April 2015 Taiwan Business TOPICS by AmCham Taipei

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Taiwan Taiwan Business Business

Topics Topics

3&5)*/,*/( 3&5)*/,*/( *..*(3"5*0/ 10-*$: *..*(3"5*0/ 10-*$: 移民政策省思移民政策省思 t *OEVTUSZ 'PDVT PO 5SBOTQPSUBUJPO t *OEVTUSZ 'PDVT PO 5SBOTQPSUBUJPO t $PSQPSBUF (PWFSOBODF t $PSQPSBUF (PWFSOBODF t 1VCMJD )FBMUI 'PSVN t 1VCMJD )FBMUI 'PSVN April 2015 April | Vol. 2015 45 | | Vol. Issue 454 | Issue 4

NT$150

Published by the Published by the American Chamber American Of Commerce Chamber Of Commerce In Taipei In Taipei

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ISSUE SPONSOR ISSUE SPONSO

GLOBAL IMMIGRATION SERVICES LTD.

投而不移快投慢移放眼全球╳國際置產╳永久居留╳迅速公民 GLOBAL VIEW‧PROPERTY ACQUISITION‧PERMANENT RESIDENCY‧CITIZENSHIP

迅速公民／快速護照

永久居留

▼

▼ 美國EB5

馬爾他

USA

‧無年齡、商業背景、學經歷或語言能力的要求 ‧無移民監的困擾，持有綠卡期間，可自由進出美國，也有在美國工作的自由 ‧一人投資，全家移民。持綠卡五年後，符合資格可選擇歸化成為美國公民，擁有美國護照

英國

‧經濟穩定、醫療免費、稅率低 ‧無移民監要求，自由進出歐盟國家居住或工作 ‧護照可免簽163個國家；2013年護照排名第9名 ‧公民可以享受免費醫療，子女可以享受免費的教育；同時進入法國、德國、瑞士與荷蘭等國家讀大學將享受學費減免待遇

聖基茨與尼維斯

‧允許雙重公民身份 ‧無經營或管理經驗要求 ‧子女享受免費高等教育 ‧全家人一起申請移民簽證 ‧居留五年，5年後拿到永久綠卡 ‧英國護照全世界通行，可在歐盟成員國工作及生活

葡萄牙

MALTA

‧1984年設立，歷史悠久的迅速公民項目安全、終身有效、無語言、居住要求、犯罪率低 ‧免簽證前往120多個國家 ‧允許雙（或多重）重國籍、無全球稅

安提瓜與巴布達

PORTUGAL

‧1年住7天、6年歸化公民 ‧可全家一起申請，包括子女和配偶 ‧享受歐洲共同體醫療，教育等共同福利 ‧條件寬鬆，不需要證明資金來源，資金要求靈活，無須凍結

ANTIGUA AND BARBUDA

‧為大英國協成員國、民主國家、政治穩定 ‧允許雙重國籍、無遺產稅、資本利得不課稅 ‧政府立案，合法移民、快速批准、家人可隨同申請 ‧護照可免簽131個國家

全球移民顧問股份有限公司台北市復興北路99號4樓之2

(近捷運南京復興站)

02.2717.7373 WWW.GISASIA.ORG

ST. KITTS AND NEVIS

註冊登記證第C0203號中移廣字第103081010號

CONTENTS NEWS AND VIEWS a p r il 2 0 1 5

vO lumE 4 5, N umbEr 4 一○四年四月號

Publisher

發行人

Andrea Wu

吳王小珍

Editor-in-Chief

沙蕩

Associate Editor

副主編

Tim Ferry

法緹姆

Art Director/ Production Coordinator

6 Editorial

Beyond TIFA: Looking to the TPP

By Timothy Ferry

14 Issues

The Aerotropolis Plan Gets Adjustments; Commenting on Cosmetics Regulation; A Labeling Nightmare

美術主任 / 後製統籌

Katia Chen

陳國梅

Manager, Publications Sales & Marketing 廣告行銷經理

Caroline Lee

跨越TIFA：展望TPP

10 Taiwan Briefs

總編輯

Don Shapiro

李佳紋

Translation

航空城計畫，調整再出發；對化品衛生管理條例修正草案的評論；食品標示噩夢一場 By Don Shapiro

翻譯

Jay Chen, Yichun Chen, Agnes Chiu, Charlize Hung

COVER SECTION

陳正杰, 陳宜君, 邱意豪, 洪兆怡

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 2015 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○四年四月中華郵政北台字第5000號執照登記為雜誌交寄 ISSN 1818-1961

Chairman/ Thomas Fann Vice Chairmen/ Scott Meikle / Dan Silver Treasurer: Cosmas Lu Secretary: Fupei Wang 2014-2015 Governors: William E. Bryson Jr., Sean Chao, Rodney Van Dooren, Cosmas Lu, Scott Meikle, Dan Silver, Gordon Stewart, Ken Wu. 2015-2016 Governors: Margaret Driscoll, Thomas Fann, Ajit Nayak, Vincent Shih, Stephen Tan, Fupei Wang, Lee Wood. 2015 Supervisors: Arthur Cozad, Kai Speth, Neal Stovicek, Wern-Yuen Tan, Neil Waters. COMMITTEES: Agro-Chemical/ Melody Wang; Asset Management/ Christine Jih, Derek Yung; Banking/ Victor Kuan; Capital Markets/ Miranda Liaw, C.P. Liu, Shirley Tsai; Chemical Manufacturers/ Michael Wong; CSR/ Lume Liao, Fupei Wang; Customs & International Trade/ Stephen Tan; Education & Training/ Robert Lin, William Zyzo; Greater China Business/ Helen Chou, Cosmas Lu; Human Resources/ Richard Lin, Seraphim Mar, Vickie Chen; Infrastructure/ L.C. Chen, Paul Lee; Insurance/ Arthur Cozad, Joseph Day, Dan Ting; Intellectual Property & Licensing/ Jason Chen, Peter Dernbach, Jeffrey Harris, Vincent Shih; Marketing & Distribution/ Wei Hsiang, Gordon Stewart; Medical Devices/ Cyndi Chang, TseMau Ng, Dan Silver; Pharmaceutical/ Margaret E. Driscoll, David Lin, Jun Hong Park; Private Equity/ William Bryson; Public Health/ Jeffrey Chen, Dennis Lin; Real Estate/ Tony Chao; Retail/ Prudence Jang, Ajit Nayak, Wern-Yuen Tan; Sustainable Development/ Kenny Jeng, Kernel Wang; Tax/ Stella Lai/ Cheli Liaw, Josephine Peng; Technology/ Revital Golan, Scott Meikle, Jeanne Wang; Telecommunications & Media/ Thomas Ee, Joanne Tsai, Ken Wu; Transportation/ Michael Chu; Travel & Tourism/ Anita Chen, Pauline Leung, Achim v. Hake.

taiwan business topics • april 2015

19 Rethinking Immigration Policy

移民政策省思 As the composition of the Taiwan population rapidly ages, the size of the labor force will soon start shrinking substantially each year. Given that demographic challenge, the government is looking at promoting immigration as a means of maintaining economic growth and vitality. A Talent Recruitment Policy Committee has been established under the Executive Yuan to explore ways to attract both white-collar professionals and specialized blue-color skilled workers from other countries. By Timothy Ferry

26 From Studies to Work and Residence

Taiwan is making an effort to attract more

TAIWAN BUSINESS

31 You Say Relocation, I Say Mobility

The relocation services industry oils the wheels of an increasingly globalized and migratory world and has had to transform itself as times have changed.

By Jules Quartly

BACKGROUNDER

34 Fighting the Good Fight

The Taiwan Stock Exchange Corp. is taking steps to improve board

international students – and hopes that growing numbers of them will stay on to join the workforce after graduation.

27 Foreign Brides: Don’t Call Them Imports 28 Two Who Changed Citizenship governance among listed companies. By Christopher Bates

AMCHAM EVENTS

40 Public Health Workshop on Infection Prevention and Safety

COv Er SpONSOr

a p ril 2015 • Volume 45 n umbe r 4

iNDuSTrY

CuS

aDVancinG tHrouGH tecHnoloGY

A Report on the Transportation Sector Keeping moving

44 High Speed Rail in Financial Crisis Time is running out for a solution to avert bankruptcy and total takeover by the government. By Timothy Ferry

46 Controversy over Songshan Airport

Audi, one of the world’s leading manufacturers of premium cars, is noted for its striking design, innovative technologies, and high-quality

The recent plane crash in the Keelung River has renewed calls for closing the airport earlier than the planned target of 2030.

vehicles. The company’s values are expressed in the brand statement “Vor-

By Jens Kastner

sprung durch Technik” or “Advance through Technology,” which underlies Audi’s commitment to offering sporty, innovative, and

48 Taiwan Embraces No-Frills Air Travel

sophisticated vehicles. The statement also embodies Audi’s pledge to satisfy the high expectations of its customers in every respect.

By Philip Liu

51 Taiwan’s eTag System Gains Acceptance

Audi Taiwan, the 12th sales subsidiary of AUDI AG globally, commenced operations in March 2009. Since then, Audi has been one of

By Philip Liu

the fastest growing automotive brands in Taiwan. In 2015, Audi Taiwan intends to continue its impressive growth by accelerating the introduc-

52 Big “Bikes” Remain a Niche Market

tion of new models, such as the new Audi TT Coupé, so that consumers in Taiwan can experience Audi’s technological advances first-hand.

Taiwan has opened to large-displacement American “cruiser” motorcycles, though many obstacles remain.

At the same time, Audi Taiwan is also bolstering its maintenance and customer-service capabilities. Customers’ enthusiasm for Audi’s prod-

By Sean Scanlan

ucts and services are bringing Audi recognition as the new benchmark in Taiwan’s premium market.

taiwan business topics • april 2015

Beyond TIFA: Looking to the TPP

mCham Taipei had expected that by the time this April issue of Taiwan Business TOPICS was published, the 2015 TIFA Council meeting under the U.S.-Taiwan Trade and Investment Framework Agreement (TIFA) would already have been conducted. The 2013 round of those bilateral trade negotiations was held in March that year in Taipei, and the 2014 session in early April in Washington. But so far no date has been set for the 2015 round, due to be held in Taipei again. Although in principle the TIFA talks should take place annually, they did not occur at all between 2007 and 2013 because of U.S. displeasure over what it regarded as Taiwan’s unreasonable restrictions on the import of American beef. The delay in scheduling the 2015 talks has inevitably aroused speculation that the reason again is U.S. irritation over agricultural trade matters – this time centering on pork (though not all beef issues have been resolved). AmCham hopes that such speculation is unfounded. As the previous five-and-a-half year hiatus in TIFA Council meetings made clear, refraining from sitting down at the negotiating table is counter-productive. Further, it is flagrantly unfair to all other sectors of U.S. business if their issues are not pursued because of a dispute over a single commodity. While the speculation reflects the continued seriousness of the impasse over barriers to the entry of U.S. meat products, the official (and plausible) explanation for this year’s delay in the TIFA process is the current heavy workload at the Office of the U.S. Trade Representative (USTR), the relatively thin-staffed agency that handles U.S. trade negotiations. If that workload is a sign that all-out efforts are currently underway to finalize the first round of the comprehensive trade pact known as the Trans-Pacific Partnership (TPP) being negotiated between the United States and 11

other countries, it may actually be good news for Taiwan. Although Taiwan is not a party to that first round, the Ma administration and both major political parties clearly realize that this international trade-dependent economy cannot afford to be excluded for long from such an important regional trade bloc as the TPP. The solution is for this country to participate in a second round of negotiations when it takes place to enlarge the TPP’s scope, but the content of a second round will not be considered until the first one is concluded. With that eventuality now apparently drawing closer, it is incumbent on the Taiwan government – both the executive and legislative branches – to demonstrate convincingly to the global trading community that Taiwan deserves inclusion in the TPP. It is not sufficient that Taiwan is among the world’s top 20 trading nations. Rather, this country needs to show concrete progress on last year’s promise to revise laws and regulations in Taiwan that are out of step with international standards and practices. Further, Taiwan must deal forthrightly with any outstanding trade issues with the existing 12 TPP negotiating parties, since each one of those countries will in effect have veto power over entrants into the second round. Some observers worry that China will also have veto power, albeit behind the scenes, on Taiwan’s TPP participation. But while Beijing may be able to privately pressure others to refrain from entering into bilateral free trade agreements with Taiwan, the TPP – which in principle is open to any APEC member – should be a different story. As long as Taiwan can deliver not only trade volume but a firm commitment to trade liberalization and regulatory accountability, it will be hard for anyone to publicly deny its qualifications for TPP membership.

跨越TIFA：展望TPP

台

北美國商會期盼，台美雙邊貿易與投資協定架構

協定，也就是美國與其他11國間正在談判的跨太平洋夥伴協

之下的2015年台美雙邊「貿易暨投資架構協定」

定（TPP）的話，對台灣來說，實際上可能是個好消息。

（TIFA）會議，會在新聞月刊Taiwan Business

雖然台灣並非第一輪談判代表方，馬政府和兩大政黨皆

TOPICS四月號發行時舉行。2013年的雙邊貿易談判於當年

明白，像台灣這種國際貿易依賴型經濟，禁不起長期被排除

三月在台北召開；2014年會議則於四月初在華盛頓舉行。但

在如TPP這等重要的區域貿易圈之外。解決之道是台灣應在

2015年會議的日期，截至目前為止仍未決定，今年將再度在

TPP第二輪談判擴大範圍舉辦時加入。然而在第一輪談判未

台北舉行。

有結果前，更遑論第二輪談判。

雖然台美貿易暨投資架構協定談判原則上應每年舉行，然

隨著上述情況日益接近，台灣政府行政和立法兩大機關，

而2007年到2013年間卻未舉行，原因是美國不滿於台灣對美

有責任向全球貿易圈展現台灣應被納入跨太平洋夥伴協定的

牛肉進口的不合理限制。因此，2015年談判的延宕，難免引

理由。光以台灣是世界排名前20大貿易國這點是不夠的，更

發聯想，臆測是農業貿易議題再度惹惱美國，只是這次主角

需要的是，台灣須以去年承諾修訂的那些與國際標準慣例背

是豬肉（雖然牛肉議題仍未全盤獲得解決）。

離的法律法規，已獲得具體進展來證明。再者，既然TPP談

台北美國商會當然希望此類臆測毫無根據。一如先前停擺

判國任一代表皆具備實質否決權，能否決欲加入第二輪談判

了五年半的台美TIFA會議所指，拒絕談判只會適得其反。況

的國家，台灣更應立即處理與目前TPP的12個談判國間，任

且，若只為單一商品爭議，就影響其他議題進展，對美國其

何懸而未決的貿易問題。

他部門的商業發展更是極度不公平。

儘管身處幕後，部分觀察家也擔心中國握有否決台灣加入

正當臆測反映出美國肉品進口障礙僵局的持續嚴重性，官

TPP的一票。不過，北京雖有可能私底下對他國施壓，不讓

方（似有其事的）解釋今年台美T I F A會議舉辦進度之所以

台灣簽署任何雙邊自由貿易協定，但TPP原則上開放所有亞

延宕，是因為美國貿易代表辦公室（USTR）當前工作量繁

太經濟合作會議成員參與，因此不應等同視之。只要台灣持

重，且負責美國貿易談判的單位人力相對不足之故。若這繁

續實現貿易量，且善盡貿易自由化與監管責任，任何國家都

重的工作量，恰巧說明該單位正傾全力完成第一輪全面貿易

很難公開否認台灣具備TPP成員的資格。

taiwan business topics • april 2015

— by TI M O TH y f erry —

econoMic indicaToRs

MACROECONOMIC Unit: US$ billion

stabLe bUt nOt DYnaMiC Economist John Anderson observed at a recent AmCham luncheon that Taiwan's economy in recent years has been a rather lackluster performer compared with regional peers, but on the other hand has avoided many of the financial problems besetting its neighbors, such as unsustainable credit booms and sharp currency depreciations. Anderson noted that Taiwan delivers solid if unremarkable economic performance year in and year out. The latest statistics seem to bear him out on both counts. Ta i w a n ’s F e b r u a r y n u m b e r s o n a monthly or yearly comparison are skewed due to the annual Chinese New Year, which this year occurred from February 18 to 23, resulting in two fewer working days in Febru ary compared to last year. A look at the combined figures for January and February still results in rather diminished numbers, however. Total trade fell 2.3% in New Taiwan dollar (NT$) terms, but dropped 6.9% in US dollar terms, reflecting a strengthened US dollar. The NT dollar value against the

Taiwan sTock exchange PeRFoRMance

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

9750

135

9500

120

9250

105

9000

8750

8500

8250

8000

7750

7500

data source: twse

February unit: nt$ billion

taiwan business topics • april 2015

Current Account Balance (Q4 2014)p Foreign Trade Balance (Jan.-Feb.) New Export Orders (Jan.) Foreign Exchange Reserves (end Feb.)

