的許多創新。世界資源亞太公司副總經理傅雲政強調綠建築回收資源的重要性、利用從有害廢棄物處理中取得之沉澱物作為製造原料的商機，以及世界資源公司在高雄獲得LEED認證的廢棄物處理設施有哪些環保特色。這場會議也提供機會，介紹蕭氏工業獲LEED 認證的地板鋪材等能在台灣市場取得的美國綠建築產品。例如該公司的尼龍地毯不僅利用回收材料，還具備特殊「從搖籃到搖籃」的回收生產流程，將二手地毯割碎加入原料中，再次製造出新地毯。 —撰文／沙蕩

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Cover story

education

Extending and Improving Basic Education 追求優質國民教育 BY ALAN PATTERSON

photo : Ministry of education

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撰文 / 白逸仁

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Cover story

photo : moe

台灣政府推動的十二年國民基本教育計畫，旨在發展學子的多元天份，而台灣要在現今知識導向的全球經濟中維持競爭力，創造力的培養尤其重要。不過這項計畫爭議不斷，有人批評政府尚未與學生、家長和教師充分說明計畫細節。

馬

政府計畫將台灣國民基本教育由9年延長為12年；然而隨著施行階段（預計將於 2014年8月全面實施）即將到來，這項計畫卻面臨了一連串的挑戰。其中最主要也是最棘手的問題，在於如何與學生、家長和教育人士充分溝通；計畫中各項變革將造成什麼影響？預期能帶來哪些益處？另一個主要的障礙，在於如何順利施行這套新制度；畢竟未來數十年中，它將對台灣的經濟及社會層面造成深遠影響。教育部推動的12年國民基本教育大計，是在實施近40年的九年義務教育的基礎上，增加三年免學費、自願入學的學校教育。政府的主要目標是改善免費教育的品質並延長年限，再次活絡台灣經濟。教育部中等教育司長張明文指出，台灣現行教育制度著重死記硬背，訓練出來的人才適於投入台灣經濟的主力產業──代工製造外銷產品。如今台灣經濟發展已來到另一個階段。作為知識 16

he M a a d m i n i s t r a t i o n ’s p l a n t o extend Taiwan’s basic education program from nine years to 12 is facing a number of challenges as it nears the implementation stage scheduled for the 2014-2015 school year. The first and most difficult is to communicate to students and parents, as well as to educators, what the proposed changes will entail and what benefits they are expected to bring. The next major hurdle will be smoothly implementing a new system that is likely to have broad implications for Taiwan’s economy and society for decades to come. The National Twelve-year Basic Education System under the Ministry of Education (MOE) will add three more years of optional free schooling to the current nine-year compulsory education system that has been in effect for nearly 40 years. The government’s main goal is to help reenergize the Taiwan economy by transforming the quality and duration of tuition-free education. The existing system, which emphasizes rote memorization, has been effective in training people for jobs in what has been the mainstay of the Taiwan economy – contract manufacturing to produce goods for export – according to Chang Ming-Wen, director of the MOE’s Department of Secondary Education. Now Taiwan has reached another stage of development. To bolster Taiwan’s competitiveness as a knowledge-based economy, it needs to develop a new talent pool characterized by

經濟體，若要提升整體競爭力，台灣需要培育出更具創意和創新能力的新人才。張明文說：「我們希望能減輕學生的升學壓力，並且讓教育更多元化。但不是要完全消除壓力；若毫無壓力，台灣將失去競爭力。我們希望教學方式的改變，能夠讓學生學會獨立思考。直至今日，台灣的教育制度只教出應考機器。」 12年國教上路後，義務教育仍為九年；未來國中畢業生若想繼續升學，將可免試入高中職。此外，高中職免收學費後，學生不論家境好壞均有機會接受 12年基本教育。希望進入北一女中或建國中學等明星高中的學生，未來還是得通過入學考試。不求一定要進明星學校的學生則可免試進入學區內高中職就讀。台灣教育當局的教改之路走得很辛苦，因為當局既想要維持舊制的優點，但推動的教改方案卻讓人摸不著頭緒。國教計畫究竟能否成功，部分教育界人士抱持懷疑觀點。

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greater creativity and ability to innovate. “We aim to ease the pressure on students and make education more diverse,” says Chang. “But we don’t aim to eliminate the pressure. Without pressure, we will lose our competitiveness. We hope that by changing our methods of instruction, students will learn how to think independently. So far, we have just been turning out test-taking machines.” After the new system takes effect, education will still be compulsory for nine years only. Those wishing to continue their studies in pursuit of a high school diploma will be able to do so without having to take and pass an entrance examination. In addition, elimination of high school tuition charges will enable students to complete 12 years of education regardless of their family’s financial condition. The high school entrance examination will continue to exist for students applying to elite institutions such as Taipei First Girls High School or Taipei Municipal Jianguo High School. Those who are not seeking entrance to the top schools can skip the exam and enter high schools in the neighborhoods where they live. Taiwan’s education authorities are treading a difficult path by aiming to maintain the strengths of the old system while introducing reforms that many have found confusing. Some educators

have expressed concerns about the prospects for the plan’s eventual success. “In the beginning of the nine-year national education system, there were shortages of teachers, schools, textbooks, facilities, and other resulting issues,” wrote Wu Ching-shan, president of Taiwan’s National Academy for Educational Research (NAER), and Lin Tienyu, president of the Taipei Municipal University of Education, in an article in the Chinese-language Journal of Educational Resources and Research. “In the ensuing 40 years of implementation, there was an overemphasis on entering the best schools and a widening gap between urban and rural areas. We need to recognize and compensate for these issues in order to avoid their replication under the 12-year basic education system.” Some other educators have made even stronger criticisms. “The aims are unclear, and many teachers don’t know what to do,” says Lee Chia-Tung, former president of National Chi Nan University. “The overall plan will be a disaster for Taiwan’s economy.” Eliminating the entrance exam will make students less diligent and leave Taiwan’s workforce less competitive, he argues. A group opposed to the 12-year program, the Civilian Education Union (CEU), was formed this summer under t h e l e a d e r s h i p o f N a t i o n a l Ta i w a n

國家教育研究院院長吳清山和台北市立教育大學校長林天祐為《教育資料與研究》雙月刊撰文指出，九年國教實施之初遭遇的教師、學校、教科書、設備等資源不足衍生的相關問題，以及實施四十餘年來所呈現的過度升學壓力、城鄉差距日拉大，應該加以檢視與調整，避免讓十二年國教重蹈覆轍。其他教育界人士質疑聲浪更為強烈。前暨南大學校長李家同說：「教改目標不明確，許多教師不知道該怎麼做。整個教改計畫將對台灣經濟造成災難性影響。」他表示，取消入學考試將導致學生不用功，整個國家的競爭力也會大幅下降。在台大教授王立昇、劉廣定及田光復領軍下，反對 12年國教的國教行動聯盟於今年夏天成立。《自由時報》7月10日報導指出，國教盟已召集一萬多人連署請願，呼籲政府廢除這項教改計畫。陳情書促請中央尊重教育選擇權與地方自治權，並表達不信任教育部能夠順利達成口號目標，讓部份學生可自由選讀最感興趣的科目。

University professors Wang Li-Sheng, Liu Kwang-Ting, and Tien Kuang-Fu. A July 10 article in the Liberty Times reported that the organization had collected more than 10,000 signatures on a petition calling for the new educational program to be scrapped. The petition urged that local governments be given educational autonomy and reflected a lack of confidence in the ability of the MOE to achieve its stated goal of enabling students in the higher grades to elect to study subjects

Total Number of Enrolled Students Unit: million

1955-56 1960-61 1965-66 1970-71 1975-76 1980-81 1985-86 1990-91 1995-96 2000-2001 2005-06 2011-12

1.54 2.38 3.12 4 4.45 4.6 4.94 5.28 5.23 5.3 5.32 4.86

Source: Ministry of Education

英文《台北時報》8月29日報導指出，國教行動聯盟指控教育部引用之研究有缺失，或是錯誤解讀研究結果，使得12年國教有誤導民眾之嫌。國教盟呼籲政府就相關議題進行政策大辯論。報導引述國教盟召集人王立昇的發言：「我們要求教育部公布這項教育政策的相關研究和分析，讓社會大眾共同檢視該政策的基礎。」

開路先鋒批評聲浪並未減緩政府實施這項教改計畫的腳步。教育部中等教育司長張明文說，台灣實施教改後，將成為亞洲第一個效法西方教學方法的國家。他補充說，教育部的長期目標是要取消本地大學的入學考試制度，但現階段沒有明確的時間表。數學、語文等基礎科目的教學方式將維持不變，但將為學習低就學生放慢教學速度。

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Cover story they are most interested in. The group has accused the MOE of using flawed studies or interpreting research results incorrectly to mislead the public about the 12-year program, according to an August 29 article in the English-language Taipei Times. The group reportedly called on the government to hold public policy debates on related issues. “We urge the ministry to make public the studies and analyses used to back up the education policy so that members of the public can examine the policy basis,” CEU convener Wang Li-Sheng was quoted as saying.

Blazing a trail The criticism has not deterred the government from moving forward with the proposed new program. MOE Director Chang says the reform will make Taiwan the first country in Asia to create a system that employs teaching methods similar to those used in Western nations. Over the longer term, he adds, Taiwan aims to eliminate the entrance exam requirement for admission to local universities, though no timetable has been set for that step. Taiwan will not change the way basic subjects such as mathematics and languages are taught,

photo : Ministry of Education

Chang notes, but it will slow the pace for students who have difficulty keeping up. For the time being, passing the university entrance exam remains the prime goal for Taiwan’s students and their parents, and the test-taking mentality that prevails here will therefore persist and continue to set the educational agenda, some educators say. “After students finish high school, guess what? There’s this entrance exam. It will still drive the whole curriculum,” says Chiung-Yao Ho, a Fulbright Senior Scholar from the United States who is a visiting lecturer at National Taiwan Normal University. As a product of the Taiwan educational system and a graduate of topranked National Taiwan University, Ho understands how the college entrance exam shapes educational experience on

部分教育界人士指出，現階段台灣的高中生和家長仍把大學入學考試視為首要目標，為考試而讀書的普遍心態仍會持續，並繼續主導教育政策。美國傅爾布萊特資深學者、現任台師大客座講師何瓊瑤說：「學生高中畢業後，還得參加（大學）入學考試。所以整體課程仍將以考試為導向。」身為台灣教育制度的產物，台大畢業的何瓊瑤深知大學入學考試深刻影響了台灣的教育方向。她說：「 12年國教上路後，如果老師還是用以前的那一套，就失去教改的意義了。教改的目地是廢除考試、以及為考試而教學的心態。」何瓊瑤說，台灣多數的家長都期望孩子能認真唸書，順利通過入學考試。為了要擠進好學校，孩子下課後往往長時間埋在補習班。「對家長來說，教育就是這樣。」何瓊瑤提到，她最近和一位屏東的老師聊天。這位老師認為台灣的教育環境短時間內很難有什麼改變。何瓊瑤說：「我也認為希望不大。」教育部中等教育司長張明文說，通過大學入學考試的壓力沈重，很多學生一定會繼續去上補習班。主要 18

the island. “If the teachers are still doing the same thing under the new system, it defeats the purpose,” she says. “The purpose is to do away with the test and with teaching for the test.” Most parents in Taiwan expect their children to study with the aim of passing entrance examinations, says Ho. Achieving the goal of entering a good school usually means spending long after-school hours in cram schools, known as buxibans in Mandarin, she says. “It’s the parents’ idea of what education should be.” Ho referred to a recent conversation she had with a teacher in the southern Taiwan city of Pingtung who said the likelihood of any quick change in Taiwan’s educational milieu is slim. “I’m not very hopeful either,” Ho says. MOE Director Chang says that the

的因素在於家長們「望子成龍」的殷切期盼。然而，補習班的存在也拉大了家境富裕和家境清貧學生之間的差距。何瓊瑤說：「如果你家境不好，根本無法負擔補習班的學費。」此外她指出，許多偏遠鄉鎮或農村地區也找不到補習班。張明文指出，長期處在追求優異成績的壓力下，常會出現反效果；他把目前的教育體制比做800公尺賽跑：「大家在前600公尺都卯足全力衝刺，但跑到最後200公尺時，早已筋疲力竭了。」現年14歲的白瑞恩，上過台灣本地學校，也唸過台北歐洲學校；他舉了一個簡單的例子說明台灣教育系統和國外系統的主要差異：「在本地學校，學生上課時常常打瞌睡，因為都是老師在講課。」白瑞恩說，本地學校的老師沒時間回答學生的提問，而且往往認為學生提問是不敬之舉。

改革的原因台灣自1968年起實施九年國民義務教育，為一度

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buxibans will undoubtedly continue to be well attended because of the pressure to pass the university entrance exams. A major factor is parents’ “aspiration for sons to become dragons,” Chang says, citing the Chinese saying 望子成龍. But the buxibans also widen the gap between rich and poor students. “If you’re underprivileged, you can’t even pay for a bushiban,” Ho says, adding that many rural and remote areas lack such cram schools altogether. In addition, the constant pressure to excel academically often has a contrary result, notes Chang, likening the current system to an 800-meter race. “In the first 600 meters, everyone is going all out, but in the final 200 meters, everyone is exhausted,” he says. Bai Ruei-en, a 14-year-old who has studied both in the local school system and at the Taipei European School, provides a simple example of a key difference between the local and international education systems. “In the local schools, the students sleep a lot during class,” he says. “That’s because the teacher does all the talking.” Instructors in the local schools don’t have time to take questions from students and in fact often view such questions as disrespectful behavior, he says.

