2012Vol.42No.09 by AmCham Taipei

CU S

En S vi pe r c DU onme ial Re ST ntal port RY Prot on FO ectio n

THE AMERICAN CHAMBER OF COMMERCE IN TAIPEI

Taiwan Business

Topics

Shipping in a Slump 徘徊低谷的海運業

TAIWAN BUSINESS TOPICS September 2012 | Vol. 42 | Issue 9 中華郵政北台字第號執照登記為雜誌交寄 5000 9_2012_Cover.indd 1

NT$150

September 2012 | Vol. 42 | Issue 9 www.amcham.com.tw

2012/9/25 9:35:43 PM

CONTENTS NEWS AND VIEWS

4 Editorial

TIFA Needs Quick Wins Plus Big Goals

S Ep TEmb Er 2 0 12 vOlum E 42, NumbE r 9 一○一年九月號

加速推動TIFA協商

5 Taiwan Briefs Publisher

Andrea Wu

By Jane Rickards

發行人

9 Issues

吳王小珍

Editor-in-Chief

總編輯

Don Shapiro

Revamping the Executive Branch; Championing Public Health; TAS Adds Three New Buildings

沙蕩美術主任 /

Art Director/ Production Coordinator

後製統籌

Katia Chen

陳國梅

Staff Writer

改造行政體系；提昇台灣公衛水準；台北美國學校新添三棟校舍

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

Chen Yu-chun, Sonia Tsai 陳宜君、蔡函岑

COVER SECTION

Shipping in a Slump 徘徊低谷的海運業

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○一年九月中華郵政北台字第5000號執照登記為雜誌交寄 ISSN 1818-1961

OFFICERS: Chairman/ Bill Wiseman Vice Chairmen/ William E. Bryson / David Pacey Treasurer: Carl Wegner Secretary/ William J. Farrell

14 Waiting for Better Times to Return

Excess shipping capacity is making for a difficult market, but long-term prospects are still considered bright.

19 The China Factor and Taiwan’s Ports

As cargo volume drops, Kaohsiung could be revived as a hub if foreign carriers could sail cross-Strait routes

22 A New State-owned Company Takes Charge of the Ports

Shipping executives welcome the change, but some question whether it comes too late considering the fierce competition.

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, Varaporn Dhamcharee, 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/ David Price; 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.

IN GOVERNMENT CIRCLES

24 Legislative Problems Remain Following the 2004 Reform

Issues of efficiency, transparency, and integrity are still cited, as is the penchant for unseemly brawls to break out. By Debby Wu

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s ept em b er 2 0 1 2 • Volu m e 4 2 n u m be r 9

TAIWAN BUSINESS

INDUSTRY

28 Promoting Business through Trade Shows

Special Report on Environmental Protection: Steady Progress

Taiwan is continuing to add exhibition space to meet growing demand. By Joe Sydewitz

BEHIND THE NEWS

38 Adjusting Taiwan’s International Ranking

A previous dismal environmental report card was due largely to the impact of diplomatic isolation on data collection.

32 Island of Typhoons and Earthquakes

Taiwan’s meteorologists are kept busy tracking tropical storms and monitoring seismic activity. By Jane Rickards

CUS

Better laws and enforcement have helped; so have new technologies by enabling the extraction of valuable resources.

By Timothy Ferry

45 Trying to Strike the Right Balance

Ecological factors now receive greater weight in government decisions regarding economic development projects.

By Timothy Ferry

40 Recycling Now a Way of Life

The volume of trash disposal has declined sharply and new businesses have emerged since the program was introduced.

43 Managing Hazardous Waste

By Audrey Yung

AMCHAM EVENT

50 Another AmCham Taipei Milestone: 61st Anniversary Party

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TIFA Needs Quick Wins Plus Big Goals

ue to miscues on both sides, disputes over import conditions for American beef into this market wound up souring U.S.-Taiwan government-to-government economic relations for the past five years. Until the problem was resolved, Washington was unwilling to schedule bilateral talks under its Trade and Investment Framework Agreement (TIFA) with Taiwan – talks normally held on an annual basis but last conducted in 2007. While both countries were engaged in active trade negotiations with other trading partners, the status of U.S.Taiwan economic relations seemed stuck on hold. Now, finally, the logjam has been broken. The Ma administration in late July expended the substantial political capital needed to get a bill through the legislature to lift Taiwan’s ban on beef containing traces of ractopamine, a leanness-enhancing feed additive widely used by U.S. ranchers. The Taiwan authorities followed up this month by setting a maximum residue level for ractopamine, opening the way for U.S. beef shipments to return to previous quantities. Although no date for revived TIFA sessions has been announced, both governments have given positive signals that the talks could take place soon – hopefully before the end of the year. The key question at this stage is what should the TIFA talks aim to accomplish? After the unfortunate rancor over ractopamine, the two governments owe it to one another – and to themselves and their respective business communities – to ensure that this round of TIFA talks is unquestionably a success. That will mean ending the several days of meetings with public announcements

of some concrete achievements – something that did not always happen in the past. AmCham Taipei’s hope is that the agenda will lend itself to spurring progress on both short-term and longer-term goals. For the near term, the absence of TIFA talks for five years has created a long backlog of issues that need attention if Taiwan is to maintain, and ideally enhance, its global competitiveness. Many of those issues are described in detail in AmCham’s annual Taiwan White Paper. Taiwan may have additional requests, such as agreement to cooperate in areas like green-energy research. But TIFA should not focus only on small, incremental gains. AmCham encourages the two governments to commit to seeking much more ambitious objectives – projects that will ensure a deeper, broader trade and investment relationship between them well into the future. Such an objective is unlikely to be a bilateral free trade agreement; instead of starting any new FTA negotiations, the United States currently is concentrating on bringing the multilateral Trans-Pacific Partnership (TPP) to fruition. One welcome result of TIFA would be to establish a mechanism for close consultation on how Taiwan can best advance its candidacy for eventual entry into the TPP. Another significant development would be movement toward negotiating a bilateral investment agreement, similar to the one that Taiwan concluded with Japan last year, but perhaps even meatier. The best recipe for TIFA, in short, will be a combination of quick wins to restore mutual trust, plus the adoption of big goals to solidify U.S.-Taiwan ties in ways that will serve the two countries’ economic and strategic interests.

加速推動TIFA協商

由

於雙邊的失策，因美牛重返台

面訊息—希望在今年年底前。現階段的

漸進的收穫。本商會鼓勵雙邊政府承諾

灣市場進口條件所引發的爭

關鍵問題是，TIFA會談應希望達成什

會尋求更具雄心的目標，確保協商能為

議，導致過去五年來美、台政

麼目標？

彼此帶來前瞻未來、範圍更深更廣的貿

府對政府的經濟關係惡化。在這問題解

在萊克多巴胺對雙邊關係造成令人遺

易投資促進計畫。這樣的目標不可能成

決前，華府不願安排和台灣進行貿易暨

憾的衝擊後，美台政府對彼此—還有對

為雙邊自由貿易協定；當前美國主要任

投資架構協定（TIFA）的雙邊會談。

本身與各自的企業界—都負有確保本回

務不是新的自由貿易協定（F T A）談

TIFA協商過去通常每年都會舉行，但

TIFA談判成功的義務。這意味數天的

判，而是專注於實現多邊的泛太平洋夥

上一次是在2007年召開。儘管兩國都

會談結束後，應該公開宣布達成一些具

伴關係協議（TPP）。

和其它貿易夥伴進行積極貿易協商，美

體成果，而過去未必都會出現這樣的進

TIFA一個令人樂見的成果，將是針

台經濟關係發展似乎陷入停滯。

展。台北市美國商會希望重啟協商能刺

對台灣要如何朝取得TPP候選成員資格

激各項短程和長程目標的進展。

邁進，建立密切的諮詢協調機制。另一

如今僵局終於打破。馬英九政府在七月下旬動用了政治資本，讓立法院通過

就近程而言，五年未曾舉行TIFA談

個重要發展則是旨在建立雙邊投資協定

法案，解除台灣對牛肉不得含有萊克多

判，已造成台灣若希望維持（理想的是

的相關協商，類似台灣和日本去年達成

巴胺（美國業者廣泛使用的瘦肉精飼料

加強）全球競爭力所須注意的許多議題

的協定，但或許內容更充實。

添加物）的禁令。台灣政府接著在本月

被積壓多時。這些議題中，許多已在本

簡言之，要讓TIFA協商有實質成果

設定萊克多巴胺最高殘留量標準，為美

商會的年度《台灣白皮書》中詳述。此

的最佳作法，應是在一些議題上快速達

牛產品重回過去進口數量開路。

次台灣可能會有額外要求，例如推動在

成共識以恢復互信，同時尋求遠大目

綠能研究之類領域合作的協議。

標，透過符合兩國經濟與戰略利益的方

恢復TIFA協商的日期還未宣布，但雙邊政府都釋出會談可能很快舉行的正 4

不過TIFA不應只把焦點放在微小、

式長期鞏固美台關係。

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— BY jane ri ch ards —

MACROECONOMICS

Economic Indicators

EXPORTS DECLINE, INFLATION INCREASES Exports in August dropped to US$24.69 billion, the sixth successive month of decline, the Ministry of Finance reported, indicating a worsening global economic outlook as China’s economy cools and the Eurozone faces debt problems. The drop of 4.2% year-on-year was greater than analysts had expected; Bloomberg put the consensus at 2.7%. By region, the biggest decrease, at -17.4%, was in exports to Europe, while exports to the United States fell -8.4% and those to China/Hong Kong by -5.7%.The only positive news was in exports to the Association of Southeast Asian Nations (ASEAN), which were up 24.2% from a year earlier, boosted by demand for Taiwanese petrochemical and mineral products. Imports in August fell 7.6% from last year to US$21.38 billion, with the trade balance a favorable US$3.3 billion. Concern is also growing about rising inflation, especially of food and energy. The consumer price index in August rose at its fastest pace in four years – 3.42% year-on-year – as vegetable and fruit prices were affected 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

August chart source: TwSE

Unit: NTD billion

Current Account Balance (2012 Q2) 10.00 Foreign Trade Balance (Aug) 3.312 Foreign Trade Balance (Jan-Aug) 15.43 New Export Orders (August) 36.15 Foreign Exchange Reserves (end August) 394.23 Unemployment (July) 4.31% Overnight Interest Rate (Sept 10) 0.388% Economic Growth Rate (2012 Q2) 0.77% Annual Change in Industrial Output (July) p -0.02% Annual Change in Industrial Output (Jan-July) p -2.57% Annual Change in Consumer Price Index (August) 3.42% Annual change in Consumer Price Index (Jan-August) 1.84% NOTE: P-PRELIMINARY, R-REVISED

by two typhoons (vegetable prices increased nearly 57.9% year-onyear). As a result, Premier Sean Chen announced in mid-September that the government would postpone a second increase in electricity prices originally planned for December. The Ministry of Economic Affairs had announced in May that electricity rates would go up in three phases, eventually raising household electricity prices by 16.9%, commercial rates by 30%, and industrial-use rates by 35%. The first rate hike took place in June, increasing household electricity rates by an average of 6.7% and industrial rates by 14%. Chen said the second round would now be put off until October next year. “During this period, [the postponement] can soothe the pressure on our community, companies, and factories; it will help stabilize commodity prices and will also cushion the impact from QE3 in the U.S. and easings from Europe,” the premier was quoted as saying by Reuters. Experts say that Taiwan’s subsidized electricity prices are still far below market levels, as global energy prices rise. The stateowned Taiwan Power Co. remains seriously in the red, this year facing losses of an estimated NT$76.8 billion

Year Earlier 11.01 2.65 16.1 36.7 400.29 4.41% 0.392% 4.52% 3.85% 1.34%

SOURCES: MOEA , DGBAS, CBC, BOFT

(about US$2.56 billion), Reuters said. It quoted the company’s deputy director of public relations, Huang Huei-yu, as saying that if further rate increases are delayed throughout 2013, the losses next year would reach NT$81 billion. In a more optimistic forecast than most other institutions, Standard Chartered Bank is predicting economic growth for Taiwan in 2012 of 2%, which is still a downward revision from its earlier forecast of 2.7%. The bank cited resilient and expanding domestic consumption, boosted by an anticipated two million tourists this year. It also noted that new smartphone products such as Apple’s iPhone 5 released in mid-September will provide a boost to Taiwan’s exporters. At the other end of the spectrum, Cathay Financial Holdings in early September lowered its growth forecast for the year from 2.45% to 1.47%, due mainly to sluggish export conditions.

CROSS-STRAIT BEIJING SIGNALS TAIWAN CAN JOIN ICAO In an unexpected move, Chinese President Hu Jintao in early Septem-

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ber hinted that Beijing might drop its opposition to Taiwan’s participation in the United Nations-affiliated International Civil Aviation Organization (ICAO). At the Asia-Pacific Economic Cooperation (APEC) forum in Vladivostok, Hu said that Beijing would “seriously study” the possibility of Taiwan entering the aviation body “in an appropriate way.” For Taiwan, joining the organization would be a diplomatic breakthrough. Since 2009, Taiwan has been able to an observer at meetings of the World Health Assembly (WHA) – the first time it is able to take part in U.N.-related activities in around 30 years – as a result of President Ma Ying-jeou’s policies of détente with the mainland. Shortly afterwards, Taiwan applied to join the ICAO and the United Nations Framework Convention on Climate Change (UNFCCC), but there was no discernible progress for three years. Some China-watchers said Beijing was reluctant to allow Taiwan's U.N. presence to expand beyond the WHA, lest it encourage the opposition Democratic Progressive Party (DPP) to push further for a position in the international arena that smacks of Taiwan independence. Hu made the surprise remarks in a meeting with former Vice President Lien Chan, who was representing President Ma at APEC, on the sidelines of the leaders’ meeting.

time, the Bank of Taiwan’s branch in Shanghai had been designated by Taiwan as the clearing bank for the yuan, but the Chinese side had not confirmed its approval. China was yet to select its own settlement bank for yuan transactions, although reports said the Bank of China was likely to be chosen for that role. Taipei and Beijing are still negotiating a currency swap arrangement that would allow Taiwan to hold yuan assets in its foreign-exchange reserves.

DOMESTIC MORE SUPPORT VOICED FOR MEDICAL PAROLE FOR CHEN SHUI-BIAN Amid growing concern over the health of imprisoned former president Chen Shui-bian, Taipei Mayor Hau Lung-bin, an influential figure in the ruling Kuomintang, in late August called for medical parole for the former president. He cited the need to heal the divisions in society between pro-independence supporters in the “pan-green” camp who support Chen’s need for medical parole and “pan-blue” backers who insist that

Chen should be dealt with strictly according to the law and in the same manner as any other prisoner. “Giving Chen medical parole will prevent our society from dividing any further, which is something Taiwan cannot afford at this moment,” Hau said. Earlier, visiting former U.S. Attorney-General Ramsey Clark, a human rights activist, urged the Ma administration to give Chen medical parole or “risk being seen as his murderer.” Chen is largely confined to a tiny cell without any furniture (although he is allowed 60 minutes’ exercise per day when the weather is good), and must sleep on the floor. In mid-September, a frail-looking Chen, sitting in a wheelchair, was rushed to hospital for the fourth time this year, suffering from urinary ailments. DPP lawmakers and medical experts appointed by Chen’s family also said he had suffered a stroke and had serious psychiatric problems. DPP politicians who visited Chen said his speech was slurred and he stuttered. His cell has been plagued by ants, but prison authorities insist that they have fixed the problem by blocking entrances to his cell with silica gel.

RMB CLEARING SYSTEM TO BE ESTABLISHED Taiwan’s Central Bank in late August signed a memorandum of understanding on a currency clearing agreement with its mainland counterpart, enhancing further cross-Strait economic integration. The agreement, coming after three years of negotiations, will bring the two sides’ financial sectors closer together. It allows banks in Taiwan to clear transactions in Chinese currency, enabling them to offer loans in renminbi to entities outside Taiwan. As of press

FINAL JUDGMENT — After 14 trials over 21 years, the "Hsichih Trio" defendants have been acquitted. photo : cna

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“HSICHIH TRIO” ARE FREED After their 14th trial, three men who had been on death row for most of the past 21 years, accused of a brutal robbery and murder of a couple in the outskirts of Taipei in 1991, were finally freed in early September. Known famously as the “Hsichih Trio,” the men had been acquitted and reconvicted numerous times over the years in a case that cast doubt on the workings of Taiwan’s criminal justice system and attracted the attention of human rights groups such as Amnesty International. In appealing their sentences, the defendants recanted earlier confessions that they said were given as a result of police torture that included being hung upside down and water-boarded with urine and shocked with cattle prods.

I N T E R N AT I O N A L ROW CONTINUES OVER DISPUTED ISLANDS Japan’s purchase from private owners of some of the disputed islands in the East China Sea – the area known as Diaoyutai in Taiwan, Diaoyu in China, and Senkakus in Japan – sparked outrage in China and Taiwan in September. China saw the biggest anti-Japanese protests since 2005. They took place in at least two dozen mainland cities and in some cases turned violent. U.S. Defense Secretary Leon Panetta called for calm and said America did not take sides regarding sovereignty over the contested island chain. He added that it is in everyone’s interests to maintain stable relations between Asia’s two largest economies. Taiwan, which also claims sovereignty over the disputed isles, is more or less powerless to act on these claims, analysts said, due to its diplomatic isolation. To reassure the public that he cares about Taiwan’s claims to the islands without actually offending

Beijing or Tokyo, Ma in early September put on a military display on a remote Taiwanese islet called Pengjia, around 140 kilometers west of the Diaoyutai, but the closest point he could reach without actually entering the disputed area. Mirage jet fighters and warships escorted Ma’s military helicopter to the barren islet, where Ma denounced Japan for invading the disputed islet chain in 1895, beginning what he called an illegal occupation of territory that had been part of Taiwan since the Ming Dynasty. But he also called on China and Japan to join Taiwan in conducting a dialogue on how to jointly explore and develop rich resources in the East China Sea. Ma also urged all parties to be rational and avoid jeopardizing regional stability. Ma also held videoconferences with commanders at two Taiwan-controlled islets i n S o u t h C h i n a S e a ’s P r a t a s a n d Spratly island chains, asking them to strengthen their vigilance. But despite these efforts, People First Party and DPP lawmakers jeered at him for not daring to set foot on the actual Diaoyutai islets themselves. Just before Ma’s Pengjia excursion, three Taiwanese lawmakers led

by the KMT’s Lin Yu-fang, a defense expert, landed on Taiping, the largest island in the hotly contested Spratly archipelago, to inspect Taiwan’s Coast Guard activities. The Coast Guard put on a display for them of live-fire exercises involving grenades, mortars, and machine guns, to bolster Taiwan’s claims in the region. The island group is claimed entirely or in part by Taiwan, China, Vietnam, Malaysia, the Philippines, and Brunei. The lawmakers’ visit triggered a protest from Vietnam.