Year Earlier 19.18

16.33

9.36

4.53

39.04

36.1

417.83

417.98

Unemployment (Jan.)

3.71%

4.02%

Discount Rate (Mar.)

1.875%

Economic Growth Rate Q4 2014p

3.35%

3.40%

Annual Change in Industrial Output (Jan.)p

8.14%

-1.45%

-0.94%

0.83%

Annual Change in Consumer Price Index (Jan.) p=preliminary

US dollar fell to NT$32 in early January, before strengthening to NT$31.5 by the end of February. Total trade for the first two months of 2015 stood at US$80.6 billion. Exports, at US$44.98 billion, posted a yearly decline of 1.3%, while imports saw an even bigger drop by 13.2%, to US$35.61billion. The latest figures for Taiwan’s leading indicators are for January and most come in positive. The National Development Council (NDC) reports that Taiwan’s business climate indicators flashed green in January, an improvement over the “yellow-blue” of a month earlier. Industrial production was up 8.14% year-on-year, the 12th consecutive month of increases, according to the Ministry of Economic Affairs. MOEA also noted that export orders, an indicator of future sales, rose in annual comparisons by 8%, to US$39.04 billion, a recent peak. The NDC’s PMI (Purchasing Manager’s Index), a barometer of the health of the manufacturing sector – with a score above 50 indicating growth – dropped 5.7 points from January to February, to 47.8 from 53.5, also reflecting the shorter work-month. Taiwan’s Directorate General of Budget, Accounting, and Statistics (DGBAS) now forecasts GDP growth of 3.78% for 2015, up from 2014’s 3.5%, helped by a depreciating NT dollar that should stimulate exports, as well as

sources: moea, d Gbas,cbc, boFt

cheap oil that is revitalizing consumption. The Taiwan Institute for Economic Research (TIER) raised its forecast for 2015 to 3.67%, and economic forecast organization Focus Economics puts growth at 3.7%, but Taiwan’s ChungHua Institution of Economic Research (CIER) sees growth at a more modest 3.5%, citing continuing weakness in global markets. Comparatively, major trade partner China is looking at 7% growth for 2015, according to most economists, the slowest growth in decades, while the Bank of Korea slashed its 2015 forecast for South Korea to 3.4% on global weakness. Anderson attributes much of Taiwan’s stability to an economy that is buffered from global shocks, allows for good liquidity, and has excellent current account and offshore balances. According to Taiwan’s Central Bank (CBC), in the fourth quarter of 2014, the overall balance of payments recorded a surplus of US$1.82 billion, and the current account posted a quarterly surplus of US$19.18 billion and US$65.34 billion for the whole of 2014. Taiwan’s foreign exchange reserves stood at US$417.98 billion, down slightly from January 2014’s US$416.9 billion, according to the CBC. The DGBAS reports that unemployment remained low in February at 3.69%, and the consumer price index

(CPI) fell slightly year-on-year, by 0.19%. According to the Ministry of Labor, Taiwan is forecast to add 45,100 new jobs to the economy in 2015, mostly in manufacturing and services, and the Financial Supervisory Commission (FSC) says its survey of listed companies showed that more than 55% are likely to raise salaries in 2015.

DOMESTIC sUnfLOwer MOVeMent COMMeMOrateD Civic groups and politicians commemorated the one-year anniversary of the Sunflower Movement protest that saw demonstrators opposing the proposed Cross-Strait Trade in Services Agreement (CSSTA) with China seize control of the Legislative Yuan’s main chamber. An organization known as the People as Masters Association led a demonstration outside the Legislative Yuan on March 18 to advocate revisions to the law to make it easier to pass referendums. It was joined by the Citizen 1985 Action Alliance and the Appendectomy Project, which recently led a recall movement against firebrand Kuomintang (KMT) legislator Alex Tsai. The Sunflower Movement began on the night of March 18, 2014, when a group of students stormed the Legislative Yuan building to protest what they perceived as the ramrodding through the legislature of the Cross-Strait Services Trade Agreement. The students were joined by various civic groups and occupied the main legislative chamber for three weeks before being persuaded to give up the sit-in under the promise that the CSSTA and all trade pacts with China would be subject to close scrutiny by the Legislative Yuan. Politicians from both sides of the aisle discussed the impact of the movement on Taiwan’s politics and civil society. Taipei Mayor Ko Wen-je, an independent allied with the opposition Democratic Progressive Party (DPP) described the Sunflower

Movement as “the most important movement over the past few years.” He said it galvanized Taiwan’s youth to become more engaged with Taiwan’s politics and its future, and said it influenced his own decision to run for mayor. On behalf of President Ma Yingjeou, the Presidential Office said that the anniversary required humble introspection from political leaders and that the government needed to stand with the people. KMT Chairman Eric Chu highlighted the necessity of listening to the younger generation’s needs and priorities, declaring “there is only hope with young people, and only a future with young people.”

LY issUes resOLUtiOn On beef iMPOrts The Legislative Yuan’s Economics Committee on March 19 issued a non-binding resolution calling on the Ministry of Economic Affairs (MOEA) to ban the import of certain U.S. and Canadian beef products. The resolution move was in response to the Council of Agriculture’s declaration that six products, including tallow and bone marrow, were not internal organs and need not be included on the list of beef products banned from nations with a history of bovine spongiform encephal-

opathy (BSE), also known as mad cow disease. The products in question are bone marrow, blood, meat attached to the skull, cheek meat, gullet muscles, and fat. U.S. regulations define “specified risk materials” for BSE as the brain, skull, eye organs, spinal cord and column, spinal nerves, tonsils, and distal ileum (part of the small intestine) from cattle 30 months or older. Beef cattle are typically slaughtered when they are 12 to 24 months old. According to the Food and Agriculture Organization of the United Nations, all of the products except tallow are considered “slaughter by-products.” Tallow is a food tissue and has not been implicated as a BSE reservoir.

reCOrD DrOUGHt brinGs ratiOninG Phase-3 water rationing will begin April 1 in parts of northern Taiwan as the nation struggles with its worst drought in 67 years, declared Yang Wei-fu, vice minister of economic affairs, at a press conference March 19. The stringent water rationing will be implemented in New Taipei City’s Linkou, Banqiao, and Xinzhuang districts, along with Taoyuan, all areas supplied by the Shimen Reservoir, which now holds less than 25% of its capacity. Despite recent

SUNFLOWER REMEMBRANCE — Students cheer during a gathering to mark the first anniversary of the protest-movement occupation of the legislature. photo : ap/ wally s antana

taiwan business topics • april 2015

rains, experts estimate that the reservoir currently has only a two months’ supply of water before running completely dry. Under Phase-3 water rationing, households will be supplied with water only five days a week, which could be reduced to four days a week if conditions do not improve. MOEA stated that the worstcase scenario would see water supplied for only a few hours per day. The water restrictions will impact more than a million residences and industrial users. The new restrictions will further reduce the supply of water to industrial parks in Taoyuan, New Taipei City, and Miaoli County – from the current 7.5% reduction to 10%. These industrial parks are home to some of Taiwan’s biggest water consumers – semiconductor and LCD manufacturers – prompting some to consider drastic action that might include trucking in water from remote parts of the island. But some manufacturers, such as Taiwan’s largest DRAM maker, Nanya Technology Corp., have their own well-managed water supplies and say they will be unaffected by the cutbacks, at least in the short-term. The Hsinchu Science Park will also tighten up restriction on water supplies, from the current 5% reduction to 7.5%. The Industrial Development Bureau is set to release a study on the impact of water rationing on industries by the end of April. Nearly all of Taiwan’s reservoirs are less than half full, with only the Feitsui Reservoir – the source of Taipei City’s water – filled to a comfortable 80% of capacity.

of a contraband-cigarette vendor by a local police officer and led to widespread Taiwanese protests against KMT abuses of power in the period following the end of Japanese colonial rule. A crackdown by Nationalist troops then left more than ten thousand Taiwanese dead and marked the beginning of martial law and the White Terror in Taiwan. During his address at the 228 Memorial Park, Ko frequently broke down in tears as he recalled the pain his family felt from losing his grandfather, who died three years after the incident from the injuries he had sustained. News reports indicated that following the speech, Ko appeared to reject President Ma’s handshake, although Ko later said he had not intended to snub the president.

DPP sPOKesPersOn QUits OVer CritiCisiM Of CHen DPP Chair Tsai Ing-wen accepted the resignation of party spokeswoman Hsu Chia-ching on March 9 following Hsu’s recent allegations that former president Chen Shui-bian had accepted billions of NT dollars in bribes from construction magnates during his presidency. Speaking before the Taiwan Benevolent Association of Dallas, Texas, on February 15, Hsu said she had been told by a wealthy entrepreneur that while attend-

ing a gathering during Chen’s presidency, he had heard a number of owners of construction companies offer the thenpresident between NT$30 million and NT$70 million (US$947,000 and US$2.2 million) each. However, Hsu could offer no corroborating evidence and, conceding that her remarks were inappropriate for a party spokesperson, the former legislator tendered her resignation. She also apologized to Chen and his family for any pain she had caused them. Chen is serving a 19-year prison sentence on other corruption charges but was released on medical parole early this year.

MaYOr’s Gaffes sParK Debate Taipei Mayor Ko Wen-je continues to gain media attention with verbal gaffes, including his March 8 reference to foreign brides as having been “imported.” His remarks raised the ire of various organizations, including the Taipei branch of the Female Immigrant Care Association and the TransAsia Sisterhood Alliance, who demonstrated in front of the mayor’s residence to protest his alleged denigration of foreign spouses. The episode was only the latest in a series of gaffes that have put the mayor under the spotlight, including dismissing a gift watch given by a British official by

natiOn reMeMbers 2-2-8 inCiDent Painful memories of the 2-2-8 massacre were brought to the fore as Taipei City Mayor Ko Wen-je wept during ceremonies marking the anniversary of the event while recalling his grandfather, who died as a result of torture during the incident. The 228 Incident began on February 27, 1947 with the beating

TEARS OF PAIN — Taipei Mayor Ko Wen-je, whose grandfather died as a result of injuries sustained during the 2-2-8 incident, weeps as he delivers a speech during a memorial service marking the 1947 Incident. photo : ap/ c hianG yinG -yinG

taiwan business topics • april 2015

tZU CHi CanCeLs COntrOVersiaL PLan Taiwan’s highly acclaimed Buddhist Compassion Relief Tzu Chi Foundation on March 16 withdrew its controversial plan to develop an environmentally sensitive piece of land in Taipei’s Neihu District following allegations that the group was trying to steamroll the project over environmental concerns and that it used donation funds to purchase property and stocks. Tzu Chi had planned to build a logistics center and workshops for disaster relief on the 4.4 hectare property, but critics said that the land was prone to flooding and landslides and should not be subjected to large-scale development. The foundation also said that it would disclose all information on donations received and how the money was spent, as well as invite reputable new board members to help it monitor its activities and improve operations.

CROSS-STRAIT CHina beGins triaL Of new fLiGHt rOUte China began trial runs of its controversial M503 flight path on March 15, according to an announcement by Taiwan’s Civil Aeronautics Administration. The flight path was criticized because as initially announced, it would run just 7.8 kilometers from the median line separating the two sides of

Taiwan's JanUaRY - FebRUaRY 2015 TRade FigURes (YeaR- on-YeaR coMPaRison)

HK/china

Japan

asean

ToTaL

4 4.26

4.41 6.62

45.57 41

europe

2015

2014

2015

2014

exports

8.69

2014

4.81 4.1

U.s.a

2015

44.98 35.62

2014

4.74

2015

4.7

6.14 3

5.77

2014

3.2

2015

7.96

17.72

saying he would throw it onto the scrap heap. The mayor was also embroiled in a dispute with a U.S.-based publication, the bi-monthly Foreign Policy, in which he claimed that the journal had mistranslated a portion of an interview in which he seemed to support colonization. Ko backed off that claim when the publication produced the transcript of a tape substantiating its version. The new mayor nevertheless enjoys a 75% public approval rating, based on such policies as his crackdown on illegal constructions.

6.55

5.38 3.92

17.35

7.31

imports

the Taiwan Strait. The Taiwan government charged that Beijing was taking “unilateral” actions and failed to consult it concerning safety issues. China responded that the new route is necessary to ensure safety in its otherwise crowded airspace, but promised to move the route 11.1 kilometers to the west and only use it for one-way traffic north to south. In addition, the route will only go into regular use once guidance and navigation systems are proved reliable. Taiwan’s Mainland Affairs Council and Ministry of National Defense said that they were informed of the tests beforehand.