Reasons for reform In 1968, Taiwan introduced the nineyear compulsory education system that played a key role in its economic development by training students who went on to become engineers, technicians, and business managers in the island’s oncevibrant manufacturing sector. The origins of the new 12-year plan can be traced back four decades to when some educators offered ideas on how to fix some drawbacks in the current system. The existing system focused too much

on honing the skills of students who excel in mathematics and languages, while neglecting the potential of those with other aptitudes and interests, according to Chang. Moreover, the old system has widened gaps in educational standards between urban and rural areas and between the wealthy and the poor. “We will not change education for the elite students,” says Chang. “We don’t aim to pull those students down, but we need to help the students who have fallen behind. We also need to help students from disadvantaged families.”

Premier Sean Chen, President Ma Ying-jeou, and Education Minister Chiang Wei-ling attend a forum to explain the new 12-year education program. photo : cna

蓬勃發展的製造產業奠定人才基礎，培育出的學子後來成了工程師、技師、和商務經理人，是為台灣經濟發展的主要支柱。12年國教方案的起源可回溯至40 年前，當時一群教育人士針對教育制度的缺失提出改善建言。張明文指出，現行教育制度過度著重在培育數理和語文資優學生，卻忽略了擁有其他性向和興趣的學生的潛能。此外，現行制度也使得城鄉、貧富之間的教育資源差距擴大，「優秀學生的教育資源不會改變。我們不是要把優秀學生往下拉，而是要幫助學習落後和弱勢家庭的學生。」張明文以芬蘭教育系統為例，該國推動教育改革已逾25年，可作為台灣學習的典範。芬蘭學校的基本教育不以能力分班，學生盡可能就近入學。反觀台灣，許多學生每天得耗費數小時通勤。芬蘭的學校也在班級內提供特殊教育，有助於縮小優秀學生和落後學生之間的差距。2008年聯合國公布的人類發展指數報告顯示，芬蘭的教育指數在全球名列前茅；而台灣仍然計畫保有明星學校。教育部近期發行之「（十二年國教）開啟孩子的無

限可能」宣導手冊指出，儘管台灣的教改方案受到教育界人士批評，卻獲得部分企業大老的支持。廣達電腦董事長林百里說：「未來十年世界需要的人才，是具備人文藝術科學背景的跨領域人才。從基礎教育就要開始啟發學子的創新能力。十二年國教的架構如能貫徹執行，台灣的未來將是精采可期！」廣達是全球最大的筆記型電腦代工廠。宏碁電腦創辦人施振榮，也對這項教改計畫抱持樂觀期待。他說：「十二年國教是國家推動的重要新政策，對於下一代的教育影響深遠。」

魔鬼就在細節裡張明文表示，政府為推動教改大計，計畫挹注更多資源至國、高中教育。今年度支出將高達288億元（相當於9.6億美元），2014年預估將增為380億元。他補充說，未來由於學生人數減少，教育資源應該相當充沛。目前，台北地區各高中的班級規模平均將近40位

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Cover story Chang offers the educational system in Finland, which launched reforms more than 25 years ago, as a possible model for Taiwan. In the Finnish school system, students are not placed in different streams as part of their basic education, but instead attend schools as close to their homes as possible. In Taiwan, in contrast, students often spend hours commuting each day. Finland also provides special education within the classroom to help narrow the gap between the top and bottom students. The Education Index, published as part of the United Nations’ Human Development Index in 2008, credits Finland with having one of the best educational systems in the world. Unlike Finland, Taiwan still aims to keep its elite schools. Despite educators’ criticism, Taiwan’s new educational initiative has the support of some prominent local business leaders, according to a Chinese-language MOE publication entitled Unlocking the Unlimited Potential of Children. “During the next decade, the world will need talented people who have interdisciplinary skills in science, arts, and humanities. We need to start inspiring students’ ability to innovate,” says Barry Lam, chairman of Taiwan’s Quanta Computer, the world’s largest maker of laptop computers. “If the framework for 12-year education can be thoroughly implemented, we can look forward to a brilliant future for Taiwan.” Stan Shih, founder of Taiwan’s topranked computer brand, Acer Inc., also

A parents' organization calls on the educational authorities to provide more concrete details as to how the new system will improve children's schooling. photo : cna

sees the educational reforms as positive. “Twelve-year national education is an important new policy for the progress of our nation,” he says. “It will have a profound influence on the education of our next generation.”

Devil in the details To carry out the reforms, the Taiwan government plans to invest more in education at the junior-high and highschool levels. This year, that spending will come to about NT$28.8 billion (about US$960 million), increasing to some NT$38 billion by 2014, Chang says. Because the number of students will be fewer, educational resources should be abundant, he adds. The average class size in Taipei high schools at present is nearly 40 students, but the MOE aims to reduce that number

學生，但是教育部計畫減少每班學生人數，以改善教學環境。此外，教育部也計畫提高輔導老師人數，幫助學生更了解自身性向與興趣。教育部已委託國家教育研究院，為12年國教研擬新版課程綱要。國教院明年將擬定課程發展建議書，2014年訂定課程綱要發展原則，2015 年將公布一般細則。國教院為政府組織，其網站指出：「本院定位為研究機構，從事各類長期性、整體性、系統性的教育研究，根據研究結果，提供政府研擬相關政策的參考。」12年國教將於103年正式上路， 104年才訂出一般細則或許為時稍晚。教育部預估，12年國教上路後，國中畢業生將可輕鬆進入高中職就讀。新制實施後，全國將分為15 個免試就學區，其規劃以縣市行政區為原則。讀完九年級的學生將可申請就讀學區內任何一所學校。若某一高中職報名人數少於學校招生人數，報名學 20

to improve the classroom environment. The ministry also plans to increase the number of guidance counselors to help students better understand their aptitudes and interests. The MOE has entrusted the NAER with developing a new curriculum for the 12-year program. A government organization, NAER states on its website that it “serves primarily as a research institute on the national level, responsible for long-term, integrated and systematic research, offering the results as a reference for the government to develop related policies.” The Academy will present its formal recommendations next year, and in 2014 will provide overall guidelines, to be followed by general rules in 2015. With the 12-year program starting in 2014, however, the creation of general rules in 2015 may be a bit late. The MOE expects that when the

生將全額錄取。如報名人數太多，則須與其他競爭者進行超額比序，包括學業表現、多元學習、扶助弱勢等比序原則。張明文說，扶助弱勢一項旨在協助各免試區內經濟弱勢學生，其精神正如美國政府保護弱勢族群所推動的平權措施。張明文指出，取消高中職入學考試的考量之一，在於高中學生人數漸趨下滑。儘管要進入明星學校還是得擠破頭，但一般性學區高中職的名額足以吸納想就讀的學生。學生每個月仍須參加考試、隨堂測驗、和期末考，以確保達到一定的學習目標。明星高中也將參考學業成績作為篩選學生的標準。過去，入學考試成績是唯一的評選標準。張明文說，教育部已展開為期兩年的教師訓練，協助老師們提升教學技巧，達成12年國教「點燃學生的學習熱情」之目標，並確保每堂課有充分時間

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new system starts, all of Taiwan’s junior high graduates will easily find seats in high schools. Under the new program, Taiwan will be divided into 15 educational districts that are coterminous with the island’s counties and municipalities. Students who have finished ninth grade will be allowed to apply to any high school within their educational district. If the number of applicants to a high school does not exceed the number of seats available, all of the applicants will automatically be admitted to the school. Otherwise, schools will select applicants based on a wide range of criteria including academic achievement, participation in extracurricular activities, and family income. The income criterion is aimed at helping Taiwan’s poor families in much the same way as affirmative action is intended to benefit the disadvantaged in the United States, Chang says. One of the reasons behind eliminating the high-school entrance exam is a decline in the high-school-age population, notes Chang. There is still competition to enter the elite schools, but now also more room for students in ordinary neighborhood schools. Students will still take monthly tests and quizzes as well as final examinations to verify that they are meeting educational standards. That academic record will also be used to help determine which students are selected for entrance into the elite high schools; previously performance on the entrance exam was the sole criterion.

The MOE has begun training teachers – a two-year process – on how to improve their instruction methods to meet the new program’s objectives of “inspiring students with a passion for learning” and ensuring that classes include ample time for discussion between students and teachers, says Chang. That will be a significant change. Currently, teaching schedules leave little time for deviation from the focus on passing tests, according to some educators. “I still see that,” says Ho of classrooms she has visited recently. Some parents say they are unconvinced about how successful the new system will be in changing the approach to education in Taiwan. “A lot still needs to be done,” says Linda Hong, whose son Jacky Lee entered high school this year. “Teachers don’t seem to understand how they need to change,” Hong says. Other parents appear more confident that the educational reforms are a step in the right direction. “In the beginning, I was confused, but now it seems quite clear,” says Carol Wang, who is more reassured after speaking with teachers. Wang’s son, Chen Yu-Chiao, will enter a local high school two years from now. She says the new system should ease the pressure on her son. “The new program should have a positive effect on raising the educational level of Taiwan’s people,” she says. Besides lessening the pressure on students and doing more to foster unde-

進行師生互動。這是一項重大改變。部分教育人士指出，目前教學課表仍以考試為重，沒有太多時間進行其他的活動。何瓊瑤近期完成班級訪視後表示：「這個現象仍然存在。」部分家長說，他們不認為新方案能夠真正改變台灣的教育體制。兒子（李杰）今年上高中的洪憶玲說：「老師們似乎不知道他們該如何改變。」其他的家長似乎較有信心，認為這項教改計畫是方向正確的一步。家長王學歡說，「一開始我覺得很難懂，但現在大概都弄清楚了。」她和老師談過後感到放心不少，兒子陳禹樵兩年後就要上本地高中了。她說，12年國教應能減輕孩子的讀書壓力：「這項新方案應該有助提升台灣人民的教育水準。」清華大學動力機械工程系退休教授彭明輝，常針對教育政策議題發表評論。他說，除了減輕學生升學壓

veloped talent, Taiwan also needs to adopt measures to improve students’ practical skills, says Perng Ming-Hwei, a retired professor of mechanical engineering at National Tsing Hua University who is a frequent commentator on matters of educational policy. “Education at the primary and secondary levels needs to focus more on developing analytical skills,” he notes, adding that most Taiwan high-school students lack the ability to write analytical reports because their reasoning skills have been sacrificed to the overemphasis on memorization. The proposed changes may take decades to implement fully, Taiwan’s educational authorities say. “Teachers and curricula will change gradually,” says Chang. “It may take as many as 20 years.” Two decades will see changes in government administrations and political agendas. Unless those currently promoting the new 12-year education program put in place a system that stands the test of time, their efforts may be swept aside by their successors. People in Taiwan generally recognize the shortcomings of the entranceexamination system and the need to develop students’ broader talents through education. Yet to ensure lasting benefits for local students and Taiwan’s economy, educators and government officials may need to do more consensus building to win widespread public support on reforming the system.