BUSINESS IMMIGRATION CLEARANCE EASED FOR FOREIGNERS Foreigners who are permanent residents, diplomats, missionaries, or legal residents with multiple-entry rights can now take part in Taiwan’s automated immigration clearance system known as e-Gate, the National Immigration Agency (NIA) announced. The system, installed at all the nation’s international airports, involves automated immigration checks that can be completed in 11 seconds. All travelers are required to do to obtain clearance

CLEARANCE IN SECONDS — A foreign resident demonstrates how easy it is now to pass through immigration using e-Gate. photo : NIA

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AND THE WINNER IS... — ASUSTeK Computer took first place in this year's Taiwan Excellence Gold Awards for its UX21E/UX31E notebook computers. photo : TAITRA

The Taiwan External Trade Develo p m e n t C o u n c i l ( TA I T R A ) , t h e semi-official trade promotion organization, in late August announced 10 winners of its prestigious annual Taiwan Excellence Gold Award for outstanding products. The winning companies this year showcased a diversity of products, such as machine tools, bicycles, and interior art decora-

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

2012

16.03 21.8

20.05 21.11

18.64 19.15

Europe

2011

2012

2011

2012

Imports

159.54 171.65

2011

TOTAL

168.72 182.22

2012

21.3 35.83

11.9

2011 U.S.

22.1 33.62

12.23

2012

35.8

76.86 28.53

2011

ASEAN

Japan

31.9

HK/China

17.94 24.7

Speaking at an AmCham membership luncheon on September 5, Micron Te c h n o l o g y C E O M a r k D u r c a n outlined the rapid changes occurring in the global market for memory products and discussed his vision for Micron’s role after it completes its takeover of bankrupt competitor Elpida, including the Japanese company’s stake in Taiwan. With fewer major players and a slower rate of technological change as the industry matures, the memory industry will be more stable than in the past, Durcan said, while the Elpida purchase will give Boise, Idaho-based Micron the necessary scale to compete successfully with Samsung. Durcan praised the investment environment in Taiwan of government support, the quality of employees, educational system, stable infra-

tion, contrasting with previous years when winning companies tended to focus mainly on electronics. Personal computer maker ASUSTeK took two gold awards, coming in first place for its UX21E/UX31E model notebook and in second place for its Transformer Prime TF201 model Eee Pad. In a fresh move for Taiwan, a design company, Franz Collection Inc., took fourth place with its Jungle/Extraordinary Garden Screen, an interior art decoration composed of 64 white matte glazed porcelain tiles of different patterns integrating Eastern and Western styles. The winners were selected by a panel of international judges with expertise in four key evaluation criteria: research and development, design, product, quality, and marketing.

TAITRA SPOTLIGHTS EXCELLENT PRODUCTS

84.2

MICRON INCREASING PROFILE IN TAIWAN

structure, capital availability, IPR protection, and the existence of a wellestablished supply chain. Micron holds a 60% stake in Inotera Memories, a joint venture with Nan Ya Technology, and is poised to assume Elpida’s 65% shareholding in Rexchip Electronics.

30.9

is swipe their passport and look into a monitor. Foreign residents must first register by bringing their passports and ARC to stations set up by the NIA in five locations: its Taipei headquarters, Taipei Songshan Airport, Taoyuan International Airport Terminal 2, Kaohsiung International Airport, and the airport at Kinmen. The registration process involves taking a facial scan and fingerprinting.

Exports

2011

2012

Unit: US$BN Source: BOFT

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Issues

Revamping the Executive Branch Some ministries and councils are still awaiting legislative approval for their restructuring.

lthough the process has taken longer than originally expected, the Executive Yuan’s Research, Development and Evaluation Commission (RDEC) is still hoping that Legislative Yuan approval of each element of the central government’s reorganization plan can be completed by January 1, 2013. When finished, the plan will decrease the number of Cabinet-level entities from the previous 37 to 29 – consisting of 14 ministries, eight councils, three commissions, two directorates-general, the Central Bank of the Republic of China (Taiwan), and the National Palace Museum. The longer-than-expected legislative process is due to the Legislative Yuan’s decision to pass a separate bill governing each organization. So far 15 such laws have been enacted, and most of the government agencies they cover have already started operations under the new structure. “Because a new Legislative Yuan took office on February 1, we had to resubmit the other 14 bills and start the review process over again early this year,” says RDEC Minister Sung Yu-Hsieh. By the end of the new legislature’s spring session, 10 of the bills were still being considered by the respective committees, while four had been voted out of committee and were ready for deliberation by the full legislature. “If we’re lucky enough, all 14 bills will be passed by the Legislative Yuan before the end of the year,” says Sung. After enactment of the enabling legislation, it takes at least a month or two – and more typically four to eight months – before the revamped organization has completed its preparations and is ready to be launched. An example of a transformation already in place is the Ministry of Culture, which began work on May 20, combining the former Council for Cultural Affairs with departments transferred from other entities such as the now-defunct Government Information Office. Another example is the Financial Supervisory Commission (FSC), which has now been repositioned under the Executive Yuan rather than operating as an independent commission. Decision-making authority has also been clearly delegated to the FSC minister, with the former full-time commissioners replaced by part-time advisers. The National Communications Commission (NCC), on the other hand, remains an independent commission, but the chairman is now appointed by the premier instead of elected by the other commissioners, in a move designed to clarify the lines of authority. Of the ministries still to be restructured, one of the more complicated cases will be the Ministry of Environment and Natural Resources, which will integrate units currently found within six separate ministries. Among other changes still to come are: • Creation of a Ministry of Health and Welfare, which will add

改造行政體系行政院部分部會的組織改造仍待立法院核准

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管過程已較原本預期更久，台灣行政院研考會仍希望立法院能在2013年1月1日前，審查核准中央政府組織改造計畫的所有項目。一旦完成，這項計畫將讓內閣層級的部會數目，從以往的37個減為29個—由14部、8 會、3獨立機關、2總處、中央銀行和故宮博物院組成。立法過程較預期久，是由於立法院決定針對各部會通過個別的組織法案。目前已頒布15項這類組織法，其所管轄的政府部會多已開始根據新架構運作。研考會主委宋餘俠表示：「因為新一屆立法院在2月1日上任，我們必須在今年初重送其它14項法案，重新展開審查程序。」在新立法院的春季會期結束時，其中10項法案仍由各相關委員會審議中，其它4項則已完成委員會表決，準備交付全院審議。宋餘俠說：「如果運氣夠好，立法院將在年底前通過全部14項法案。」授權法律頒布後，至少要1到2個月（較通常的是4到8個月），進行組織改造的部會才能完成預備作業，準備成立。已轉換就緒的一個例子是文化部，在5月20日開始運作，由前文建會和其它部會（例如現已裁撤的新聞局）所屬單位整併而成。另一個例子是金管會，現已被重新定位在行政院之下，而非以獨立機構運作。決策權也已明確賦予金管會主委，過去全職的委員改由兼職顧問取代。從另一方面來說，國家通訊委員會仍是獨立機構，但主委現在由行政院長指定，取代以往由委員互選產生，此舉是為了讓權責歸屬明確。仍待組織改造的部會中，較複雜的個案之一是環境資源部，將整併目前設在6個不同部會下的單位。即將來臨的其它改變包括：

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Issues social welfare responsibility to the functions of the current Department of Health. • Transformation of the current Ministry of Economic Affairs into a Ministry of Economic and Energy Affairs with eight bureaus under it. • Establishment of a National Development Council (NDC) by merging the RDEC, Council for Economic Planning and Development, and part of the Public Construction Commission. The NDC’s eight business units will be responsible for overall planning, economic development, social development, industrial development, human resources development, spatial and regional development, control and evaluation, and information management. The NDC will also assist each ministry with its policy planning. “In general, the reorganization process has been going smoothly,” says RDEC Minister Sung. “Some people need time to get used to change, but the majority of public servants understand the need for change. Our surveys show that the acceptance rate is quite high.”

• 創立衛生福利部，將現行的衛生署職務增加社會福利職責。 • 將現行的經濟部轉變為經濟及能源部，下設 8個司、局或處。 • 設立國家發展委員會，由研考會、經建會和工程會部份單位整併而來。國發會的8個業務單位將負責綜合規劃、經濟發展、社會發展、產業發展、人力資源發展、國土發展、管制考核、資訊管理。國發會也將透過政策規劃協助各部會。宋餘俠表示：「組織改造過程進展大致順利。有些人需要時間適應改變，但多數公務員了解變革的需要。我們的調查顯示接受度相當高。」

—撰文／沙蕩

—– By Don Shapiro

Championing Public Health AmCham’s latest committee aims to help improve Taiwan’s healthcare environment.

m C h a m Ta i p e i ’s n e w l y e s t a b l i s h e d P u b l i c H e a l t h Committee aims to raise government and public awareness of issues in the areas of disease prevention, healthcare management, epidemiology, preventive medicine, environmental health, and occupational health. “The existing committees for healthcare-related industries – the Pharmaceutical and Medical Devices Committees – focus chiefly on relatively technical regulatory matters,” says Dennis Lin, General Manager Taiwan for medical-device manufacturer BD and one of the three co-chairs of the new committee. “We feel a need to also look at higher-level issues and see what can be done to make Taiwan an even healthier place to live.” The Committee’s first task will be to collect data on Taiwan’s public health conditions for purposes of benchmarking with other countries. “Getting the baseline data is the starting point,” says Lin. “Then we can see how good or bad we are now. Even if we’re good, we can always do better.” The group also plans to sponsor a variety of presentations and workshops, inviting foreign and domestic experts to speak on their areas of professional expertise related to public health issues. To start, the Committee has identified five subjects to focus on: 10

提昇台灣公衛水準台北市美國商會近期成立新的委員會，旨在協助提升台灣的醫療環境

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北市美國商會新成立公共衛生委員會，目標是要提升政府與大眾的公衛意識，關注疾病防治、醫療管理、流行病學、預防性醫學、環境衛生、及職業衛生等議題。醫療器材廠商B D台灣區總經理林家慶表示：「目前與醫療保健產業相關的委員會– 例如製藥委員會和醫療器材委員會，比較關注技術性的法規議題。」林家慶也是新委員會的三位共同主席之一，他說：「我們認為也有必要關注較高層級的議題，發掘改善問題，讓台灣的公衛環境更加健全。」新委員會的首要任務是蒐集台灣公共衛生環境的相關資料，以和其他國家的標準作一比較。林家慶說：「取得標準值是個起點，可藉此了解台灣的狀況是好是壞。即使我們的現狀不錯，一定還有改善空間。」此外，美國商會公共衛生委員會也考慮舉辦一系列說明會與研討會，邀請國內外公共衛生相關議題的專家學者，就其研究領域發表演講。首先，公共衛生委員會已列出五大重要議題：

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Issues 1) Implementation of the “needlestick prevention law” passed by the Legislative Yuan last December. The purpose of the legislation is to reduce the incidence of infection and injury of healthcare workers, especially nurses, laboratory technicians, and janitorial personnel, due to being inadvertently stuck by needles or syringes. Under the law, hospitals and health clinics must adopt the use of safety engineered devices within five years or face fines of up to NT$50,000 (US$1,667) for each violation. “This was a very positive step,” says Lin. “Now we’d like to encourage the authorities to come up with a clear plan and budget for how to implement the program smoothly.” 2) Improved control of the spread of infections within hospitals and clinics. As discussed in an article in the July issue of Taiwan Business TOPICS, healthcare-associated infections (HAI) are a significant problem in Taiwan. The Committee would like to reference the experience of various medical institutions around the world in better safeguarding patients and healthcare workers by reducing such infections. 3) Women’s health issues, such as cervical cancer screening. Unlike some other markets in the region such as Singapore, Hong Kong, and Malaysia, Taiwan hospitals have been very slow to adopt the latest generation of screening equipment, which provides far more accurate detection than the conventional technology. 4) The re-use of medical devices designed for single use. If a patient needs multiple injections in one day, the Taiwan hospital might use the same needle each time, without sterilization – which presents the possibility of bacterial infection. The hospitals may wish to save costs due to their budget constraints, but such practice needs to be properly controlled by the healthcare authorities. 5) Tuberculosis screening. Because the cost of the screening is not reimbursed under the National Health Insurance system, not everyone is screened who should be. In addition, use of new technology could reduce the time needed for diagnosis from one month to about one week, decreasing the chance that the disease will spread in the interim. “Our goal is to encourage the government, the media, and the general public to pay more attention to these types of issues,” says Lin. “With greater attention, hopefully action and solutions will follow.” —– By Don Shapiro

一，立法院去年12月通過的「針扎預防條文」之施行。該項條文旨在要減少醫護人員受傷感染的意外，尤其是護士、醫事檢驗員、清潔人員等，可能在工作過程中不慎遭針頭或注射器扎傷。新法規範醫院和醫療機構必須在五年內全面提供安全針具，否則將處新臺幣五萬元以下罰鍰（相當於 1,667美元），並按次連續處罰。林家慶說：「這是非常正向的發展，現在我們要籲請主管機關訂出明確的計畫與預算，以順利推動這項規定。」二，加強控管醫院及診所內的感染擴散。美國商會Taiwan Business TOPICS雜誌六月號一文指出，醫療照護相關感染（H A I）的問題在台灣層出不窮。商會公共衛生委員會希望能借助世界各國醫療機構的防治經驗，降低這類感染的機率，以加強病患及醫療人員的保護機制。三，子宮頸抹片檢查等女性健康議題。相較於新加坡、香港、馬來西亞等其他亞洲市場，台灣的醫療院所引進新一代篩檢設備的速度非常緩慢。新型設備的偵測精準度遠高於傳統篩檢技術。四，限單次使用之醫療器材重複使用的問題。若病患一天之內需接受多次注射，台灣的醫院可能會略過消毒程序而重複使用同一支針管，導致細菌感染的機率提高。醫院這麼做可能是因為經費短絀而想降低成本，但衛生主管機關必須妥善控管這項作法。五，肺結核篩檢。由於肺結核篩檢成本並未納入全民健保給付項目，潛在病患並未全數接受篩檢。此外，新型篩檢科技也能大幅縮短診斷時間，由一個月加快為一星期左右，降低檢測期間病毒擴散的機率。林家慶說：「商會公共衛生委員會旨在呼籲政府、媒體和一般大眾多加關注這類公衛議題。也希望引起大家關注後，後續將積極行動，找出解決方案。」 —撰文／沙蕩

TAS Adds Three New Buildings Taipei American School gets impressive new facilities for science, athletics, and the performing arts.

photos: Tobie Openshaw

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Issues

mCham Taipei has always recognized the importance for multinational companies of having top-quality educational programs and facilities available for the children of expatriate families. When the U.S. severance of formal diplomatic relations with Taiwan in 1978 left the fate of various American community institutions in doubt, for example, the Chamber played a leading role in negotiating with the Taiwan authorities for a new legal status for the Taipei American School, as well as helping to arrange for the site of a new TAS campus – the current 6.5-hectare location in Tienmu. That site has recently gone through a major transformation. For the past two years, the southern end of the campus has been abuzz with construction activity as part of an NT$887 million (about US$30 million) development project to erect three new structures – a Science and Technology Building, multi-use gymnasium, and arts center hosting music, theatre, dance, and art classrooms plus performance and practice space. The science building is already in use in the new academic year, the athletic facility (featuring two full-size basketball courts and four tennis courts) will follow in a few weeks, and the arts center is scheduled to open in the first half of next year. The Science and Technology Building, equipped with 31 hightech classrooms and 14 laboratories, is in line with TAS’s strategic vision of promoting excellence in what is called the STEM subjects – science, technology, engineering, and math. Besides the usual labs for chemistry, physics, and biology, the building includes a robotics lab, a research lab where students can carry out independent projects, and two rooftop environmental labs for research on wind and solar power. The robotics program, initially developed with assistance from the National Taiwan University of Science and Technology, is believed to be the first of its kind in a high school in this region. The new classrooms employ a number of energy-saving devices and other “green” innovations. When motion sensors detect that the room is unoccupied, for instance, the lights will automatically turn off after 15 minutes and the heat or air-conditioning after 45 minutes. In addition, the newly added space includes a college-style lecture hall, equipped with state-of-the-art audio-visual equipment, for use in conferences, model United Nations, and other activities. “Our focus for the past several years has been to assure that the TAS program, the people teaching in it, and the place where learning is accomplished compare favorably with the very best public and private schools in the United States,” says Superintendent Sharon Hennessy. She notes that since the vast majority of TAS students aspire to go to U.S. colleges or universities, the school has tried to infuse the high standards of the National Association of Independent Schools – whose member schools tend to send most of their graduates on to college – into its academic and other programs. Hennessy describes the current development project, which was 10 years in the planning, as part of that continuing effort, saying that the “newly available resources and spaces will enable our signature programs in scientific research, public speaking, forensics, model UN, robotics, and so on to flourish as never before.” —– By Don Shapiro

台北美國學校新添三棟校舍台北美國學校有了三座新穎的大樓，分別作為科學、體育、和表演藝術課程之用

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北市美國商會一向認為，對跨國公司來說，駐外員工子女能有最高品質的教育課程和學習設施非常重要。1978年美國與台灣斷交，許多以美籍人士為主的社區機構前途未卜，當時台北市美國商會居中與台灣當局協商，為台北美國學校爭取新的合法地位，並協助該校尋找新校址，也就是現今位於天母、佔地 6.5公頃的校區。台北美國學校校園近期有了改頭換面的大改造。過去兩年以來，校園南端大興土木；這項斥資8.87億台幣（約 3000萬美元）的開發計畫是要建設三棟新校舍，一棟科技大樓、一座多功能體育館、和一座能夠容納音樂、戲劇、舞蹈、美術教室與表演練習空間的藝術中心。科技大樓這學期已經啟用，體育館（包括兩座完整的籃球場和四座網球場）也將在未來幾週開放使用，藝術中心則預計於2013年上半年開幕。科技大樓共有31間高科技教室和14間實驗室，符合台北美國學校的策略願景：帶動科學、科技、工程和數學等四大科目的卓越表現。科技大樓裡除了化學、物理、生物等一般校舍較常見的實驗室之外，還有一間機器人實驗室、一間學生可以進行獨立計畫的研究室，以及兩間屋頂環境實驗室，可進行風力和太陽能研究。由台灣科技大學協助發展的機器人計畫，可說是亞洲地區的創舉。新教室設有節能裝置和其他環保設計。舉例來說，動作感應器若偵測到教室裡已空無一人， 15分鐘後將自動關閉電燈，45分鐘後將自動關閉冷暖氣。此外，擴增的空間還包括大學裡常見的演講聽，並配有最新型的視聽設備，以進行國際會議、模擬聯合國等各類活動。總校長韓雪倫說：「過去幾年來，台北美國學校的發展重點在於確保我們的課程、師資、和學習環境，都足以媲美美國最佳的公私立學校。」韓雪倫指出，台北美國學校的學生大多數都希望能到美國唸大學，因此學校在學科和其他課程安排上，均致力符合美國私立學校聯盟（NAIS）的高標準。NAIS 的成員學校畢業生大多都能順利進大學就讀。韓雪倫表示，這項開發案是學校努力的方向之一，前後共籌劃了10年；她說：「新的資源和空間，將有助於本校的科學研究、公眾演說、辯論、模擬聯合國、機器人研究等招牌課程發展得更加有聲有色。」 —撰文／沙蕩

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Cover story

shipping

Shipping in a Slump 徘徊低谷的海運業 BY JANE RICKARDS

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Cover story

Waiting for Better Times to Return

photo : cna

The downturn in world trade, combined with excess capacity due to the overbuilding of new vessels ordered when economic prospects looked brighter a few years ago, has depressed prices and cargo volumes in the container shipping business. The situation is exacerbated by the huge size of the new mega-ships now being delivered. To bring more cargo to Taiwan’s ports, the government is hoping to attract more transshipment business from mainland China. But the rapid expansion at Chinese ports in recent years is making that objective more difficult to attain. 全球貿易不振，加上前幾年看好景氣時簽約建造了頗多新船，海運業運能擴增超出需求，貨櫃運輸的價格與運量也難有成長。近期陸續交貨的超大型新船，則使運能過剩情況更加嚴重。台灣政府希望從中國吸引更多轉運商機，以幫助商港發展，但中國各大港口近年積極建設，台灣重現港埠榮景的難度更高。。

期待海運榮景重現〔節譯〕

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海運輸業的命運無可避免地和世界經濟起伏休戚與共，其興衰交替的產業週期眾所周知。即使如此，產業消息人士表示，航運業過去四年的最新一波衰退，嚴峻程度前所未見。在金融海嘯後出現的溫和復甦力道已開始減弱，尤其是歐洲需求疲軟。在金融海嘯前的景氣繁榮期，航運業許多業者對市場前景過度有信心，對新船做出過度投資，導致他們現在運輸能力過剩。此外，燃油價格居高不下，造成營運成本提高。新一代的大型船隻現在正陸續投入市場，船東可從它們更棒的燃油使用效率獲得一些好處，但運輸能力過剩的問題將會惡化。裕民航運總經理王書吉表示：「所有這些因素 14