BUSINESS KaOHsiUnG CaLLs fOr CHeMiCaL firMs tO MOVe The Kaohsiung City Government has ordered petrochemical companies that use underground pipelines within its boundaries to relocate their headquarters to the city. It said that if the companies refuse, they will be banned from using the pipelines, and described the change as needed to improve safety in the wake of pipeline explosions that killed more than 30 people last summer. Kaohsiung Mayor Chen Chu, denying that the order was intended simply to raise tax revenues, said the city wants closer communications between the

2015

2014

UNIT: US$ Billion SOURCE: BOFT/MOEA

city and the companies that operate the pipelines. According to the mayor, the explosions last August that devastated the port city revealed that the central government’s Factory Management Act alone is insufficient to protect the city. Thirteen companies operate 89 pipelines in Kaohsiung, but nearly all of them are headquartered in Taipei. The central government has questioned the legality of Kaohsiung’s plan. The issue may go to the Cabinet for a decision, and possibly eventually to the Constitutional Court for a ruling.

taiwan aDDs 10 tO fOrbes riCHest The number of billionaires in Taiwan rose to 38 in the 2015 Forbes Billionaires list, up from 28 in 2014. Snack food king Tsai Eng-meng, chairman of the Want Want group, retained his position at the top of the list despite dropping from US$9.5 billion to US$8.9 billion in total wealth and falling to 147 from 130 in the global rankings. With wealth totaling US$6.1 billion, Terry Gou of Apple supplier Hon Hai rose to second from third last year, following the death of Fubon chairman Tsai Wantsai. Tsai’s sons Daniel and Richard both entered the list for the first time with estimated wealth of US$3 billion each.

taiwan business topics • april 2015

Issues

The Aerotropolis Plan Gets Adjustments The new mayor of Taoyuan says the project is viable, but needs more transparency and public involvement.

hen preparing the report that appeared in the August issue last year on the massive infrastructure development project known as the Taoyuan Aerotropolis, Taiwan Business TOPICS solicited the views of Cheng Wentsan, then the Democratic Progressive Party candidate hoping to become the first mayor of Taoyuan City after the former Taoyuan County’s elevation to the status of special municipality. During the interview, Cheng made clear that he supported the overall concept of the Aerotropolis project, but disagreed with the way it was being implemented. Though considered the underdog, Cheng swept to victory over incumbent John Wu of the Kuomintang in the balloting last November. TOPICS recently called on him in the mayor’s office to check on the status of the project after the change in administration. The mayor stressed his desire to put the project on a firmer footing, with broader public support, even though building that foundation will mean slowing down the timetable somewhat. Noting the widespread public criticism of the project in the past, including suspicions that it was enabling special interests to profit from land speculation, Cheng said the new watchwords are transparency and public involvement. Transparency will include the posting on the Internet of price and other information for all land transactions. The role of the semi-official Taoyuan Aerotropolis Co. has also been adjusted to enable the government to exercise greater oversight. The city has now taken over direct responsibility for land acquisition, leaving the corporation with the assignment of investment promotion. To assure greater public engagement by local residents, numerous rounds of hearings will be held covering the entire land area under the city government’s authority – not just the land currently zoned for agricultural use, for which hearings are mandated under the law. “People have a lot of different opinions and I hope they can all be expressed,” says Cheng. “I’m not afraid of hearing different points of view because the result should be a stronger plan that more people can accept.” Suggestions will also be sought from prospective investors through a series of forums starting this year for various industry sectors. “In order to come up with the most practical plans, we need to hear suggestions from the private sector and understand their requirements,” says Cheng. Through the forums, for example, he hopes to learn whether a second cargo terminal is needed and whether the facilities planned for logistics operations and aircraft maintenance are adequate. To ensure proper coordination between the local and central 14

taiwan business topics • april 2015

航空城計畫，調整再出發桃園市新任市長指出，航空城計畫確實可行，但需提升計畫透明度及公眾參與度。

本

刊(美國商會工商雜誌)在去年八月號的雜誌中，即報導了航空城這項重大建設的發展。本刊在撰稿期間詢問了鄭文燦對航空城的看法，而當時他還不是市長，而是欲角逐第一任桃園市長的民進黨參選人。在當時的訪談中鄭文燦明確表示，他支持航空城計畫的整體概念，但無法苟同計畫的實行方式。鄭文燦雖然在選舉時不被看好，卻在去年十一月的大選中囊括多數選票，贏過當時在任的吳志揚縣長，獲得勝選。本刊近日至桃園市政府拜訪鄭市長，以了解市府改朝換代後航空城計畫的進展情形。鄭市長強調，他希望航空城計畫能有更穩固的基礎、得到更廣泛的民意支持，即便花更多時間建立民意基礎的另一面就是航空城的時間表難免有所延宕，也是值得的。鄭市長提到過去航空城計畫飽受批評，質疑內容包含航空城計畫圖利特定利益團體炒地皮牟利等。而目前最高指導方針，則在於提高航空城計畫的透明度及公眾參與度。所謂透明度乃是指，市府將會把所有土地交易價格及其他資訊都公告上網。目前半官方的桃園航空城公司所扮演的角色已有所調整，使桃園市府更能對其進行監督；另外，土地徵收事宜已由桃園市政府全權接手負責，讓航空城公司專心處理其他招商事務。為提高當地居民的公眾事務參與度，市政針對其管轄範圍內的所有土地，都將採取全區聽證程序，而非只針對原本依法即須強制辦理聽證會的特農區土地。鄭市長說道：「大家都有許多不同意見，而我希望每個人都能充分表達他們的想法。我不怕聽不同意見，因為凝聚各方意見得到共識之後，所建立的民意基礎反而會更穩固，也能為更多人接受。」此外，從今年開始市府也將舉辦一系列的產業論壇，針對不同產業徵詢航空城計畫潛在投資人的意見。市長指出，「為了訂出最務實的計畫，我們需要採納企業界的意見，並了解他們的需求。」例如，藉由本系列產業論壇，市長希望可以了解第二貨運航站是否必要，以及為物流作業及飛機維修所

Issues governments – the Ministry of Transportation and Communications is responsible for the airport itself (referred to as the “egg yolk”), while Taoyuan is in charge of planning for development of the surrounding area (the “egg white”) – Cheng is proposing establishment of an office jointly staffed by the two levels of government. Another of Cheng’s ideas is to incorporate a plan for development of the area around the Taoyuan High Speed Rail station in Chingpu into the Aerotropolis project. The Chingpu plan calls for creation of a Taoyuan World Trade Center with conference and exhibition facilities, as well as office space for rent to “Taishang,” Taiwanese businessmen with operations in China who may also need a base in Taiwan. Incentives will also be offered for the construction of five-star hotels in the zone. — By Don Shapiro

規劃的設施是否足夠。為釐清中央及地方政府的適當分工，機場第三航道，也就是航空城計畫的主計畫部分(即所謂「蛋黃區」)是由交通部負責，而周圍地區(即「蛋白區」) 的都市計畫則由桃園市政府負責規劃。此外，鄭市長提議成立中央跟地方成立一個產業共同辦公室，協調地方的工作，或牽涉中央法令與機場管理，並由中央與地方政府各自推派代表參與。所以第一階段是產業論壇，第二階段是產業辦公室，第三階段才是實際招商。鄭市長的另一個構想，則是將高鐵站周圍青埔地區的發展納入航空城計畫。青埔項目計畫成立航空城世貿中心，內設會展及展覽設施，以及可租給台商的辦公空間；這些台商在大陸已有事業版圖，但也可能需要在臺灣設置辦事處。同時，市府也將提供獎勵給欲建在該區的五星級飯店。 — 撰文／沙蕩

Commenting on Cosmetics Regulation AmCham’s Retail Committee offers suggestions on making proposed regulatory changes more practical.

henever member economies of the World Trade Organization propose to alter existing regulations in ways that would potentially impact foreign products or services, a comment period of up to 90 days is available for other governments or concerned parties to raise objections or make suggestions for revision. Recently Taiwan notified WTO of its intention to adopt a number of regulatory changes in line with amendments to its Statute for Control of Cosmetics Hygiene, and AmCham Taipei’s Retail Committee availed itself of the opportunity to issue a series of comments. Among the key recommendations: • Avoid a “dual-control” model. For medicated cosmetics, the draft regulation would create a five-year transition period in which the current pre-market approval system would remain in effect while an additional post-market control mechanism would be introduced requiring cosmetics companies to submit highly detailed documents known as Product Information Files (PIF). Given that such a dual system would be unique in the world, it would pose an extremely steep compliance burden for the cosmetics industry. The Committee urges termination of the pre-market approval process, shifting the regulatory approach to one of postmarket surveillance and industry self-regulation. • Remove stipulations on evaluating and penalizing advertising thought to be untrue or misleading. The proposed regulation would authorize health-administration personnel to assess whether an advertisement or product claim is “seriously exaggerating or untrue,” with violators required to

對化粧品衛生管理條例修正草案的評論台北市美國商會的零售委員會提出建議，希望使研議修訂的法規更為實際可行。

世

界貿易組織的會員在修訂現行法規時，如果可能對外國產品與服務造成衝擊，都會設定最長90天的評論期，讓其他會員的政府或相關各方可以提出異議或修訂建議。最近台灣知會世界貿易組織，準備依化粧品衛生管理條例修正草案採取多項法規變革。台北市美國商會零售委員會利用這個機會，提出一系列的評論，其中重點包括： • 避免「重複規範」。依修正草案的規定，將針對含藥化妝品設定為期5年的過渡期，在這期間，現行含藥化妝品「上市查驗登記」制度將維持不變，並加上新建立之上市後的監管機

taiwan business topics • april 2015

Issues broadcast or publish apologies and corrective statements. The health-administration staff could also prohibit the distribution, display, and sale of the advertised product for an indefinite period. This proposal, which is another case of Taiwan-unique behavior, raises some serious issues for a society dedicated to the rule of law. In making their judgment about the fairness or truthfulness of the advertising, for instance, the health-administration personnel would not be limited to considering safety or health-related content. The scope of their authority would far exceed their professional competence. Without the due process assured when such matters are handled by the courts, in addition, the compulsory “corrective advertising” and removal of products from store shelves could severely damage a company’s commercial reputation and ability to do business. In urging an alternative approach, the Committee is asking the authorities to engage in broad-based discussions in preparation for establishing advertising guidelines and a system of industry self-regulation • Simplify the labeling requirement. The draft would require labels to list full contact information – company names, addresses, and telephone numbers – for both the manufacturer and the importer. But inclusion of the importer’s information should be sufficient, as there is no need for a Taiwan consumer to contact a manufacturer located overseas. In fact, for some “private label” products, the identity of the actual factory may be considered confidential. • Provide an adequate grace period. As the draft reclassifies toothpaste and mouthwash as cosmetics, industry will need enough lead time to undertake substantial product relabeling and possibly changes to the formula. The challenge is most acute for multinational companies that source products worldwide and share product labeling and formulations across borders. The Committee requests a transition period of at least five years. The Committee expressed the hope that in the interest of avoiding unnecessary technical barriers to trade that would contravene WTO principles, the Taiwan government will modify the proposed provisions to promote commerce and maintain positive relations with its major trading partners.

制，要求化妝品公司提供非常詳細的產品資訊檔案。這種重複、雙軌並行的制度在全球僅此一例，化妝品業者被要求要符合此規定，將會是非常沈重的負擔。零售委員會敦促終止含藥化妝品「上市查驗登記」制度，改採上市後監管與業界自律。 • 取消有關廣告被評估為不實或誤導消費者後裁罰的更正廣告之規定。此一規定將授權衛生單位人員評估某項廣告或產品宣稱的效能是否「嚴重誇大不實」，違者必須刊登道歉啟事並發表更正聲明。衛生當局並可無限期禁止相關商品發行、展示與銷售。這項新規定也是台灣獨一無二的做法，它將為奉行法治的台灣社會帶來嚴重問題，例如衛生當局人員在判斷廣告是否公平或真實時，他們需要考慮的不僅僅是涉及安全或衛生的內容。然而，他們的權限遠遠超過他們的專業能力。而且，這類問題不經法院的正當審理程序，直接由衛生當局下令刊登「更正廣告」並且將沒有安全衛生之虞的商品下架，將嚴重損害業者的商譽與經商能力。零售委員會敦促當局改變做法，廣徵各方意見，以建立廣告規範以及業界自律制度。 • 簡化標示規定。修正草案規定商品標示必須列出完整的聯絡資訊：製造商與進口公司的名稱、地址與電話。但對進口產品而言，列出進口商的資訊應該已經足夠，因為台灣的消費者沒有必要聯繫在海外的製造商。事實上，對有些「自有品牌」商品來說，實際負責生產的廠商資訊可能被視為商業機密。 • 提供適當的緩衝期。由於修正草案將牙膏與漱口水重新定位為化粧品，業界需要足夠的預備時間，以便將產品重新標示，並且可能要更改配方。這項挑戰對跨國企業尤其嚴峻，因為它們的產品在世界各地生產，產品的標示與內容在各國都需取得一致。零售委員會要求當局將緩衝期訂為至少5年。為了避免可能違反世界貿易組織原則的非必要技術性貿易障礙，委員會希望台灣政府修改化粧品衛生管理條例修正草案，以促進商業活動並維持與台灣主要貿易夥伴的良好關係。

— By Don Shapiro

— 撰文／沙蕩

A Labeling Nightmare Food companies find it hard to comply with a rule on the listing of ingredients.

taiwan business topics • april 2015

n the food industry lexicon, a “carry-over” is a substance – either a food ingredient or a food additive – that is present in a food product only because it is a subcomponent of another ingredient. The carry-over performs no significant technological function in the final product and is often present in only minute quantities. Examples of such carry-overs are edible oil such as corn oil used as a dispersant or solvent for a food colorant, or corn starch or corn syrup used as a carrier for a food flavoring. In other countries around the world, carry-overs do not

Issues

食品標示噩夢一場食品業者發現原料成分標示規定難以遵守。

need to be included among the ingredients listed on the label of a food product. But in another example of a unique-to-Taiwan regulation that poses hardships for multinational corporations operating in many markets, the Taiwan Food and Drug Administration (TFDA) is requiring that carry-overs be listed on product labels. As last amended in the wake of the spate of food scandals to hit the Taiwan market in recent years, Article 22 of Taiwan’s Act Governing Food Safety and Sanitation set the principle that every ingredient in a food product must be listed on the product label. When issuing the enforcement regulations for the law, the TFDA exempted carry-overs officially classified as “food additives” from that requirement so as to simplify the process. But it did not provide the same waiver for those carryovers that are food ingredients. Companies serving the Taiwan market with processed food products made abroad are now faced with an arduous – and in some cases impossible – task. Since carry-overs do not need to be identified in the United States, the European Union, and other countries among Taiwan’s major trading partners, the original label from overseas does not contain the information the Taiwan regulations are requiring to be disclosed. In fact, the information often is not even readily available. Importers or manufacturers will have to go through a complicated and costly procedure to inquire about each minute ingredient, and sometimes the supplier will refuse to divulge the information, treating it as a trade secret. Even if the information can be obtained, companies will have to go to the trouble and expense of preparing special labels just for this relatively small market. The process will slow down the delivery time of imported products and their availability for Taiwan consumers. Problems are also foreseen in the customs-clearance process if Customs officials seek further documentation or explanation from foreign suppliers and local importers about the subcomponents listed among the food ingredients. Shipments may be held up as the overseas exporters scramble to provide satisfactory answers. AmCham Taipei’s Retail Committee has called attention to Taiwan’s treatment of carry-over labeling as a potential technical barrier to trade in violation of WTO rules. The Committee urges the Taiwan government to harmonize its regulation with international practice by granting carry-over food ingredients an exemption from Article 22 requirements. — By Don Shapiro