力、加強培養潛力尚未開發的人才，台灣還需要設法提升學生的實用性技能。彭明輝指出：「初等和中等教育需要加強培養學生的分析能力。」他補充說，台灣多數中學生都缺乏撰寫分析報告的技能，因為學校過度強調死記硬背，沒有機會發展推論能力。台灣教育主管機關表示，教改計畫可能需要數十年的時間才能徹底施行。張明文說：「教師和課程都會逐步改變，這個過程可能要花上20年。」 20年的時間裡，當政者與政策方向可能歷經不少變動。現在推動的12年國教新策，若是禁不起時間的考驗，這一切的努力難保不被後繼者全盤推翻。台灣人民大多認為入學考試制度有許多缺失，也認為必須透過教育，協助學生發展更多元的才能。然而，為了莘莘學子和國家經濟發展的長遠未來著想，教育人士與政府官員必須更努力凝聚共識，使教改計畫廣獲大眾支持。

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Cover story Taiwan Gets a Passing Grade in English Though Taiwan compares favorably with many other countries in the region, listening comprehension remains a major shortcoming. BY ALAN PATTERSON

f t h e p e o p l e o f Ta i w a n w e r e assigned a grade on their overall English-language capabilities, they would get a 70, according to Karen Chung, associate professor in the Department of Foreign Languages and Literatures at National Taiwan University (NTU). That’s not too bad compared with some other Asian countries, says Chung, who has lived in a number of Asian and European nations as a language student herself. “Taiwan is not the worst. Japan and South Korea are weaker,” Chung says. “China is probably pretty comparable to Taiwan. Hong Kong is not as good as it used to be.” Those views are similar to some test results. The scores of Taiwanese taking the International English Language Testing System (IELTS) exam improved last year, moving Taiwan into second place among Asian countries for which English is not the native language, according to an August 16 Taipei Times report based on information from the examining body at Britain’s University of Cambridge. The average score of Taiwanese IELTS test-takers rose to 5.9 last year from 5.8 in the previous year, according to the report. Taiwan’s 2010 score tied with Japan to rank third, after Hong Kong (6.4) and Vietnam, Thailand, and South Korea, which were in a threeway tie for second with 5.9. In the Asian rankings for 2011, Hong Kong was at the top, with an average score of 6.4, while Taiwan was tied with Vietnam and South Korea with 5.9. Next on the list were Japan (5.8), Thailand (5.8), and China (5.6). The main problem for most students o f E n g l i s h i n Ta i w a n i s l i s t e n i n g comprehension, says Chung. Teachers don’t place enough emphasis on learn-

ing spoken English and instead focus on reading and writing, she says. “Unless people learn how to listen well from the very beginning, they are never going to do well,” she notes. “If you’re teaching piano, you don’t hand the student a book with a lot of musical notes in it and say ‘study that for two hours every day.’” By learning how to listen well, students can internalize complex rules of grammar, sentence structure, and intonation, says Chung. S o m e o f Ta i w a n ’s p r o b l e m s i n English-language instruction stem from a shortage of qualified teachers in areas other than the large cities such as Taipei and Kaohsiung, according to some educators. Despite that shortage of teachers and resources, many of the other cities and counties have pushed forward to introduce English into the curriculum in the third year of primary school – resulting in a “one country, multi-system” phenomenon, says Vincent Chang, a retired professor of English at National Taiwan Normal University. Basic competence tests at the high school level show considerable gaps in students’ writing performance, he notes. Other problems relate to an overemphasis on acquiring grammatical skills. By 2008, nearly one-third of the universities and colleges in Taiwan had adopted the General English Proficiency Test (GEPT) as one way for nonEnglish majors to fulfill graduation requirements for English ability. The GEPT was developed in Taiwan following feedback from teachers and employers that most graduates of Taiwanese high school had difficulty communicating in English, according to an academic study by Pan Yi-Ching of the National Pingtung Institute of Commerce and Tim Newfields of Toyo

University in Japan. Each of the four levels in the GEPT is administered in a two-stage process. First, all examinees at each level take a listening and reading comprehension test. Those who pass this first stage are allowed to register for the second stage, the speaking and writing portions. Pan and Newfield attributed the poor performance to an outdated approach to English-teaching that placed far too much importance on grammatical accuracy. Students in Taiwan are often intimidated when they start thinking about all of the rules of English, and as a result fail to say anything. Many of Taiwan’s strengths and weaknesses in English education are related to the local culture, Chung says. The warmth of Taiwanese people is a positive factor in aiding communication with visitors from overseas, but their shyness is a negative. How would Chung revamp English instruction in Taiwan if she were given a clean slate? Advanced students need to spend time studying abroad, she says, adding that local teachers need more awareness of the drawbacks of existing language programs. For example, she cites insufficient emphasis in Taiwan on the fundamentals of language learning, which start with the passive process of listening and proceed to speaking, reading, and writing. In Taiwan, reading and writing get too much stress before the basic skills of listening and speaking have been established. “The mind needs to have recordings of speech patterns that can be ‘played’ before speaking in order to build sentences that are grammatically and structurally correct,” Chung notes. Without such mental files that can be played back, a student can only try to

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Advertising for language schools often stresses how better English can enable students to be more successful in their careers. photo : Henry Westheim

recall rules of grammar and may ultimately be left tongue-tied, she says. Chiung-Yao Ho, a Fulbright Senior Scholar from the United States who is a visiting lecturer in National Taiwan Normal University’s English department for a year, was less generous than NTU’s Chung in her assessment of Taiwan’s level of English language capability. “If you’re speaking about the area outside Taipei, I wouldn’t give Taiwan a 70,” Ho says. Yet Chung and Ho agree that listening skills in Taiwan are generally poor.

Foreign teachers In 2005, the education authorities lowered the starting point for Englishl a n g u a g e i n s t r u c t i o n i n Ta i w a n ’s elementary schools to third grade, overcoming long-held fears that early exposure to a foreign language would be detrimental to children’s ability to learn Chinese. As part of the initiative, Taiwan began recruiting language teachers from the United States. Decades ago, it was very rare to find primary school children in Taiwan who could speak English. Now it’s more common, especially in urban areas,

to encounter youngsters who are able to carry on simple conversations in English. The change is at least partially attributable to greater access to English content on computers, smartphones, and electronic games. Although Ho says it is still too early to make a definitive assessment of the benefit of using foreign teachers in Taiwan’s public schools, she mentions that “so far, based on a study of sixth graders, the results have been positive.” The foreign teachers in the English Teacher Assistant (ETA) program work side-by-side with a local teacher. The program, which covers grades three through six, has been implemented in Yilan and Kaohsiung counties as well as on the offshore island of Kinmen, in cooperation with the Fulbright project that Chiung-Yao Ho is also affiliated with. “They try to make it fun,” Ho says of the foreign teachers. “They motivate the kids to learn.” But Ho says the fun stops at the junior high level, when teachers believe they need to bear down to be sure of meeting the various criteria set by local education authorities. At that point, the more practical skills of listening to and speaking English take a back seat to an

emphasis on reading and writing. But even in that respect, Ho faults the way students are asked to spend their time. “They are copying sentences, but that’s not writing,” she says. A native of Taiwan and a graduate from National Taiwan University, Ho is familiar with how English instruction has evolved in this society. She says that in order to learn English well, students need to be able to interact with their teachers – and that’s not easy in local schools that stress rote memorization. “I’ve been able to see the different working styles of teachers from overseas and locally,” Ho notes. “Compared with what I was used to when I was educated here as a little girl, there are more chances in the classroom to respond. But I was expecting more change.” In some cases, the foreign teachers may be less effective than their Taiwanese counterparts because they lack the knowledge and experience to be able to address the specific needs of local students, says Chung. Many of them have never received training in how to teach English, and come to Taiwan because they couldn’t find a job in the United States. “My experience is taiwan business topics • october 2012

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Cover story

A Kaohsiung elementary school holds a Food Festival as a vehicle to encourage students to converse in English. photo : cna

that if these teachers don’t understand Chinese, they will have difficulty teaching here,” Chang continues. “They need to understand how Chinese sentence structure and grammar affect the way students express themselves in English.” Another problem, says Chang, is that language education in Taiwan, including Chinese-language education, tends to leave students with the impression that language is a boring subject. Although Chinese is a very rich language that draws on a cultural and literary heritage going back thousands of years, an overemphasis on orthodoxy in Chinese-language education

has made the subject uninteresting to students, she notes. Both Ho and Chung have lessthan-positive assessments of Taiwan’s English-language cram schools or buxibans. Ho’s most favorable comment is that the cram schools “extend the exposure of students to the target language.” But some cram schools have as many as 200 students in a class, which has a negative impact on the effectiveness of instruction, she says. Because so many parents send their children to buxibans, it becomes something that others feel obliged to do in order for their youngsters to have an

台灣人英文程度差強人意（摘譯）整體而言，台灣人的英文程度大概有70 分左右，比起區域內若干國家好。去年全球雅思（IELTS）考生成績統計顯示，在英語非母語的亞洲各國中，台灣考生的英文程度持續進步，與越南和南韓考生並列第二。台灣學生學習英文的主要障礙在於聽力不佳；因為老師教學時過於著重閱讀和寫作，而非口說能力。此外，台灣在大都會以外的地區，常面臨合格英文教師不足的窘境。過於講求文法正確的壓力下，學生往往不敢開口練習說英語。語言教育學者建議，在初學階段應著重聽力練習，讓學生有機會熟悉口語的模式。現今年輕人透過電腦、智慧型手機和電玩遊戲得以 24

equal opportunity, says Chung. The pace of learning is fast, she notes, so that if a student misses a key lesson, there is often no way to catch up. “That’s the biggest tragedy of the education system here – it’s one size fits all. Once you are lost, there’s nothing to save you,” Chung says. “Teachers in schools and buxibans are on such tight schedules, they seldom have time to address the problems of individual students. In general, the cram schools are focused on teaching students how to pass English exams in the school system and not so much on teaching practical English.” Ho has a suggestion on how to make English-language education more widely available to students regardless of their family income level: install computers in the island’s public library system, available for everyone to use free of charge. The computers would be installed with software specifically designed for the study of English language. “More money should be put into the public library system,” she says. “That would help narrow the divide between privileged and underprivileged students. The libraries would be a buxiban open to all.” In addition, Ho says, the IT infrastructure to support the effort could be put together relatively cheaply by enlisting Taiwan’s high-tech companies to donate equipment and expertise as charitable contributions.

接觸更多英文內容，因此，如今能用英語進行簡單對話的年輕人比數十年前多出許多。此外，英語教學助理（ETA）計畫引進一群年輕又熱血的美籍助教至特定地區的學校。這些助教努力讓台灣小朋友覺得學英文很好玩，但問題是這些助教既不會說中文，也缺乏教學經驗，因此不了解台灣學生練習說英文時，往往會受到中文句型結構和文法的影響。補習文化的盛行也是台灣教育的奇觀之一。家長認為一定得送孩子去補習，因為其他同年齡的小孩也都有補習。但是補習班的教學方式有許多缺點，包括往往訓練學生如何應付考試，而不是加強學生實際使用英語的能力。此外，補習班的存在也擴大了貧富差距，使得家境富裕和城市學生享有優勢。有人建議，不妨在公共圖書館設置更多電腦，並安裝英語教學軟體，如此可有效促進英語學習風氣，並可避免英文補習班的缺失。

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Foxconn: Unwelcome Place in the Spotlight The major Apple supplier has been in the news over its China labor practices and plan to invest in Sharp.

Chairman Terry Gou is known as a hard-driving executive who emphasizes the importance of speed in business. photo : cna

BY DEBBY WU

lthough it is the leading maker of iPhones and iPads for Apple, Taipei-based Hon Hai Precision Industry Co. (better known as Foxconn) and its chairman Terry Gou largely shunned publicity and for years were little known internationally outside the IT industry. That changed suddenly two years ago when a spate of more than a dozen suicides occurred among workers at its facilities in China, giving the company overnight international notoriety. Critics charged that the tragedies were the result of high pressure and poor working conditions inside com-

pany’s plants. But with its capability to mass produce popular Apple gadgets at low cost but with highly dependable quality, Foxconn remains a key supplier to the Cupertino, California-based company. As the world’s largest contract manufacturer of electronics, Foxconn also makes laptops for Dell, LCD TVs for Sony, and printers for HP, among other business. Today, Foxconn is China’s biggest exporter, last year shipping out goods worth US$111.7 billion, equal to about 5.9% of total Chinese exports. Home in Taiwan, Hon Hai has taken the top spot on CommonWealth

magazine’s ranking of the largest manufacturing companies each year since 2005. Its consoliated revenue for 2011 was given as NT$3.45 trillion (US$118 billion), equivalent to about 21.4% of Taiwan’s total GDP. All that has made Gou one of the richest men in Taiwan, with a personal fortune calculated by Forbes in early 2012 as worth US$4.8 billion. The hard-driving executive is known for the speed with which he responds to his customers’ needs. In a May 2011 story about Foxconn’s business success, CommonWealth said that “among the top five Taiwanese contract electronics manufacturers, Terry Gou offers the best service to his clients.” Foxconn employs about one million people in China, working at over 31 manufacturing bases all over the country. Its Longhua campus in the southern Chinese province of Guangdong is a city in its own right. Most of its 300,000 employees live in dormitories on the site, which also contains sports and other recreational facilities, restaurants, banks, and shops. Negotiations are continuing as Gou seeks to make a major strategic investment in Sharp. photo : cna

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The company has also made major overseas investments in such markets as Brazil, the Czech Republic, Vietnam, and the United States. But with China as its principal manufacturing base, the electronics giant has made great efforts to improve working conditions there in an effort to mitigate the criticism. Still, it continues to be plagued by labor issues due to its high profile. Recently Gou has been facing some other bumps in the road in his ambitious efforts to expand his multibillion-dollar industrial empire. Earlier this year he arranged for Foxconn to acquire a stake in Sharp, the well-known but financially challenged Japanese brand. But the plan has since been stalled, reportedly due to Gou’s attempts to renegotiate the price to reflect changes in the market. Though the Japanese acquisition might help Foxconn secure more component business from Apple, analysts say that Sharp or no Sharp, Apple will continue to rely on Foxconn due to its unrivaled production management. Sixty-two year-old Terry Gou, hailed by the Taiwan media as a modern day Genghis Khan, comes from a modest background. His father was a police officer, originally from the northwestern Chinese province of Shaanxi, who came

to Taiwan in 1948 as Chiang Kai-shek’s Nationalists were losing control of the mainland to Mao Zedong’s Communists in the Chinese civil war. Though not an academic standout, the younger Gou earned a degree from China Maritime College in Keelung and after graduation started working as a shipping clerk. In the early 1970s, witnessing how surging exports were driving Taiwan’s economic boom, he looked for an opportunity to quit toiling for others and become his own boss. In 1974, he borrowed NT$100,000 from his mother and joined together with some friends to found Hon Hai Plastics Enterprise, a manufacturing company specializing in making knobs for black-and-white TV sets. The plant was located in the gritty Taipei suburb of Tucheng, literally “Dirt Town” in Mandarin, which still serves as Foxconn’s global headquarters. Hon Hai eventually transformed itself into an electronics manufacturer when it received a breakthrough order from Atari in 1980 to produce game console connectors. The company kept expanding over the following decade. At a time when the Communist Party was yet to fully embrace the idea of encouraging foreign investment, Gou – seeing the opportunity represented by China’s lower labor and land costs – proceeded to establish a factory in the southern Chinese city of Shenzhen in 1988. Hon Hai became listed on the Taiwan Stock Exchange in 1991.