Excess shipping capacity is making for a difficult market, but long-term prospects are still considered bright.

ith its fortunes inextricably tied to the ups and downs of the world economy, the shipping industry is notorious for its boom-and-bust cycles. Even so, industry insiders say, the latest downturn over the past four years has been unprecedentedly severe. The global financial crisis was followed by a mild recovery that has already begun to falter, particularly in Europe, weakening demand. During the boom times before the financial crisis, many in the industry had been too confident about market prospects and over-invested in new ships, leaving them now with excess capacity. In addition, fuel prices are high, raising operating costs. With a new generation of larger vessels now coming into the market, ship owners may

加在一起，為這次衰退周期創造了完美風暴。」裕航是一家散裝航運業者，由台灣遠東集團所有。估計全球航運業去年共蒙受約56億美元虧損。就營業運輸能力而言排名全球第五大貨櫃航運業者的長榮海運，提報的虧損約1億400萬美元。儘管情況不如2009年（當時運貨萎縮，估計讓業者損失共195億美元營收）嚴峻，趨勢發展卻一直令人憂心。今年第一季，多數航運公司依然提報鉅額虧損。市場狀況在第二季稍有改善，貨運費雖仍低於2010年水準，但至少不再下跌。長榮海運出現一年來的首次季獲利—— 2900萬美元。不過重要的問題是，這些稍微正面的市場狀況能否持續下去，歐債危機的衝擊是主要的不確定性因素。試圖以緊縮流動性抑制通膨的中國成長趨緩，以及美國復甦力道無精打采，也讓前景黯淡。標準普爾（Standard and Poor's）子公司中華

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benefit some from their greater fuel efficiency, but the problem of excess capacity will be exacerbated. “All these factors put together create the perfect storm for this down cycle,” says C.K. Ong, president of U-Ming Marine Transport Corp., a bulk carrier operator owned by Taiwan’s Far Eastern Group. “The down cycle has been here for some time and this is bad.” For Taiwan, one piece of good news is that its shipping companies have proved better than others at keeping their financial heads above water. Dennis Chan, managing director in Taiwan for Singapore-based American President Lines (APL), the world’s sixthlargest container shipping company, cites an April report in industry publication Alphaliner estimating that the global shipping industry collectively suffered losses of around US$5.6 billion last year. APL was US$478 million in the red in 2011, while Denmark-based Maersk, the world’s biggest container line, posted losses last year of US$521 million. Evergreen Marine, the world’s fifth-largest container shipping carrier in terms of operating capacity and Taiwan’s largest, reported a deficit of around US$104 million last year. While not as severe as the situation in 2009, when a collapse in trade cost the industry an estimated US$19.5 billion in

Anthony Randell, managing director of Maersk Taiwan, maintains that opening crossStrait shipping to foreign carriers would be the most effective way to revive Taiwan's container port activity. photo : maersk

revenue, the trend has been worrying. For the first quarter of this year, Chan says, most shipping companies, including APL, continued to register huge losses. “The first thing on all carriers’ minds is to stop the bleeding,” he says. Market conditions improved somewhat in the second quarter of this year, and freight rates – although still well below 2010 levels – at least stopped their decline. As a result, APL was able to report second-quarter earnings of US$16

信評的副總裁許智清表示：「從近期到中期而言，我們對全球貨櫃運輸業的看法仍相當負面。」今年一開始，航運業預期全球貨櫃運輸會有6%到 8%的成長，但現已下修到3%至5%。就貨櫃運輸量而言。台灣的出口在今年上半年減少2.6%，進口則持平。占台灣出口約三分之一的歐洲市場，需求尤其疲軟，預估在2012會計年度，運往歐洲的貨櫃運輸量會減少8%到10%。如果有任何正面跡象，那就是中國以外的亞洲新興市場，國際貨幣基金（IMF）預測，亞太地區會有6% 的國內生產毛額成長。裕航的王書吉對散裝乾貨業務的長期前景甚至更樂觀，儘管目前這項業務深受運輸能力過剩所苦。對照涉及製造商品的貨櫃航運，王書吉說：「我們運送原物料，例如煤、鐵礦砂和其它礦物，全都仰賴新興市場。」他認為這些市場會繼續強勁成長，順應全球化趨勢，這些國家的都市化和科技升級都會更進一步。至於在金融海嘯前過度投入新船建造，導致目前大

million, while Evergreen Marine had its first quarterly profit – US$29 million – in a year. The big question, however, is whether those somewhat positive market conditions can continue, with the impact of the Eurozone debt crisis as the main uncertainty. The latest GDP forecast by the International Monetary Fund (IMF) for the 17-nation Euro area in 2012 is -0.3%, compared with the 2% it foresees for the United States. “The fourth

規模運輸供應過剩的問題，王書吉表示，這是「船公司不智」，不過航運業務向來是景氣循環周而復始。從下單訂購新船到交船，需要二到三年，所以這些決策是在經濟展望看似健全時所決定。在目前情勢下，過分堅定自身立場的船東發現難以找到資金紓解他們的財務壓力，因為銀行緊縮流動性，變成小心翼翼的放貸者。對造船業者而言，景氣繁榮期也代表賣方的市場，過去進行大規模採購的航運公司後來被收取非常高的價格，是目前處境雪上加霜的原因之一。裕航和長榮是台灣僅有兩家在金融海嘯後建造新船的業者，他們也因此省下了大筆支出。王書吉表示，裕航今年將進行約5億到8億美元的資本投資，主要用於新船，他估計長榮會投入數十億美元。長榮集團公關部門表示，長榮目前正在建造的船，運輸量共為8400TEU，但他並未透露價格。最近引起國際注意的一筆交易，是長榮和希臘船東 Enesel S.A簽署租約，租借每艘運輸量1萬3800TEU的

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Cover story quarter and first quarter 2013 could be a different ball game – it all depends on the Eurozone,” says Chan. Prospects are also being dampened by the slowdown in China, which is trying to cap inflation by tightening up liquidity, and the lackluster recovery in the United States. Although U.S. consumer spending – crucial for container shipping carriers, which carry finished goods like clothing, computers, furniture, and televisions – posted the biggest increase in five months in July, the upcoming Christmas season is unlikely to provide the economic boost that it normally does. Anthony Randell, managing director for Maersk Taiwan, says the holiday season is more likely to be a “bomb.” Adds Chan: “The trend for the next six months is quite uncertain.” Raymond Hsu, director of corporate ratings for Taiwan Ratings, an affiliate of Standard and Poor’s, also foresees limited market improvement because shipping conditions remain weak. “From the near to medium term, our view on the global container shipping industry is still quite negative,” he says. Unless the world economy improves significantly, he says, it will be hard for shipping companies to improve their profitability. Randell notes that at the beginning

of this year, the industry was expecting 6-8% growth in global containerized shipping, but these expectations have been revised to 3-5%. He adds that in terms of container volumes, Taiwan’s exports have fallen 2.6% in the first half of this year, while imports remained flat. Demand is especially weak from Europe, which takes around one-third of Taiwan’s exports, and containerized shipments to Europe are projected to fall by 8-10% in 2012, he says. Randell overall says he is “bearish” on demand from both the United States and Europe, while forecasting that China’s growth will be slow.

Rates hold steady Generally, industry experts say, the container shipping lines have recently been unable to increase their freight rates, but neither are they willing to respond to the situation by dropping their rates. “They’re inclined to hold onto the rates, to sail their ships if they’re less than full,” Chan says. “The key is to turn around the company and strengthen the balance sheet and prepare for a possibly tougher year next year.” If there are any positive aspects, they are in Asian emerging markets outside

China, with the IMF forecasting 6% GDP growth for the Asia Pacific region. U-Ming’s Ong is even more optimistic about the dry bulk business in the long term, although for now it is plagued by oversupply. In contrast to container shipping, which involves manufactured goods, “we are carrying raw materials like coal, iron ore, and other minerals – all mainly dependent on emerging markets,” Ong says. He sees these markets as continuing to grow strongly in line with the “globalization” trend that is fueling urbanization and technology upgrading in these countries. Some of these countries, such as Indonesia, India, and China, also have enormous populations. “They will start from a very primitive infrastructure, so there will be a lot of investment in infrastructure and that will generate a lot of demand for dry bulk,” he says. “When the developed market is down and not growing, the money will have to go somewhere where it can seek faster growth, like emerging market nations.” Regarding the overbuilding of new vessels before the financial crisis that has created the current massive oversupply, Ong says it was “kind of foolish of the ship owners” – but the shipping business

photo : maersk

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is always cyclical. It takes two or three years from ordering a new ship until delivery, so those decisions were made at a time when the economic outlook seemed healthy. Under current conditions, the ship owners who over-committed themselves find it hard to get funding to relieve their financial pressures, as banks have tightened up liquidity and became cautious lenders. “They have now become very selective, and because shipping is capital-intensive, only those companies that did not over-expand are likely to receive funds,” Ong says. The boom period was also a seller’s market for shipbuilders, and the very high prices then being charged have further contributed to the current woes of shipping companies who made large-scale purchases then. “Today if I go to a shipyard, they are willing to discuss everything under the sun with me – not only the price, but most importantly the fuel efficiency,” Ong says, that adding ships built now are around 40-50% cheaper and considerably more fuel efficient than before the financial crisis. U-Ming and Evergreen are the only two companies in Taiwan that are building ships postfinancial crisis, Ong says, and they are reaping some substantial savings.

Taiwan is now seeking to promote itself as a port of call for cruise ships, especially to Keelung Harbor. photo : tourism bureau

U-Ming, says Ong, is making capital investments of around US$500 million to $800 million this year, mainly in new ships, while he estimates that Evergreen’s will run into the billions of dollars. John Chen, a public relations official for the Evergreen Group, says that Evergreen is currently building ships with a total capacity of 8,400 TEU (twenty-foot equivalent unit, the standard measure of cargo capacity), but did not disclose the dollar value.

十艘貨櫃船，將成為長榮船隊中最大型的船隻。這些船將由南韓現代重工（Hyundai Heavy Industries）打造，預定從2013年下半年到2014年下半年之間陸續交船。商業雜誌（Journal of Commerce）六月號報導指出，和數年前的類似交易相比，每艘船的造價減少 4000萬美元。 Enesel租約是一個例子，龐大的嶄新貨櫃船現在被引進市場，會對航運業務的經營方式產生重大衝擊。在航運業，唯一的主要成本項目是燃油，這些新船的特色是省油，且排出的碳足跡較少。其他航運業者，例如台灣快桅（M a e r s k，馬士基航運）和美國總統輪船公司（American President Lines），也都在打造這類大船。因此，運輸能力供應過剩的問題可能持續到2013年，新船交貨數量要到2014年下半年才會開始減少。幾乎所有受訪者都把台灣主要航運公司（除了裕航和長榮，還包括萬海航運、部分國有的陽明海運）的健全財務體質，歸功於審慎經營，包括在景氣繁榮期不過度進行資本支出的決策在內。中華信評的許智清還指出，台灣航運業者受惠於低利環境和政府支持，因此能有較低的成本結構。在百家爭鳴的全球航運市場中，馬士基擁有不超

A transaction that attracted much recent attention internationally was Evergreen’s charter agreement with Greek ship owner Enesel S.A. to lease 10 container ships of 13,800 TEU each, which would make them the largest in Evergreen’s fleet. The vessels will be built by South Korea's Hyundai Heavy Industries, with delivery expected from the second half of 2013 through the second half of 2014. A June Journal of Commerce report put the price per ship

過15%的最高市占率，本土業者長榮的市占率在5%到 6%之間，陽明約2%到3%，萬海約1.5%——對台灣業者而言的另一個正面因素，是他們參與亞洲區內生氣蓬勃的貿易，尤其是和中國往來。就較長期的情況而言，產業消息人士對航運業前景傾向樂觀。王書吉表示，他看到供需動能會在2013 年下半年或2014年變得更有利，一旦建造新船的下單熱潮趨緩，運輸能力過剩問題就會消失。受訪者們也提到業界合併的可能性，因為較弱的業者會被迫出局。王書吉和美國總統輪船公司台灣區總經理陳家聰都強調，對台灣航運業者而言，未來中國和其它新興市場會扮演越來越重要的角色。陳家聰表示：「就短到中期而言，中國對台灣航運業者來說仍然重要，不過長期來看，東南亞將非常有吸引力。」他堅信，馬來西亞、泰國和其它東南亞國協（ASEAN）會員國對台灣的重要性，可能會讓中國相形失色。長榮海運董事長王宗進在寄給本刊的電子郵件中表示，貨櫃航運受到短期的不確定性所苦，但他對潛在的長期成長抱持審慎樂觀態度。台灣交通部政務次長葉匡時建議：「業者應該設法持續參與競爭，並期待榮景重返。」

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Cover story at US$40 million less than in similar deals conducted a few years ago. Evergreen’s Chen confirmed that the price is significantly cheaper than in pre-financial crisis days, but again would not provide the exact figure.

Mega-vessels The charter arrangement with Enesel is an example of the enormous new container vessels now being introduced to the market, with a major impact on how the shipping business is run. Ong notes that with shipping, like the aviation industry, the single major cost component is fuel, and these new vessels are characterized by their fuel efficiency. Maersk, for its part, has signed a contract with Korea’s Daewoo Shipbuilding and Marine Engineering, to build 10 of the world’s largest and most efficient vessels – called “Triple-E ships” – scheduled for delivery between 2013 and 2015, with an option for an additional 20 vessels. With a length of 400 meters, width of 59 meters, and height of 73 meters, and with a capacity of 18,000 TEU, their capacity is 16% greater than today’s largest container vessel, the Emma Maersk. But at the same time, they produce 20% less CO2 per container and consume 35% less fuel per container. The overall price of the 10 vessels is US$1.19 billion. APL, reports Chan, is also introducing five more fuel-efficient vessels between 2013 and 2014, with capacity of 14,000 TEU per vessel. APL estimates that oversupply woes will continue into 2013 due to orders of these mega-ships, and it predicts that ship deliveries will only start to diminish in the second half of 2014. Unsurprisingly, in a situation of oversupply, weaker players may be forced to exit the market. A recent such case involves Sanko steamship, one of Japan’s oldest shipping firms, which filed for bankruptcy in early June after months of battling with ship owners over the restructuring of US$2 billion in debt, Reuters reported. The dry bulk and tanker company that began in 1934 joined U.S.based containership company General Maritime Corp. and South Korea’s Korea line in seeking bankruptcy protection. 18

In addition, various European shipping companies are undergoing debt restructuring, Ong points out. “There will be more bankruptcies to come, as the oil tanker business and dry bulk continue to be bad. Basically, it is an oversupply situation.” Maersk has also restructured, laying off approximately 400 people, including 250 in Copenhagen. The company says the move will improve efficiency by decentralizing operations away from the head office. “Our financial results over the past year show that we are in a volatile business, and our results have not been satisfying,” says Ruth Chen, a spokeswoman for Maersk Taiwan. Nearly all interviewees attributed the relatively sound financial health of Taiwan’s major shipping companies – which besides U-Ming and Evergreen also include Wan Hai Lines and partially state-owned Yang Ming Marine Transport – to prudent management, including decisions not to overdo capital expenditures during the boom period. “There was steady growth rather than getting carried away with the boom,” says Ong. Hsu of Taiwan Ratings also notes that Taiwanese shipping companies have benefited from a low interest rate environment and government support, enabling them to have a lower cost structure. “This is an advantage for Taiwanese containership companies, especially compared with carriers from Europe and other countries where there are high interest rates,” Hsu says. Yang Ming reportedly lost NT$9.29 billion in 2011, although the company is considered financially sound, while Wan Hai and U-Ming experienced a decline in profits. In general, most of the money earned by Taiwanese shipping companies these days comes from markets other than Taiwan. In a fragmented global shipping market in which Maersk has the highest market share at no more than 15% – with local carriers Evergreen in the range of 5-6%, Yang Ming around 2-3%, and Wan Hai around 1.5% – another positive factor for the Taiwan-based companies is their engagement with the vibrant intraAsian trade and particularly with China (see the sidebar on direct links). Chan says he thinks APL can study

the success of Taiwanese carriers in the intra-Asian trade. He notes that the focus of U.S.-Taiwan shipping – which has been on the decline in recent years, following China’s emergence as the manufacturing center for much of the consumer goods formerly produced in Taiwan – is on speedy delivery. But intra-Asia shipping, which accounts for most of APL’s business out of Taiwan these days, is more about the frequency of sailings and the flexibility that companies can offer their customers. “The intra-Asia segment is so huge,” Chan says. “Taiwan, Korea, and Japan can be regarded as one segment, China and Hong Kong as another, and then there’s the Indian sub-continent and the Middle East gulf and Red Sea states. It’s a big playing field.” For the longer term, industry insiders tend to be optimistic about the shipping industry’s prospects. Ong says he sees the supply-demand dynamics as becoming more favorable in the second half of 2013 or in 2014, once orders for building new ships slow down and excess capacity is mopped up. Interviewees also mentioned the possibility of industry consolidation as some weaker players are forced out. Ong and Chan both stress the increasingly important role that China and other emerging markets will play for Taiwan’s shipping companies in the future. “In the short to medium term, China will continue to be important for shipping companies based in Taiwan, while in the longer term Southeast Asia will be very attractive,” Chan says. It’s even possible that markets like Malaysia, Thailand, and other ASEAN countries will eclipse China in their importance for Taiwan, he contends. “Southeast Asia will continue to be an essential and vibrant manufacturing hub,” says Chan. In an email message to TOPICS, Evergreen Marine Chairman C.J. Wang said that container shipping is plagued with short-term uncertainties, but he is cautiously optimistic about the potential long-term growth. “What you need to do,” advises Deputy Minister Kuang S. Yeh of the Ministry of Transportation and Communications, “is keep yourself in the game and wait for the good old days to return.”