在

食品工業詞典中，一種叫做 “c a r r y-o v e r” 「附帶成份」，它是由食品原料帶入產品中的副成份，它本身是食品成份或食品添加物。“Carry-over”「附帶成份」本身在產品終端並不存在顯著功能，且通常被檢測出來的量微乎其微。以食用油中的玉米油為例，玉米油通是被用來當作食品著色劑的分散劑或溶劑，而玉米澱粉或玉米糖漿一般作為食品香料載體的。它們都是因為食品著色劑或食品香料的添加而被帶入的副成份－“carry-over”「附帶成份」。世界上其他國家，都不需要在食品原料成分裡標示“carry-over”「附帶成份」。而台灣食品藥物管理局「獨有」的這一條法規，要求“carry-over” 「附帶成份」必須標示在食品成分標示上，卻為跨國企業在多個市場的營運帶來麻煩。為表示對近幾年接連打擊台灣市場的食安風暴有所醒悟，最新修訂的食品安全衛生管理法第22條規定，食品中所有原料都必須出現在成分標示上。食品衛生管理法發布實施細則時，為簡化流程，正式將歸類為「食品添加物」的“carry-over”「附帶成份」得以豁免展開標示。然而，屬於食品成份的“carry-over” 「附帶成份」卻未在豁免之列。對消費市場在台灣，產品卻從國外製造的食品加工業者來說，目前正面臨一項艱鉅且在某些情況算得上是不可能的任務。既然“carry-over”「附帶成份」在美國、歐盟及其他台灣主要貿易國都不需經過確定，那麼，來自海外的原標示就不會涵蓋台灣法規所要求披露的成分資料。事實上，這些成分資料通常很難取得。進口商或製造商得歷經複雜且花費大把鈔票，才能打聽到每種原料的成分。有時候供應商還會以原料是商業秘密為由，拒絕透露資料。就算順利獲得資料，食品業者還得費盡千辛萬苦，花錢準備為了因應台灣這個相對小型市場的特殊標籤。而這個製作標籤的過程將拉長進口品的交貨期，以及台灣消費者等待產品上架的等候期。在海關通關時會發生的問題也可想見。比如海關官員要求國外供應商和當地進口商，進一步提供食品原料成分標示相關文件或解釋。出貨時間也將隨國外出口商爭相交付答案過關而被拖延。台北美國商會零售委員會，呼籲台灣重視要求 “carry-over”「附帶成份」必須依法標示的規定，已違反了世界貿易組織規定，成為潛在的貿易壁壘。該委員會敦促台灣政府應以與國際接軌為本統一法規，將屬於食品成份的“carry-over”「附帶成份」納入食安法第22條的豁免展開標示之中。

— 撰文／沙蕩

taiwan business topics • april 2015

Cover story ImmIgratIon/manpower

rethInkIng ImmIgratIon polIcy 移民政策省思

BY timothY ferrY

撰文 / 法緹姆

taiwan business topics • april 2015

Cover story ImmIgratIon/manpower

As the composition of the taiwan population rapidly ages, the size of the labor force will soon start shrinking substantially each year. Given that demographic challenge, the government is looking at promoting immigration as a means of maintaining economic growth and vitality. A talent recruitment Policy Committee has been established under the executive Yuan to explore ways to attract both white-collar professionals and specialized blue-color skilled workers from other countries. 台灣人口結構快速老化，很快就會開始出現勞動力逐年大幅萎縮。由於面臨前述人口挑戰，台灣政府正研議透過吸引移民的方式，維持經濟成長與動能。政府已成立行政院人口及人才政策會報，研究從他國吸引白領專業人士和藍領特殊技術勞工來台的方法。

rom European colonizers to adventurous settlers from China and Japanese imperialists, Taiwan as long been a magnet for an array of people attracted by its strategic location along vital East Asian shipping routes. But while Taiwan has long been closely tied to the global market – and is widely considered to be among the most diverse and multicultural environments in Northeast Asia – this openness hasn’t previously been reflected in immigration policy. “Though Taiwan has always had a high amount of imports and exports, that hasn’t always been translated into government policy in terms of immigration,” says Peter J. Dernbach, a U.S. citizen and partner at Winkler Partners Attorneys at Law who closely follows immigration issues. “We have huge numbers of people who go abroad to study and stay abroad to live and work, but government policy hasn’t been open to the same extent to the import of people, the import of talent.” Recent developments in Taiwan’s economy, and more importantly its population structure, have led to a rethinking of the national position on immigration. The Taiwan government has begun adopting a far more open approach to immigration, looking for ways to recruit highly skilled people from around the world to boost its plateauing economy and its soon-to-be declining population.

歐洲殖民、中國人渡海屯墾到日本帝國主義統治，台灣因地處東亞運輸航線的戰略位置，長久以來不斷吸引大量的外地人前來。台灣和全球市場一直保持密切往來，被外界廣泛視為是東北亞最多元、文化融合融洽的地區之一，但這樣的開放態度過去並未反映在移民政策上。博仲法律事務所的美國籍合夥律師譚璧德（Peter J. Dernbach）表示，「台灣的進出口一直很活絡，但並未完全轉化在政府的移民政策上」，「台灣有許多人出國留學，留在海外生活和工作，但政府對於吸引移民、吸引外來人才的政策並未抱持同等開放的立場。」。由於台灣最近的經濟情勢發展，加上更重要的人口結構問題，促使政府針對移民問題檢討國家立場，開始對移民採取遠較過去開放的策略，設法從全球各地吸引擁有高等技能的人

從

taiwan business topics • april 2015

Despite Taiwan’s overcrowded residential areas and the often overwhelming busy-ness of the place, the island is actually facing a demographic crisis. Like many rich developed countries, Taiwan is facing the prospect of an aged population. Currently 12% of the population is over the age of 65, which as it stands is not a very serious situation. In the European Union, roughly 17-18% of the population is in that age bracket, and in Japan it’s a quarter of the population. An exacerbating factor, however, is Taiwan’s extremely low fertility rate (the average number of children born to women over their lifetime). In fact, it is one of the lowest rates in the world. The United Nations regards 1.3 as the threshold for “ultra-low” fertility rates, but in Taiwan the figure hovers around 1.1, and in 2010 even dropped to 0.9, among the lowest rates ever recorded. As a consequence of fewer births and greater longevity, demographers forecast that within a period of 25 years – from 1993 to 2018 – Taiwan will have gone from an aging society, with 7% of the population over 65 years old, to an aged society with more than 14%. The only nation to have made this transition faster is Japan. “The trend is the same in all advanced countries, as they all experience declining birth rates,” says National Taiwan University sociologist James Hsueh, a former minister

士，以提振進入發展停滯期的經濟，以及即將委縮的人口。台灣住宅區人口過於稠密，且人車往來常過於繁忙，但事實上卻面臨人口危機。一如許多富有的已開發國家，台灣也正面臨人口老化，目前有12%的人口超過65歲，情況還不算非常嚴重。歐盟(European Union)約17%到18%的人口落在此一年齡層，日本則有四分之一。不過台灣有一項因素讓情況加速惡化，就是生育率（即婦女一生平均生育的子女總數）極低，而且事實上還是全球最低的地區之一。聯合國（United Nations）將生育率1.3或以下歸類於「極低」，但台灣在1.1上下，2010年甚至降到0.9，為歷來最低的紀錄之一。由於生育率下滑和壽命延長，人口統計學家預測，台灣將在 1993至2018年的25年內，從65歲以上族群占總人口7%的高齡化社會（aging society），變成老

ImmIgratIon/manpower without portfolio. “But the challenge for Taiwan is the steep rate of change.” The impact on Taiwan’s economy and civic society could be profound. Starting next year, the number of people in the workforce will begin declining by 180,000 annually. In 2021, the overall size of the population will also begin to shrink, according to National Development Council (NDC) forecasts. The result will be massive stress on the social welfare system. As the elderly account for the vast majority of healthcare dollars, Taiwan’s vaunted National Health Insurance system will face a huge struggle maintaining quality standards as it seeks to care for the rising wave of senior citizens. Labor pension schemes will be similarly burdened by the sheer number of recipients. And there will be fewer workers contributing tax dollars to support the whole system. Taiwan is working on a number of policy initiatives aimed at mitigating the situation. According to the “ROC Population Policy Guidelines” issued by the Executive Yuan, these include such efforts to increase the fertility rate as “improving the environment for spouse selection” and providing “assistance in creating happy marriages.” NDC representatives say the government is also devising plans to encourage people to retire later and to implement better controls to reduce cheating in the labor pension system. Fostering immigration is another of the strategies designed to mitigate the

impact of an aging society. “Immigration is a logical and potentially powerful step to remedy these demographic changes,” says Dernbach. Citing the very low fertility rate and the “number of young people who go overseas to pursue their higher education and remain overseas to pursue their careers,” he says “we need to counterbalance that outflow with an inflow of equally talented, motivated young people coming into Taiwan.”

Seeking talent The need for greater immigration seems apparent to both the ruling Kuomintang and the opposition Democratic Progressive Party (DPP). But not all types of immigration are valued equally. While at least 600,000 foreign spouses are living in Taiwan, these immigrants by marriage tend to be from Southeast Asia and mainland China, with many of them unskilled and less-well-educated. (There are also some 550,000 foreign laborers in Taiwan, also from Southeast Asia, but their status as guest workers is subject to a time limit and they are not eligible for citizenship or permanent residence.) Both the government and the DPP take pains to say they do not want to discriminate against different social or ethnic groups. They also agree, however, that priority for immigration should be given to “talent,” by which they mean those who will take high-paying jobs or

年人超過14%的高齡社會（aged society）。人口老化速度唯一超越台灣的國家是日本。曾任行政院政務委員的台大社會系教授薛承泰表示，「全球已開發國家都出現同樣的趨勢，因為生育率都下滑」，「但台灣面臨的挑戰在於變化速度很急遽」。這對台灣經濟和民間社會可能產生深遠影響。據國家發展委員會預測，從明年起，台灣的勞動力人口將每年減少18萬人，總人口到2012年時也將開始萎縮。這將對社會福利制度構成龐大壓力。由於健保的絕大多數支出都用於老年人身上，台灣引以為傲的全民健保制度在設法照顧不斷增加的老年人的同時，勢必得經過一番努力，才能維持品質標準。勞工退休金計畫也將因請領人數急增而面臨類似的壓力。而且繳稅支撐整套系統運作的勞工將會減少。台灣正在研議許多政策計畫，希望緩和人口老化壓力。根據行政院發布的中華民國人口政策綱領，將透

start their own businesses. The vision is to attract dynamic highly skilled immigrants who will make positive contributions to Taiwan’s economy and society, regardless of their country of origin, as taxpayers and consumers. “There’s a lot of data from the United States to show how many of the gamechanging entrepreneurs are second-generation Americans,” says Dernbach. According to Bloomberg, in 2010 AsianAmericans became the majority of the tech workforce in Silicon Valley, and fully one-third of tech startups are founded by Indian-Americans. “If Taiwan were to open itself to immigration, it absolutely could become the Silicon Valley of Asia,” asserts Dernbach. “Why? Because we’re an open, democratic country with freedom of speech, lots of diversity, lots of collaboration. There are more opportunities to collaborate in Taiwan than in any other place in Northeast Asia.” A 16-year resident of Taiwan, Dernbach says that he knows a lot of people who are currently working in China but would prefer to be in Taiwan. But the obstacle is that “the job isn’t here, or it is here but at a fraction of the salary.” That observation gets at the challenge Taiwan currently faces. The high-talent immigrants that Taiwan wants to attract are likewise in strong demand around the world. Can Taiwan compete with other prominent destinations in East Asia, including Tokyo, Hong Kong, Singapore,

過「改善擇偶環境」和「協助打造幸福婚姻」等方式提高生育率。國發會指出，政府另外還策劃多項計畫，鼓勵民眾延後退休，並改善管控，減少勞工退休金的詐領漏洞。促進移民是政府緩和高齡化社會衝擊的另一項策略。譚璧德說：「利用移民補救人口結構變化的衝擊，是合理的作法，且可能相當有效。」他舉例，台灣生育率非常低，「許多年輕人到海外深造，然後留在國外就業」，「必須吸引同樣有才華和進取心的年輕人進入台灣，以抵銷人才外流的衝擊」。

尋覓人才對執政的國民黨和在野的民進黨而言，必須吸引更多移民是顯而易見的解決辦法。但不同種類的移民對台灣的價值也不盡相同。目前在台灣定居的外籍配偶至少有 60萬人，這些婚姻移民往往來自東南亞和中國大陸，其

taiwan business topics • april 2015

Cover story ImmIgratIon/manpower and Shanghai? “We face a challenge from the globalization of human resources,” says Chang Herng-yuh, director-general of the NDC’s department of human resources development. “Other countries are also competing for talent in the region.” Taiwan’s appeal is unlikely to be based on salaries. Its pay levels lag behind the other East Asian powerhouses by a large measure, and Taipei can hardly match Hong Kong as a financial center, nor is it a commercial center for international business on the scale of Shanghai or Singapore. Even Taiwan’s pride, its technology sector, continues to walk in Japan’s shadow. So what does Taiwan bring to the table in attracting foreign talent? Many cite the friendly people, the tolerant attitude, and low crime rates. The cost of living is low as well. Housing prices may be far beyond the reach of most except the wealthiest, but rents are reasonable. Air quality is much better than in many other locations in the region, and with Taiwan’s compact size, a range of natural environments are easily within reach, from nearly 4,000-meter-tall mountains to lovely beaches. But will these be enough to attract sufficient numbers of talented immigrants for there to be an appreciable impact on Taiwan’s economy and population trends?