Media scrutiny Despite Foxconn’s huge size and its status since 2002 as China’s numbero n e e x p o r t e r, t h e c o m p a n y h a d remained under the radar of the international press for a long time until the British tabloid Daily Mail in 2006 took the company to task in a story detailing the long working hours and low wages inside two Foxconn facilities. But that story, though harsh, did not attract anything near the global attention – and public outratge – that was aroused in early 2010 when a series of suicides took place at various Foxconn complexes in Shenzhen. A total of 14 workers jumped from the top of Foxconn buildings, 12 of them falling to their deaths. Most of them were young migrant workers who had left their rural homes in the hope of a better life. Similar incidents had occurred at Foxconn plants before, but not in such quick succession nor in such large number. As a result of the series of suicides, international labor rights groups, the media, and Chinese officials began to scrutinize the company’s practices as never before. Many media outlets and labor rights groups portrayed Foxconn as a tech sweatshop with managers verbally abusing frontline workers, who faced long hours of repetitive work in a military-style environment. They also censured Foxconn’s Western customers, including Apple, for not supervising

Gou announces a cap on overtime hours at Foxconn's China plants, above, and joins the singing at a company banquet in Taiwan, right. photos: cna

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their contractor properly. At the same, other reports argued that Foxconn offered better conditions than most other manufacturing operations in China – and that employees were usually happy to work overtime, even exceeding the legal limit of 36 hours per week, in order to earn more money. Some stories pointed out that the suicide rate on Foxconn campuses was in fact lower than that of the general population in China. Foxconn was also criticized for its slow response to the tragedies. In an interview with Bloomberg Businessweek in September 2010, Gou said that he only came to grasp the gravity of the problem after the fifth suicide occurred. At that point Foxconn surrounded its buildings with safety nets, set up counseling hotlines, and more than doubled its standard wage from 900 yuan (US$143) to 2,000 yuan (US$318) a month. Gou further announced a number of changes in Foxconn’s Chinese empire that might help smooth over labor problems. One initiative was to open new plants in the Western Chinese cities of Chengdu and Zhengzhou so as to alle-

viate migrant-worker issues by bringing factories closer to the homes of potential employees. The move was also in line with the Chinese government’s efforts to accelerate the development of inland areas to reduce disparities between income levels there and the bustling provinces along the eastern coast. Another project was to deploy a million robots throughout Foxconn’s Chinese plants by 2014 to take over dull and repetitive tasks. To achieve that goal, Gou has made huge investments in the central Taiwanese city of Taichung to build new factories to specialize in robotics. Despite its substantial efforts to improve the labor conditions in its plants, Foxconn’s problems did not end in 2010. Additional suicides occurred, though fewer in number, in 2011. Adding to its woes, Foxconn’s safety compliance became another source of international concern after three workers were killed in an explosion at a Chengdu polishing plant. This year the manufacturing giant has continued to be dogged by Chinese labor issues. In March, the global monitoring group Fair Labor Associa-

tion found major violations, including excessive overtime and subpar safety practices, at Foxconn plants after it conducted a comprehensive audit of the company’s Chinese campuses at the request of Apple. The association in August said Foxconn had made improvements, and that the company was ahead of schedule in implementing recommendations. Yet the electronics titan was the subject of further negative news in September when Chinese media r e por te d that s tude nt i nt erns had been forced by teachers to work at its plants. Foxconn acknowledged that there were student interns in its work force, but said they were free to leave whenever they wished. The company has also been suffering from the growing social unrest and increasing labor tensions in China. In June, about 1,000 workers rioted around their dormitories in Chengdu after some of them had been involved in a clash with security guards. In late September, some 2,000 employees engaged in a late-night mass brawl at the Taiyuan plant in Western China following what Foxconn described as a “personal dispute” unrelated to work. Forty people were injured and an unspecified number were arrested. While Foxconn has received significant blame for poor work conditions, Hong Kong-based labor rights group Students and Scholars Against Corporate Misbehavior (SACOM) considers Apple to be the main culprit. “The illegal long working hours, low wages, and poor occupational health and safety are rooted in the unethical purchasing practices of Apple,” SACOM’s project officer Debby Chan contends.

Relationship with Apple

The groundbreaking ceremony in May this year for a new China headquarters building for Foxconn in Shanghai's Pudong district. photo : cna

Chan adds that Apple’s continued pressure on Foxconn to meet tight production schedules is inconsistent with its claim that it seeks to ensure improved work conditions inside Foxconn plants. She says her organization still found excessive overtime, insufficient rest breaks, and occupational hazards to be present in Foxconn’s

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Zhengzhou plant after researchers spoke to workers there in September. In a written statement in answer to questions from TOPICS, Foxconn says the company has implemented several measures to help employees cope with both professional and personal challenges since 2010. The initiatives include suicide prevention training for managers, residence counseling programs, additional recreational facilities, and enhanced on-site monitoring systems. Foxconn adds that while its compensation policy always exceeds legal requirements, it is also taking steps to address the issues of long work hours and safety compliance. "Foxconn takes our responsibility to our employees very seriously and we work hard to give our 1.2 million employees in China a safe and positive working environment," the company says. “We are committed to working together with all of our customers to ensure that our employees are treated fairly and their rights are fully protected.” Lin Thung-Hong, an associate research fellow at Taipei-based Academia Sinica Institute of Sociology, says Foxconn’s problems are not unique in China. “Foxconn’s issues are a reflection of the difficulties faced by the whole manufacturing industry centered in the Pearl River Delta (in southern China),” Lin says. He adds that Foxconn, its Western brand customers, and the Chinese government all share responsibility for ensuring that workers enjoy decent conditions. “Especially the Chinese authorities should think about what role they want workers to play in the future economy,” he notes. Despite the labor problems, informed observers say that Apple and Foxconn remain highly dependent on one another. “Apple needs a partner to assemble its products, and no one else in the world does it better than Foxconn,” says Yuanta Securities analyst Vincent Chen. “Apple has to think seriously about how to keep working closely with Foxconn on the labor issue to help its partner avoid losses.” Gou’s ambitions, and Foxconn’s expansion, are not limited to China. This year the company announced new

Hon Hai is constructing a cloud computing technology center in the Kaohsiung Software Technology Park. photo : cna

investment projects in overseas locations including Brazil and Indonesia. The most attention-grabbing move was its proposal to acquire a stake in the century-old Japanese electronics powerhouse Sharp Corp., but the deal is yet to be closed. On March 27, Foxconn announced it would pay 550 yen (US$7.10) per share, or 67 billion yen (US$863 million) in total, for a 9.9% stake in Sharp. The Japanese company’s share price closed at 490 yen later that day. In July, Gou successfully obtained a 37.6% stake in Sharp Display Product’s Sakai plant, the world’s only tenthgeneration TFT-LCD production line, through his personal investment company SIO International Holdings. Gou told local cable news station ETTV that he plans to have the plant produce highdefinition and next-generation TVs in the future, in addition to flat panels. However, Sharp’s stock price has plunged significantly since the March announcement due to the company’s massive losses. The price was down to 202 yen (US$2.60) as of September 20. Foxconn spokesman Simon Hsing says talks are still under way as the two companies engage in renegotiations over the

transaction price. He adds that Foxconn is not in a rush to seal the deal, noting that Japanese brands are not wellaccepted in the Chinese market right now due the ongoing territorial disputes over the Diaoyutai islands (known to the Japanese as the Senkakus). Media reports have suggested that Foxconn’s aim in seeking to obtain S h a r p ’s a d v a n c e d t e c h n o l o g y f o r making large-sized panels is replace Korea’s Samsung Electronics as the panel supplier for iPhones and iPads and maybe even secure future orders for the upcoming Apple TV. Analysts say the Sharp acquisition could allow Foxconn to help Apple reduce its dependency on Samsung, which is now both a major component supplier for the U.S. company and its biggest rival in the smart phone market. “For Apple, Samsung has become a threat and an enemy, so Apple naturally wants to shift its production away from Samsung,” says Fubon Securities analyst Arthur Liao. He adds that if Foxconn can secure panel orders from Apple in the future, it will give Foxconn a bigger margin and make the U.S. company even more reliant on its Taiwanese contractor. taiwan business topics • october 2012

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A n A ly s i s

Myanmar: Southeast Asia’s “Last Frontier” for Investment The country’s reforms and the easing of Western sanctions are opening the way for many new business opportunities. BY DAVID DUBYNE

yangon

ollowing the recent reforms in Myanmar that have caused the United States and other countries to ease sanctions against its military regime, businesses around the world are taking a new look at opportunities in that market. Taiwan is no exception. Recently a private Myanmar trade delegation visited Taiwan courting investors, and in May this year the Taiwan’s Ministry of Economic Affairs (MOEA) issued a 36-page, Chinese-language Investment Guide to Myanmar. In July this writer attended, at the invitation of two Taiwanese business owners, a Myanmar Investment Conference sponsored by the MOEA’s Department of Investment Services in conjunction with the Taiwan External Trade Development Council (TAITRA) and the Myanmar Investment Commission (MIC). The purpose of the conference was to showcase investment opportunities in what was termed the “Last Frontier Market in Southeast Asia.” A quick glance at a map of Asia shows the central location of Myanmar (also known as Burma) as a crossroad between China, India, Bangladesh, and Thailand, giving it a strategic poten-

tial for shipping. As a member of the Association of Southeast Asian Nations (ASEAN), it should also benefit from the increasing regional economic integration that ASEAN is fostering. Another attraction of Myanmar’s infant market is the huge investment the country will need to build its economy. Both U.S. and Taiwanese companies should be able to find space in certain sectors of what is already becoming a crowded foreign investment destination. Of the 31 countries with investments in Myanmar, China leads with US$14 billion or 34.5% of the total, followed by Thailand with $9.6 billion, Hong Kong with $6.3 billion, South Korea with $2.9 billion, Britain with $2.7 billion, and Singapore with $1.8 billion. The few small Taiwanese firms there are manufacturing consumer products such as diapers, mobile phones, and foodstuffs. Among U.S. firms, Chevron has a stake in oil exploration, and CocaCola and Pepsi are on sale again after a period of 59 years in which U.S. trade sanctions kept them out of the market. “Myanmar is ready for any foreign partnership, joint venture, or investment,” says U Tin Ko Win, deputy director general of the Directorate of

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Investment and Company Administration (DICA). To entice Foreign Direct Investment (FDI), the MIC has been offering incentives such as a five-year corporate tax holiday and an increase in the length of the normal land lease from 35 years to 50 years with two additional 15-year extensions. Myanmar’s parliament passed a new FDI law on September 7, the last day of the lower house’s session, and in the final version of the bill dropped a controversial clause of requiring a US$5 million minimum investment. The parliament also increased the maximum shareholding of foreign parties to 50%, up from the previous 49%, in sectors including manufacturing, farming, hotels, and fisheries. Many would-be investors worry, however, that a 50/50 shareholding means potential deadlock. Under the new law, 13 vaguely defined additional sectors are also open to foreign investment, but only if the

foreign partner’s holding is less than 50%. As of early October, the specific sectors had not yet been announced. There were also unconfirmed reports that Myanmar was considering allowing foreign investment of up 100% in some high-tech sectors Some local business interests in Myanmar “worry that opening the country too aggressively would let foreign firms dominate the economy,” says Kristy Hsu, program coordinator at the Chung-Hua Institution for Economic Research who attended a Myanmar Global Investment Forum in Yangon in September. “The fear is that 90% of Myanmar’s business sector is comprised of SMEs and they feel the new bill puts them at a competitive disadvantage from the start. Most SMEs in the country want fresh capital through a JV partnership, not direct competition from 100% foreign-owned entities. They also want the same tax incentives that are offered to foreign firms.” Hsu also noted that “local unions are beginning co-ops in order to garner heavier bargaining power, and to include themselves in pivotal roles in price, wage, and investment issues. Strikes and land disputes are heating up as land prices increase throughout the

country, but the government arbitration committee has continued a handsoff approach unless a dispute involves thousands of workers.” Another FDI inducement was removal of a “Hostile Buy-Out” clause that allowed a Myanmar joint-venture partner to forcefully buy out the other side if they had enough capital, whether agreed to or not by the counterpart. In addition, rules and regulations have been relaxed, and it is now supposed to be possible to complete the entire incorporation process in a day, though that does not seem to be realized in practice. A new session of parliament begins this month, and more changes in the law may be forthcoming.