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The China Factor and Taiwan’s Ports With the decline in cargo volume, Kaohsiung could be revived as a hub if foreign carriers could sail cross-Strait routes.

n the glory days of the Port of Kaohsiung, as recently as 2000, the port ranked fourth in the world in terms of shipping container throughput. But those days are over. Last year, the port’s global ranking fell to 12th place. And it seems unlikely that Kaohsiung’s role as a major hub can ever be restored. Had the island’s ports, especially Kaohsiung, been corporatized a decade or so earlier, say industry insiders, Taiwan could have better assured the continuing competitiveness of its harbors, even maintaining an edge over China and its plethora of busy ports. As it is, the government and the newly created Taiwan International Ports Corp. (TIPC) are now relegated to the position of asking the mainland for leftovers. To maintain container volumes at Kaohsiung harbor, says Kuang S. Yeh, Deputy Minister of the Ministry of Transportation and Communications (MOTC), the govern-

On its maiden voyage, a large container ship belonging to China's COSCO calls at Kaohsiung Harbor. photo : cna

ment is urging TIPC to form strategic alliances with second-tier ports in China, such as the fast-growing harbors of Xiamen and Fuzhou, so that Kaohsiung can act as a transfer point for Chinese cargo bound for the United States and other markets across the Pacific. “There is no point in having fierce competition between these ports when they are geographically so close,” Yeh says. Chang Ya-fu, a senior director in TIPC’s planning and development department, notes that the company has also signed cooperation agreements with the ports of Shanghai, Gaungzhou, and Dalian for the promotion of business and exchange of personnel. The agreement is now still in the “conceptual”

中國崛起與台灣港埠發展

不

過12年前，高雄港還是一片興盛，貨櫃吞吐量排名全球第四。然而，榮景不再。去年高雄港的全球排名滑落至第12名，而且似乎不太可能恢復航運樞紐的地位。業界人士指出，台灣各港口（尤其是高雄港）的民營化如果提早10年左右，原本可以維持競爭力，甚至在面臨中國眾多繁忙港口的競爭時，仍可保持優勢。但目前的情況是，台灣政府與新設立的台灣港務股份有限公司恐怕只能要求跟對岸港口分一杯羹。交通部次長葉匡時說，為了維持高雄港的貨櫃運量，政府正敦促台灣港務公司與廈門、福州等快速發展的中國二線港口策略結盟，好讓高雄港成為中國貨物運往美國和太平洋其他市場的轉運站。葉匡時說：「這些

stage, says Chang, with the details yet to be worked out. TIPC is also hoping to attract Chinese investment once currently stringent restrictions are loosened; there is already talk of state-owned COSCO, China’s largest container carrier, investing in Taiwan’s ports. C.K. Ong, president of U-Ming Marine Transportation, says that Taiwan missed out on a “golden opportunity” 10 to 15 years ago when China’s port facilities were still relatively undeveloped. If Taiwan had converted the harbor bureaus into a corporation at that time, it would have limited the amount of growth occurring in China’s ports, he contends. “This business is a zero-sum business,” says Ong. “If companies had already invested

港口地理位置如此接近，相互廝殺毫無意義。」台灣港務股份有限公司企劃處資深處長張雅富指出，該公司也已跟上海、廣州和大連等港口簽署合作協議，以促進商務和人員交流。張雅富說，這項協議仍處於發想評估階段，細節還有待進一步討論。此外，一旦現有嚴格法規鬆綁，台灣港務公司也希望吸引中國的投資。已經有說法指出，中國最大貨櫃運輸業者中遠集團可能投資台灣的港口。裕民航運股份有限公司總經理王書吉說，10到15 年前，中國港口設備仍相對落後時，台灣未能把握「黃金時機」。王書吉認為，如果台灣當時就把港務局轉型為公司，就可能限制中國各港口的成長空間；王書吉說：「這是個零和的生意。如果企業在台大舉投資，用台灣港口作為樞紐，就不至於輕易轉移陣地到中國。」台灣各港口是由公家單位負責經營，中國則在10年

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Cover story heavily in Taiwan to use it as a hub, they would think twice before switching to China.” While Taiwan’s ports were being run as part of the government bureaucracy, China a decade or so ago began welcoming foreign investment in its harbor management with open arms. “Everyone has now committed their investment to China,” Ong says. “Terminals are a heavy, long-term investment, and now it would be difficult for Taiwan to bring that business back.” Dennis Chan, managing director for Taiwan at American President Lines, notes that even aside from the effects of the economic downturn, transshipment volumes are falling as cargo that previously would have passed through Kaohsiung is now bypassing it. “It’s a double whammy,” he notes. “The volumes will slowly go away from Kaohsiung. The writing is on the wall and there is nothing the MOTC can do.” TIPC’s Chang notes that the Port of Kaohsiung over the past four years has seen 3-5% average annual growth in container shipments, while this year overall container shipping in Taiwan has increased by 2% and the transshipment trade by a significantly larger 7%. But some of the booming ports though which China has been exporting consumer

Kaohsiung Harbor's business is still growing, but not at its former pace or anywhere near as fast as some other ports in the region. photo : cna

goods to Western countries have seen annual growth as high as 30-40%. One foreign shipping industry source, who preferred not to be named, said Chinese ports are in fact already facing a glut in capacity. “It’s one province versus another province, and they’re fighting tooth and nail,” he said. “This doesn’t benefit Taiwan at all.” The source notes the increasing overcapacity in terminals in Kaohsiung operated by local carriers such as Yang Ming and Evergreen, with similar under-utilization also apparent in the Port of Taipei terminal operated by Evergreen. He adds that the efficiency and relative cheapness of its port operations has helped immunize Hong Kong from feeling the same pressure as Kaohsiung.

前左右開始張開雙臂，歡迎外資參與港口營運。王書吉說：「現在資金都到中國去了。碼頭屬於資金密集的長期投資，台灣現在很難把生意搶回來。」美商美國總統輪船股份有限公司總經理陳家聰指出，撇開景氣衰退的影響不談，轉運量仍出現下滑，因為以前會經過高雄港的貨物，現在是過門而不入。陳家聰指出：「這等於是雙重打擊，高雄港的吞吐量將逐漸流失，大勢已去，交通部也無力回天。」台灣港務公司的張雅富指出，過去四年，高雄港的貨櫃運量平均年增率約為3%到5%，今年以來，台灣整體貨櫃運量提升2%，相較之下，轉口貿易成長率要高得多，達到7%。然而，出口消費性商品至西方市場的中國港口業務繁忙，有些貨櫃運量年增率高達30% 到40%。一位不願具名的外國航運業者說，中國港口其實已經面臨運量過剩的問題。業者表示：「各省之間都在搶生意，競爭非常激烈。這對台灣完全沒有好處。」這位業者指出，高雄港由陽明海運和長榮海運等國內航商經營的貨櫃碼頭，運量過剩的情形日益嚴重；長榮在台北港經營的碼頭利用率過低的問題也很明 20

Direct links Although the direct navigation links that Taiwan set up with China in 2008 have improved the situation somewhat, ultimately they have done little to bring Taiwan’s aspirations of becoming a regional shipping hub to realization, since foreign carriers are excluded from participation in direct cross-Strait shipping, industry players say. The reason for that exclusion is political: China insists that Taiwan is part of its territory, making those shipping routes domestic rather than international. Currently, 72 Chinese ports, including river ports, are open to Taiwanese ships, while 13 Taiwanese ports are open to Chinese vessels, according to the

顯。業者並指出，香港的港口效率高而且費用相對低廉，因此面對來自中國港埠的競爭壓力時，感受不像高雄港那樣強烈。航運業者表示，兩岸在2008年簽訂的海運直航協議，讓情況有些改善，然而台灣終究未能實現成為區域航運樞紐的願景，因為外國航商不能參與兩岸直航業務；排除外商是出於政治因素：中國堅持主張台灣是它的領土，因此兩岸之間屬於國內航線而非國際航線。陸委會官員表示，目前中國共有72座港埠（包括河港）開放給台灣船隻停靠，台灣有13座港口對中國船隻開放。兩岸開放海運直航後，據說運輸成本降低了 15%到30%，基隆到上海的航程只需17個小時；先前往返兩地的船隻依規定須先經過第三地，得花上26個小時才能抵達。台灣港務公司的張雅富表示，台灣港口去年經手的1342萬TEU（20尺標準貨櫃）貨櫃中，兩岸貿易量比重約佔8%，達110萬TEU。長榮海運董事長王宗進以電子郵件回應TOPICS雜誌提問時表示，兩岸直航對台灣和中國民眾而言都是「意義重大的里程碑」。王宗進指出，兩岸貨櫃運量受

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economic affairs section of the government’s Mainland Affairs Council. The opening of direct shipping has reportedly reduced operating costs by 15-30%. It now takes 17 hours for a vessel to sail between Keelung and Shanghai, compared with 26 hours previously when ships were required to first pass through a third nation or territory. TIPC’s Chang says that of the 13.42 million TEU of container cargo handled by Taiwan ports last year, cross-Strait trade accounted for 1.1 million TEU or around 8%. C.J. Wang, chairman of Evergreen Marine, told TOPICS by email that the cross-Strait direct links are a “phenomenal milestone” for the people of Taiwan and China. He noted that cross-Strait container volumes, boosted by the Economic Cooperation Framework Agreement (ECFA) that Taiwan signed with China in 2010, showed a year-onyear increase of 9.3% in the first half of 2012, higher than Taiwan’s overall container traffic. But U-Ming’s Ong contends that since Taiwan’s exports of sensitive and high-value components used in the all-important tech trade tend to be transported by airfreight, the airlines (and tourism) have been more significant beneficiaries of direct crossStrait links than shipping. Permitting foreign-flag carriers –

especially those who have invested in container terminal facilities in Taiwan – to participate in the direct cross-Strait links would be the best way to facilitate Kaohsiung’s reemergence as a hub, say representatives of the international shipping lines. Anthony Randell, managing director of Maersk Taiwan, says he hopes the ban is lifted soon, since “otherwise Taiwan will be further marginalized.” He notes that the only way the Port of Kaohsiung can attract cargo back is by increasing transshipment volumes. Randall also cites the example of his company’s Daily Maersk service, which connects four ports in Asia with three ports in Europe, in allowing customers to cut storage costs and speed up delivery. If Maersk were able to sail Taiwan-loaded cargo to China’s port of Yantian and then transfer it to Daily Maersk – rather than sailing to Malaysia as is done now – it would be faster, more efficient, and would save money for the shipper. APL’s Chan further points out that since China does not permit cabotage (defined by Wikipedia as “transport of goods or passengers between two points in the same country by a vessel or an aircraft registered in another country”) and also sees Taiwan as a Chinese province, foreign carriers – despite having invested in terminal facilities on either

惠於2010簽署的經濟合作架構協議（ECFA），今年上半年較去年同期成長9.3%，大於台灣整體貨櫃運量的年增率。然而，裕民航運總經理王書吉則認為，台灣出口的敏感性及高價位零組件是用於非常重要的科技業，多半以空運方式運送，因此兩岸直航後，航空業（和旅遊業）受惠程度遠大於海運業者。國際航運公司的代表說，開放外國航運業者 – 尤其是已經在台灣投資貨櫃碼頭的航商 – 參與兩岸直航業務，是使高雄港再次成為航運樞紐的最好辦法。台灣快桅股份有限公司總裁安瑞德表示，希望法規早日鬆綁，「不然台灣將進一步邊緣化」。安瑞德指出，唯有提高轉運量，高雄港才能吸引貨運量回流。安瑞德舉例說明，該公司新推出的天天馬士基（Daily Maersk）服務，連結四座亞洲港口與三座歐洲港口，讓客戶降低倉儲成本，加快到貨時間。如果快桅公司能把載有台灣貨物的貨輪開到中國的鹽田港，在那裡接上Daily Maersk，而不必像現在這樣取道馬來西亞，就可以更快、更有效率，也可以為託運貨物的公司節省成本。

side – are not permitted to handle China’s international relay cargoes in Taiwan nor Taiwan’s international cargos in Chinese ports. “It raises a question as to why anyone should continue to invest and locate in Kaohsiung when they might be better off elsewhere, where they can reduce costs and scale their terminal operations through higher aggregated volume,” Chan says. But he stresses that while some other foreign carriers have moved out over the years, APL is committed to maintaining its foothold in Kaohsiung. Starting from the end of 2010, the Ta i w a n g o v e r n m e n t h a s p e r m i t t e d Taiwanese and Chinese carriers to carry cross-Strait cargo on behalf of foreign carriers. But both Randell and Chan say that this arrangement is no substitute for letting foreign-flag carriers participate in the direct links. Deputy Minister Yeh says that Taiwan supports this idea, which it sees as good for the development of Taiwan’s ports. He notes that the national shipping association, which negotiates with China on shipping matters under the guidance of the Straits Exchange Foundation, is actively discussing the proposal with its Chinese counterpart. But whether China will be open to sharing the cross-Strait business with foreign carriers is still unknown.

美國總統輪船股份有限公司總經理陳家聰進一步指出，由於中國不提供「沿海航權」（Cabotage，維基百科定義：以他國註冊的輪船或飛機，於一國國內兩地之間運送貨物及乘客），並將台灣視為中國的一省，外國航商雖在台灣或大陸投資建造碼頭設施，仍不許在台灣處理中國的國際轉運貨櫃，也不能在中國港埠處理台灣的國際貨物。陳家聰說：「這就產生一個問題：航運業者若有更好的選擇，能藉較高的總運量來降低成本、擴大碼頭營運規模，為何要在高雄繼續投資和落腳？」然而他強調，過去幾年來部分外國航運業者已陸續搬離高雄港，但美國總統輪船公司將維持高雄的據點。從2010年底開始，台灣政府准許本地及大陸的航運公司代外國業者在兩岸之間運送貨物；但陳家聰和安瑞德都說，不如讓外國航商參與兩岸直航業務。交通部次長葉匡時表示，台灣支持這個構想，因為它有益於台灣港埠發展。葉匡時指出，在海基會指導下與大陸協商航運事宜的台灣相關公會正積極與中國同業討論此事。然而，中國是否願意開放外國航商參與兩岸直航業務，仍然是未知數。

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Cover story A New State-owned Company Takes Charge of the Ports Shipping executives welcome the change, but some question whether it comes too late considering the fierce competition. BY jane rickards

n an effort to spur greater efficiency in port management, the government in early March combined the operations of the island’s various harbor bureaus, transforming the new unit into a state-owned company, the Taiwan International Ports Corp. (TIPC), with headquarters in Kaohsiung. At the same time, a Maritime and Ports Bureau was inaugurated under the Ministry of Transportation and Communications (MOTC) to oversee TIPC and take overall responsibility for regulating the ports. Chang Ya-fu, a senior director in TIPC’s planning and development department, says the corporatization of harbor operations is in line with trends elsewhere in the world, such as in Singapore and China. TIPC will seek to boost the revenues, efficiency, and flexibility of the ports, contributing to domestic economic growth. More specifically, Tsai Ting-yi, TIPC’s vice president for business, says the company has set the goal of expanding Taiwan ports’ annual containerhandling volume from the current level of around 13 million TEU to 18 million within five years. During the same time span, TIPC aims to increase harbor revenues from nearly NT$20 billion to NT$30 billion (about US$1 billion). MOTC Deputy Minister Kuang S.Yeh notes that although cross-Strait shipping and Taiwan’s cargo volumes with Southeast Asian nations such as the Philippines and Vietnam should continue to grow, it is unlikely that the Port of Kaohsiung will ever be able to return to the ranks of the world’s 10 largest harbors in terms of container traffic. “It will be very difficult to reverse that trend,” he says. “We should actually be asking ourselves: is it really necessary to do that? I think it’s important to increase the value

of the port, not the volumes going through the port.” With competition from flourishing ports in mainland China and declining export business, Taiwan currently may have more international ports than it needs. Yeh says an important mission of TIPC will be to coordinate the activity of the island’s seven ports so that they complement one another strategically rather than compete. In August, the government’s Council for Economic Planning and Development approved TIPC’s budget request for NT$66 billion in infrastructure investment at the ports between 2012 and 2016. These plans are designed both to promote Taiwan’s competitiveness as a shipping hub and to enable it to accommodate more cruise ships so as to enhance tourism. A major portion of the budget will earmarked for further development of the Kaohsiung Intercontinental Terminal, a long-term project whose first-phase construction was recently completed, along with the

building of two logistics parks and new connecting roads in Kaohsiung. Also included is NT$4 billion to redevelop Kaohsiung’s old dock district into a stylish cruise-ship passenger terminal surrounded by commercial shopping areas. Designer Jesse Reiser of New York-based RUR Architecture has come up with a unique design for this terminal that is expected to make it an architectural landmark contributing to Kaohsiung’s overall urban renewal. Construction is to begin next year and is scheduled for completion by 2015. Another element of the plan is to refocus the Port of Keelung primarily on the cruise-ship business, especially for Chinese tourists. There is no space to expand the port any further, and its water depth is insufficient to accommodate the new generation of very large container ships. While the nearby Port of Taipei takes over the role of Taiwan’s main northern harbor for commercial shipping, NT$6.3 billion in the new plan is to be used to develop a

Container operations at the Port of Taipei, which is taking over from Keelung as Taiwan's main northern harbor. photo : cna

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new cruise-ship terminal and surrounding business and cultural district in Keelung by 2017. The area will feature duty-free shopping and sightseeing boat tours. TIPC is holding an international competition to select a designer for the Keelung terminal, with the winner to be announced at the end of the year, Chang says. Currently Keelung receives some 430,000 international cruise passengers per year, mostly from China, accounting for the bulk of the 630,000 passengers visiting Taiwan by cruise ship. The government’s target is to increase the annual number of such arrivals to 1.3 million in five years. “As Keelung becomes more passenger-oriented, more shipping lines will move from there to the Port of Taipei” near the mouth of the Danshui River, says Deputy Minister Yeh. Already such shipping lines as Evergreen Marine, Yang Ming, and Wan Hai operate terminals in the new port on a buildoperate-transfer basis. The Port of Taipei, which officially opened in 2009 and is still undergoing additional construction, has recorded 30% growth in container volumes so far this year, handling around 1.1 million TEU in the first seven months. Although the Port of Taipei is well situated to serve companies based in Taiwan’s more prosperous north, Yeh stresses that Kaohsiung will always remain Taiwan’s major port.

Free trade zones Part of the government’s plan to boost cargo volumes is to promote the growth of the free trade zones located around five of the ports, notably the Port of Taipei and Port of Kaohsiung. If semi-finished products from China are turned into finished goods in these zones, enabling them to be labeled “Made in Taiwan” rather than “Made in China,” the selling price in Western consumer markets could be increased by 20%, Yeh says. He also notes that many Taiwanese-invested businesses in China, ranging from solar panels to furniture, are moving back to the island due to

Jesse Reiser's design for a new passenger-ship terminal in Kaohsiung, expected to become a city landmark. photo : MOTC

rising costs and less favorable investment conditions on the mainland. “We will encourage them to run their businesses in the free trade zones,” says Yeh. The target companies will tend not to be involved in high-tech, as those high-value and time-sensitive components usually rely on air transportation, but rather more conventional industries such as auto parts. The shipping industry has generally appreciated the creation of TIPC to replace the former harbor bureaus. “It’s definitely a good move and a good direction,” says C.K. Ong, president of U-Ming Marine Transport Corp., noting that the new company will face fewer bureaucratic restrictions than agencies within the government hierarchy. For example, it will be able to attract managerial talent unrestricted by hiring and salary regulations governing civil servants. “It should make the harbor operations more nimble and flexible, and hopefully bring more ships to use Taiwan as a hub,” says Ong. But other interviewees note that the change has come late in the game, at a time when international competition is fierce. C.J. Wang, chairman of Evergreen Marine, stresses that progress needs to be accelerated. “Taiwan is already running behind many other countries in Asia, not only in functionality, but also in capability in attracting more business

and investments,” he said in an email message to TOPICS. He expressed the hope that TIPC can make some rapid improvements in both infrastructure and the regulatory environment. Anthony Randell, managing director of Maersk Taiwan, notes that not much seems to have happened in the six months since TIPC was formed. “ Th e co mp a ny ha s n ot di sp l ay ed a clear strategy to revive its ailing volumes,” he says. “So far we don’t see any measures considered to be an opening up or more flexible compared with the former port organization.” He adds that TIPC needs to come up with a clear strategy to differentiate itself from other Asian ports if it wishes to attract new business. Another experienced shipping industry executive, who asked not to be named, said that aside from the new name, the creation of TIPC has not brought about much change in harbor management. Meanwhile, he noted, ports such as Korea’s Busan are aggressively offering far more flexible policies and attractive incentives to reward carriers that deliver more cargo volume. “It’s likely to take a couple of years for the civil service mentality [in TIPC] to go,” he concluded. “The change is good, but it may be too late because of the competition elsewhere in Asia.” taiwan business topics • september 2012

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Legislative Problems Remain Following the 2004 Reform Issues of efficiency, transparency, and integrity are still cited, as is the penchant for unseemly brawls to break out.