Demographic background The main reason for the large number of elderly people in Taiwan is the huge fertility boom of the 1950s and 1960s. At one point Taiwan had one of the highest fertility rates in the world, at 6.9. Those post-war babies have resulted in the current surge of people approaching or exceeding 65 years of age. In addition, a very successful healthcare system has extended lifespans to an average of 80 years for both genders. A partial explanation for the current low fertility rate, James Hsueh notes, is that as development ramped up in the 1960s and 1970s, transforming the society from an agrarian to an industrial base, the government made a strenuous effort to promote birth control under the slogan “Two Kids, Just Right.” Taiwan’s reproduction rate has experienced a gradual decline ever since, as is typical everywhere that has gone through a similar development curve. Less clear is why fertility rates continued to fall over the past decade and remain among the lowest in the world. Why do young Taiwanese seem so reluctant to marry and have children? Exorbitant housing prices are considered to be a major reason, along with stagnant salaries and growing income inequality. Gordon Sun, a senior econo-

中許多人並無技能，教育程度也較低。台灣另有約55萬名來自東南亞的外勞，但他們的身分是外籍勞工，有居留時間限制，且沒有資格申請歸化國籍或永久居留權。國民黨政府和民進黨都強調他們無意歧視不同社會或族裔的族群，但都贊同台灣應將「人才」，亦即來台從事高薪工作或自行創業者，列為優先爭取的移民對象。這麼做是因為擁有高技能的機能性移民能為台灣經濟和社會帶來正面貢獻，不論他們來自何國，都應爭取他們成為台灣的納稅人和消費者。譚璧德表示：「美國有許多資料顯示，很多改變局勢的企業家都是第二代移民的美國公民。」根據彭博社（Bloomberg）報導，亞裔美國人在2010年躍升為矽谷（Silicon Valley）科技業勞動力的多數族裔，足足有三分之一的科技新創公司是由印度裔美國人創辦。譚璧德很肯定地說：「台灣若能開放移民，絕對可以成為亞洲的矽谷。」「為什麼？因為台灣是開放的民主國家，有言論自由，充滿多元化和合作機會。台灣是東北亞合作機會最多的地方。」已在台灣居住16年的譚璧德表示，他認識許多人，目前雖在中國工作，心裡卻比較想待在台灣，不過問題在於「台灣沒有工作機會，或者即使有，薪水卻很微 22

taiwan business topics • april 2015

mist at the Taiwan Institute for Economic Research, notes that these factors engender a sense of frustration and hopelessness among young people concerned about their future. James Hsueh concurs, saying “when I was young, we all experienced a lot of hardship, but we could feel the economic growth and the opportunity it was creating, so we had hope that with some effort we could make our dreams come true. But nowadays things have changed.” Whether to better prepare for reality, or as many older Taiwanese suspect, to avoid reality, many students stay in school well into their twenties, earning one degree after another. Taiwan has 164 universities, virtually guaranteeing a place for every high school graduate. According to economists, the overavailability of higher education has led to an excess of people with advanced degrees, giving Taiwan one of the highest rates in the world of Master’s and Ph.D. holders per capita. The result has been to devalue such degrees on the labor market. Further, the longer the period of education, the shorter the working careers, leading to less tax money paid in to support the social system. Scant relief is likely to come soon for any of these circumstances. Most nations are confronted with growing income gaps, and even acclaimed economist

薄」。他的觀察心得切中台灣目前所面臨的挑戰。台灣希望吸引的高級人才移民，在世界各地都很搶手。台灣能否比得過東京、香港、新加坡、上海等其它東亞主要地區？國發會人力發展處處長張恒裕表示，「我們面臨人力資源全球化的挑戰」，「這個區域的其他國家也在搶奪人才」。台灣的吸引力不太可能建立於薪水上，因為其薪資水準遠遠落後於其它東亞主要經濟體。台北不但根本比不上香港的金融中心地位，也無法和上海或新加坡所具有的國際企業商務中心規模相比。即使是被視為台灣之光的科技業，也一直無法超越日本。所以台灣能端出哪些條件吸引外國人才？許多人舉出人情味、包容力和犯罪率低等優點，此外生活成本也相當低。台北的房價可能遠遠超出多數人的能力範圍，只有最有錢的人才買得起，不過房租卻相當合理。空氣品質也比東亞許多地方好很多，而且台灣面積不大，很容易就可以走訪許多自然景點，例如將近4,000米高的山區、美麗的海灘等。但這些是否就足以吸引夠多的優秀移民前來，為台灣經濟和人口變化趨勢帶來顯著的影響？

ImmIgratIon/manpower Thomas Pikkety, author of the tome Capital in the Twenty-first Century, has little to offer in the way of a solution except for a global tax, which politically would seem to be a non-starter. Although housing costs in Taiwan are slowly stabilizing, the reality is that even a slight drop in prices could have huge ramifications, considering the amount of wealth tied up in the property market. So without a huge hike in incomes, housing prices are unlikely to come down into an affordable range. And with fertility rates unlikely to rise anytime soon, the promotion of immigration is left as the most feasible option to ensure continued economic vitality. That certainly seems to be the conclusion the government has drawn. In the past, Taiwan only reluctantly opened its doors to immigrants, and permanent-residence status was created only in the late 1990s and at the time was very difficult to obtain. More recently, the Ma Yingjeou administration has made a concerted effort to ease certain restrictions for people interested in living in Taiwan.

Governmental changes I n l i n e w i t h t h a t e n d e a v o r, t h e National Immigration Agency under the Ministry of Interior this year revised its name in Chinese to remove the words

人口背景台灣老年人口眾多的主因，在於1950和1960年代的生育潮。有一段時間，台灣生育率達到6.9，在全球位居前茅。二戰後出生的那一代，就是目前接近或超過65 歲的大量人口。此外，台灣完善的醫療制度，讓男性與女性的年齡壽命都延長到80歲以上。薛承泰說，目前出生率偏低的部分原因，在於1960 和1970年代台灣快速發展，從農業社會轉型成為工業社會，政府因此提出「兩個孩子恰恰好」的口號，努力控制生育。台灣的生育率從此便逐漸降低，這點跟其他經歷類似發展曲線的國家一樣。比較不清楚的，是為何台灣的生育率在過去10年持續降低，在全世界位居最後幾名。台灣的年輕族群為何結婚生子的意願似乎偏低？一般認為高得嚇人的房價是主要原因，此外還有久未調漲的薪資與收入不平等逐漸擴大的現象。台灣經濟研究院資深經濟專家孫明德指出，年輕族群關心未來，而這些因素讓他們感到挫折、沒有希望。薛承泰對此表示同意，他說：「我年輕的時候，大家日子都很苦，但我們可以感覺到經濟的成長，以及經濟成長帶來的機會，因此我

INFoG rAPHIC By JAMes CHAr D

們有希望，相信只要努力，我們的夢想可以實現。但現在情況不一樣了。」許多台灣學生到了20好幾歲還在學校，拿到一個學位之後再拿一個，或許這是為了充實自己，以便因應今天的社會現實，但有些長輩懷疑，年輕人這麼做是為了逃避現實。台灣有164所大學，等於每個高中畢業生都保證可以升學。經濟專家說，高等學府泛濫導致太多人擁有高等學歷，台灣也成為世上碩、博士比例最高的國家之一。結果是這些高等學歷在勞動市場上貶值，而且在學校待愈久，職涯的時間愈短，這使得可以用來支撐社福制度的稅金相對減少。以上的問題，在短期內都不太可能解決。全球多數國家都面臨所得差距擴大的問題，連著名的經濟學者、重要著作〈21世紀資本論〉的作者皮凱提都沒有解決之道，只能建議課徵全球稅，但這從政治觀點來看並不可行。雖然台灣的房價在慢慢趨於穩定，但即使是微小的跌幅，都可能產生重大影響，因為投入房市的資金非常龐大。因此，除非民眾收入大幅增加，房價不太可能回跌到民眾可以負擔的水準。由於生育率在短期內不太可能上升，為了確保經濟活

taiwan business topics • april 2015

Cover story ImmIgratIon/manpower “entry” and “exit” from the title, highlighting the “immigration” nature of its portfolio. According to Director-General Mo Tien-hu, “we feel it is simpler and also more in line with international trends.” The NIA also underwent some restructuring, including the addition of more service centers. “The purpose is to enhance our work efficiency and be able to offer more services,” says Mo. Overall policy on immigration is being directed by a high-level Talent Recruitment Policy Committee established under the Executive Yuan and including representatives from various ministries, including Economic Affairs, Labor, Education, and Health and Welfare, in addition to the NIA. “The goal we are working toward is to make it possible for people from all over the world to come to Taiwan to live and work,” says Mo. He points to a number of recent changes to liberalize rules govern ing foreigners’ residence and employment in Taiwan. For example, last year the government amended regulations affecting foreigners who have completed their work assignments or are no longer employed by their original company. “Now we give them more time – up to six months – to find another job before they are required to leave the country,” he explains. Until the change, the time allowed was 90 days, already an

improvement over the original 15 days. Another revision allows foreign students graduating from Taiwan universities to qualify for employment here without needing to meet the general requirement of having two years of work experience. Besides such professional, white-collar talent, Mo says the Talent Recruitment Policy Committee is also looking at “how to recruit bluecollar specialists to take up residence here” to help meet domestic industry’s manpower needs. He also notes the government’s efforts to provide a more comfortable environment for foreigners already staying in Taiwan. The NIA, for example, operates a hotline (0800-088-885), with multilingual specialists manning the phone 24 hours a day. If the NIA personnel lack the information being sought, they will find the appropriate government agency to contact. In another initiative, the NIA in recent years has simplified the application process for obtaining an Alien Permanent Resident Certificate (APRC). Applicants no longer have to undergo an interview, and the number of documents they need to produce has been reduced. Last year the government also made it easier for the offspring of foreign permanent residents to qualify for APRC status by allowing them to count the years of residence in which they were listed under

力，鼓勵外來移民是最可行的方案。這肯定是政府做成的結論。在過去，台灣只是勉強對外來移民開放門戶，到1990年代末期才提供永久居留權，而且起初非常難以取得。最近，馬英九政府各部門做了一致的努力，讓有興趣居住在台灣的外人不必像過去受到那麼嚴格的限制。

政府的新措施在新的政策之下，內政部移民署今年初把署名中的「入出國」拿掉，強調這個部門是負責「移民」的相關事務。據署長莫天虎表示：「我們覺得這樣比較簡化，也比較符合國際趨勢。」移民署同時進行組織改造，包括建立更多服務中心。莫天虎說：「此舉目的在於提升工作效率，並提供更多服務。」有關移民的整體政策，是由行政院人口及人才政策會報負責。參與這個高階層會報的代表，分別來自移民署和經濟、勞動、教育與衛生福利等部會。莫天虎說：「我們努力的目標，是要讓全球各地的人都能夠來台灣生活和工作。」他指出，有關外國人在台灣居住與就業的規定，最 24

taiwan business topics • april 2015

their parents’ APRC. At the same time, some overly restrictive regulations remain on the books. Forward Taiwan, a civic organization describing itself as “dedicated to strengthening Taiwan’s global economic position through efforts to improve national immigration policies,” notes that foreigners living here are banned from engaging in musical, theatrical, or other artistic performances outside the scope of their work permit. The group considers this regulation to be an unwarranted limitation on creative expression that is also not in this society’s best interest. Another issue is that under current law, foreigners seeking to take Taiwanese nationality must renounce their original citizenship instead of being able to hold dual nationality. Many would-be immigrants from less prosperous countries would be happy to do so, but relatively few expatriates from the United States or other Western nations are willing to take that step (see the accompanying story on American citizens who have given up their passports to take ROC citizenship). The rule against dual citizenship, however, does not apply to ChineseAmericans or other overseas Chinese. Foreword Taiwan, of which Dernbach is a member, is urging the government to remove the restrictions on foreigners’ obtaining ROC citizenship. In fact, the

近有些放寬，例如政府去年修改規定，讓階段性工作已經結束或者原雇主不再聘用的外國人士不必很快離境。他說：「現在時間放寬了，他們在必須強制出境之前，有6個月的時間可以找新的工作。」在規定修改之前，停留的期限是3個月，這比原本的15天已經是很大的進步。還有一項修訂，是讓從台灣的大學畢業的外國學生可以找工作，不必受限於一般外國人在台就業必須有兩年工作經驗的規定。這指的是專業或白領階層的工作，但莫天虎說，人口及人才政策會報也在研究「如何徵求藍領技術人員，讓他們在台灣定居」，以因應國內產業的人才需求。他並且指出，政府在努力為已經在台灣的外國人提供更為舒適的環境，例如移民署建立熱線(0800-088885)，由能說各種語言的專人24小時接聽電話。如果移民署人員無法提供來電者所需的資訊，他們會告訴對方該向哪個政府機關洽詢。移民署的另一項做法，是在最近幾年簡化外僑永久居留證的申請程序。申請人已經不需要通過面談的程序，需要提供的證件數目也已減少。去年，政府讓具有永久居留權的外國人的子女較容易取得外僑永久居留證，做法是採計他們先前以眷屬身

ImmIgratIon/manpower government is considering just this sort of rule change, allowing those with exceptional skills, talents, or resources to obtain ROC citizenship without renouncing their own. This rule change specifically references Quincy Davis, the American-born basketball player who now plays on the Chinese Taipei national team but had to give up his U.S. citizenship to do so. The proposed rule change, which is awaiting deliberation by the Legislative Yuan, is aimed at drawing such exceptional talent to Taiwan, but it must be noted that the prospective revision is extremely limited in scope and will not apply to most foreigners. Forward Taiwan is asking for the scope to be broadened to include all foreigners willing to take ROC citizenship. The official DPP policy on immigration is still being formulated, but a representative said by email that the party favors a “nondiscriminatory and immigrant-friendly policy position under the precondition of border security and safety.” The email also stressed that “the DPP values the culture new immigrants bring to Taiwan.” In addition, the opposition party appears well aware of the looming demographic threats to Taiwan, and considers a partial solution to be urging women to participate in greater numbers in the workforce. In terms of government policy, the NDC says that while it is trying hard

Taiwan is seeking to enroll more international university students in hopes that some will choose to stay after graduation to live and work in Taiwan. photo : cna

to increase Taiwan’s attractiveness for highly skilled immigrants, immigration can only do so much to bolster the country’s economy and population. Therefore, the NDC is promoting a number of policy initiatives aimed at mitigating the consequences of an aging population. One is to encourage people to retire later – especially women, who often cite their reason for retirement as the need to take care of aging parents or other family members. Keeping them in the labor

分在台居留的時間。但同時，有些過度嚴格的規定依然存在。向前台灣是個公民團體，宗旨是要「努力改善我國移民政策，致力於強化台灣的全球經濟地位」。這個團體指出，居住在台灣的外國人不得從事工作許可範圍以外的音樂、戲劇或其他藝術表演。向前台灣並且認為，這項規定是對創意表達不合理的限制，也不符合台灣社會的最佳利益。另一個問題在於在現行法律之下，想要取得中華民國國籍的外國人必須放棄原本的國籍，不能擁有雙重身分。許多來自較不繁榮國家的人民會樂於配合，但來自美國或其他西方國家的人士就比較不願採取這個步驟（請參考本期另一篇報導，它講的是放棄本國護照以取得中華民國籍的美國人）。禁止雙重國籍的規定，並不適用於美籍華人或其他海外華僑。向前台灣敦促政府廢除外國人取得中華民國籍的限制。事實上，政府已經在考慮採取這類變革，要讓具有特殊技能、才華或資源的外國人入籍，同時保有原本的國籍。在研擬這項修法時，相關方面特別提到昆西‧戴維斯的例子。這位出生於美國的籃球選手目前是中華隊的一員，但為了成為台灣的國手，他放棄了美國籍。修訂的規定在等待立法院審議，它的目的在於吸引特殊人

force longer may require improvement in Taiwan’s social infrastructure for care of dependents. Currently about 28,000 white-collar foreign professionals are working in Taiwan, according to the NDC, which says it hopes to increase that figure substantially over the next few years. But with stagnant incomes and high real estate prices, does Taiwan have what it takes to attract the kind of talented professionals that it seeks?