Numerous challenges Despite the new opportunities, there is agreement that foreign companies will find Myanmar a difficult place to do well in. “The market is small and the pool is full – everyone is already in,” said Taiwanese businessman Roger Yin, general manager of Good-Men Associates, interviewed while attending the investment conference in Myanmar in July. “The only way to compete is to have a high-tech advantage in mate-

A street market in downtown Yangon selling produce. photo : wikipedia

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Cargo ships on the Yangon River, just offshore downtown Yangon. photos: wikipedia

rials or techniques that will take a few years to copy. When I started in China 20-plus years ago, there weren’t too many foreign businesses there, so you could experiment and start slowly. But precisely the opposite is true in Myanmar. Everyone is here and they only want big investments. The climate is not right for what I’m doing at this time. It’s cheaper to manufacture in China, and the infrastructure is in place there, unlike Myanmar.” On the other hand, explains Albert Fan of TAITRA’s Market Research Department, a keynote speaker at the July conference, Taiwan may enjoy some special advantages in dealing with Myanmar. One is the fact that many people in Myanmar are able to communicate in Chinese due to the country’s longstanding trade ties with China. Another is the legacy of the presence of former Kuomintang troops in the mountain regions of Myanmar, where they fled across the border at the end of the civil war with the Chinese Communists. For years, the Taiwan government subsidized the education in Taiwan universities of the offspring of these soldiers – known as Myanmar-born Kuomintang (MBK). After graduation, many of them returned to Myanmar. “If you must have a Myanmar JV partner,” says Fan, “the safest approach is to partner with a Taiwan-educated MBK business family.” U.S. companies might also benefit from choosing an MBK entity to partner with, especially in fields in 32

which the MBK businesses are strongest – canning and dehydrating equipment, as well as other machinery for the food and beverage industry. Overall, however, the most productive sectors are those related to natural resources: oil and gas, mining, and timber. The first challenge in trying to assess the business climate is the lack of trustworthy data, with different private and government sources releasing different figures. Although no comprehensive nationwide census has been taken since 1931, the current estimated population is about 50 million. Import figures are grossly underestimated since so much smuggling takes place from Thailand, China, Malaysia, and India. The International Monetary Fund forecasts Myanmar’s 2013 GDP growth at 7.7%. Another negative is that the administration is widely perceived as nontransparent, corrupt, and highly inefficient. Over 60% of the FY2010-11 national budget was allocated to stateowned enterprises, most of which operate at a deficit. TAITRA’s Fan notes some other drawbacks. “As the rural population is too small, spread out, and impoverished to purchase anything, most investors, including Taiwanese businessmen, focus only on major cities like Yangon, Mandalay, and Naypyidaw,” he says. Additionally, in the absence of a formal stock market, domestic investment goes mainly into land, “creating sky-high prices that deter the development of manufacturing facilities and

warehouses.” Kristy Hsu notes that “property prices in the city of Yangon are higher than Bangkok and some places in Tokyo,” and that while the official exchange rate is 6 kyat to the dollar, “on the street that same dollar will get you 860 kyat.” In 2010-11, the transfer of state assets, especially real estate, to military families under the guise of a privatization policy further widened the gap between the economic elite and the general public. Generals control vast tracts of land and therefore hold the key to the development process, says Fan. “These generals can use their power for or against reforms.” Under a controversial 2010 amnesty agreement, the military was given a clean slate for any crimes committed before 2010.

Potential transport hub If U.S. sanctions are fully lifted, economic stability should be assured, as Myanmar is well situated to be a regional transport hub. For China and India, a stable Myanmar would be a strategic asset providing deepwater port access to the Indian Ocean and enabling circumvention of the Malacca Straits by using overland rail routes through Yunnan Province in western China. The rail connections from the Chinese side are in place, but key portions of track within Myanmar remain in the planning stages. Existing railways are old and rudi-

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mentary, using narrow gauge, and haven’t been repaired in decades. The train trip from Mandalay to Myitkyina, which is 530 miles, takes 24-30 hours, but the same distance can be covered by car in 17 hours. Highways are unpaved, and even streets in major cities are a patchwork of semi-pavement. Transportation costs are high and energy shortages are common, especially from January to April when hydroelectric reservoirs are at low water. To further complicate matters, ethnic armies control all the roadways throughout the Shan and Kayah States. “Bribery and road-use taxes imposed every hundred kilometers or so through different ethnic army-controlled areas make it cheaper to deliver by air,” says Kristy Hsu. What will look more attractive to potential investors are the low wage rates. Factory workers earn US$50-100 per month, a truck driver $150, and salespeople $80-160. Social Security Benefits require the employer to contribute 2.5% of the insured wage and the employee 1.5%. Most workers come from remote rural areas, so that room and board must also be included in labor costs. Those over the age of 40 can speak English as they received schooling during the period of British rule, while the English ability of younger workers is described as hit or miss, but generally higher in the cities. The population consists of many different ethnicities, with different management techniques needed

for each group. The capital of the country is now Naypyidaw, so that companies setting up in Yangon (formerly known as Rangoon), the largest city and commercial center, may encounter delays in paperwork running into days or weeks while documents are sent back and forth. Construction has begun on a new industrial park for foreign investors within the Thilawa Special Economic Zone, which includes the deep-sea port of Thilawa 25 kilometers south Yangon. P o l i t i c a l l y, “ M y a n m a r r e c o g nizes the People's Republic of China, accepts the One China Policy, and does not maintain any representation in Taiwan,” including non-official representation, notes Kristy Hsu. With even TAITRA barred from opening an office in Myanmar, connections are maintained through wholly private entities. Hsu says that some Taiwanese businessmen have set up a desk at the Yangon Golf Club to serve as a channel to provide business information and answer inquiries and business. In addition, she says she receives at least 12 calls a day in Taipei from Taiwanese companies, mostly asking about the investment law changes. “Foreign firm are highly soughtafter as partners as they can bring new technology and fresh capital,” says U Ken Tun, CEO of Myanmar’s Parami Energy Group. “Foreign firms should come in and identify an opportunity,

then find a person who shares the same vision,” he suggests. “Access to the oil and gas industry is limited to a profitsharing joint venture arrangement with a local company owning the exploration concession. The same is true for mining, since mineral reserves are controlled by the Ministry of Mines and the best spots have been awarded to private local companies. One advantage is that with a well-known business entity as a partner, you could circumvent some of the bureaucratic challenges – that’s local firepower. The partner can also contribute essential assets in the form of connections, land holdings, and property.” But prospective investors need to be aware that many leading business figures are former members of the military regime that the U.S Treasury Departments has placed on its Specially Designated Nationals (SDN) list of individuals targeted for “Frozen Asset” sanctions. Dealings with them could pose long-term risks to a company’s finances and reputation. Some of the key opportunities for investment are likely to be in such areas of infrastructure development as power plants, industrial parks, airports, and telecommunications, as well as in mining, oil and gas exploration and production, forestry and timber development, agriculture, and hotels and other tourism facilities. In manufacturing, major sectors identified as in need of investment are cement, building materials, and spare parts for agricultural machinery and automobiles. There is also a need for imported hospital equipment, even second-hand.

— David DuByne is an American businessman currently resident in Taiwan. He has been studying the feasibility of the Myanmar market for an algae biodiesel production system.

A jetty along the Yangon River . photos: wikipedia

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behind the news

With Visa-free Travel, the U.S. Beckons The travel industry is looking forward to around 40% growth in visitors in the near term.

photo : State of Alaska Office

BY JANE RICKARDS

merican Institute in Taiwan Director Christopher Marut called it a “new exciting move forward in our relationship,” while Taiwan’s Ministry of Foreign Affairs proclaimed it a “tangible result” of President Ma Ying-jeou’s diplomatic efforts. They were celebrating the U.S. announcement in early October that Taiwan citizens would be included in its visa waiver program, strengthening the two sides’ close unofficial ties. Starting November 1, Taiwanese for the first time will be able to travel to the United States for business or tourism

for 90 days without a visa. Taiwan has now received visa waiver treatment from 129 countries, and it becomes the 37th country to enjoy that status with the United States. In Asia, there are four others: Brunei, Singapore, South Korea, and Japan. Not all Taiwanese travelers will be able to take advantage of the U.S. visa waiver. They will need to hold one of the biometric passports (also called e-passports) that Taiwan started to issue in late 2008. They will also have to be in travel categories that previously required a B1 or B2 visitor visa,

which eliminates students and temporary workers. And they must first receive travel authorization through an online system run by the Department of Homeland Security (DHS). Called the Electronic System for Travel Authorization (ESTA), it can be reached with a click of a mouse from the AIT website. The increased ease of travel between Taiwan and the United States will be “good for our social, our business, our cultural, our economic ties,” Marut, the de facto U.S. ambassador in Taiwan, said in his first press conference in early October. “It’s going to be good

NORTHWARD HO! — The state of Alaska is optimistic about attracting much more tourism from Taiwan due to visa waiver. photos: State of Alaska Office

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behind the news

for employment on both sides.” AIT officials say Taiwan’s inclusion in the program also reflects the island’s importance as an American security partner. The United States is already among the top five destinations for Taiwan outbound travelers and is the top longhaul destination outside Asia. In terms of visitor arrivals into the United States, Taiwan ranks sixth in the Asia Pacific region and 22nd in the world. Taiwanese citizens made some 290,000 trips to the United States in 2011 (about 30% below the pre-9/11 level), spending US$1.1 billion, according to U.S. Department of Commerce figures. To estimate the probable impact of the program on the number of Taiwanese visitors to America, travel industry experts point to the experience of South Korea, which joined the U.S. visa waiver program in 2008. A 35-40% rise in South Korean travelers to the United States occurred in the first year or so, says Erick Kish, Alaska’s trade representative in Taiwan. A Ministry of Foreign Affairs (MOFA) statement also referred to the South Korean experience, noting that the tourist volume from South Korea to the United States eventually rose by 50%. Kish expresses optimism about the prospects for Alaska, saying he expects the state to enjoy an increase of around 50% in the number of Taiwanese visitors in the next few years. Alex Lei, executive director of the State of Hawaii Office in Taipei, predicts a 40% growth in visitors to Hawaii. Travel industry specialists say Taiwanese visitors to the United States tend to spend an average of around US$4,000 each. If a 40% increase in travel volume materializes, it is therefore likely to equal an additional US$440 million for the U.S. economy. Hawaii’s Lei also sees a multiplier effect, in that the ease of travel will cause more Taiwanese to consider the United States as a destination for education, trade, and investment. The program will be a particular convenience for Taiwanese living in the southern, central, and eastern parts of the island, as they will no longer have to come to Taipei for an interview at AIT

WIN-WIN PROPOSITION — In his first press conference, AIT Director Christopher Marut stressed the benefits for both economies of U.S. visa waiver for Taiwanese travelers. photo : ap

as part of the visa process. The MOFA statement notes that a family of four living in Kaohsiung can save up to six hours in travel and visa interview time and NT$30,000 in related expenses. In addition, each person taking advantage of the program can save around NT$4,800 in visa fees, but will need to pay US$14 (roughly NT$408) for the online ESTA registration. Morgan Parker, chief of AIT’s consular section, points to the security component of the arrangement, noting that nations aspiring to receive U.S. visa waiver must first enter into various information-sharing agreements with the United States, such as the sharing of information on lost and stolen passports. In addition to cooperation on law-enforcement and securityrelated information exchanges, the agreements cover cooperation on repatriation matters and the maintenance of high standards on aviation and airport security. After the September 11 attacks, border security and the protection of U.S. citizens became a crucial issue for the American government, Parker says. But with a flagging U.S. economy, the U.S. national interest is also served by expanding travel and tourism. “The visa waiver program is perfect for this, as it encourages high security standards,” he notes. Parker also sought to correct the impression in some quarters that the

timing of the visa-waiver announcement was related to Taiwan’s relaxation of its restrictions a few months earlier on the import of American beef. He points out that Secretary of State Hillary Clinton first nominated Taiwan for the visa waiver program in 2011, after which the DHS needed to conduct a comprehensive review, a process that was only completed recently. A basic criterion to qualify for U.S. visa waiver was to reach a non-immigrant visa refusal rate of less than 3% in a year. Taiwan’s rate was brought down to 2.2% in 2010 and 1.9% for 2011. In addition, the Taiwan government made concerted efforts to meet other U.S. requirements. To improve passport security, for example, Taiwan began issuing the biometric passports containing electronic chips and bearing the user’s national ID number at the end of 2008. It also began requiring for the first time that citizens make a personal appearance when applying for a passport.