BY DEBBY WU

without reservation, h e n Ta i under the new system wanese it has become almost lawmakers impossible for the voted to cut the total DPP to win a legislanumber of legislative tive majority, experts seats in half on August s a y. A s t h e 2 0 0 4 23, 2004 – a historic reform has failed to moment in local polresolve many major itics – the move was issues of legislative generally expected to effectiveness, both help raise the quality political scientists of the Legislative and many lawmakers Yuan’s performance contend that further and relegate the body’s revisions are needed notorious reputation to improve the effifor brawling to the ciency, integrity, and past. FRACAS ON THE LEGISLATIVE FLOOR — Blue and green camp legislators go transparency of the The change took at it in July 2010 during deliberations over Taiwan’s signing of an Economic legislature. effect with the 7th legCooperation Framework Agreement with China. photo : cna Taiwan’s Legislaislature that came into t i v e Yu a n b e g a n t o office in 2008. Four gain international notoriety in the late of Taiwan’s parliament. years have passed since then, but most 1980s as opposition lawmakers often The public continues to distrust lawobservers of the legislative process say resorted to scuffles to highlight their makers, who regularly come in at the that little significant improvement has frustrations in trying to promote their bottom in opinion polls rating citizens’ occurred. Scuffles still frequently break agenda under the Kuomintang’s then confidence in various professions. out during tense legislative sessions, and authoritarian rule. In 2000, the DPP While not remedying old probwhen fists are not flying, lawmakers defeated the KMT in the presidential lems, the reduction in the number of often attack one another with crass election, in the first democratic transfer legislative seats has had a serious conseinsults. What’s more, the legislators are of power in Taiwan. The DPP victory, quence for Taiwan’s two-party politics. regarded as having been slack in their however, did not end the legislative Although the opposition Democratic lawmaking duties, and a major corrupchaos. Its lawmakers would still get Progressive Party supported the change tion scandal has again sullied the image 24

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physical when the KMT and its allies, who continued to have a majority in the legislature, repeatedly blocked government initiatives. Tired of the brawling and the poor example it provided to youngsters on how to resolve differences, the public put increasing pressure on politicians in the early 2000s to reform the quarrelsome Legislative Yuan. All parties across the political spectrum eventually caved to the demand. In 2004, the legislators passed a constitutional amendment to reduce the 225 legislative seats to 113 – a rare and perhaps unique case internationally of lawmakers voting to terminate their own jobs. The amendment also converted the previous multi-member districts into single-seat constituencies, with a number of seats reserved for allotment through a party-list proportional representation system, and it extended the legislative term from three years to four. In the new system, which was ratified by the now-defunct upper house National Assembly in 2005, voters get to cast two ballots in legislative elections: one for a district representative and another for the political party they favor. The parties then secure at-large seats according to the proportion of votes they receive. The revised method has so far been used for two elections: the one that chose the 7th legislature in 2008 and the election in January this year of the 8th legislature. During this period, the KMT defeated the DPP in the presidential election to return to power and at the same time maintain control of the legislature. The DPP took a serious beating in 2008, winning only 27 legislative seats out of 113, while its proindependence ally, the Taiwan Solidarity Union (TSU), did not win a single seat. The KMT’s ally in the “Pan-Blue Alliance,” the People First Party (PFP), gained only one seat. In 2012, the DPP recovered somewhat by taking 40 seats. The TSU and PFP returned to the national political arena with three seats each, giving them the right to form legislative caucuses. Scholars say the small parties’ return

better reflects the political diversity in Taiwan, but also adds more uncertainties to the legislative process. A major surprise brought by the new electoral mechanism has been the fall of some senior legislators. In 2011, for example, seven-term KMT lawmaker Chu Fong-chi lost the party primary to a township chief in her Taoyuan County constituency. Her fiveterm DPP colleague Lee Chun-yee was defeated by a local city councilor in the Tainan primary. As a result of this apparent threat from local insurgents, incumbent lawmakers now tend to spend more time in their districts serving their constituents, putting less focus on their lawmaking responsibilities in Taipei. DPP caucus whip Tsai Chi-chang, who lost his reelection bid in 2008 but made a successful comeback in 2012, says that “lawmakers are forced to spend more time in their constituencies in order to counter their competitors’ efforts, and consequently legislative efficiency and quality take a hit.” Political scientist Paul Chu of National Taiwan Normal University echoes Tsai’s comment. “Many voters care more about their representatives’ appearances in the district than in the legislature,” Chu says. “Lawmakers have come to shun their legislative duties because that’s what voters seem to want.”

Some welcome departures In one respect, the new electoral mechanism appears to have had a positive effect, speeding the exit from the scene of the more demagogic politicians who sought to win attention through extreme rhetoric and coarse language. “After the reform, the ‘three stooges’ are gone from the legislature because they could not win majority support in the single-seat districts,” says DPP strategist and ex-lawmaker Lin Cho-shui, referring to three former colleagues who got the nickname for their often clownish behavior and vulgar speech. Still, defamation of opponents continues to be a feature on the legislative floor. Even lawmakers who pride them-

selves on their good reputations may sometimes have a loose tongue, cursing at colleagues in front of the TV cameras. Shoving matches and fisticuffs are another fixture that has not died with the old voting system. Over the past four years, KMT and DPP lawmakers brawled over a number of major government initiatives, including the Economic Cooperation Framework Agreement between Taiwan and China, and an amendment to the Act Governing Food Sanitation to allow the import of U.S. beef containing ractopamine residue. The DPP’s Tsai says that his caucus, as the opposition minority in the legislature, will use any means possible to highlight its agenda. “As the minority, both civilized dialogues and physical conflicts are our weapons,” Tsai says. “We will decide on which approach to use depending on the issue at hand.” In another respect as well – the legislature's longstanding reputation for lack of efficiency, expertise, and transparency – the electoral reform has not brought much improvement. Lawmakers managed to pass a mere 15 bills in the current legislature’s first regular session, which ended in June, and another 15 in a two-day special session that followed. In comparison, the 7th legislature passed 80 bills per session on average, and in one session it enacted 113 new laws. Critics fault the lawmakers for often putting in little effort in reviewing bills and cultivating knowledge relevant to their committee affairs. Even committee co-chairs (known as conveners in the Taiwan system) are not necessarily senior legislators with long experience in their area of jurisdiction. Many legislators just concentrate on gaining membership, session after session, on the committees with the most opportunity for pork-barrel bills to aid their constituents. In Taiwan’s legislative process, either lawmakers and or the government can propose bills to the legislature. The legislature’s Procedure Committee then reviews the submitted bills and sends them for a first reading if they meet certain basic criteria. In the first reading, taiwan business topics • september 2012

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the titles of bills are read on the legislative floor. Next, a bill is usually assigned to a committee for public hearings and discussions, and after review and deliberation, the committee may send the bill to the full house for a second reading. (Alternatively, the lawmakers have the option of bypassing the committee process and deciding a bill should go directly to a second reading.) In the second reading, lawmakers will either approve a bill based on the committee’s recommendation, or vote on the bill article by article if there was no consensus in the committee review. After the second reading, a bill cannot be further revised substantially and will go to a third reading for lawmakers’ final approval or disapproval. It is also possible for committee members to ask their caucus whips to intervene before a second reading if they cannot agree on certain articles in a bill – or the caucus whips may take the initiative to intervene, raising a motion during the second reading that the bill first go through “inter-caucus negotiation.” Once the whips agree on the content of a bill during this negotiation, lawmakers will not be able to make further adjustments during the second reading.

The inter-caucus negotiation is the most disparaged and controversial element in Taiwan’s legislative process. Former KMT lawmaker and National Security Council Chairman Su Chi once called it “the darkest corner in a democracy.” The negotiation is a closeddoor meeting chaired by the legislative speaker and attended by caucus whips, government officials, and lawmakers familiar with the bill involved. While committee meetings and plenary sessions are broadcast live on the internet, an inter-caucus negotiation is not even open to press coverage. Only the negotiation conclusions are made public. The mechanism is designed to handle disputes surrounding a bill that committees fail to resolve. During the negotiation, caucus whips may dismiss conclusions already reached by committee members and produce their own version of a bill to be approved in the second reading. Shih Shin-min, president Citizen Congress Watch, says that while the inter-caucus negation mechanism aids legislative efficiency by resolving stalemates, it totally lacks transparency and undermines the power of legislative committees. Citizen Congress Watch is a non-governmental organization that regularly releases assessments of law-

SEEKING A CHANGED CABINET — Opposition lawmakers this month raised a “no-confidence” motion against the government of Premier Sean Chen, claiming mishandling of the economy. photo : cna

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makers’ performance. “We don’t like the mechanism because the meeting is conducted behind closed doors, and caucus whips may reach under-the-table deals,” Shih says. “The public cannot participate in the process, and they only get to see the conclusions.” Executive Director Lin Feng-jeng of the Judicial Reform Foundation adds that the mechanism reduces lawmakers’ willingness to attend legislative committees meetings “because they know it is more effective to work on caucus whips if they want to pass a bill.” Political scientist Hawang Shiowduan of Soochow University says that in an inter-caucus negation, “everyone wants to bargain for the best deal, but the attending lawmakers do not closely evaluate the impact a bill may have.” She adds that caucuses sometimes use non-controversial bills as bargaining chips to get more contentious bills passed. The return of the smaller parties, the TSU and PFP, to inter-caucus negotiations creates further complications. Legislative Speaker Wang Jin-pyng says it is not entirely reasonable that small caucuses should have the same rights as their bigger counterparts in such negotiations. “Small caucuses may threaten to use their veto rights in a negotiation to get their bills approved by the majority party. This has a negative impact on legislative efficiency,” Wang said in a written statement to TOPICS, citing the TSU’s attempt to delay the starting date of the spring legislative session to highlight its demand for a change in the electoral system. Besides maneuvers by the small parties, legislative inefficiency is often a result of the chronic heated standoff between the two major political camps, while lawmakers’ negligence and general voter disinterest in legislative performance further aggravate the problem. “Voters are not casting their ballots according to their representatives’ performance in the legislature, and that is why legislators are not interested in attending committee sessions and cultivating expertise,” says NTNU’s Chu. “Lawmakers only want to go to the committees with bills attracting the

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in government circles

most public attention, because that’s where they can get the most media exposure.”

Unsatisfactory quality When the legislature passed a relief bill in response to Typhoon Morakot in August 2009, there were blatant errors in the law, including an article that repeated the same text as appeared in a previous article. In amending the Act Governing Food Sanitation, lawmakers inadvertently changed “head bone” to “bone” in an article listing beef parts banned from import. The incorrect version was passed in a special session in July, and later rectified. According to experts on the legislative process, these irritating errors often occur because lawmakers try to rush through bills during the last few days of a session or in a special session, leaving little opportunity for legislative and government staff to discover even the most obvious mistakes. Besides wording issues, the public sometimes finds the content of a major bill to be disappointing. The legislature passed the Judges’ Act last year, for example, but many say the law ended up protecting rogue and incompetent judges instead of setting appropriate punishments for them. It even bars citizens from filing complaints against judges directly to the government, instructing them instead to channel the complaint through the private Judicial Reform Foundation. Taiwan’s leading weekly, Next Magazine, reported this past June that then Cabinet chief-of-staff Lin Yi-shih accepted US$1.93 million in cash from a local entrepreneur in 2010 when he was still a lawmaker. In return, he allegedly helped the businessman secure procurement contracts with a subsidiary of the government-owned China Steel Corp. According to the magazine, Lin further demanded NT$83 million (US$2.77 million) from the same man this year after he had assumed the Cabinet post. Lin soon resigned from his position amid a public roar. He has been under investigation and is now being held in a

MEETING WITH AMCHAM — Legislative Yuan Speaker Wang Jin-pyng recently received a Chamber delegation led by its Chairman, Bill Wiseman.

Taipei detention facility. The news refocused public attention on the integrity of politicians and especially lawmakers, an issue that has long roiled local politics. There have long been allegations that a culture exists among some Taiwanese lawmakers of taking money in exchange for help in securing contracts or amending laws, although few have been charged or jailed on these grounds. Observers cite the example of the late KMT lawmaker Liao Hwu-peng, nicknamed “Red Envelope Peng” for what was said to be his practice accepting financial rewards for his service. The high cost of running for office is considered a major reason why lawmakers may have their hands out. “An election, sometimes including vote buying, can cost a candidate tens of millions of dollars,” says Lin Feng-jeng of the Taiwan Judicial Reform Foundation. The problem could be solved in one of two ways, he adds: complete public funding of elections or regulations stipulating that political donations can only go to parties but not individuals. There is widespread agreement among many scholars and lawmakers that further reform is needed to significantly improve the legislative branch. Some mention that under the current electoral design, the unequal population size of the various constituencies means that not every vote has the same value in legislative elections. For example, the 9,000 people on the offshore islands of Matsu get to elect one representative, but on Taiwan proper, a single lawmaker on average represents about 300,000 people, notes the DPP’s Lin Cho-shui. Lin adds that because smaller

constituencies, including aboriginal districts, usually go to the KMT, the DPP is now significantly disadvantaged. He suggests adding more seats to the legislature to resolve the inequality issue, while Citizen Congress Watch’s Shih proposes that Taiwan consider adopting a complete party-list proportional representation system. Lin Cho-shui says that to normalize the legislative process, the legislature and caucuses should also encourage lawmakers to stay in the same committee as long as possible to develop relevant expertise, while gradually phasing out the inter-caucus negotiation mechanism. KMT caucus whip Wu Yusheng calls on all parties to help bestow more power on the legislative committes by allowing only senior members with proficiency in related issues to become conveners and wield significant influences on bills. Legislative Speaker Wang adds: “We should amend laws so that committees will need to review and discuss bills thoroughly by themselves and they will not be allowed to send an overly large number of disputed articles in a bill to an inter-caucus negotiation.” Another of Wu Yu-sheng's suggestions is to increase the budget for the legislature so that lawmakers will be able to hire more professional staff, a move that would help enhance legislative efficiency and quality. According to Citizen Congress Watch, most legislators currently employ only four or five staff members to assist with their legislative duties, although they may hire more personnel to provide constituent services from their district offices.

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T A I W A N b u s in e s s

Promoting Business through Trade Shows Taiwan is continuing to add exhibition space to meet growing demand. photo : cna

BY JOE SYDEWITZ

t’s early June, and buyers from around the globe are streaming through the Taipei World Trade Center’s Nangang Exhibition Hall to meet with ICT vendors during the five-day COMPUTEX Taipei trade show, which has gained distinction as one of the world’s largest information and communications technology fairs. Business cards are exchanged, specifications discussed, prices negotiated, and deals concluded as hands are shaken all around. At a busy aisle intersection, dozens of visitors stop to watch and photograph a group of beautiful girls in branded outfits performing a dance routine on a vendor’s private stage. Across the aisle, other girls wearing a competitor’s brand perform on a similar stage while flashbulbs flicker with Academy Awards redcarpet frequency. The dancers pause from time to time to offer small branded gifts to audience members. Meanwhile, in a large meeting room upstairs, foreign buyers meet with enthusiastic Taiwanese exhibitors looking to gain new business in procurement sessions that resemble a speed dating event. Businesspeople from around the world are seeking suppliers of quality ICT equipment like motherboards, tablets, and USBs, to name just a few. At the same time, the Taiwanese 28

suppliers are looking for opportunities to build relationships and access new markets around the globe. These meetings, and the activity on the show floor, will ultimately account for nearly a quarter of Taiwan’s annual ICT exports of approximately US$110 billion, according to the semi-official Taiwan External Trade Development Council (TAITRA). The lively Nangang exhibition hall scene is repeated numerous times during the year, only with different products and different participants. The venue, operated by TAITRA, is home to an average of 68 shows each year, including 13 that are recognized as international exhibitions. In 2011, those international shows attracted a total of 500,000 visitors from 170 countries; 6,300 exhibitors displayed their products, taking a total of 21,300 nine-square-meter booths. Besides COMPUTEX, another show that has become a must-attend event for international buyers in its industry is the Taipei CYCLE show held in March – the largest bicycle trade exhibition in Asia and one of the top three in the world. Nearly 25,000 visitors attended the 2012 edition of the show, including about 6,500 overseas buyers. The trade-show business has come a long way from 1976 when the coun-

try’s first such event, the Taiwan Export Clothing Exhibition, was staged at the Grand Hotel. At that time, the Taiwan economy was heavily focused on the production of textiles and garments for export markets. Over the years, the nature of the trade shows has evolved as Taiwan’s economy has developed. COMPUTEX, for example, made its debut in 1984 with 400 vender booths, and two years later it broadened its scope, internationalizing by including an American pavilion. Fast forward 26 years, and this year’s COMPUTEX was flush with 5,300 booths, 36,000 foreign visitors, and 100,000 local attendees. Besides those quantitative measures, the show has established itself as an important global platform for the introduction of new products. Global ICT giants Microsoft and Intel have both used this show over the years as a launching pad for some of their innovative products. Another leading Taipei-based exhibition, AMPA and AutoTronics Taipei for the auto parts and accessories (including automotive electronics) markets, set records this year, according to Conference & Exhibition Taiwan magazine. The four-day event attracted more than 45,000 visitors, including 6,027 foreign buyers from 126 countries. At a time when the trade show busi-

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T A I W A N b u s in e s s

ness is becoming increasing competitive, TAITRA is seeking to achieve quantity through quality, attracting more buyers to its events by offering them unbeatable service. As TAITRA Executive Vice President Walter Yeh puts it, “quality trade-show services are Taiwan’s competitive advantage.” As early as their hotel check-in for a show like COMPUTEX, attendees can use a smartphone app to obtain their entrance passes and pick up all the show information they will need, including the hall layout, calendar of events, shuttle-bus schedule, and so on. COMPUTEX is also applying radio frequency identification (RFID) and quick response (QR) code technology to buyers’ badges to make their show experience even more convenient. The RFID badges come with complimentary two-day MRT passes, as well as access to food coupons and free passes to hot spots around Taipei. The QR function enables visitors to update show information at any time through their smartphones or other internet-enabled devices. Yeh says TAITRA is “constantly innovating in order to provide state-of-the-art services that will keep us competitive on an international scale.”

Letting the MICE play In recent years, governments around the world have been paying increasing attention to the Meetings, Incentive Travel, Conventions & Exhibitions (MICE) industry because of its high potential and profitability. As a result, a growing number of colleges are offering training to students in the MICE field, and more companies are entering the industry. In Taipei, the Chihlee Institute of Technology is one of the schools that has created a dedicated MICE program. Says Chihlee’s Business Department Chairman, Mel Fan: “Our program emphasizes empirical learning whereby students gain valuable experience working at trade shows and exhibitions.” The training is designed to ensure that future trade show employees can carry out their duties with a confident and professional demeanor. In addi-

tions, programs like the one at Chihlee are conducted exclusively in English to give students the international communications skills the industry requires. Another aspect of raising the standards of Taiwan’s trade exhibitions involves sending personnel of professional organizations like TAITRA to the United States for management training from the International Association of Exhibitions and Events (IAEE) headquartered in Dallas, Texas. Graduates of the program receive a Certification in Exhibition Management (CEM), which is considered equivalent to earning a Master’s degree in exhibitions. Additionally, Yeh and other TAITRA managers regularly attend exhibition-related conferences with an eye toward learning new techniques and exchanging ideas. For example, on September 27 and 28 the Taiwan International Conference Center (TICC) hosts the 7th Asian MICE Forum (AMF), focusing this year on innovation, technology, service trends, and future opportunities. Some high-end hotels are also sending their managers on professional training missions to places like Singapore and Malaysia for more exposure to the MICE business. Shelly Lee, room sales director at the Westin Taipei, for example, will spend 10 days exploring MICE best practices at one

such training session next summer. “I look forward to exchanging ideas and learning new strategies in Singapore that will help us provide superior service and accommodation to business people during big shows like COMPUTEX, CYCLE, and AMPA, to name a few,” says Lee. While show organizers, training schools, and the business community shore up their service-oriented human resources, the government is also taking steps to make sure that sufficient exhibition space is available to meet demand. Taipei’s exhibitions currently are centered on buildings in two primary locations – downtown in the multicomplex Taiwan World Trade Center (TWTC) and a short drive east in the Nangang District. The TWTC, which opened in 1986, operates three exhibition halls, and also makes use of the neighboring Taipei International Convention Center (TICC), which began operations in 1989. The much larger Nangang Exhibition Hall opened in 2008. Together these facilities place Taiwan sixth in the region behind China, Japan, Hong Kong, Korea, and India in terms of amount of show space. In the coming years, Taiwan will be working to expand exhibition capacity. “Taiwan needs more halls and more space to continue realizing growth in show size,” says TAITRA’s Walter Yeh.