才到台灣，但必須指出，修訂的範圍非常有限，對多數外國人並不適用。向前台灣要求將範圍擴大，以便讓所有希望入籍中華民國的人都能夠如願。民進黨對移民的政策仍在研擬當中，但一位代表以電子郵件表示，民進黨傾向「在國境安全的前提下，採取非歧視性且對移民友善的政策立場」。這封電子郵件並強調：「民進黨重視新住民帶到台灣的文化。」此外，民進黨似乎清楚台灣面臨的人口危機，認為鼓勵更多女性進入職場有助於解決問題。就政府的政策來說，國家發展委員會表示，政府在努力提高台灣對於高等技術移民的吸引力，但移民對於提升台灣經濟與人口的作用畢竟有限。因此，國發會在推動多項政策，希望藉以減緩人口老化的效應。其中一項是鼓勵民眾延後退休，尤其是女性。女性退休時，理由往往是需要照顧高齡的父母或其他家人。為了讓女性在職場工作更長時間，可能需要改善台灣社會照護的基礎設施。據國發會表示，目前台灣有大約28,000名外籍白領上班族。國發會希望這個數字能在未來幾年有大幅成長。但薪資沒有增長，且房價偏高，台灣是否有足夠條件，能夠吸引到它所需要的專業人才？

taiwan business topics • april 2015

Cover story ImmIgratIon/manpower

FroM stUDIes to WorK AND resIDeNCe taiwan is making an effort to attract more international students – and hopes that growing numbers of them will stay on to join the workforce after graduation.

e s p i t e b e i n g o n l y a Ti e r I I team, the soccer squad at National Pingtung University of Science and Technology (NPUST) regularly defeats some of Taiwan’s top-division university teams. But what also sets them apart is that there is not a Taiwanese face in the group. All the players hail from Africa, Central America, or Southeast Asia. “Football isn’t popular in Taiwan, so these players are the only ones to represent our university,” says Henry Chen, NPUST’s dean of international students. A t N P U S T a n d a r o u n d Ta i w a n , university student bodies have become increasingly diverse as Taiwan has rolled out the welcome mat for students from around the world. African, Latin American, and Caribbean students predominate in NPUST’s 900-strong international student program, attracted to the southern university’s solid presence in agricultural technology, with many programs taught exclusively in English. At National Sun Yat-sen University (NSYU) in Kaohsiung, French students are the biggest contingent in its 900-plus international student body, drawn by the university’s strengths in business administration, also taught in English – and perhaps by the area’s acclaimed beach, suspects Kuo Chi-wen, dean of the international student program. Fu Jen Catholic University in New Taipei City, a pioneer in international education from its start on the mainland decades ago, continues to expand its increasingly diverse international programs. So has Taiwan’s top institution of higher learning, National Taiwan University (NTU), while German, French, and Spanish are frequently heard on the campus of National Chengchi University (NCCU). “The number of foreign students has 26

taiwan business topics • april 2015

increased rapidly over the years, to the point where we can’t even accommodate all who would like to come,” says Angela Yung-chi Hou, dean of international education at Fu Jen. Taiwan hosted 92,685 international students in 2014, according to Ministry of Education (MOE) statistics, three times the 2007 figure of 27,000. Of these, 52,607 are registered in short-term programs, including 15,526 students studying Chinese. Among the degree seekers, over half – 20,134 – are classified as “Overseas Compatriots,” which includes both foreign-born Chinese as well as students from Hong Kong and Macau. Another 5,881 are from mainland China (and the MOE separately lists 27,030 exchange students from China taking short-term courses or attending seminars or training programs). These numbers reflect a policy turnaround for Taiwan, which didn’t actively seek foreign students until about a decade ago when Taiwan established a multibillion dollar budget to improve the quality of its universities. Along with raising the level of teaching and research, attracting international students was an important component of this project. Increasing Taiwan’s profile in the market for international students is seen as having a number of benefits. First, a diverse multicultural atmosphere on campus helps expand local students’ horizons, giving them a more international perspective as well as a chance to practice foreign language skills. Such an environment can enable Taiwanese students to become more competitive in the global arena. It is important for young people to develop an international mindset, but not everyone can afford to go overseas to study, explains Angela Hou of Fu Jen.

But when they have international classmates, “they mingle in class and outside of class, and do activities together,” she says. “This opens the students’ minds and lets them realize how big the world is.” Another compelling factor is that Taiwan has an excess of universities and a shortage of students. According to National Development Council (NDC) data, Taiwan has 164 institutions of higher learning enrolling some 1.46 million students. Virtually all high school graduates are now guaranteed a place, and over 95% of them in fact go on to university. But with Taiwan’s population of young people on the decline, many colleges will be unable to fill their rosters with local students. “Many, many institutions in Taiwan will not have enough students and will be forced to close,” says Hou. “International students can compensate for the decreasing numbers of locals.” However, the value of running such large international student programs is also being questioned, considering that as many as 40% of the students are on full scholarships and that even for those paying tuition, which tends to be double the amount charged their Taiwanese classmates, the fees hardly cover the entire cost of the education. One of the critics is NSYU president Yang Hung-duen, who contrasts Taiwan’s approach with those of the United States, Canada, and Australia, where foreign students generally pay full tuition without access to financial aid and may be charged up to three times as much as domestic enrollees. Tuition is highly subsidized in Taiwan, as each student is considered a future contributor to this society and economy. The vast majority of international students, however, return to their home countries to work, meaning that that they

ImmIgratIon/manpower contribute to their home countries economies but received their education at Taiwan’s expense. Proponents of the recent push to internationalize Taiwan’s university system say that these criticisms miss the point. Although the Taiwan government is trying to encourage more of the foreign students to remain in Taiwan to take employment after graduation, even those who leave the island will take with them an understanding and appreciation of Taiwan that could have immeasurable benefits when they go on to take leading positions in government offices, multinational corporations, and global NGOs. “Their contribution can be incalculable in terms of soft diplomacy,” says NYSU’s Kuo, stating that these departing students can serve as unofficial spokespersons for Taiwan.

Part of a broader strategy To help meet the challenges caused by an aging population, as well as to revitalize an economy that has lost some of its vibrancy over the past decade or so, Taiwan is looking beyond its borders for talented immigrants. But low salaries, high property costs, and the lack of strong brand appeal puts Taiwan at a disadvantage in the global competition for highly skilled immigrants. Rather than taking on the likes of Singapore, Tokyo, or Hong Kong in head-to-head competition, Taiwan is instead targeting international students. By offering high-quality education at attractive prices, along with a friendly environment that is both exotic and familiar at the same time, Taiwan hopes that more and more international

students will choose not only to study in Taiwan but also to call the island home after graduation. “We need to attract talent, but how? A very important resource is students from abroad, especially overseas Chinese,” explains Chang Herng-yuh, director-general of the NDC’s department of human resources. Accordingly, Taiwan has revised its rules to make it easier for foreign students to stay in Taiwan after completing their education. Previously, they needed to have at least two years’ work experience to qualify for a work permit, and the job had to pay a minimum monthly salary of NT$47,000. Last July, though, Taiwan changed to a point system. Prospective students are awarded points in eight sectors, including Chinese-language ability, educational level, and other experience. A total of 2,000 places a year was set aside under this program, but for jobs paying at least NT$47,000, the point system and quota would not apply. The new system has resulted in a 40% increase – to more than 1,300 – in the number of international graduates who chose to remain in Taiwan to begin their careers. The NDC’s Chang says the program has stimulated considerable interest among both students and small businesses. About half of the new hires have been either engineering or business administration graduates. Chang notes that Taiwan hopes to increase the number of international students to around 150,000, and to continue to raise the proportion who stay on after graduation. Accommodating the foreign students has presented some challenges for the

Taiwan universities, however. Fu Jen found it helped to institute a buddy system, pairing international students with a local classmate to help them adjust to life in an unfamiliar country. Cultural differences have also presented challenges, with many foreign students having far different expectations about drinking and smoking on campus than local universities allow, for example. Language issues also arise frequently, and most universities report that few of their international students graduate with any degree of fluency in Chinese, despite the availability of free Chinese-language training on most campuses. The offering of degree programs in English, in addition, puts a tremendous strain on local professors, and several universities said that they need to offer bonuses to faculty members to persuade them to teach in English. Perhaps the biggest challenge, though, is competing for international students in the first place. Low tuition (less than NT$100,000 a year) and scholarships have allowed many people from developing nations to attend Taiwan’s universities. But do Taiwan’s universities have the same level of prestige as their East Asian competition? Only one – NTU – is ranked within the top 100 global universities, although several others fall within the top 500. Many Taiwan universities have entered into cooperative programs with foreign universities, and it is through such partnerships that many of the international students first come here. But quite often those who initially arrive as exchange students for a semester enjoy the experience so much that they return later for Master’s or doctoral programs.

ForeiGn briDes: Don’t call tHeM iMports

hen Taipei mayor Ko Wen-je casually referred to foreign brides in Taiwan as having been “imported,” his words struck a nerve with the some 600,000 foreign spouses living in Taiwan. Several groups including the Trans-Asia Sisters Association loudly protested the mayor’s word-

ing, and the matter took several days to die down. Ko has a history of making off-thecuff remarks that land him in hot water, but the reaction provoked by the one word “imported” points to bigger issues than simply a lack of eloquence. Women who have immigrated to Taiwan to marry

local Taiwanese are sensitive about any suggestion that they second-class status. Over the past 15 years or so, the government, along with social welfare organizations like the Eden Social Welfare Foundation, has made a great effort to help integrate these women and their children more fully into Taiwan society. taiwan business topics • april 2015

cover story ImmIgratIon/manpower Once little more than baby-making machines obtained through what were often regarded as seedy “marriage brokers,” many of these women have since gained employment, developed language skills, learned the local culture, and become welcome members of their communities. A change in the law has prohibited “marriage broking” as a business, reserving the function for nonprofit organizations. As a result, the price of the service has decreased from what was formerly NT$300,000-400,000 to around NT$200,000. More importantly, however, is that the parents of the foreign bride now receive a much bigger portion of the money than they did previously. Rules pertaining to immigration and divorce have also been liberalized. If a woman from Southeast Asia divorces her husband after three years of marriage, she can still remain in Taiwan as a permanent resident. Also, judges in divorce cases – who once nearly always granted custody to the husband – now tend to give priority to the needs of the children, often granting custody to the foreign-born wife. Although 68% of the brides from outside Taiwan are from the Chinese mainland, the rest are almost all from Southeast Asia, primarily Vietnam, and

usually lack Chinese-language skills. Most of them are from underprivileged families in rural areas, and so even if they have the language ability, they often lack the social and cultural skills to navigate Taiwan’s modern urban society. Eden provides a number of programs, many of them self-development activities, to help the foreign brides adjust. The foundation’s caseworkers also seek to establish a relationship with them and try to look for signs of any difficulties they may be having. There is a helpline for providing assistance in case of spousal abuse or other serious problems. Whether or not such marriages will succeed often depends on how they began. Those starting as love relationships are far more likely to endure than marriages brokered through an agent, and as business connections and other links continue to grow between Taiwan and both China and Southeast Asia, the opportunities for authentic love relationships have grown. Taiwan society has matured, becoming less parochial and more multicultural. Although instances of discrimination still occur, says Sharon Yang, an Eden representative, “people are starting to adapt to others’ cultures and to think of them not just as ‘foreign brides,’ but as members of the community.”

NANYANG DELIGHTS — Wives from Southeast Asia show off their culinary talents at an event sponsored by the Taipei City Labor Bureau. PHOTO : CNA

TWO WHO CHANGED CITIZENSHIP TC Locke

f one’s love of country can be measured in terms of struggle to gain citizenship, then TC Locke should be counted among Taiwan’s most ardent supporters. The Florida native and current member of acclaimed blues band The Muddy Basin Ramblers came to Taiwan in 1989 as an exchange student at Tunghai University in Taichung and immediately fell in love with the place. But his first few years in Taiwan after finishing university in the United States were anything but easy. He worked at many low-wage jobs, eking out a living on earnings of NT$15,000 a month and often living on instant noodles and tea eggs to survive. “I felt my future lay here,” he says, but admits that “things were pretty desperate for quite a few years though.” His situation became so dire that eventually he sought work in China as a 28

taiwan business topics • april 2015

quality control inspector in a factory. And while he enjoyed the people in China, he hated the work conditions and the authoritarian control of the Chinese government. Although desperately wanting to return to Taiwan, he was deterred by regulations that required foreigners to have a work visa if they wished to stay in Taiwan for any length of time. “I missed Taiwan so much I decided, screw it, I’m going to emigrate,” he recalls, understanding that this step meant abandoning his U.S. citizenship. Since the American Institute in Taiwan (AIT) at that time was unable to process such documents, Locke headed to Hong Kong, where he found that renouncing his U.S. citizenship was “remarkably easy.” He merely needed to sign a few forms and answer a few questions at the U.S. Consulate-General, before turning in his passport. As he walked out of

ImmIgratIon/manpower the building immediately afterwards, though, he says he thought to himself, “Oh my God, what have I just done?” He was now a stateless person living in Hong Kong, and getting back to Taiwan without a passport suddenly seemed an almost insurmountable challenge. While working through the red tape, he managed to survive by selling his book collection on the street to buy food and for a time drawing shoes for a catalog to earn cash. Eventually, though, he got his ROC passport and was able to return to Taiwan – but that led to yet another challenge. As he was then in his early twenties, he needed to serve in the ROC military. Locke, who has described his experience in the military in several books, remembers one moment in particular: his first

day at basic training when the new inductees were brought into the mess hall. Every action – including moving the bench back, sitting down, moving the bench back in, and so on – was supposed to await the appropriate command. The lefthanded Locke reflexively moved his chopsticks from the right side of his bowl to the left. The outraged drill sergeant responded with the common insult in Taiwan’s military: “Are you from America?” Not anymore. Reflecting on his decision to take Taiwan citizenship, Locke says: “I wouldn’t want to be a guest my whole life. I want to be a part of it.” “What did I gain? I gained my whole life.”