Beginning to promote Travel agencies and U.S. state representative offices are now gearing up to promote travel to the United States, which they expect to start booming around the time of the Chinese Lunar New Year holiday in February. “The visa waiver was a vital step, but the next step is transportation and market promotion,” says Lei. He is actively taiwan business topics • october 2012

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behind the news

photo : wikipedia

working with China Airlines (CAL) and EVA Airways to start direct flights from Taipei to Honolulu. Currently Taiwanese passengers visiting Hawaii need to transit in Japan. Lei says the two domestic airlines are very likely to start direct flights next April. Executives of Hawaiian Airlines were in Taiwan in early October in the U.S. to study the idea of setting up new routes to Taiwan, possibly in cooperation with CAL or EVA, Lei reports. And several travel agencies are in discussions with CAL about organizing charter flights to Hawaii starting January 31 for island-hopping packages, Lei adds. Alaska representative Kish says his office will soon discuss the prospect of charter services to Alaska with local carriers. He notes that many such charter flights to Alaska operate from Japan in summer, and also in winter, the best time for viewing the Aurora Borealis. Kish estimates that Alaska now receives 5,000 to 6,000 Taiwanese tourists a year, and sees the potential for a US$18 million annual boost to the state if the number of visitors can be increased by 3,000, based on an average spend in Alaska of about US$6,000 per person. Patrick Lin, special liaison to the chairman of Lion Group, says the travel company is preparing to expand its U.S.-bound tours. The existing packages focus on such traditional destinations for Asian visitors as Los Angeles, Las Vegas, and Niagara Falls. Now Lion is creating new tours to such places as Miami, Texas, and various national parks. Overall says Lin, Lion expects to see a 40% increase in U.S. travel, whether on group tours or individual visitors. 36

AIT Commercial Section chief Helen Hwang notes that AIT – in partnership with the Discover America Committee in Taiwan – is sponsoring a program called “My Dream Vacation” that was launched last year to promote U.S. tourism in the Taiwan media and travelers. The United States will also be sending a travel and tourism trade mission to Taiwan in November, Hwang says, adding that the Taiwan travel industry is expected to organize its largest-ever delegation to attend America’s main wholesale business-tobusiness travel trade fair, International Pow Wow, to be held in Las Vegas next spring. The event will give Taiwanese travel companies the chance to meet with U.S. counterparts to form partnerships to develop tour packages or promote destinations. Hawaii’s Lei warns that introduction of the visa waiver program also presents some risks to the travel industry. If too many flights and tours are offered, prices will go down and the quality of travel may be affected, he says. Lei also notes that following a substantial decade-long slowdown in travel to the United States, new visitors may have completely different preferences and travel tastes from those who took packages 10 years ago. In the past, tourists usually visited five or six destinations in as many days, but now they tend to prefer to visit one place and explore it in depth, he says. He suggests that tours may need to be re-designed, for example introducing specialized themes such as golf packages and museum tours. The AIT website notes that the 90-day period of visa-free travel cannot be extended and that a traveler using the visa waiver program cannot

change status while in America, such as switching to a status as a foreign student. The ESTA registration enables the DHS to evaluate whether the applicant poses any law enforcement or security risks. As part of the process, potential visitors provide certain background information and confirm their eligibility by answering questions relating to communicable diseases, criminal arrests and conviction, and any past history of visa revocation or deportation. Processing is normally completed within minutes, but as in some cases it can take up to 72 hours, AIT recommends applying as early as possible. ESTA authorizations are valid for two years or until the traveler’s passport expires, whichever comes first. Those with ESTA authorization may travel to the United States repeatedly within the period of validity without having to reregister, unless vital details have changed, such as the issuance of a new passport or a change in name or citizenship. The visa-waiver program is expected to be a boon for Taiwanese tourism to the United States. The additional security measures and paperwork after the 9/11 attacks discouraged many Taiwanese from including the United States in their travel plans, and in the meantime many other countries were granting Taiwan visa-waiver treatment. Lin says before 9/11, Lion offered around 100 tours a year to the United States, but the number currently is only 10 to 15. AIT’s Parker concludes that while security is important to the United States, so is attracting foreign travelers. “It helps us to explain our culture and our ideals, and dispel misperceptions about the United States,” he says.

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INDUSTRY

CUS

A Report on the Medical Device Industry

A Complicated Market

photo : henry westheim

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Low Prices, Lengthy Approval Process Suppliers consider Taiwan one of the most difficult markets in the region.

BY DON SHAPIRO

IN THIS SURVEY

• Low Prices, Lengthy Approval Process p38

• Local Industry at a Crossroads

p41

• A Dream for Taiwan’s Medical Device Industry in 2020 p45

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ith the Taiwan market for medical devices dominated by the approximately NT$15 billion (US$500 million) annual expenditure for those products by the single-payer National Health Insurance (NHI) system, government regulatory and reimbursement policies have a huge bearing on the operations and profitability of the numerous multinational companies who account for the great majority of the devices used in Taiwan’s healthcare system. The suppliers generally express considerable frustration over what they see as the uniquely difficult conditions the industry faces in Taiwan – particularly the extremely low prices offered by the Bureau of National Health Insurance (BNHI) in an effort to control costs. “If a device is priced at say US$100 in Hong Kong, Korea, or Japan, in Taiwan it’ll be $60 because of the reimbursement system,” says Susan Chang, commercial director in Taiwan for Johnson & Johnson Medical. “You can sell just as many units in Taiwan as in other markets but come out with a much lower dollar volume.” In addition, BNHI employs several other tools to hold down expenditures. One is the “global budget”

that places a cap on the total amount of money to be spent on healthcare each year, usually based on a modest growth rate from the year before. Second is the Price Volume Survey (PVS) mechanism, which checks for discrepancies between the government-defined reimbursement price for an item and the discounted price that hospitals typically negotiate with the device suppliers. The survey is then followed by a cut in the reimbursement price to try to eliminate the price gap, though a gap soon reappears when the hospitals ask for discounts off the new price. The PVS process for medical devices is similar to the one applied to pharmaceuticals, which usually takes place every two years. But the medical device PVS is conducted annually on onequarter of the products in the market, so that each item is surveyed once every four years. The BNHI is also in the process of introducing a third type of pricing control, a methodology called Diagnostic Related Groups (DRG) in which the Bureau pays the hospitals a fixed sum for performing a certain medical procedure, rather than calculating the cost of each drug and device used in that procedure. The first phase of Taiwan’s DRG system

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A Report on the Medical Device Industry

was launched in 2010 with 164 procedures; expansion through additional phases is still under discussion between BNHI and the medical community. The medical device manufacturers are unenthusiastic about DRG because it discourages the use of higher-quality, newtechnology products, as they would be not be reimbursed at any higher rate than conventional ones. In addition, the DRG-style price ceiling for individual procedures comes on top of the overall expenditure cap through the global budget. “Most countries have either a global budget or a DRG system,” says Chang, who is also a co-chair of the AmCham Medical Devices Committee. “Taiwan is the only one to have both.” (She adds that Taiwan is also a relative exception in subjecting medical devices to Price Volume Surveys, although Korea

reportedly is considering starting the practice in emulation of Taiwan). Yet another regulatory tool that impacts the medical device suppliers, as it does the drug companies, is called a Price Volume Agreement (PVA). When a new product is being launched, BNHI may ask the manufacturer to sign a PVA pledging to reduce the price if the sales volume exceeds a certain number of units. As a consequence of all these measures, medical device prices in Taiwan are about the lowest in the region. “Compared with other markets in the Asia Pacific,” says Jeffrey Chen, country manager for Bard Pacific Health Care, “Taiwan is one of the toughest in which to do business, simply because of the reimbursement system.” To avoid having the low Taiwan price benchmarked in other more profitable

markets in the region, medical device makers now sometimes even choose not to introduce a new product into this market, industry sources say.

Long time to market On top of the pricing problems, the manufacturers also complain about the length of time it takes to go through procedures to get a product licensed and obtain a reimbursement price. A survey of its member companies by the AmCham Medical Devices Committee found that the typical time needed for approval of a new product is 15-16 months, with some applications taking as long as 28 months. Adding on the time for BNHI to issue a reimbursement price, the entire process requires two or three years. “When you consider that the normal

photo : Henry Westheim

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INDUSTRY

CUS

life cycle for a medical device is three to five years due to technology constantly advancing, it means that a ‘new’ product entering the Taiwan market usually is already an old product in most of the rest of the world,” says Albert Lim, vice president for business operations at Medtronics Greater China and another AmCham Medical Devices Committee co-chair. “That’s not very beneficial to Taiwan patients.” The licensing process comes under the jurisdiction of the Taiwan Food and Drug Administration (TFDA), which like BNHI is a unit of the Department of Health. TFDA is still a rather new organization, having been established in 2010. Members of the industry credit the agency with working hard to upgrade standards, but consider that it has been given insufficient manpower and funding to carry out its mission smoothly, contributing to the slow approval process. Because of a limit on its authorized headcount, TFDA reportedly has to rely on contract employees to handle much of the reviewing process. Frequent turnover means that reviewers often lack the training and experience to carry out the task expeditiously. Industry sources note that China, which for a long time faced a similar backlog problem, in recent years has vastly increased its professional staff for product approvals. “Taiwan may soon be rather embarrassed to discover that new medical devices are available in China

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before they are on this side of the Strait,” says one executive. Before an application for registration in Taiwan can be filed, medical devices manufactured in the United States must first have received approval from the U.S. FDA, and those made in Europe must have obtained the CE mark. The manufacturers therefore question the need for Taiwan to repeat the approval process, which is time-consuming and requires a large staff with technical expertise. “The U.S. and Europe certainly have a lot more experts in product safety and efficacy than we do,” says Bard’s Jeffrey Chen. He notes that Hong Kong and Singapore accept the American and European approvals and engage only in postmarket surveillance to ensure that the devices are being used properly. The time lag for new medical devices to enter the Taiwan market has added to the current sense of malaise among many surgeons and other healthcare workers, who are already dispirited by the relatively low pay and heavy workload in Taiwan. “Taiwanese doctors frequently go abroad to attend international medical congresses where they become familiar with state-of-the-art medical devices, but they know it will be a long time before those products are approved for use in Taiwan,” says Chang of Johnson & Johnson (though she notes that in some cases it is possible to get special “early use” permission to import such devices for use in clinical trials).

“The situation has implications for the brain drain Taiwan is facing,” says Dennis Lin, general manager Taiwan/ Hong Kong for Becton Dickinson. “It’s not just a question of pay, but also access to the latest technology. Both are trigger factors causing doctors and nurses to leave. Taiwan is losing its edge.” Although the doctors and hospitals would like to see faster access to innovative products – for the sake of their professional development but more importantly to enable them to offer better treatment to patients – they have not made this subject a major issue. The workload burden is their main concern, say industry insiders, and because the NHI system enjoys such a high rate of public satisfaction, the healthcare professionals do not wish to be seen as criticizing the program. As Taiwan gears up to implement its “second generation NHI” on January 1, the medical device companies are also concerned about a section of the authorizing legislation dealing with “balance billing.” This concept permits a sharing of the cost of a medical device that is more expensive than the NHI system is able to cover completely. The amount in excess of the NHI coverage can be paid by patients who opt to have that product used in a given medical procedure. While the industry was pleased to have a legal basis for balance billing confirmed in the new law, it was uneasy about the lawmakers’ insistence that a cap should be placed on the amount of self-payment, to prevent patients from being overcharged. “Setting a cap could wind up being unfair to the suppliers because technological changes happen so fast in this industry and the inflationary environment is so volatile,” says Medtronics’ Lim. “The end result could be that no one wants to supply the product at that price.” Instead of government officials arbitrarily setting a ceiling on the self-payment amount, the AmCham Medical Devices Committee has suggested allowing market forces to work for a period of two years to provide a basis for reference. Overall, given the numerous difficulties in dealing with the NHI program, the multinational producers sometimes

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A Report on the Medical Device Industry

consider whether it is better to apply for reimbursement for a particular product or to simply make the item available on a self-pay basis. But usually the conclusion is to still seek reimbursement coverage, since most patients lack the medical knowledge to make an informed decision about which product is best or most cost-effective. “You need to convince the doctor, and the doctor needs to convince the patient, but a doctor is a professional, not a salesperson,” says Susan Chang. “Some doctors aren’t comfortable in that role, and they also try to help the patient save money.” Ultimately, especially under demographic conditions of a steadily aging population, Taiwan may conclude that the only solution is to find a way to raise its current level of national spending on healthcare. At under 7% of GDP, it is now less than half that of many developed countries.