A scene from the 2011 COMPUTEX, which attracted some 36,000 international visitors over five days, showing the need for increased exhibition space. photo : cna

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T A I W A N b u s in e s s

As a result, construction has started on a second hall in Nangang, with completion set for 2015. With 150,000 square meters of floor space, the new hall will be able to accommodate 2,350 standard-sized booths. Planning for a third Nangang hall is also currently under way. Meanwhile, the Farglory Dome is under construction at the corner of ZhongXiao East and GuangFu South Roads, within walking distance from the TWTC. According to the Farglory Dome website, “upon completion in 2014, the Dome will be a ballpark that can be transformed into a 13,000 ping (43,000 square meters) exhibition hall able to accommodate 700 3m x 3m booths [equivalent to two TWTC exhibition halls] to be used for consumer or professional exhibitions.” In addition, new exhibition halls are under construction in Taichung, Tainan, and Kaohsiung cities. According to TAITRA, the Kaohsiung Exhibition and Convention Center is being built jointly by the Ministry of Economic Affairs and the Kaohsiung City Government, and is due to be completed by the end of 2013. As for new themes in the Taipei trade show lineup, exhibitions related to green technology are taking on

The Taiwanese-German design team shows off the architectural model for the second exhibition hall in Nankang, scheduled to open in 2015. photo : cna

greater prominence. In recent years, says Yeh, TAITRA has “targeted key emerging industries by launching a series of exhibitions on environmental protection and energy saving, in direct response to global trends” and the need for channels for small and medium enterprises (SMEs) to reach the market. Such shows have included the Taiwan International Lighting Show, Taiwan International Electric Vehicle Show, Taiwan International Green Industry Show, and Taiwan International Smart Green City Expo. A show for solar energy is likely to be added in the future, and the annual CYCLE show does its part for the environment through a continued emphasis on elec-

tric bicycles. Through the collective efforts of TAITRA, government offices, educators, and local business professionals, Ta i w a n ’s t r a d e s h o w i n d u s t r y i s blossoming into an internationally recognized exhibition player. With its commitment to providing innovative services, dedication to MICE education, and proactive infrastructure growth, Taiwan’s exhibition industry is determined to maintain and enhance its competitiveness. Trade show professionals look forward to many years of lively events chock full of successful meetings, relationship building, and of course lovely dancing girls promoting their brands.

The multipurpose Farglory Dome currently under construction can serve as a large-scale exhibition hall as well as a baseball stadium. photo : courtesy of far glory

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behind the news

Island of Typhoons and Earthquakes Taiwan’s meteorologists are kept busy tracking tropical storms and monitoring seismic activity.

photo : nasa

BY JANE RICKARDS

hen powerful, swirling typhoons slam into the island, most people take shelter in their homes. But meteorologist Wu Chun-chieh frequently hops into a 15-meter long jet and flies directly into the ravaging turbulence. A distinguished scientist and chairman of the National Taiwan University (NTU) Department of Atmospheric Sciences, Wu created a program called DOTSTAR (Dropwindsonde Observations for Typhoon Surveillance near the Taiwan region), the only aircraft surveillance of typhoons in the northwest Pacific, which helps Taiwan and peoples in the region better understand the impact of these potential weather disasters. Flying at an altitude of 42,000 to 43,000 feet (higher than the usual altitude of a passenger jet at 36,0000 feet but around 2,000 feet beneath the ceiling of safety for aircraft), Wu and other meteorologists involved drop over 10 cylindrical instrument packages called dropwindsondes into the wind. Armed with sensors, the devices measure temperature, humidity, and wind 32

velocity at different levels as they fall to the ocean's surface. Wu likens this to putting leaves in a river to determine the direction and rapidity of the water flow. The practice is necessary, Wu says, as other available technology is not sufficient for measuring the impact of a typhoon. Satellites detect atmospheric disturbances but cannot measure wind in much detail. Radar technology can sometimes help, but in Taiwan radar stations are ground-based and are unable to detect tropical typhoons as they move across the ocean. “So the only aggressive or progressive way to measure tropical cyclones is through airplanes,” Wu says. While the DOTSTAR Gulfstream 100 jet normally flies into the few hundred kilometer radii of typhoons, it avoids penetrating the storm’s deep and mysterious eye as that is too dangerous, although other more advanced jets can do so in the United States, Wu says. But nevertheless, DOTSTAR missions have sometimes been quite scary. In one incident in 2004, Wu recalls, the plane was flying in a heavy thunderstorm and was pelted with marble-like hailstones,

causing cracks in the plane’s windshield. In another incident, the plane was rocked by extreme turbulence for around an hour as the plane was forced to navigate through storm rain bands – weather events that passenger jets try to avoid at all costs. “There was no way we could get around them,” Wu says, adding that advances in technology have helped prevent any fatalities during aircraft reconnaissance of storms since the 1970s. DOTSTAR recently deployed its jet to monitor the August Typhoons Temblin and Bolaven. Owing to limited resources, Wu says, the plane targets only the most sensitive or critical areas in the storm for information gathering. The collected data is transmitted in near real time to Taiwan’s Central Weather Bureau (CWB) as well as to the United States’ National Centers for Environmental Prediction (NCEP) and the Japan Meteorological Agency, among others. When the data is assimilated into these agencies’ numerical models, it helps improve the accuracy of typhoon track forecasting by 10-30%, says Wu. D O T S TA R a l s o i n v o l v e s i n t e r-

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behind the news

national research with participants including other NTU scholars and the CWB, in partnership with American scientists at the NCEP and the Hurricane Research Division (HRD) of the National Oceanic and Atmospheric Administration (NOAA) under the U.S. Department of Commerce. Wu says that from the time he was studying for his doctorate in meteorology at the Massachusetts Institute of Technology in 1991, he was inspired by the HRD’s pioneering work in using aircraft and dropwindsondes to assess hurricane threats. In 2002, Wu proposed to Taiwan’s National Science Council that Taiwanese scientists collaborate with American counterparts in similar projects. In September 2003, the first DOTSTAR mission was undertaken to study Typhoon Dujuan. Currently, D O T S TA R i s m a i n l y m a n a g e d b y Taiwanese scientists, although collaboration with the United States continues. Wu says he hopes that Taiwan can purchase even more advanced aircraft for the program, such as C-130 jets that can penetrate the storm’s eye, to improve data collection. He also expresses interest in getting more Asian countries involved in collaborative research efforts. “What we are doing now not only benefits Taiwan, but also

Television anchors in Taiwan spend a lot of air time updating viewers on the course of typhoons.

photo : FTV

the forecasts of nearby areas, because typhoons hit other countries after moving out of Taiwan,” he notes.

Japanese antecedent The origins of weather forecasting in Taiwan can be traced back to 1898 during the Japanese colonial period, when the first weather bureau was

Left, Wu Chun-chieh, who flies above typhoons to measure their conditions. Right, a computer rendering of the structure of a typhoon. photos: left/CNA, right/NTU

created at the current site near the Presidential Office. Later, on the China mainland, the CWB was established by the Nationalist Government in 1941. When it was relocated to Taiwan in 1949, it took over the old Japanese site. Currently the bureau has an annual budget of around US$58 million and over 600 employees, 45% of them with postgraduate degrees. Three universities in Taiwan have atmospheric science departments where meteorologists are trained, while seismologists study at the earth sciences departments of National Taiwan Normal University and other schools. Many of the staff members, such as Cheng Ming-dean, director of the CWB’s weather forecast center, also received postgraduate training in the United States, and a few in Britain. Among the CWB’s divisions are a meteorological information center that carries out computer modeling for advanced weather forecasting, and a seismology center that focuses on detecting earth tremors and earthquakes. The bureau also operates 25 ground weather stations, four weather radar stations, and an astronomical observatory. It offers short-term forecasts for the current day and the following day, as well as a seven-day forecast. Forecasting in Taiwan is especially taiwan business topics • september 2012

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behind the news

Rescue operations (left and below) in the wake of severe Typhoon Morakot in 2009. photos: ap

challenging as there is limited coverage of weather behavior over the Western Pacific Ocean – and also because weather patterns can be affected in unpredictable ways when they hit the mountains that cover some two-thirds of the land area of the island. Cheng Ming-dean notes Taiwan’s geographical location between the vast Western Pacific and the Asian continent puts it directly in the path of tropical typhoons and causes it to be influenced by both tropical and more temperate mid-latitude weather systems. “This means the weather is more varied,” he says. “More varied is not necessarily more difficult to forecast, but with Taiwan we have to add topography and that makes things really complex.” An encounter with Taiwan's mountains can cause typhoons to unexpectedly change direction, even reversing course 180 degrees. Weather cannot be accurately predicted more than 10 days in advance, scientists say. Cheng notes that Taiwan’s weather is more predictable in winter than in summer because the storms hitting Taiwan are coming from the west, moving over the Asian continent where they are easier to track than the summer typhoons approaching over the sea from the east. Another characteristic of the Taiwan weather pattern is the Plum Rains front that remains stationary over the island in May and June, bringing heavy rainfall. In contrast, Cheng says, winter fronts pass over the island rela34

tively quickly. The CWB learned a lesson from 2 0 0 9 ’s Ty p h o o n M o r a k o t , w h i c h caused more than 600 deaths in Taiwan, that public communication can be as important as the accuracy of the forecasting, says Cheng. When the typhoon was approaching, the bureau made known that southern Taiwan would receive a high level of rainfall – as much as 800 millimeters. But many citizens did not realize just how severe that amount of precipitation could be, and failed to take enough precautions. Since then, the CWB has intensified the communication training given to its forecasters, emphasizing that it is not sufficient just to announce the scientific

details. Instead, the situation needs to be explained in terms that the average person can understand. “After Morakot, we changed a lot,” Cheng says, with help from the National Center for Disaster Reduction on how to better communicate with the public. Other meteorologists praise the CWB’s professional performance. Wu Chun-chieh says the CWB has a good rain-gauge network across the island and a well-equipped radar system. It also helps that all the major meteorological centers around the world share data, he notes. According to Wu, the margin of error for the forecast of the path of a typhoon one day before it strikes is close to 95 kilometers. “The CWB, Japan, and the U.S. are all in the same ballpark,” he says. “Because all this data and all the numerical outputs are shared, everyone has the same information.” Shaw C. Liu, director of Academia Sinica’s Research Center for Environmental Changes, says the CWB often averages out different predictions from

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behind the news

various international agencies, particularly those from Japan, the United States, and Europe, and as a result tends to be more accurate. Liu adds that the most difficult weather condition for meteorologists to predict is rain, as there are simply too many fastchanging variables in the atmosphere. In most countries, he says, forecasters cannot rely purely on numerical models for rainfall, as they might for predictions involving temperature, and often modify their computer-generated assessments based on personal experience. With typhoon assessments in particular, forecasters depend “pretty much on what happened with a previous typhoon that looks like the one coming in, Liu says. “It’s a semi-empirical type of forecast.”

Earthquakes are a common occurrence in Taiwan, but tremors severe enough to cause major damage are rather rare. photo : ap

Seismic stresses With regard to earthquakes, Taiwan is home to nearly 18,000 seismic events each year, as the island is located at the intersection of two tectonic plates, the Eurasian and Philippine Sea Plates. The CWB’s seismology center can detect earthquakes within 45 seconds of occurrence in the vicinity of the island, and information is released to the public within three to five minutes. The center is also linked to the Pacific Tsunami Early Warning Center in Hawaii. Seismology center director Kuo Kaiwen notes that the most dangerous fault line is the Chelungpu fault that runs 100 kilometers from Miaoli to the border of Tainan and Chiayi Counties. The massive September 1999 earthquake, which took more than 2,000 lives, occurred along this fault. While 75% of Taiwan’s earthquakes are centered in the sea to the east of the island seas, the western coast can be more disaster-prone as the epicenters tend to be shallower. Taipei is especially vulnerable to earthquakes as it is in a basin surrounded by mountains, Kuo adds, and in the past the capital city has frequently been affected by earthquakes centered in other areas. He points to an incident in 1986, when an earthquake located in Hualien caused a

market to collapse in the Taipei suburb on Chungho, killing 13 people. Another Hualien earthquake caused a crane to fall 46 floors during the construction of Taipei 101 in 2002, crushing parked cars but fortunately not injuring anyone. Kuo also notes that in the information age, earthquakes also wreak havoc by damaging undersea cables, disrupting communication, as the 2006 Hengchun earthquake did, severing telecommunications services in various parts of Asia. On the subject of global climate change, meteorologists say the effects are very much in evidence in Taiwan. Mark Cheng, director of the CWB’s research and development center, notes that rainfall is becoming more extreme, for example. The bureau’s data amassed over the past century shows that light rainfall in Taiwan is becoming lighter and heavy rainfall heavier. In addition, the number of days per year when the average temperature is 35 degrees Celsius or above is increasing, while the number of days with temperatures below 10 degrees Celsius is decreasing. “We are having heavier precipitation than before, but the total annual amount each year remains unchanged,” says Cheng Ming-dean. Heavier rainfall can cause more flash floods, mudslides,

and floods, experts say. Cheng says that the rising incidence of Dengue fever on the island may be another consequence of the climate change, as mosquitos thrive more easily in warmer winters. Temperatures in cities like Taipei are much warmer at night than in the past, but this is also due to the “urban heat island” effect, he notes, since cities use building materials that effectively retain heat and energy usage also results in waste heat. NTU’s Wu says numerical calculations have shown that if the whole atmosphere becomes hotter with climate change, the higher sea temperatures will increase the possibility of more intense storms in future. Even so, by 2100, the difference is “only in the order of a few meters per second stronger wind,” he says. The total number of storms could decrease, with fewer but stronger storms. But there is still high uncertainty about these findings, Wu adds, and no clear evidence that global warming is affecting the behavior of typhoons at present. Wu and other scientists also caution that although statistically the number of heavy rainstorms is increasing, there is not enough evidence to blame climate change for the severity of any individual storms. taiwan business topics • september 2012

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INDUSTRY

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Special Report on Environmental Protection

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Adjusting Taiwan’s International Ranking A previous dismal environmental report card was due largely to the impact of diplomatic isolation on data collection. BY TIMOTHY FERRY

IN THIS SURVEY

• Adjusting Taiwan’s International Ranking p38

• Recycling Now a Way of Life

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• Managing Hazardous Waste

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• Trying to Strike the Right Balance

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he 2012 Yale/Columbia Environmental Performance Index (EPI) has been released, and this year Taiwan scores a relatively high 29 out of the 135 nations surveyed, surpassing Canada (ranked 37), Australia (48) and the United States (49). This ranking reflects the strides Taiwan has made in terms of environmental policymaking and implementation. President Ma Yingjeou has put green policies on carbon reduction and renewable energy at the core of his administration’s agenda, and the Environmental Protection Administration (EPA) has been a vigorous watchdog for Taiwan’s environment. E PA M i n i s t e r S t e p h e n S h e n expresses satisfaction with the ranking on this year’s Index. “Taiwan’s performance was not excellent, but has been quite good,” he notes. Taking the island’s population density and high level of economic development into account, he adds, the improved ranking “reflects how hard both the Taiwan government and the general public have been working to protect our environment.” Less than a decade ago, a similar study – the Environmental Sustainability Index (ESI), created by the same partner institutions – shocked

Taiwan by ranking it second from the bottom of 147 nations, just above North Korea but below such environmental train-wrecks as Burkina Faso and war-torn Iraq. The two highly disparate results, only seven years apart, raise the question: Why did Taiwan rank so dismally in the 2005 ESI, and what explains its subsequent steep rise in the related 2012 EPI? To a large extent, the two varying results reflect differences between the ESI and the EPI in their missions and methods. “The ESI is a completely different animal than the EPI,” says Angel Hsu, a Yale scholar who is director of the EPI project for 2014. “You really can’t compare the two in terms of ranking and scores because they’re based on completely different things. You’re comparing apples and oranges.” Interviewed by telephone, Hsu said the ESI emerged from questions over how to implement the Millennium Goals – a series of eight development targets agreed upon by 193 United Nations members in 2000. While many of the goals dealt with public health and poverty, goal number 7 was “ensuring environmental sustainability.” The problem, explains Hsu, was the Millennium Goals “didn’t provide any clear def-

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Special Report on Environmental Protection inition for what exactly that meant or metrics for how to measure it.” In the case of the EPI, Yale’s Center for Environmental Law and Policy teamed up with Columbia University's Center for International Earth Science Information Network (CIESIN) and the World Economic Forum's Global Leaders for Tomorrow Environment Task Force to develop the necessary metrics to evaluate environmental sustainability. The Index, launched in 1999 under the leadership of Yale professor Daniel C. Esty, is defined by Yale as a “composite index tracking socio-economic, environmental, and institutional indicators that characterize and influence environmental sustainability at the national scale.” Hsu compares it to such indices as Gross Domestic Product and says the mission was to track “how well countries are really doing on sustainability.” The ESI, on the other hand, measured sustainability across five equally weighted components, including the “state of environmental systems,” “human vulnerability to environmental change,” and “social and institutional capacity to cope with environmental change.” Among the numerous challenges the project faced was the lack of clarity in defining several of the components. “Some of the ESI variables that you look at are a bit more abstract and a bit harder to wrap your head around,” Hsu says, citing the problems entailed in measuring a component like “human vulnerability to environmental change.” “What kind of data do you even look at?” she asks. She also describes other criteria, such as “social and institutional capacity to cope with environmental change” as “pretty subjective.” In addition, much of the data needed to carry out the study properly simply did not exist or was not universally recorded by all countries. As a result, the researchers were often forced to extrapolate data from figures such as GDP, land area, and population, rather than using actual measurements. For Taiwan, the issue of data availability was particularly acute. Diplomatic isolation affects Taiwan in many international contexts, from world health monitoring to trade pacts, and without membership in the U.N., Taiwan cannot report data to international bodies

such as the World Bank and the United Nations Framework Convention on Climate Control (UNFCCC). But it was just these international bodies that the project turned to for help with their data gathering. Yale’s Angel Hsu says that the small academic staff conducting such a project would be unable to assure the quality of the data if collected from each individual nation. Rather, it has to “rely on all these big multilateral organizations to go through their own quality control procedures and set their own guidelines for reporting data.” As Taiwan has been deprived of a channel for reporting its data on air and water quality, public health, and biodiversity, the embarrassing 2005 ESI ranking “did not reflect the real condition of Taiwan’s environment at that time,” says EPA researcher Yang Yu-ling, who worked closely with the EPI team on Taiwan’s data. She notes that in the aftermath of the release of the study, the EPA and related ministries studied the report and found that out of a total of 76 indicators spread across five categories, “the data on Taiwan were incorrect in 27 indicators, while the data for 33 indicators were not available or unable to be confirmed.” In meetings with the ESI team, Taiwan’s EPA found that the main reasons for the horrible ranking were “a lack of data, or when the data was available in the international databanks, it was outdated.” In the cases of missing data, Taiwan’s EPA notes that “the ESI team simply took the average data on Central or

Eastern European nations and applied it to Taiwan, such as children with malnutrition, indoor solid fuel burning, water supply, and appropriate sanitation system.” But as economic development in Eastern Europe and Taiwan has been very different, these numbers rarely reflected real conditions. “There was a big gap between the data shown in the 2005 ESI report and the reality,” notes the EPA’s Yang.