Quincy Davis

uincy Davis III may not look like a typical Taiwanese, but the 6’8” former Tulane University basketball star is in fact a citizen of the Republic of China. In June 2013, the Los Angeles-born, Mobile, Alabama-raised Davis gave up his U.S. citizenship to accept ROC nationality, enabling him to play on the Chinese Taipei national team. While many might find his decision surprising, the onetime center for Tulane’s Green Wave, who garnered 1,106 points and 559 rebounds during his four-year college career, says it was actually easier than he thought and he remains comfortable with his choice. “I went into AIT and they asked me, ‘Are you sure you want to do this? Nobody’s putting a gun to your head? You’re not trying to evade taxes, are you?’” he recalls. “Then the guy asked me, ‘Why do you want to give up citizenship in the greatest country on earth?’ I was like, ‘Do you see the color my skin? Do you see what’s going on on TV and in the news?’ And he said, ‘Okay I understand.’” Three days later he received a document certifying that he was no longer a U.S. citizen. Before his journey took him to Taiwan, Davis had roamed far and wide trying to stake out a place in the game he loved, playing in locales ranging from Cyprus to Venezuela to Portugal and China. After five years, he felt dispirited and returned to the United States. He had pretty much given up on basketball and was in training to be a paramedic when a call came in: a team in Taiwan was interested; could he be on a plane in two days? Davis says his first reaction was “where's Taiwan?” Still, he was curious enough to take up an offer to check it out for a tenday stint. That ten-day stint has so far turned into a four-year career with the Pure Youth Construction team in Taiwan’s Super Basketball League (SBL). The “Builders,” as they are known, have won three SBL championships with Davis and are currently in the finals for a fourth. The Chinese Taipei national team has also performed much better with Davis as center. It did well in the 2013 William Jones Cup in Taiwan, took fourth place in the International Basketball Federation (FIBA) 2013 Asia Championship and rose to second place in that tournament last year. Davis scored 19 points and grabbed 12 rebounds in the final loss to Iran.

“New Taiwanese” basketball star Quincy Davis III scoring for the Chinese Taipei national team. photo : ap/bullit Marquez

Although Davis is sitting out the SBL championship this year with a back injury, he still feels his decision to take Taiwanese citizenship was the right one. He points to the warmth of the people in Taiwan and their sense of fairness. “This country wants to embrace me, and so far they’ve taken me to heart, and taken to heart the views of MLK (Martin Luther King Jr.) to only be judged by the content of your character, not the color of your skin,” he says. “They’ve done that, they follow that principle. They say ‘that Davis guy, he’s a nice guy, and he’s a black guy.’” taiwan business topics • april 2015

TAIWAN busINess

You saY relocation, i saY MobilitY The relocation services industry oils the wheels of an increasingly globalized and migratory world and has had to transform itself as times have changed.

BY JULES QUARTLY

ake a look at the relocation services industry in Taiwan and you can see writ large the effects of government policy, economic forces, and global mobility trends. The changing job description – from “moving company” to “relocation services” and now “global mobility teams” – emphasizes how this trade has changed with the times. Rather than just being responsible for transporting furniture and kitchenware from one house to another down the road, in another city, or even another country, these enterprises take responsibility for everything involved in transplanting an executive and his family. The operation is as likely to include assistance with visas, cultural assimilation, and insurance as transporting physical goods. At the same time, the scope of services has expanded greatly to include help in finding a place to live, storing documents, language teaching, and transporting exhibitions or fine art. And the list keeps growing. While the term “mobility services industry” has not caught on 100%, “that’s essentially what we do,” says Dan Tattersfield, Taiwan country man-

ager for Asian Tigers Mobility, which has 30 offices in 14 countries or territories and an annual turnover of more than US$115 million. “It differentiates from just moving household goods to a more service-oriented approach that includes hunting for schools, leasing cars, opening bank accounts, and arranging for insurance. The whole package, really.” While major companies used to assign their human resources departments to take care of such matters, the job is now often outsourced to relocation companies because of their specialized services and local knowledge. “It’s definitely a trend,” Tattersfield notes. At the same time, there has been a shift away from shipping three containers of belongings, “along with the kitchen sink,” as part of the package when executives are sent from one side of the world to the other. “Companies are more mindful of savings, so not offering employees the relocation allowance they used to means those willing to accept less are more likely to be offered the position,” Tattersfield says. “Typically they (employees) will take 500 pounds

(227kg) of goods. What we are seeing is the number of shipments is holding steady or going up slightly, but the size of shipments is going down. This is what’s happening and I think it’s going to continue.” The new business model is for major companies to have contracts with global relocation management companies such as Paragon Relocation and Brookfield Global Relocation Services, says Tattersfield. They then outsource to origin and destination agents. Put simply, they don’t have have the trucks or movers themselves, but they know someone who does. Another change is that the individual on the move is just as likely to be Asian as Western, Tattersfield observes. “More than 50% of our business is Asians. A huge proportion consists of Taiwanese who were living in the States or elsewhere – they are the perfect candidates to return. It also includes Malaysian-Chinese, Hong Kong-Chinese and Singapore-Chinese. More and more international companies are going with Chinese speakers because of how well they fit in with the company’s needs.”

taiwan business topics • april 2015

TAIWAN busINes s

Taiwanese are migrating as never before – either returning from the United States and Europe, moving there, taking the short trip across the Taiwan Strait to China, or heading for another Asian destination. “Taiwanese are more mobile, more eager, and have fewer requests when assigned elsewhere,” says Tattersfield. “To bring someone from Taiwan back is often cheaper, as they don’t have as much stuff, they have family here, and don’t need relocation services like house finding. I often encounter a situation when a Taiwan person has been allocated a 40-foot container and instead of 32

taiwan business topics • april 2015

using up the allowance, they just take their clothes, a couple of suitcases, and the rice cooker because they will probably be living in a serviced apartment.” His comments reflect broader changes in the political and economic landscape. In a 2012 profile, the Migration Policy Institute (MPI), a Washington, D.C.-based think tank, characterizes emigration from Taiwan as “driven mostly by the deindustrialization of the country’s interior and massive outflows of human capital and investments to China and ASEAN countries.” The report adds that “emigration to China, in particular, has become

prominent in the past decade, though Japan and the United States remain major destinations for Taiwanese migrants as well.” Many major Taiwanese manufacturing companies now do much of their production in China and ASEAN countries, making Taiwan a base for international operations. MPI notes that an outflow of talent, once seen as a “brain drain,” now tends to be a sign of economic development rather than cause for concern, as individuals return with heightened skills and newfound knowledge, often used to start their own businesses. Queenie Huang, general manager of Crown Worldwide Taiwan Limited, says Taiwanese tend to be nimble and flexible, so when they move abroad for a job the company generally provides an allowance but lets the employees take care of housing by themselves. Obviously, this arrangement is not such a lucrative proposition for relocation companies as the traditional “expat package,” but it appears to be the wave of the globalized future. At a time when companies have been tending to hire locally, the ability of employees to adapt quickly to a new environment and permit cost savings helps to maintain international hiring as a viable option. One of the most significant business trends to have affected her business, Huang says, is the number of Taiwanese taking up employment in China, particularly in Shanghai. After decades of total separation, Taiwan entrepreneurs stared investing in China in the late 1980s, to set up factories in the Pearl River Delta region for relatively laborintensive operations. A second wave of investment followed after 2000, principally in the Shanghai area. Yet, given the chance, Taiwanese prefer to live in Taiwan “because it’s a better environment,” says Huang. She adds that many people divide their time between the two sides of the Strait, returning to Taiwan for weekends or on holidays. Taiwan remains the permanent residence for most Taiwanese working in China. As for moves into Taiwan, Huang says the volume was higher during the late 1980s and 1990s due to the large

TAIWAN busINes s

number of Western engineers brought in for major infrastructure projects, such as the Taipei MRT and Taiwan High Speed Rail. More recently, the country’s semiconductor business and high-tech industrial parks have attracted international talent. According to sources in the relocation services industry, the volume of inward moves had been declining, caused by the global financial crisis as well as the lure of China. However, they report that an uptick has occurred in the past few years. National Immigration Agency figures for 2011 indi c a t e t he re we r e a b o u t 1 2 ,0 0 0 American citizens and 10,000 Japanese who were permanent residents in 2011 and about the same number two years later. By January 2015, the number had risen, respectively, by roughly 1,000 and 2,500. A major potential source of future growth for the relocation industry here is the China market, as the Taiwan government gradually eases restrictions on investment by mainland companies and work permits for their executives. Huang’s parent company, Crown Worldwide Group, was founded 50 years ago by the American Jim Thompson in a small office in Yokohama, Japan. Headquartered in Hong Kong, it provides transportation, relocation, logistics, and storage services from offices in nearly 60 countries, including China. Huang says it is still difficult for Chinese passport-holders to get permission from the Taiwan government to live and work on the island. That policy, she notes, also discourages some Western and Japanese companies from setting up here, as a key factor for any company wishing to invest in Taiwan is how to integrate the Taiwan operation with its regional business plan. Another issue is the higher personal income tax in Taiwan compared with Hong Kong and Singapore. “Taiwan is a great country to live in – it’s got a good environment and is safe and friendly – but without the right conditions, people won’t move here,” Huang says. She hopes the Taiwan authorities will do more to promote the island as

an Asian hub. “This was the idea some time ago and the government really ought to look at it again,” she urges. With Hong Kong and Singapore still viewed by most multinational corporations as the ideal bases for business in Asia, Taiwan needs to up its game to be seen as a viable alternative, she believes. Jim Hill, general manager of Santa Fe Relocation Services Taiwan, says his company’s business tends to be more reliant on the state of the U.S. economy, rather than China or other regional markets. “We’re currently benefiting from a strong U.S. economy, which in turn increases the movement of Americans and Taiwanese.” He reports seeing an increase recently in the number of expats – most of them single – coming for relatively short-term, project-based assignments. He adds that companies are reducing the relocation allowances they are offering, instead paying for relatively small sea or air shipments “and with very few extra perks.” His observations jibe with the Cartus 2014 Trends in Global Relocation: Global Mobility Policy and Practices survey that shows families are less likely than before to accompany an executive being transferred, even for long-term assignments. Only 76% of assignments to emerging countries now include family members, a decline from 90% in 2012, at least in part because of cost considerations. One of the main reasons for a failed assignment is that

the family is unable to adapt to the new environment. Cost control was identified by 75% of the survey’s respondents as the top global mobility challenge, above immigration problems and compliance with local laws. While most of those surveyed said the quantity of overseas assignments had remained stable over the past two years, 50% said they expect to see more “mobility” in the next two years, though this includes short-term assignments and extended business travel in addition to longer postings. Other findings from the survey are that the importance of local hires is receding somewhat, in favor of company individuals having the right training and background for the job in hand. This change could also mean that companies are often having difficulty finding the right talent locally. Meanwhile, language and cross-cultural training have been shown to be important factors in ensuring the success of overseas assignments. Among survey findings are that 54% of expats assigned abroad are over 40 and that the top destination is the United States, followed by China, the United Kingdom, Singapore, and Hong Kong. “Our clients are more and more requiring truly international relocation companies, which provide transparency,” meaning accountability and openness, Hill observes. “They also look to us to ensure they’re in compliance with local or international regulations.”

taiwan business topics • april 2015

B a c k g r o u n d e r

FIGHTING THE GOOD FIGHT The Taiwan Stock Exchange Corp. is taking steps to improve board governance among listed companies. BY CHRISTOPHER BATES

ooking oil scandals, chemical pipeline explosions, pollution exposés – a common thread runs through these headline-grabbing incidents in Taiwan in 2014. Beyond the lamentable suffering and social costs, they represent avoidable destruction of shareholder value that could have been mitigated with the effective oversight of an independent board of directors acting in the interests of all shareholders. Research suggests that there is a correlation among corporate governance, board effectiveness, and corporate performance. The Taiwan Stock Exchange Corp. (TWSE) is leading the effort to increase attention to board effectiveness and compliance in the ROC.

Where does Taiwan stand? Since 2003, the Executive Yuan has been paying increased attention to corporate governance and has sought to direct policy and encourage voluntary adoption of best-practice principles of corporate governance, corporate social responsibility (CSR), and ethical management and conduct. The TWSE’s Corporate Governance Center over the past two years has put in place a Corporate Governance Evaluation System for Taiwan listed companies. The system involves a mandatory evaluation in which 92 yes/no questions explore five dimensions of governance: • Protection of shareholder rights • Equitable treatment of shareholders • Board composition and management • Information transparency • Protection of stakeholder interests and CSR The outreach to Taiwan listed companies took place in Q1 2014 and the results are expected to be released this month. To ensure that company boards understand the evaluation criteria, the Taiwan-listed companies were encouraged to do a voluntary self-assessment. An independent task force 34

taiwan business topics • april 2015

established by the Stock & Futures Institute will also collect publicly disclosed information about all listed companies as the basis for determining the answers to the 92 questions. In this first year of the evaluation, the Center has decided to “honor outperformers and encourage benchmarking” by releasing the results of only the top 20% of listed companies, highlighting and celebrating their compliance. “The goal is that right action will be taken by all listed companies to bring Taiwan in line with international standards and enhance transparency, investor involvement, and the quality of capital markets,” stressed Joe Cheng, senior vice president of the TWSE’s Corporate Governance Department. Over the coming years, the percentage of results released will be ramped up, reaching 100% in 2016. Research conducted by Heidrick & Struggles and presented in the Asia Pacific Corporate Governance Report 2014 found that other Asia Pacific (APAC) nations, with Australia in the lead, have well-established board governance and compliance regimes in place and are now starting to focus on the bigger question of improving board effectiveness. The Heidrick report showed consistently that the capabilities of “People, Vision, Leadership and Innovation” were the leading indicators of sound board effectiveness; four core drivers and five supporting drivers were also identified as necessary to promote change and deliver best practices. The APAC survey respondents identified a balance of skills, knowledge, and experience on the board as the #1 core driver. Having this balance impacts the chairman, as well as the ability of the board to constructively challenge senior management on vision and corporate strategy and on the assessment of systemic risks and innovation rewards. As shown in Table 1, Taiwan directors do not appear to be “over-boarded” and could afford to work on more boards. The concomitant cross-fertilization of ideas and best practices is seen as beneficial. Taiwan also lags behind the APAC

Backgrounder

average for the percentage of directors with previous CEO experience. Having such experience enhances the director’s perspective and credibility as a counterweight to the corporate CEO. Table 1. How many boards do directors serve on?