Local Industry at a Crossroads With growing competition from China, manufacturers face pressure to upgrade technology.

BY LIANNA NICOLE FARUOLO

n the wake of the financial crash of 2007, when investors globally were searching for relatively safe opportunities with potential for growth, the medical devices industry proved to be one of these rare opportunities. Beyond merely weathering the recession, it has since demonstrated that it is one of the few manufacturing sectors almost immune to global economic volatility. According to industry reports, total rev-

enues for the global medical devices market was US$210.2 billion in 2008, US$223.3 billion in 2009, and US$237.4 billion in 2010, the most recent year available. Future growth is expected to be in the range of 5-7% annually. For the time being, Taiwanese medical device companies are showing their resiliency, seemingly insulated from the problems in the worldwide economy. But as competition mounts from coun-

terparts in China, the domestic industry is also aware that it will need to develop new strategies to ensure continued future success. According to the Industrial Technology Research Institute (ITRI), last year the total production value of the Taiwan industry was estimated at NT$72.1 billion (US$2.467 billion), a healthy 8.9% increase from the reported value of NT$66.2 billion (US$2.265 billion) in

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2010. According to the Ministry of Economic Affairs (MOEA), Taiwan is the world’s largest producer of electric wheelchairs, holding a 22.7% share of the global market in 2011. It is also the second largest producer of electronic digital blood glucose monitors, with a market share of 37%. In recent years, Taiwan has also seen a dramatic rise in the production of contact lenses for export. These products, which require a medium to high level of technology, fall within what regulators define as the Class II medical device category. Such devices, though typically directly related to human health, are not subject to controls and regulations as strict as those applied to Class III, which are regarded as entailing greater risk. Taiwan medical device companies generally focus on Class II products, which are readily available on the consumer market, especially for homecare use, and thus present opportunities for high demand. Class I products, which are generally low-value basic equipment such as latex gloves and syringes, are not subject to specific controls or regulations. Taiwan specialized in making items in this category until the late 1990s, but production since then has largely moved to China, though a substantial proportion of the production activity there is accounted for

by Taiwan-invested companies. The heavily regulated Class III products usually involve more sophisticated technology and are mainly produced by companies from advanced Western nations and Japan. They are mostly marketed to hospitals and clinics rather than to general consumers, and thus represent a smaller market in terms of units sold, although unit prices can be much higher than for other types of medical devices. An example of a successful company in the Class II category is the Apex Medical Corp., which has seen its stock price rise by nearly 50% on the Taiwan Stock Exchange since 2008. Last year, Apex Medical reported a 13% profit margin on total revenue of nearly NT$1.749 billion (US$59.7 million). Vice President Jack Hsu explains that this growth can be attributed to the increased sophistication of Apex’s production over the years. “Apex was originally focused on durable, low-value manufactured products, but has since switched focus to high-value continuous positive airway pressure machines (generally known as CPAP machines) for sleep apnea,” he says. Apex’s products have received medical device certifications from qualifying bodies in countries around the world, and the company operates sales offices in China, the United Kingdom,

Spain, Egypt, and most recently, the United States. A s w i t h m o s t o f Ta i w a n ’s o t h e r robust industries, such as the information and communication technology (ICT) sector, Taiwan’s limited domestic market makes it necessary for Taiwanese medical device industry to rely on exports for most of its sales. In 2010, the most recent year for which figures are available, the main export markets for Taiwan medical devices were the United States with sales worth NT$12.2 billion (US$417.5 million), Japan with NT$4.3 billion (US$147 million), and China with NT$2.5 billion (US$85.5 million). The United States and Japan together accounted for 42% of Taiwan’s total medical device exports in 2011. Most Taiwan medical device companies export their products on an OEM basis, handling just the manufacturing for a foreign brand, or else under an ODM contract, doing both the product design and manufacture for the overseas customer. “It is still very difficult to sell within the European and U.S. markets [under our own brand name] and so we have to rely on ODM for most business,” Hsu explains. “Apex designs and builds the product, but we use the customer’s name on the packaging.” As Taiwan medical device companies gradually gain more reputation on the international market, selling their products under their own brand name becomes more feasible. “We can use our name ‘Apex’ on the packaging in some European countries, and we also cobrand with other brands,” Hsu adds. While traditional markets continue to provide valuable outlets for Taiwan medical devices, Taiwan has recognized the burgeoning export opportunities presented by the various healthcare reforms in several large markets including the United States, mainland China, and India.

Buyers look over Taiwan-made medical products at the annual trade exhibition for the industry. photo : MEDICARE TAIWAN 2012, TAITRA

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The Medicare Taiwan trade show organized by TAITRA is an opportunity to view the wide range of medical products made by Taiwanese companies. photo : MEDICARE TAIWAN 2012, TAITRA

In the United States for example, implementation of the new “Obamacare” healthcare reform is expected to increase the number of insured persons and therefore expand sales opportunities in the healthcare industry market. Over the long term, these countries and other smaller, emerging markets such as Vietnam and Iran will undoubtedly be increasing spending on healthcare. Further, emerging economies such as India and China are beginning to experience the aging of their populations due to years of increasingly widespread, accessible, and effective healthcare. In Taiwan, the government has forecast that by the year 2025 over 20% of Taiwanese will be aged 65 and older. Accordingly, Taiwan’s medical device companies are positioning themselves to take advantage of the resulting large and increasing demand associated with the healthcare needs of the elderly domestically and in the new global healthcare

environment. Products in high demand for older consumers tend to be related to the treatment of diabetes, arthritis, hypertension, and heart ailments, as well as to facilitate mobility. Taiwan medical device companies have long been major producers of such items, including blood glucose monitors and test strips, blood pressure monitors, and wheelchairs and electric mobility scooters. The rising domestic elderly population is of special interest to Apex, and not merely for profit-making reasons. The company’s Corporate Social Responsibility (CSR) activity focuses on studying the needs of the aged in the Taiwan population and “utilizing that information to lobby the central government to ask them to increase budgets to help elderly people,” explains Jack Hsu. “Apex has invested a lot in R&D and clinical research in developing products to suit the needs of the elderly and we’ll continue to do so,” says Hsu.

Government efforts In its efforts to foster the medical device industry, the Taiwan government has used a combination of approaches. One method is to outsource responsibility for guiding the upgrading of the industry to non-profit organizations such as ITRI. The government’s Industrial Development Bureau provides funding to ITRI for activities aimed at helping the private sector by developing technological know-how, improving existing products, and collecting and disseminating market information. ITRI also assists the domestic industry develop international contacts and follow global trends by organizing conferences and international seminars (with one medical electronics occurring in November of this year) and inviting international experts to come to Taiwan to give speeches. In addition, Taiwanese medical device companies may seek support from ITRI

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in strengthening their business models. “We have hired engineers and acquired patent licensing through ITRI,” says Hsu. As part of the Ma administration’s “Six Critical Emerging Industries” initiative, the MOEA implemented a series of tax incentives, including deductions for R&D expenditures, and launched the “National Diamond Development Take-off Action Plan” in 2009. The plan’s objective is to promote the Taiwan biotechnology industry (with a special focus on medical devices and pharmaceuticals), utilizing government resources to build an environment that fosters sustained growth. The plan was built on four main pillars: • Launching of a venture capital investment fund initially projected at NT$60 billion (US$2 billion) • Encouragement of collaboration among the government, academic and research community, and existing ICT and medical devices companies; • Establishment of the NT$9.2 billion (about US$306 million) Bio-Medical Devices Industrial Cluster located in the Southern Taiwan Science Park; • The January 2010 creation of the Taiwan Food and Drug Administration (TFDA) under the Department of Health. Modeled after the U.S. FDA, the TFDA provides a more streamlined approach to completing the development-to-market approval process. According to most industry assessments, implementation of the plan has not gone smoothly. With regard to the venture capital fund, for example, the original proposal was for the government to contribute 40% of the fund and the private sector 60%. But the Legislative Yuan voted to cut the government share to 20%, and the first round of private fundraising reportedly has faltered. The idea of fostering collaboration between Taiwan’s high-tech electronics companies and the medical device industry to develop more sophisticated and innovative healthcare products seemed to be a logical strategy on the surface, but in practice it proved impractical, industry sources say. “No one in the government asked us in the healthcare industry if we thought this policy was a good idea,” says one executive. The problem is that people in the two indus-

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tries have two quite different perspectives. Whereas the ICT industry tends to center its business strategy on meeting consumer-driven demand for “cool” new items with impressive features, their counterparts in the medical device business are used to focusing on high-precision, safety-first models. Though the two industries each possessed resources the other could benefit from, in the end the different mentalities and orientations proved incompatible. Creation of the TFDA, on the other hand, is seen as an important and positive step – although one that was fairly easy to achieve by revamping Taiwan’s existing bureaucracy using the U.S. FDA as a model. Some industry sources describe the Diamond Plan as “unrealized” due to internal strife among various government agencies, and Legislative Yuan Speaker Wang Jin-Pyng was quoted in the media as blaming “selfish departmental attitudes” for a lack of cooperation in carrying out the program. Michael Kuo, CEO of Comdek and chairman of the Taiwan Medical and Biotech Industry Association, has further criticized the government for failing to focus sufficient attention on the medical device industry. In a recent interview with the local trade publication Medical + Health Buyers' Source, Kuo said he was working on a white paper to be issued next year to set out a roadmap for the industry’s development. He also says that the signing of the Economic Cooperation Framework Agreement (ECFA) with China two years ago has in fact contributed to making Taiwan’s medical devices less competitive against the high-capacity manufacturing operations on the mainland. According to Kuo, “Taiwan’s shipments to the mainland [must contend with] complicated rules and regulations in place in China. [Meanwhile], mainland China exported a higher value of medical goods to Taiwan.” A number of types of medical devices are included on Taiwan’s list of Chinese commodities that are barred from being imported into Taiwan, and some in industry cite such protectionist measures by the government as having so far

managed to save the Taiwan market from becoming inundated by Chinese goods. But other Chinese medical devices are entering the Taiwan market, and manufacturers say that is presenting them with increased competition at the same time as they have to struggle to get their products into China. Apex, for example, cited difficulties in entering the mainland market, especially when dealing with the hospitals, because of complicated distribution networks. At one time, Class II medical devices were touted as the Taiwan industry’s future due to the island’s ability to produce technologically reliable yet budgetfriendly goods. Today, many in the local industry say Taiwan is fighting a losing battle against China in the Class II segment, which requires medium-to-high technology and benefits from high manufacturing capacity to bring down cost. Instead, some industry insiders argue that Taiwan’s best future opportunities may lie with higher technology Class III products, taking advantage of the island’s solid foundation in advanced technology, highly competent labor force, strong manufacturing expertise, and close proximity to China. What Taiwan lacks, however, are businesses with the financial resources and experience to successfully develop competitive Class III medical devices. “International collaboration is the key,” says one source. “Taiwan is an excellent business partner. The Japanese are noticing that and their companies are flooding in to find partners.” The ease of raising capital in Taiwan and the well-established intellectual property protection are other factors that may attract both Western and Japanese companies to consider tie-ups with Taiwanese manufacturers, whether for joint ventures or licensing arrangements. In either case, the primary target may be sales to the China market. “Taiwan offers one of the best medical and technological environments in Asia,” says Hsu of Apex Medical. “There is a healthy research environment and collaboration with doctors and hospitals.” And if Taiwan can serve as an intermediary between advanced markets and China, the island could carve out a new and potentially lucrative role for itself.