Revamping the system Taiwan was not the only country to feel unfairly treated by the ESI. Upon reflection, the ESI team decided to revamp the index away from simply descriptive indicators towards measures of environmental policy performance. “We decided to just look at indicators and variables for which government could be directly responsible and for which government actions could be directly tied,” says Hsu. “It’s more looking at policy performance. How well are environmental policies being implemented and how well are governments performing on those particular, clearly identified policy targets?” The EPI replaces the ESI’s five components with two broad categories: “Environmental Health” and “Ecosystem Vitality.” The Environmental Health category encompasses the effects of air and water pollution on human health, as well as the environmental burden of disease. Under Ecosystem Vitality are such considerations as agriculture, biodiversity and

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habitat, climate change, fisheries, forests, and water resources. In the 2012 EPI, Taiwan scored admirably in the Environmental Health category. Out of a top score of 100, Taiwan received 95 overall in the category, with scores of 100 in both air and water effects on human health. This pattern is fairly normal, notes Hsu, who says that nations typically prioritize issues related to public health because these “have a direct impact on their citizens.” Although Taiwan is on target for most categories included within Environmental Health, the Ecosystem Vitality area is more problematic. Overall, Taiwan scored only 48.2 in this category. Taiwan’s mountainous interior – some 60% of the island’s total landmass – is almost entirely undeveloped, a fact reflected in Taiwan’s forests scoring a full 100 and “biodiversity and habitat” a relatively high 72.7. But Taiwan’s agricultural sector scores a low 36.8, fisheries a dreary 26.3, and its highly exploited water resources a 33. More alarmingly, Taiwan got a low 23.7 for climate change. Approximately 50% of Taiwan’s power generation comes from coal, and despite being a significant manufacturer of solar cells, Taiwan has negligible renewable energy installations domestically. And although energy intensity and carbon emissions have declined recently, Taiwan still has some of the highest per capita carbon emissions in Asia – over 11 metric tons annually.

Clearly, Taiwan still has work to do in certain areas, but its relatively satisfactory overall ranking on the EPI reflects the results of significant efforts to improve its environmental protection. Perhaps even more important in Taiwan’s moving up in the rankings, though, has been Taiwan’s success in engaging with the EPI project to share data that is both accurate and comparable to what was obtained on other countries. In fact, just getting into the index is an achievement; the 2010 EPI excluded Taiwan on the grounds of insufficient environmental data on the island from international sources. Angel Hsu says that the researchers recognized that the 2010 exclusion was an “oversight” because “Taiwan is an important country” from an environmental perspective. Now, in a break with protocol, the EPI researchers go directly to Taiwan’s ministries for data, without relying on global bodies as intermediaries. This decision reflects a considerable degree of trust in the accuracy of Taiwan’s measurements. Taiwan “strives to remain consistent with global standards because they definitely want to be seen as on the same level as these other countries,” observes Hsu. “The problem is we have no way of verifying” the data, aside from asking international experts to review it. EPA Minister Shen says that Taiwan takes the EPI exercise quite seriously since “environmental indicators play a critical role in Taiwan’s environmental policymaking.” He notes that the

government has established a cross-ministry platform called the “International R a n k i n g I m p r o v e m e n t Ta s k f o r c e ” to target indicators from the EPI and other global surveys that “show need of improvement.” The “relevant competent authorities are requested to find the causes of poor performance and to formulate policies and measures accordingly,” he says. The progress is evaluated and summarized for the premier and president every six months. Shen credits previous incarnations of the EPI as having been instrumental in causing Taiwan to “raise fuel quality standards to reduce sulfur dioxide emissions and in the formulation and implementation of the National Energy Saving and Carbon Reduction Action Plans.” He also notes that the passage of the Renewable Energy Development Act in 2009, along with the EPA’s recent targeting of six greenhouse gases, particularly CO2, shows that Taiwan is willing to shoulder its global responsibilities towards climate change mitigation. As for the 2005 ESI rank that so alarmed Taiwan’s environmentalists, those figures ultimately are likely to be dismissed as anomalies. In the newly introduced pilot “Trend EPI” that analyzes how countries have performed since 2000, Taiwan scores a more reasonable 58.2 and ranks number 34. The protection of the environment is getting better, it seems – and in fact may never have been as bad as it once appeared.

Recycling Now a Way of Life The volume of trash disposal has declined sharply and new businesses have emerged since the program was introduced. BY AUDREY YUNG

Mayor Hau Lung-bin inspects new uniforms — made with fibers from recycled PET bottles – for sanitation workers in Taipei City’s Da-An district. photo : cna

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s an island country with limited resources, Taiwan has made recycling a key element of its waste management system. Its experience has been lauded internationally and seen as a model for other countries. The current recycling system was established by the Environmental Protection Administration (EPA) in 1998 as part of a revision of the 1974 Waste Disposal Act. Called the Recycling “Fourin-One” plan, it called for efforts by local communities, recycling enterprises, and municipal garbage-collection departments to be backed by a new Recycling Fund Management Board (RFMB). With the EPA minister as the chairman and members coming from academia, government agencies, industry associations, civic organizations, and consumer and environmental groups, the RFMB has operated under the principle of extended producer responsibility (EPR). Under that concept, manufacturers take responsibility for the environmental effects their products may create throughout their life cycles. Accordingly, producers of recyclable products pay a fee to the RFMB, which then uses the money to subsidize recycling enterprises. There are currently 13 categories of recyclable waste subsidized by the government, with 33 specific items listed under each category. The Four-in-One program has been considered as largely successful. “Now everyone knows that you must separate your trash into three categories: general trash, recyclables, and kitchen scraps,” says Ma Nien-Ho, the RFMB executive director. “Everyone automatically separates out the recyclables.” Ma notes that the volume of trash has markedly declined. “In 1997, each person generated 1.14 kilograms of trash every day on the average, but by 2011 that amount had decreased to 0.427 kilograms. The differential represents resources that can be utilized.” The proportion of waste that is recycled has now reached 39.85%, compared with 5.8% when the program first began. Including kitchen scraps and furniture, the recycling rate increases to 50%. There is still room for improvement, however. “Different types of enterprise

have different government agencies overseeing their waste management,” says Tsai Shen-Ting, associate professor of law at National Taipei University. “The supervision is not always adequate and could result in loopholes.” In Tsai’s opinion, the current Fourin-One regulations are not clear enough. Citing junk cars as an example, he says the recycling committee did not take the sales cycle into account when considering product life, which is further complicated by year-to-year fluctuation. “If the volume of recycled cars is less than the number of cars sold, it will depress the recycling fee, enabling some recycling businesses to make a significant profit from the increased raw material cost after subsidy,” he says. The speed of technological advancement must also be considered. “There are so many new materials and new technologies being introduced, and recycling policy and strategy has to take these developments into account to deal with resource recycling effectively,” says Su Ming-Chien, associate professor of environmental policy at National Dong Hwa University. “For example, the ‘Management Regulation for Restriction or Prohibition of the Import and Export of Renewable Sources’ was announced in 2003. But now it’s 2012. After nine years, the definition may no longer be suitable. The government’s first priority should be to ensure that these definitions match current conditions.” Despite the existence of certain loopholes, the EPA and RFMB are striving to make the system as airtight as possible. “Of course, businesspeople would like to pay less,” Ma says. But producers are required to report production and import volumes, auditors examine the records, and municipal-level environmental protection officers visit factories with inventory lists to check on the accuracy of the reporting. Closed-circuit TV systems also monitor the operations around the clock, with agents sent in to check for breaks in the videos. If a producer appears to be dodging the recycling fee, the RFMB first issues a reminder, followed by a sterner official notice if there is no response. But if

the company still does not pay, it will be brought to court. In future, Ma says, a regulation may be imposed barring those owing more than NT$20 million (about US$667,000) from leaving the country. “Over the 13 to 14 years since this program has been initiated, the RFMB has been owed NT$4.69 billion in outstanding fees and we’ve managed to collect NT$3.5 billion,” says Ma. “So we’re still missing NT$1.1 billion. But that’s actually very little compared with the total of more than NT$90 billion we’ve taken in.”

Removing impurities Ma adds that many recycling businesses decline to accept the government subsidy because of the strict monitoring and high standards involved. “We have specific standards that the businesses must meet – specific amounts of impurities that must be gotten rid of. Some of these impurities are considered toxic and we require an appropriate degree of purification before recycling.” Light bulbs, for example, are a recyclable item. But fluorescent light bulbs contain mercury, which can be dangerous to humans and the environment when stored improperly or if leakage occurs. The EPA therefore requires that 80% of the mercury in a light bulb be removed before the other materials can go to market. Likewise, batteries cannot be imported, sold, or recycled if they contain more than five parts per million of mercury. Businesses may also be asked to use non-polluting materials, such as PVC, in their products. A bottle originally priced at NT$1 will double in cost if its bottle cap and label are made using PVC. The quick pace of technological advancement will spur demand for ever purer recycled materials, Ma says. The recycling impetus has also spawned new businesses. An example is the RePET® yarns and fabrics developed by Libolon Enterprise Inc., a subsidiary of the Lealea Group and its affiliated Li Peng Enterprise. Derived from recycled PET bottles, RePET® reduces energy consumption by 52.6% and carbon

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emissions by 54.6% compared with production processes for conventional materials, says Libolon president Jonathan W.J. Lin. The company website notes that these products “are free of petrochemicals, conserve natural resources, and reduce the environmental burden while still offering high-quality textile solutions.” Libolon also takes in used clothing at its retail stores, which it uses to make wood plastic composite (WPC). The WPC then becomes a raw material for flooring or furniture. The non-profit Da Ai Technology Co., an offshoot of the Tzu Chi Foundation, one of Taiwan’s most prominent Buddhist organizations, organizes the production of textile products from recycled PET bottles. The bottles are collected by Tzu Chi’s numerous volunteers, who years ago were the first group in Taiwan to create recycling centers. Currently they also recycle such other items as glass bottles, tin cans, aluminum cans, paper, light bulbs, batteries, clothing, computers, refrigerators, and scrap metal. “Going from PET bottles to the final product involves a lot of processes, and each step requires a manufacturer, so you have to have good communication,” says Walter Huang, the Dai Ai chairman. “Volunteers have to sort bottles by color, clean them, and separate the caps and labels from the bottles. When you go to the recycling station, you have to remind them to make the bottles as clean as possible so that there are no impurities. It then goes to packaging and then to the treatment plant. The treatment plants clean their machines once a week, on Sundays. We ask them to handle our production on Monday, when the machines are cleanest.” Because of impurities in the bottles, Da Ai at first was only able to make 30 kilograms of good-quality fabric out of every 100 kilograms of PET. Now the amount has increased to 80 kilograms. “The quality of our clothing has to match the quality of virgin material,” says Huang. “It’s not possible to be better, but you have to match it so the consumers will accept the product. And because the cost of production is high, the quality has to be high as well.” Much of the output is being exported to the United States,

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which waives import duties on products made from recycled materials. As a further commitment to environmental protection, Da Ai also refrains on principle from dyeing any of its products. “We don’t use a lot of chemicals, so our products don’t look as beautiful or colorful, but this is still something we insist on,” says Huang. Comparing a 1.1-kilogram Da Ai fleece blanket with a 0.3-kilogram T-shirt, Huang says production of the T-shirt uses four times as much water and generates 15 times the amount of pollution.

Room for privatization? The emergence of more recyclingrelated businesses has spurred discussion of whether the entire recycling process could be privatized. “I would prefer to have recycling privatized,” says Daigee Shaw of Academica Sinica’s Institute of Economics, arguing that it would reduce the amount of over-reporting on the recycling side and under-reporting on the producer side. He notes the existence in Taiwan, especially in rural areas, of many unregistered firms that pay no fees. “They will print the recycling mark on their bottles, and with that mark, the recycling collectors can ask the recycling fund to pay for those bottles. No one has paid a fee, but the government has to buy.” Shaw suggests shifting to a model akin to that of the Netherlands. “All the producers of, say, PET bottles get together to form a recycling cooperative. The most capable firm, the one with the biggest market share, organizes this firm, and all the others have to join the co-op, which is managed as a business. The largest firm, with the management responsibility, has the biggest interest in making the co-op profitable, so they will check whether any firms are cheating by paying less than their share, and they will check all the recyclers.” He adds that when officials sit on the committee that sets the recycling fee, it is awkward for the government to be in the middle between the producers and recyclers during fee negotiation. “Why not let them negotiate with each other? The government would tell producers to take responsibility, and producers would ask the recyclers how much they needed.

And if the rate was too expensive, they could find another company. That’s competitive business.” Su of National Dong Hwa University recalls that 10 years ago private recycling companies were hired by the government to help collect and treat waste in Taichung. The operation was found to be rather efficient and the company was making money, prompting the national EPA to consider asking private companies to do waste management for the government. In the end, that was not done, and Su believes it would not have been the best option for all areas. “There would be no profit in rural areas, where there is less population and not a lot of materials to recycle,” she points out. “That means the government would have to pay the private companies more money to serve those areas. Each area needs a different recycling plan based on its own characteristics.” In the opinion of RFMB’s Ma, “If the people can do it well, then they should be allowed to do it. But that doesn’t mean the government shouldn’t supervise the operation. Pollution prevention can be expensive, so if you don’t have any regulations in place, the job might not be done well. So ideally recycling should be a private operation but with strict governmental supervision.” At present, Ma adds, products not within the government-mandated 13 categories can be recycled privately. The reason certain products are under government jurisdiction is because they are not biodegradable and because no one is really interested in recycling them. If a successful private recycling business model exists for a product – for instance, paper and iron – the government does not need to interfere. Collection for lubricating oil stopped early this year for that very reason. “Businessmen could get a profit,” says Ma. “By the end, we had a 98% recycling rate for the oil, so we removed it as one of the recycling categories.” “The reason why recycling in Taiwan is such a big business and is so effective is because the first EPA administrator thought that recycling was the first priority,” says Academia Sinica’s Shaw. “It entails a change of behavior – of everyone’s behavior. You change the behavior, you change the attitude.” In today’s Taiwan, it is already a way of life.

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Managing Hazardous Waste Better laws and enforcement have helped; so have new technologies by enabling the extraction of valuable resources.

BY TIMOTHY FERRY

nly 20 years ago, experts in the field recall, hazardous waste management in Taiwan was spotty and riddled with organized crime. Slag from steel mills and sludge from electroplating plants were buried in farmlands or dumped in waterways. Over the years, the Environmental Protection Administration (EPA) has been forced to remove contaminants and otherwise remediate 1,769 affected farms, while another 631 sites await treatment. By the late 1990s, rapid industrialization had led to the creation of massive amounts of waste – 9 million metric tons of municipal and 14 million metric tons of industrial waste annually on average, according to Chih C. Chao, chair of the waste management division of the U.S.-based Air and Waste Management Association and an adjunct professor at National Cheng Kung University. Of that 14 million metric tons of industrial waste, roughly 10% is considered to have been hazardous. Taiwan’s small geographical size also meant there were few places to put it, leading to one of the most intensive pollution loadings in the world. Hazardous waste disposal was “very bad at the time,” notes Chao, who was a consultant to the Taiwan government as it sought to reduce the dangers of hazardous waste in the late 1980s. Now, however, the picture looks very different. At the crossroads where good environmental policy and good business intersect, Taiwan has followed many developed nations in turning industrial and hazardous waste into valuable resources that are eagerly sought by manufacturers around the world. This trend has led not only to a sharp reduction in

the generation of hazardous waste but also to attractive profits for recyclers. “In the old times, 20 years ago, old computers were often illegally disposed of by burning them in fields late at night, releasing deadly dioxins into the atmosphere,” recalls Chao. “Now e-waste recycling makes so much money, people are trading it. It’s all about money now.” Taiwan currently recycles 80% of what would normally be considered hazardous waste. Precious metals are being extracted from electroplating sludge, while steel waste is an ingredient in everything from sophisticated chemicals to paving materials. Advances in material usage have also contributed to reducing the rate of waste production, but industrial growth has kept overall volumes relatively stable. As defined by the 1989 Basel Convention on the Control of Transboundary Movements of Hazardous Waste and their Disposal, hazardous waste is any waste that is flammable, corrosive, reactive, and/or toxic. While hazardous waste is most often associated with heavy industries, medical waste and waste from dry cleaning and construction often falls under the designation as well. In Taiwan, however, industry is the main generator. The chemical, oil refining, electroplating, and steel industries all produce very dangerous wastes. Managing this waste has been a multifaceted effort on the part of both government and private enterprise. Relevant laws have been upgraded to enable the issue to be dealt with in a more comprehensive manner. The Waste Disposal Act, first enacted in 1974 and revised

several times since then, now includes provisions to strictly monitor the disposal of hazardous wastes. Augmenting this law is the Toxic Chemical Control Act, which more specifically addresses toxic chemicals. In addition, the EPA says that its Illegal Dumping Management System, updated at the end of 2011, includes GPS monitors on waste-collection vehicles to permit tracking every mile of the way and ensuring that no stops are made at unsanctioned disposal sites. Closed-circuit television monitoring and satellite remote sensing are also employed to ensure that the waste goes from the place of production to the disposal site. EPA inspectors’ authority has been clarified as well, all “adding to the tight net of controls and monitoring systems that prevent incidents of illegal dumping,” the EPA notes. Regulations governing industrial investment have also been strengthened to deter projects that are potentially polluting. “Most industries that produce hazardous waste don’t want to build factories in Taiwan because environmental protection laws are very strict,” observes Hu Ching-yao, assistant professor at Taipei Medical University’s School of Public Health, a specialist in water pollution. “For the environment, it’s a good thing,” he notes, although admitting that it might not be so good for Taiwan’s many unemployed and underemployed workers. But equally significant to reducing hazardous waste is the reconceptualization of what constitutes waste and what is actually a valuable resource. Noting that nothing is truly “waste,” Chao says use of the term only means “we haven’t yet found the proper place to use it, or

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the proper technology to add value.” Gradually the emphasis has shifted from “waste management” to “materials management,” Chao observes, as recognition of the high value of the materials present in the waste has increased and as technology has reached the point where the materials can be extracted economically. “Before, we didn’t recycle because the technology wasn’t that advanced,” says Chao. “But now, everything is possible. We have to convert waste into usable material.”

Following the 4 Rs Taiwan follows the “4-R” principle for waste management – reduce, reuse, recycle, and recover. The first step is for manufacturers to figure out how to simply generate less waste. Advances in process and materials management now allow manufacturers to turn out more product using fewer materials, creating less by-product. But since eliminating by-product entirely is not feasible, the next step is to consider re-utilizing the by-product in the manufacturing cycle, such as returning iron extracted from steelmaking waste back into the steelmaking process. If that option also is not feasible, then the waste can be given to recyclers to extract and sell whatever usable and valuable materials they can. Any waste that still remains must be either incinerated or deposited in landfills. The 4-R principle leads to waste reduction because “the cost increases at each step,” says Chao. The cheapest option for manufacturers is simply to generate less, while actual disposal can be costly. The steel industry illustrates how technology and viable business models have allowed manufacturers to turn waste into entirely new and profitable product lines. Despite its lack of domestic natural resources, Taiwan is the world’s 12th largest steelmaker, producing 22.7 million metric tons in 2011, according to the World Steel Association. The industry is dominated by government-invested China Steel Corp. in Kaohsiung. Traditionally, steelmaking has been a dirty industry. Every metric ton of steel manufactured also results in 360 kilograms of waste, consisting of heavy-metal

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laden sludge and slag, as well as toxic gases and liquids. Without treatment, these materials present grave threats to the environment and human health. But this waste now serves as the raw materials for an array of different industries. Slag – the rock debris left over after the metal has been liquefied and drained from the blast furnaces – is the most common byproduct. While not in itself hazardous, slag volumes mount quickly and require massive landfills for adequate storage. Now, though, the slag is used as aggregates in cement making, easing the burden on landfills. It also reduces the cement industry’s carbon footprint by eliminating the need for quarrying of natural aggregates. China Steel has put recycling at the heart of its business model, with subsidiaries using waste to make everything from specialized chemicals to materials related to renewable energy and high-tech electronics. China Steel Chemicals, one of those subsidiaries, extracts valuable chemicals such as naphthalene, creosote oil, and benzene from coal tar residue. According to its website, China Steel is also developing “delicate graphite products” and “active carbons” necessary for new energy products such as lithium-ion batteries. Fly ash is another byproduct from steelmaking, at the rate of 20 kilograms per metric ton. It contains high levels of a number of hazardous and some nonhazardous materials, but now all these materials – including lead, cadmium, chromium, and iron and zinc oxides – can be extracted and sold to manufacturers. Even blast-furnace gas and dust are sent to a gas-cleaning plant where dust and fumes are removed from the gas. The gas is then used as a fuel to power the plant, and the dust is reused in the steelmaking process.