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A Report on the Medical Device Industry

A Dream for Taiwan’s Medical Device Industry in 2020 By Stephen Su General Director Industrial Economics and Knowledge Center (IEK) Industrial Technology Research Institute (ITRI)

t is the year 2020. While some of Taiwan’s manufacturing industries have moved to China and other emerging countries to benefit from lower costs and market access, the medical device industry is one of the few sectors that continues to thrive in Taiwan. In recent years, the industry has achieved overall revenue growth of over 15% per year, with average gross margins of over 35%. Not only has the industry lowered Taiwan’s dependence on imports to below 50% of domestic demand, it also has increased its share of export value to over 1% of Taiwan’s total. In the same year, Taiwan has just received a top innovation award from the international medical device community – for the successful development and commercialization of cloud-based diagnostic systems in home-care products (for example, portable imaging, nonintrusive sensory equipment) and services for the elderly population (such as telecare integrated with the National Health Insurance program). The Harvard Business Review describes Taiwan as “the center of cross-disciplinary research development, rapid technology commercialization, and pioneering new service models for the medical device industry.” Rolling the clock back to the present, Taiwan’s medical device industry is an unfolding story with emerging opportunities but also significant challenges. The market size for the industry as a whole is just over US$2.5 billion in rev-

photo : MEDICARE TAIWAN 2012, TAITRA

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enues, growing at an average rate of 7.2% per year since 2009. Over 40% of the output value is related to Taiwan’s domestic needs, while the remaining export business is highly concentrated on five countries that account for over 60% of the total export value: the United States, Japan, China, Germany, and England. China surpassed Germany in 2010 to become the third largest export destination and continues to grow. Brazil and Russia are two rapidly emerging markets due to their increasing needs for quality imports at lower prices and to their government policies of deregulation. The industry’s total export value accounts for less than 0.5% of Taiwan’s export amount. At the same time, imports satisfy some 68% of the Taiwan market requirements for medical devices. Currently Taiwan has over 600 medical device manufacturers, employing over 31,000 workers. Most of the manufacturers are small-to-medium-sized enterprises focusing primarily on OEM/ ODM products, ranging from low-technology to mid-level medical devices. Over 80% of these companies maintain manufacturing operations overseas, especially in China. In the early days of the industry, it mainly produced medical plastics and gloves before switching to mid-level home medical devices including blood pressure meters, thermometers, wheelchairs, and scooters. For the past few years, glucose meters and contact lenses have also shown substantial growth. So how will the industry be able to catapult itself from the relatively small base in 2012 to the dynamic picture painted in the 2020 dream? Chang TszYin, head of ITRI’s IEK research team in medical devices, identifies four key pillars that Taiwan must properly leverage to build a firm foundation for realization of the 2020 dream: 1. Focus government plans on execution with adequate resources. The government has launched many plans and measures since 2009 to help develop Taiwan into a strong R&D partner for the global biomedical industries, including medical devices. These plans include the “Biotechnology Take-off Diamond Action Plan” designed is to

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improve the development and industrialization of corporate research institutions for the industry value chain; the Taiwan Meditech Fund (TMF) as the country’s first biotechnology venture capital fund aiming to invest in promising startups; the “Supra Integration and Incubation Center” offering counseling and investment in high-potential start-ups in biotechnology; the establishment of two major research parks, the Nankang National Biotechnology and Research Park and the Hsinchu Biomedical Science Park, to help spur the integration of research activities among public and private institutions; and the signing of the Economic Cooperation Framework Agreement (ECFA) between Taiwan and China to help Taiwan-based companies to do business in China. These measures have been well thought-out and help provide industry and research institutes with a good roadmap for development. But it is also important for adequate budget to be allocated, and for the programs to be managed by professional leaders with clear objectives and milestones. The government should avoid rolling out new programs filled with political slogans without first examining resource constraints. “Just do the right thing one step at a time” has become the general expectation of the private sector toward government initiatives. Industry leaders also expect the government to continue relaxing regulations, leading towards a more open environment for both local and foreign players to do business in Taiwan. 2. Cross-leverage Taiwan’s industrial strengths such as ICT and precision machinery. The medical device industry often requires making products by integrating cross-field technologies from a range of industries from traditional to high-tech sectors. Taiwan should be able to leverage the collective strengths of these industries to increase its competitiveness in the medical device industry. For example, Taiwan has taken leadership positions in many

Information and Communications Technologies (ICT) industries such as computers, mobile phones, semiconductors, etc. Many ICT companies such as Delta Electronics, BenQ, and Advantech have entered the medical device industry in recent years. These companies own various electronics component technologies that form the heart and soul of many medical devices such as imaging and monitoring devices. These companies are also good at managing entire supply chains and designing for high performance while reducing the overall product cost. Another example is precision machinery industry where Taiwan has developed clusters in the central and southern parts of Taiwan. Hiwin and INTAI are two examples of leaders from the machinery industries that have entered the value chain by first serving as key component suppliers for the medical device industry. These machinery industry clusters offer one-stop total solutions to medical device makers and allow them to jointly develop core technology and innovative product solutions at lower cost and higher speed. 3. Serve as a springboard and pilot site for China and other global markets. Over the last 20 years, many Taiwan companies have used China as a manufacturing base for either accessing China’s domestic market or exporting to other global markets. Moreover, since Taiwan and China share many cultural similarities due to historical ties, and Taiwan has adopted a comprehensive national health insurance system with over 99% coverage, Taiwan is an ideal place for testing advanced healthcare systems including home care and telecare for the future. Foreign companies can invest in Taiwan to jointly engage in R&D for developing advanced medical devices, to manufacture products in Taiwan first for later introduction into China, and to test consumer acceptance and monitor usage behavior for the greater Chinese population. IEK of ITRI has been engaged in research activities about global indus-

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A Report on the Medical Device Industry

The multi-channel home sleep-monitoring system developed by ITRI. photo : itri/iek

trial economics, advanced technology trends, and an assessment of Taiwan industries’ competitiveness. One key IEK study in recent years relates to understanding behavioral differences between Taiwan and China in healthcare for the elderly. Once every two years, it surveys respondents aged 50-75 from six cities in China and three in Taiwan about their healthcare behavior and unmet needs. The 2012 study reveals some interesting findings. Currently only 11% of the elderly in Taiwan use some kind of medical devices to monitor or improve their health conditions, but as many as 79% express the wish to eventually use portable devices for healthcare purposes. Surprisingly similar results are obtained from residents of major cities in China. With such consumer knowledge about the greater Chinese market, companies would be able to better understanding the current market situation before

developing consumer-oriented medical devices and services. 4. Attract talent and investment from other industries and overseas. Taiwan has a large number of highly educated people trained in its universities and research institutes. But because of the medical device industry’s current small economic scale, it has difficulty attracting the kind of talent that flows to such fields as ICT and precision machinery due to the higher compensation and career opportunities available there. For its future development, it will be important for the medical device industry to attract the right local talent, including people from such other sectors as ICT and precision machinery, or those with such skills as marketing and venture capital management. It also needs to attract start-up entrepreneurs. Also Taiwan should welcome overseas talent. Besides trying to draw overseas Chinese from the United

States and Europe, Taiwan should establish a better environment for attracting the best students and professionals from China, Singapore, Malaysia, and other Asian countries. Moreover, with its improved political and economic relationship with China and longstanding relationship with Japan, Taiwan should continue to seek partners from among foreign companies for joint investment in Taiwan and other global markets. Foreign companies can provide a depth of industry expertise in medical devices or venture capital activity that Taiwan cannot accumulate in a short period of time. For the medical device industry, Taiwan can fulfill its dream for 2020 if all four key pillars are properly leveraged by Taiwan and its foreign partners – and if government, industry, and research institutes can move ahead in concert to set the proper conditions today to make tomorrow’s achievements a reality.

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Get in the Saddle For the 2012 Taiwan Cycling Festival

here’s no better way to see Taiwan than from the saddle of a bicycle. The island is gorgeously scenic and the distances are seldom overlong, even if the mountain inclines some cyclists tackle are astounding. It is also a modern, welcoming society that bicycle riders can explore in safety and comfort. Taiwan’s rural lowlands are crisscrossed by little-used back roads on which bike enthusiasts can immerse themselves in a bucolic landscape of farming villages and paddy fields. Unlike visitors dependent on public transportation, cyclists can stop whenever and wherever something takes their fancy, be it a tiny shrine dedicated to the earth god, a vendor selling delicious tropical fruits, or a picturesque three-sided courtyard house. In terms of parking, they enjoy a flexibility envied by those driving cars. Mountains cover two-thirds of Taiwan’s land area, and the country's alpine landscapes are world-class. For hard-core cyclists, the breathtaking roads that reach deep into the highlands

are irresistible challenges. Highway 11, which runs beside the Pacific Ocean connecting Hualien with Taitung, also has legions of fans. No one who has been to Taiwan's east coast will be surprised to learn the region is tremendously popular with twowheeled tourists. Thinly populated and unspoiled, the counties of Hualien and Taitung have remarkable cultural diversity in addition to splendid scenery. The Han population includes large Hakka communities and many families who came over from the Chinese mainland after World War II, while one in four residents is a member of the aboriginal Amis, Bunun, Kavalan, Paiwan, Puyuma, Rukai, or Truku tribes. Fans of cycling should mark the following date in their 2012 diaries: November 9. The island’s premier b i k i n g e v e n t , t h e Ta i w a n C y c l i n g Festival, starts that day with a press conference in Hualien and a warmup ride on Qixingtan Bike Trail. This cycling path has been a big hit with foreign and domestic tourists because it offers excellent views of the Pacific

Ocean and the soaring Qingshui Cliffs. The following day’s highlight will be the Taiwan King of the Mountain Challenge, a 103.5-kilometer race from sea level to an altitude of slightly more than two miles. Among the foreign riders due to take part are Matteo Rabottini, a 25-year-old Italian who won the Mountains Classification in this year’s Giro d’Italia (Italy’s equivalent of the Tour de France), and the Frenchmen Anthony Charteau and Jeremy Roy. Charteau won the King of the Mountains title in the 2010 Tour de France, w h i l e R o y w o n t h e t o u r ’s “ S u p e r Combativity” award the following year for his attacking style of riding. Teams based in Japan, Korea, Hong Kong, Macau, Malaysia, Brunei, and Austria will also compete for honors in the race, which starts at 6 a.m. The fastest riders are expected to reach the country’s highest stretch of roadway at Wuling (elevation 3,275 meters) near Mount Hehuan approximately four and a half hours later. En route, they will ride through Taroko Gorge – rightfully one of East Asia's most famous

交通部觀光局廣告 TTB AD

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natural attractions – but it is only after passing Tianxiang, the village at the top of the gorge, that really serious climbing begins. The Cycling Festival is not just for professionals drawn to steep gradients. One goal is to encourage ordinary people to cycle more – for the sake of the environment as well as their health. The November 11 Come!Bike Day event, designed with amateurs and families in mind, will be held at Sun Moon Lake. Located 748 meters above sea level in the very center of Taiwan, the lake is ringed by a flattish 33-kilometer-long road ideal for leisurely cycling. Dedicated bike lanes keep pedal-powered tourists separate from larger vehicles; participants will saddle up at 7 a.m. Even without any planned events, early November would represent the beginning of prime biking season. Taiwan's summers are beautifully vivid, yet hot and frequently rainy. Consequently, those who love to get around by pedal power enjoy the cooler, dryer months of October to March. Cyclists used to North American conditions will find conditions delightful – especially in Taiwan’s south, where daytime temperatures average in the low 20 degrees Celsius (the low 70s Fahrenheit). For travelers who like cycling but who do not want to spend a major part of their vacation puffing along

roads, or prefer to be free of worries about how to ship their bicycles on trains and airplanes, Taiwan offers several possibilities. A number of the island's prettiest townships, among them Guanshan in Taitung County and Meinong in Kaohsiung City, have laid out bike paths linking sites of cultural and ecological importance. At Guanshan, it is possible to get off a train and rent a bike within 10 minutes. In Meinong, inexpensive bicycles can be rented less than 20 meters from the town’s bus station. Taiwan-based Giant Bicycles, the world’s largest bike manufacturer, has done a great deal to promote cycling in its homeland, and the company’s founder practices what he preaches. King Liu rides a bicycle to work every day. In 2007, at the age of 73, he cycled 927 kilometers around Taiwan in 17

days; two years later, he cycled 1,668 kilometers from Beijing to Shanghai in 20 days. Besides selling and maintaining medium- to high-end bicycles, Giant outlets around Taiwan rent out quality bikes. With advance planning, it is possible for tourists to collect bikes at one store and deposit them at another a few days later – an excellent option for those hoping to ride from, say, Hualien to Kaohsiung via Kending. This itinerary makes use not only of Highway 11, but also Road 199 in Pingtung County, another bikers’ all-time favorite. Visitors whose interests are entirely urban – a museum in the morning, perhaps, followed by a good lunch and then some shopping – may well find cycling a good way to get around Taipei or Kaohsiung. Both metropolises boast extensive bicycle-trail networks plus automated bike-rental stations.

The latter are integrated with the cities' public-transportation systems: EasyCard holders using one of Taipei’s “ U - B i k e ” ( w w w. y o u b i k e . c o m . t w ) machines pay nothing for the first 30 minutes, while cyclists availing themselves of a “C-Bike” in Kaohsiung (www.c-bike.com.tw) enjoy 60 minutes free of charge if they have an i-Pass. Those without one of these stored-value cards can use a credit card; the rental fee is still very reasonable – NT$10 (33 US cents) for half an hour in Taipei. Whether you aim to go slow or fast, the entire length of the island or no further than the nearest beach, cycling in Taiwan is guaranteed to leave you with stronger legs – and very happy memories! For general information about Taiwan, go to the website of the Tourism Bureau (www.taiwan.net.tw) or call the 24-hour tourist information hotline (0800-011-765, toll free within Taiwan). For information about east Taiwan – including the region's cycling routes – visit the websites of the East Rift Valley National Scenic Area (www.erv-nsa.gov. tw) and the East Coast National Scenic Area (www.eastcoast-nsa.gov.tw).

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