The electroplating challenge The U.S. firm WRC Pacific provides an example of successful recycling in another highly polluting industry, electroplating, which is the process of coating an object through an electrochemical reaction with chromium, silver, or another metal. The objects to be coated are dipped in vats of metals dissolved in solvents that are then electrified. The resulting waste is a potent cocktail of heavy metals and

organic and inorganic solvents. Dealing with this waste allows WRC Pacific to make money at both ends of the equation. First, the company charges customers to remove the waste from their plants and bring it to their treatment site in Kaohsiung’s Environmental Science and Technology Park. They then refine the metal-bearing sludge into metal concentrates. These concentrates are sought after by more advanced recyclers around the world to be converted into valuable metal products. The key to WRC Pacific’s success in the market is its comprehensive database, says Chih C. Chao. Electroplating is a batch industry in which the specific electroplating process might be customized for each customer. The waste is thus specific and requires intensive analysis to determine its constituents. The WRC Pacific database enables it to more accurately analyze the sludge and then mix materials from different batches according to customers’ demands. The company’s products are globally sought after and leave no waste. While China Steel and WRC Pacific provide examples of effective waste and materials management, the problem of hazardous waste has not been entirely eliminated. The best laws are only as good as their enforcement; monitoring users and prosecuting violators, particularly in the electroplating industry, remains a challenge. Unlike the steel industry, electroplating is dominated by SMEs and is usually done in small-scale batches with a lot of customization. EPA Minister Stephen Shen also notes that electroplating involves fairly low technology. Taiwan’s high-tech industry offers a ready supply of orders, but the small scale of the electroplating operations means less money to invest in sophisticated waste-treating technology. Rather than pay recyclers to treat the waste, electroplaters may be tempted to forego, or at least reduce, the expense by seeking alternative means of disposal. Monitoring and enforcing wastemanagement regulations on an array of players is also a headache for EPA inspectors. Electroplating plants, especially those in Taoyuan County and New Taipei City, often operate only when orders are received, allowing them to

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shut their doors when they get wind of a pending inspection. Although a number of underground electroplating shops still operate in Taiwan outside the law, Chao says their role is diminishing due to the public disapproval they encounter. Organized crime also taints the market. Some electroplating operations are reputed to be mafia-owned, which compounds the problem facing inspectors. Professor Hu of Taipei Medical University says that both the electroplating and recycling industries would benefit from more centralization. Noting the cost and difficulties in treating wastewater, he proposes clustering electroplaters into their own technology park with an onsite waste treatment plant. He also expresses

hope that one day a big player will challenge the influence of organized crime, consolidating operations into a dominant company with the resources to invest in technology and produce better quality recycled products for the market. Chao says that although mafia involvement in waste is an “open secret,” the situation has been improving, in part due to government oversight but more importantly because the growing sophistication of the technology leaves no room for the old style of doing business. Another new wrinkle stems from appreciation that while waste has been reduced, it can never be completely eliminated. To close the “gap in the loop” in the disposal process, says EPA Minister Shen, Taiwan is considering disposing

of solid treated waste on landfills on man-made islands, drawing on existing examples in Japan. Shen says the tactic will “expand the coast without damaging the existing coast.” Candidates for these landfills would have to be waste that has already been neutralized through recycling and treatment. While recycling helps to solve prickly environmental issues, it is also in the long-term interests of manufacturers. There may be only decades remaining, for example, before reserves in some of the most commonly sought metals, such as copper, run out. “Resources are very limited in the earth,” says Chao. “We should not keep digging. We should reuse whatever we have that’s existing in the system already.”

Trying to Strike the Right Balance Ecological factors now receive greater weight in government decisions regarding economic development projects. BY TIMOTHY FERRY

n April 2011, President Ma Yingjeou made the surprise announcement that the government would not support the proposed development of a large-scale petrochemical complex in Changhua County in central Taiwan that been long in the planning. K u o k u a n g P e t r o c h e m i c a l Te c h nology Co., a consortium led by state-run o i l c o m p a n y C P C Ta i w a n C o r p . , intended to build a US$24.1 billion refinery and naptha-cracking complex on 4,200-hectare site just north of the mouth of the Zhuoshui River. Kuokuang promised that the project would add thousands of jobs and help stimulate the economy of central Taiwan. Nevertheless, Ma withdrew his backing for the complex, essentially killing the project.

Originally the project was slated to be built in Yunlin County, but local opposition blocked the use of that site, and instead the government proposed the Changhua location. At the same time, the plans for the project were scaled down substantially. Nevertheless, local residents, backed by environmentalist NGOs, continued to resist the development, saying it would increase CO 2 emissions, water pollution, and risks to human health. A total of 70,000 signatures were collected on a petition opposing the plant, and hundreds of local residents and scholars turned out for protest demonstrations against Kuokuang. Since Taiwan’s petrochemical manufacturers had made a strong case for the importance of the Kuokuang complex to

EPA head Stephen Shen says creation of the new Ministry of Environment and Natural Resources should help improve coordination. photo : epa

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INDUSTRY

CUS

Hillside excavation in Miaoli spurred protests that it would cause soil erosion, endangering nearby communities. photo : cna

the future growth of what had long been a key industry on the island, the outcome has been widely interpreted as a sign that environmental protection is now given greater weight in government decision-making. Bruno Walther, who teaches environmental science and ecological medicine at Taipei Medical University’s School of Public Health, attributes the change to the pressure that democratic politics puts on elected officials to be responsive to the demands of constituents. “I was very astonished when they stopped that project,” Walther says, since he fully expected the government to make a decision that was business friendly. Apparently Taiwan officials “realized that maybe some projects are not feasible in Taiwan anymore unless you want to risk alienating the people,” he concludes. The Changhua case is seen as a watershed in Taiwan’s emerging ecological consciousness. It is striking for the clarity of positions: the economic gains for central Taiwan would have been significant, but so were the ecological risks. The development was also said by environmentalists to threaten wetlands crucial to the survival of Taiwan’s Chinese white dolphins, a rare subspecies endemic to the region, and carbon emissions and pollut-

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ants were cited as contributing to global warming and rates of cancer. Lee Pei-fan, professor of zoology at National Taiwan University and one of the experts often called upon by the government to participate in Environmental Impact Assessments for big development projects, contrasts the current climate with previous attitudes. In the past, “conservation issues or ecological issues or biodiversity issues were not emphasized by the government,” he observes. “But the situation has changed. Now the government wants to make Taiwan ‘green,’ reserve some protected areas, and protect species.” Taiwan’s limited land resources make the issue of environmental protection even more pressing. With a population of over 23 million people crammed onto slightly less than 36,000 square kilometers, Taiwan has 642 persons per square kilometer, making it one of the most densely populated places in the world. Also, as over 60% of the island consists of steep mountains prone to landslides from earthquakes and typhoons, development is thus limited to the western plains. Further compounding the environmental stresses, Taiwan is a highly industrialized nation with a nominal GDP of US$460.8

billion, ranked 20th largest in the world, according to the CIA Factbook. Taiwan actually fares relatively well in international rankings for biodiversity protection. The 2012 Yale/Columbia Environmental Performance Index gave Taiwan a score of 100 (perfect) for forestry and 76 for biodiversity. According to Taiwan’s Forestry Bureau, over 19% of Taiwan’s total land mass is under some sort of conservation protection, including 8.64% of the land protected in Taiwan’s eight national parks (compared to only 2.7% protected in U.S. national parks). But while Taiwan’s mountains are protected, the lowlands are not, even though they are vital to many wildlife species that are ill-adapted for the scarce resources and harsh conditions of the high mountains. Walther notes that societies are generally only willing to offer protection to lands that are inaccessible, have poor soils, or are otherwise less desirable for human habitation. “Taiwan is a perfect example,” he says, citing the fact that “some lowland species are teetering on the brink of extinction.” Most of Taiwan’s 500 bird species and 79 mammal species fare better at lower elevations, and some, including the fairy pitta (also called the “eight colored bird”) and the armored Chinese pangolin, are endangered. And with advances in technology and evolving zoning regulations, development in many areas is creeping up the mountains. Realtor Frank Fan says that new engineering techniques have opened the way for more buildings to be constructed on hillsides, as have re-zoning regulations allowing such construction as long it is “geologically safe and the slope degree under 30%.” This change has led to substantial new developments in Taipei’s hillside suburbs. Fan says that Xindian, Muzha and Tienmu are among the hottest markets for real estate in Taiwan, and even a casual drive in these areas reveals significant new buildings being constructed on slopelands.

Impact on biodiversity What this means for Taiwan’s biodiversity remains an open question. In a paper on bird species richness in Taiwan,

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Special Report on Environmental Protection

NTU’s Lee cautions that “the necessity of conserving native species in intensively developed lowlands (of Taiwan) cannot be overemphasized.” But how to conserve native species on limited land resources? “Obviously we cannot establish large protected areas on the lowlands,” Walther observes. The solution he envisions is multifunctional landscapes that combine ecological benefits with human needs. “Why can’t we have buildings that are like little ecosystems – buildings that produce energy, buildings that clean their own water?” he asks. In a paper on biodiversity in Taiwan, NTU’s Lee takes a similar approach. “Conservation,” he writes, “including preservation and restoration, should be incorporated into urban planning to alleviate impacts of intensive human disturbances on species.” Unfortunately, this objective is not easy to accomplish. Development that has already occurred often serves to isolate the lowlands from the highlands, preventing wildlife from reestablishing populations in more urban areas as happens in much of the developed world. In North America and Europe, wildlife populations have rebounded so successfully that even large predators are

The colorful fairy pitta is an example of a species endangered by encroaching development. photo : tourism bureau

almost common in big cities. Eastern coyotes have been captured in New York’s Central Park, while a mountain lion had to be destroyed after wandering into a garage recently in Santa Monica, California. Development in Taiwan has often “destroyed the connections between the highlands and the lowlands,” says Lee. A case in point is the wildlife populations in Yangmingshan National Park. Lee says that the cleanup of the Damshui River corridor seemed like a great opportunity to reestablish contact between the animals of Yangmingshan and the mountains south of Taipei City. That did not happen, however, as the urbanized area in between became an impenetrable barrier to wildlife flow. Another obstacle is the lack of good data with which to make decisions. Walther says that Taiwanese scientists do a lot of good research, but their research results “don't always filter down to government.” The prevailing culture among conservation researchers in Taiwan can also be a difficulty. “The problem is people have their data but they keep it in their office,” NTU’s Lee says. “They don’t make it generally available. Researchers in conservation don’t want to share their data.” This lack of hard information hampers scientists and businesses as they navigate the torturous terrain of the Environmental Impact Assessment system. EIAs have been streamlined under the Ma administration and are now considered to offer greater balance, taking both ecological and developmental factors into consideration, but getting that balance right requires good data. Lee recalls being involved in an EIA project in rural Miaoli County, an area where the professor had himself done research without observing any rare species. Unknown to him, however, other researchers had discovered the presence of the leopard cat – a small feline common in Asia but rare in Taiwan – which effectively quashed the development. He says that a big part of the problem is the unclear mission of many branches of the government. Wildlife management now falls under the jurisdiction of the Forestry Bureau, part of the

Council of Agriculture. Lee argues that the bureau has insufficient awareness of data gathering and the importance of making that data available on a database. They are good at coding the database, he says, “but not so good with content.” The Forestry Bureau will soon have a chance to clarify its mission. Later this year, the Ministry of Environment and Natural Resources will come into existence as part of the Executive Yuan’s government reorganization scheme. This new ministry will merge the current Environmental Protection Administration (EPA) with an array of agencies, bureaus, and departments, all dealing with environment and natural resources but currently scattered across a number of different ministries. Everything from weather forecasting to water resources to the national park system to sewage systems will come under the purview of the new ministry. “They are very much interrelated, but they are currently dispersed into different ministries, so it hard to coordinate efforts,” says EPA Minister Stephen Shen. He uses river management as an example. Issues related to rivers might involve the COA’s Forestry Bureau, the Soil and Water Conservation Bureau (also COA), the Water Resources Administration (Ministry of Economic Affairs), and local and county governments, in addition to the EPA. Under the current system, lines of authority are blurred and inter-ministry coordination is difficult. Will the new ministry be more effective in balancing the needs of development and conservation? EPA Minister Shen cautions that “it will take a lot of effort to manage the whole ministry.” He notes that many of the agencies that will be merged with the EPA have long histories and very different cultures. “You will have to convince a lot of people to interface,” he says. “There was a lack of coordination in the past, but now we want cooperation.” He says he wants the entire new ministry to take on the “righteousness” of the EPA in all of its concerns, but admits that will be a big challenge. “It’s a good trial,” he says. “Whether it will be better or a mess, we won’t know until it happens.”

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s e e i n g ta i w a n

2012 Taipei International Travel Fair photos: courtesy of taipei i nternational t ravel fair

n the 26 years since it was first held, the Taipei International Travel Fair has emerged as Asia's largest and most important travel-related trade show, as well as Taiwan's most popular tourism festival for consumers. The 20th edition of the ITF, as the event is known in the tourism and hospitality industries, will be held October 26-29. Online promotions will begin on October 12 and continue until the fair’s final day. As in previous years, crowds of avid travelers searching for information, inspiration, and superb deals on accommodation and tour packages will descend on the Taipei World Trade Center beside Taipei 101 in the capital's modern and bustling Xinyi District. The ITF has gone from success to success, the number of visitors to the festival climbing from 172,280 in 2006 to a record 251,231 last year. The tally for 2011 was 14.6% higher than the previous year, exceeding the organizers' expectations. According to the

fair's website (www.taipeiitf.org.tw), the 2011 event was the subject of more than 2,500 reports in local and overseas media and enjoyed TV coverage equal to 1,000 hours. Every aspect of Taiwan's tourism industry has surged ahead in recent years. Now that mainland Chinese are able to visit the island both as members of tour groups and as free and independent travelers (FITs), they have been coming in great numbers, lifting the tally of international arrivals to a record 6,087,484 in 2011, 9.34% higher than 2010. Taiwan's year-on-year growth is especially impressive by world stan-

dards. Last year, according to the United Nations’ World Tourism Organization, total international tourist arrivals around the globe grew by just 4.4%. Because outbound travel from Taiwan also continues to grow – reaching 9,583,873 trips in 2011 – several countries and territories see the ITF as a promotion opportunity they cannot afford to miss. Japan, South Korea, Malaysia, Hong Kong, Macau, and the United States are among the destinations that make sure to have a high profile at the event. Responding to unprecedented demand for exhibition space, the 2011 fair was the biggest ever, with 850 companies and organizations filling a total of 1,500 booths. Sixty-one countries and territories were represented. The 2012 ITF will be at least as large – and for participating businesses likely even more lucrative – than last year’s fair. During the four days of the 2011 event, sales totaling NT$1.59 billion

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s e e i n g ta i w a n (US$53 million) were achieved – some 14% more than in 2010. Exhibitors fall into multiple categories: Airlines, travel agencies, museums, spa resorts and leisure farms, theme parks, cruise lines, local and national government tourism bodies, industry associations, plus publishers of travel magazines and books. Participating businesses can join seminars in which they can explain their products in detail to consumers, as well as take part in a pre-fair travel mart bringing together domestic and international buyers. Taiwanese exhibitors include almost every city and county government. Those parts of the ROC where tourism is especially important to the local economy – such as the stunningly scenic eastern counties of Hualien and Taitung – try to catch visitors’ eyes with multiple booths. Government participation is not limited to local and national tourism bureaus. The Council of Agriculture, which o v e r s e e s Ta i w a n ' s pristine (and much praised by birdwatchers) national forest recreation areas, is a regular exhibitor. Exhibitors also take part in a pre-fair press conference (normally attended by 200 or more members of the media) and a welcome banquet laid on by the Taiwan Tourism Bureau. Both, it goes without saying, are excellent networking opportunities. Each day of the fair features several stage performances, with singers, musicians, and other entertainers from around the world showcasing their countries' characteristic cultures and national spirit. The full schedule will not be confirmed until closer to open-

ing day, but foreign visitors can be sure that several of the performances will highlight Taiwan's ethnic diversity. Previous editions of the fair have featured Maori dancers from New Zealand, traditional folk dancers from Brunei and India, Mongolian singers, Austrian classical musicians, and Chamorro dancers from Guam. The Cross-Strait Taipei Travel Fair, an annual event since its founding in 2006, will be held simultaneously with the ITF and at the same venue. The 2012 version of this “fair within a fair” will have 255 stalls divided into seven zones, plus its own stage shows. Last year’s performers included song-and-dance troupes from such areas of China as Yunnan, Guizhou, and Xinjiang, and a team that demonstrated Shaolin kungfu.

Those who come in the hope of snagging great travel deals will find that research done ahead of time into the strengths and specialties of particular exhibitors can really pay dividends. On one score, however, bargain-hunters can relax. Because all exhibitors must meet a strict set of conditions, visitors to the fair can be sure that every single business represented here, even those sub-leasing space from larger enterprises, has met all of the Tourism Bureau's licensing and insurance requirements. Lucky draws are an added attraction. Like last year's ITF, the 2012 fair will be held in Hall 1 and Hall 3 of the Taipei World Trade Center. Hall 1 will be the general tourism zone, while Hall 3 will be given over to hotels and resorts. As in recent years, the 2012 ITF will run from a Friday to the following

Monday. There will be an opening ceremony at 10 a.m. on October 26, and on that day members of the public will be admitted from noon until 6 p.m. On October 27 and 28, the fair will run from 10 a.m. to 6 p.m. On October 29, the final day, it will operate from 10 a.m. to 7 p.m. Ticket prices will be the same as last year: NT$200 for adults and NT$150 for senior citizens, handicapped visitors, and children less than 150-centimeters tall. Children shorter than 120 centimeters will not be admitted, nor will pets. On October 26, between 10 a.m. and 6 p.m., visitors can enjoy free entry if they leave two of their business cards, show some form of photo identification, and fall into one of the following categories: Employees of government tourism departments, airlines or transportation units; travel agents; owners or managers of hotels, homestays and theme parks; or members of the Taiwan Visitors Association. For more information, including details of nearby accommodation options and free shuttle buses to the venue, visit the fair's website, the website of Taiwan's Tourism Bureau (www.taiwan.net.tw ), or contact the Taiwan Visitors Association, the notfor-profit organization running the event, at +886-2-2597-9691.

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Another AmCham Taipei Milestone

he ballroom of the elegant Okura Prestige, Taipei’s latest five-star hotel, was the venue for AmCham Taipei’s 61st anniversary party on September 12. In congratulatory remarks delivered to the 100 Chamber members and guests in attendance, Acting Director Brent Christensen of the American Institute in Taiwan said “it is clear that both Taipei and Washington appreciate engaging with AmCham and value AmCham’s contributions to moving our bilateral economic relationship forward.” “AmCham has been a valued partner for AIT for as long as our institution has been in existence, and it has also been a leader in its policy focus,” Christensen continued. “The most recent White Paper continues that tradition with many excellent recommendations for reform and opening in Taiwan’s economy.” Enlivening the evening was a selection of cocktails made with ultra-premium tequila from Patron. The soft drinks sponsor was Swire Coca-Cola.

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