Taiwan 2011 2014

serving only on one board serving on two serving on three serving on four serving on five or more Percent of individuals serving as directors who have previous CEO experience

79.2% 14.3% 4.0% 1.4% 1.0%

APAC Average 2013

80.2% 13.6% 3.7% 1.3% 1.2%

18.9%

48.4% 24.2% 12.2% 6.4% 8.8%

17.4%

23.6%

Empowered support of committees to help the board make decisions and share the workload came up in the Heidrick APAC survey as the second most important driver of board success. The role of committees has grown significantly in recent years as they have taken on important decisionmaking tasks and then reporting back to the board. This approach has been shown to have a positive impact on talent, vision, and innovation. David Pumphrey, partner emeritus at Heidrick & Struggles and one of the authors of the study, says the benefit extends beyond the Audit and Remuneration Committees. “High-performing committees provide better talent reviews and succession planning,” he observes. “They are generally clear on strategy and assessing the importance of innovation and risk scenarios.”

identify areas of potential improvement in board effectiveness when there is a systematic review of performance. This need also dovetails with the fourth core driver, identifying board improvement opportunities. Data is not available as to how often board evaluations were conducted in Taiwan in past years or by whom. But going forward, the Corporate Governance Evaluation System will take place as an annual, formal exercise, ensuring that Taiwan listed companies reach 100% in this metric, versus the 53% average in the region. This achievement will be an admirable milestone. Of equal or greater importance, however, is the objectivity of the evaluation and who on the board has ultimate responsibility for conducting it. On average, 46% of listed companies in the six APAC countries studied retain an external consultant to evaluate the board at least once every two years. The scope is likely to cover the composition of the board (profiles of skills and competencies); its processes, structures, and culture; and its behaviors and team dynamics. “After conducting a thorough board evaluation process with Heidrick, our clients have told us it was well worth the investment,” noted Graham Poston, Regional Practice Managing Partner for the Heidrick CEO and Board Practice in Asia Pacific. “They feel they are more confident not only that they are driving improved governance and compliance, but also that they are contributing more effectively to the strategic direction of the company in the interests of shareholders and stakeholders.” In Taiwan, the board is not required to sign off on the self-evaluation submitted to the TWSE, and the SFI Task Force will conduct its objective evaluation independently. Progressive boards may want to get ahead of the curve in driving self-evaluation and board improvement or bringing in experts to help.

Table 2. Comparing the use of board committees

Taiwan

APAC Average

2011 2014

2011 2013

Average number of committees supporting the board

1.1

1.22

3.9

4.4

Percentage of boards with Nomination Committee

n/a

63%

80%

Table 2 suggests that the average Taiwan-listed company is at the stage of just accepting board committees as required under the regulations for compliance, but not leveraging additional committees to enhance board and corporate performance. Remuneration Committees are required under the regulations, and Audit committees are required under the regulations for listed firms with more than NT$2 billion in paid-in capital, and the data shows that listed companies are merely complying with this stipulation. Within the region, listed companies have progressed beyond mere compliance to appoint committees focused on nomination, strategy, risk, CSR, and other areas. This is an important aspect in which Taiwan needs to catch up with regional trends. An objective regular board evaluation is the third core driver of optimum performance, since it is only possible to

Table 3. Balance between executive and non-executive directors

Taiwan 2011 2014

Percentage of Non-Executive Directors on the Board

71.95%

67.29%

APAC Average 2011 2013

77.5% 75.2%

Achieving an appropriate balance between executive and non-executive directors was identified in the study as having a supportive, but not a core, impact on board effectiveness. It does have a positive impact on leadership and team dynamics on the board. The percentages and trend observed in Taiwan and APAC are similar (see Table 3), with around 70% of boards made up of non-executive directors. The decline over time in APAC is attributed to the trend to include CFOs on the board. The holding of regular board meetings (see Table 4) is seen as a supporting driver of board effectiveness. Too few meetings and the board does not have an opportunity to establish effective debate and an esprit de corps. Too many, poorly planned, or numerous ad-hoc crisis meetings, however, detract from board effectiveness. “A combination of the right number of meetings per year and thorough preparation and attention to detail by directors improves the relationships

taiwan business topics • april 2015

Backgrounder

Table 4. Frequency of board meetings per year

Australia

11.1

New Zealand

10.9

China

directors serving over nine years is significantly greater than the average in APAC, and – worryingly – it is on the rise. Table 6. How diverse is the composition of the board?

8.5

India

8.1

Taiwan

7.2

Hong Kong

5.9

Singarpore

5.8

Percentage of companies with no women on the board

between board members and the quality of their discussions,” notes Pumphrey. “In our experience – and as we stated in our study regarding Singapore and Hong Kong – it is difficult for a board to deal effectively with both regular compliance and emergent ad-hoc issues with the 7.2 average meetings per year in Taiwan.” While board members themselves may not (understandably) cite the need for clear criteria for board member replacement as a supporting driver to improving effectiveness, the conclusion of external observers is that it deserves inclusion. The Heidrick survey suggests that such clear criteria have a positive and objective impact on top talent performance and clarity of vision. Some of the metrics used to measure board turnover are average age and average time on the board. The average age in APAC for board directors is 60.3 years. Taiwan does not require boards to report the age of directors, so comprehensive information on this score is not available from TWSE. However for those boards that have reported their directors’ ages, the average is 63.2, older than in any of the other six countries surveyed. Taiwanese respect for ones’ elders notwithstanding, this fact becomes a worry, especially when cases exist such as one of Taiwan’s largest companies, otherwise famous for corporate governance and compliance, which has an average age for board members of well over 70 and no nomination committee.

Percentage of women board members Percentage of non-national directors on the board

Taiwan

APAC Average

2011 2014

2011 2013

46.4%

44.8%

31.5% 24.1%

12.0%

12.3%

8.8%

n/a

11.8%

23.4% 31.5%

Board diversity (Table 6), both diverse gender and nationality mix, has received significant attention from the world press and academics, but was deemed less important by survey respondents, one of whom said: “So-called ‘governance best practice’ is too preoccupied with appearance and issues such as gender diversity, and not enough with the effectiveness of the board as a whole.” Taiwan encourages gender diversity on the board to improve effectiveness, but it is not a regulated requirement. The results are mixed. While the average percentage of female board members is higher in Taiwan than in APAC, the percentage of boards with no female directors is also much higher. The TWSE requires reporting of foreign nationalities on local boards but does not release these statistics. Starting with 2014 annual reports, Taiwan listed companies will be required to lift the veil on this factor to give investors more insight into board composition. In an increasingly tightly interconnected global village, where news, trends, technologies, and disruptions can rapidly cross national boundaries and have significant business impacts, best practice embraces the concept of “diversity of thinking” in which a board is comprised of a mix of ages, nationalities, genders, and functional backgrounds to bring a more holistic approach to director selection.

Table 5. How long do board members serve?

Taiwan

APAC Average

2011 2014

2011 2013

Average number of years on the board

5.8

6.8

Percent of non-executive directors serving more than 9 years on a board

18.6%

21.2%

7.9 n/a

6.8 16.5%

The average time on a board (Table 5) is an important measure in APAC, and in the region the trend is a reduction in the number of years. In Taiwan, however, there has been a significant increase. We can only speculate whether this difference is due to a shortage of qualified people in Taiwan to serve as directors, or a propensity to engage only a small population of individuals well known to the management. A guideline of nine years as the maximum length of tenure is now becoming the norm for non-executive directors in APAC; after that they are regarded as “non-independent.” In Taiwan, the number of 36

taiwan business topics • april 2015

Table 7. Inclusion of independent directors on the board

Taiwan 2011

2014

14.18%

19.62%

Number of boards in which the chairman and CEO positions are held by the same person

31%

32%

Number of boards in which the chairman and CEO positions are held by spouses

1.5%

1.4%

Average percentage of independent directors on Taiwan listed company boards

The final supporting driver of high-performing boards is the representative number of independent directors (Table 7), as opposed to non-executive directors (who may or may not meet the criteria of being “independent”). Independence is deemed to be important to foster integrity, a balanced focus on shareholder interests, the freedom to objectively challenge management, and the integration of diverse business experience in weighing innovation and risk. The United States is

Backgrounder

an outlier in this area, since the preference around the world is for the chairman to be independent and separate from the CEO. It should be noted that the definition of an independent director is not universally agreed upon among regulators from different jurisdictions or among different boards. The Heidrick survey highlighted six indicators used to assess independence. The director: • Has no significant commercial contracts with the group • Is not currently employed by the company • Has no cross non-executive role (a non-exec director and a CEO who sit on each other’s board) • Is not a reference shareholder (major direct shareholder, such as a founder or family member) or employee shareholder representative • Has not been an executive of the company in the last five years • Has not been on the non-executive board for nine years or longer The Financial Supervisory Commission requires the inclusion of no fewer than two independent directors, comprising not less one-fifth of the total number of directors, and the evaluation system encourages companies to exceed these requirements. Its guidelines say: “Independent directors shall possess professional knowledge and there shall be restrictions on their shareholdings and the positions they may concurrently hold. They shall maintain independence within the scope of their directorial duties, and may not have any direct or indirect interest in the company.” Companies are also required to use only independent directors on the audit committee, provide them with special administrative support, have their opinions specifically noted in meetings, and other distinctions. The average number of independent directors on Taiwan

boards is both increasing and reaching the level encouraged by the regulators in their best-practice principles. This trend is an encouraging sign. The number of boards in which the chairman and CEO are the same person is high, but still less than in the United States where over 50% of S&P500 boards have this arrangement. However, given that Taiwan boards have fewer independent board committees providing oversight and objective reference, this concentration is a cause for concern. As the late U.S. Supreme Court Justice Louis Brandeis, an ardent proponent of transparency, once said: “Sunlight is said to be the best of disinfectants.” By creating the Corporate Governance Evaluation System and shining a bright light in 2015 on the best, most compliant 20% of listed companies in Taiwan, the TWSE will enable investors to gain insight into the cleanest companies. Capital flows can be expected to follow, and market forces will encourage the remaining 80% of companies to bolster their governance regime. In the 21st century, best-practice boards bring both oversight and focus to the complex forces driving change, not just compliance – and that will be the next step for Taiwan’s boards. — Christopher Bates is Partner in Charge, Heidrick & Struggles Taiwan. Notes on Methodology • The Asia Pacific Corporate Governance Report 2014 (“Foundations and Building Blocks for High-Performing Boards”) draws on data from 170 publicly listed companies on stock exchanges across six countries in Asia Pacific – Australia, China, Hong Kong, India, New Zealand, and Singapore. • The author expresses his gratitude to the TWSE Corporate Governance Department for help in extracting the Taiwan data, which is based on 780-853 TWSE listed companies from 2011 to 2014.

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photo/hunghsi Yang (c onde nast i nterculture g roup)

Ryan Searle assumed the post of Audi Taiwan’s managing director in August 2014. He has been with the Volkswagen Group since 2002, and was head of Audi’s operations in South Africa from 2008 until coming to Taiwan. Searle recently spoke to Taiwan Business TOPICS about the Taiwan car market and Audi’s plans.

Worldwide, Audi had its best year ever last year. What were the main factors contributing to that success?

Audi achieved global sales of over 1.7 million cars last year for a nearly 11% increase year-on- year. A lot of the gains were out of China, where Audi is number one in the premium market. Another big contributor to the global success story was America, which Audi definitely views as a major growth opportunity. At the same time, Audi was able to maintain its longtime dominance in Europe and continues to explore new growth opportunities across the world and on all continents. Overall, Audi has been focused on giving the brand a competitive advantage from a customer-delight perspective. And that’s starting to pay off, because 1.7 million cars puts Audi in the number-two position globally for

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premium vehicles, behind only BMW and ahead of Mercedes-Benz. Audi Taiwan has also set new sales records. What’s behind that performance?

We’ve done well, but coming from a low base since Audi is very young in

Taiwan – the national sales company was established in 2009. In 2014, we achieved a volume of 4,901 cars, but that leaves us in fourth position behind BMW, Mercedes-Benz, and Lexus, so we look forward to closing that gap with our competitors. The Audi A3 range was definitely a success story for Audi Taiwan in 2014, which enjoyed the first full year in the market for the Audi A3 Sportback and Audi A3 Sedan. In addition, the Audi A8 improved by 30% in volume year-on-year on the back of the new model launched in the spring of 2014. In summary, Audi enjoyed positive growth across its entire product range – from Audi A1 to the Audi R8. We also opened a new showroom, our 12th, on Zhongxiao East Road, which also contributed to increasing our volume. What is your assessment of the Taiwan car market and its potential?

It’s a thriving car market that’s growing at quite a significant pace. It’s a very good market, very competitive, with many brands all competing for space. The premium segment grew by about 16% last year, and represents 17% of the total market and that percentage continues to rise. Clearly many volume-brand customers are moving into the premium-brand category, and Audi is definitely making its

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mark in that arena. There’s also a move in this market toward fully functional dealerships, rather than having the showroom located away from the workshop. Audi is looking very carefully at that strategy because we’d like to offer a one-stop shop given the Taiwan customers’ very high expectations regarding customer experience. We want to meet that expectation, so we’re considering how to best make sales, service, repair, and used cars all available under one roof. What are Audi’s plans for approaching the Taiwan market?

We now have a new management team in place. Edward Butler is the new sales director for Audi Taiwan. We have a new business development director, Stephanie Wong; we have a new marketing director, Dr. Angelika Hilger, who has just arrived from Germany; and we will have a new aftersales director arriving in May, Damien O’Sullivan, who’s had experience in exactly this field in Ireland and will be introducing a very exciting new concept for aftersales. Other personnel changes have also taken place, including in senior management below the director level. This is a new team for a new future for Audi in Taiwan, and that’s a great opportunity because people make business happen. We also have a lot of opportunities in our dealer network, which is by no means saturated. Our network is

actually the smallest of the premium brands. We have opportunities to grow and enlarge our footprint and deliver our brand into areas that haven’t yet really experienced the Audi brand. Similarly, we believe there are great opportunities on the marketing front to raise the level of awareness of the Audi brand going forward. I also want to mention that we’re p a r t o f t h e Vo l k s w a g e n G r o u p , which has now established itself in the Taiwan market with Volkswagen Passenger, Volkswagen Commercial, Skoda, and Audi all under one Group structure and company, alongside Volkswagen Financial Services which serves all four brands. It’s an exciting development and by harnessing Group synergies we’re able to benefit from economies of scale. Our partnership with Volkswagen Financial Services is a big plus, and we’re looking forward to introducing some very innovative and attractive financial products in this market very soon. Last but not least, a new product revolution will be arriving in Taiwan in the next two to three years. At that time, approximately 60% of Audi’s product range will be either new or refreshed. That bodes very well for the next push in the years ahead. What are your expectations for the Taiwan market in 2015 and Audi’s place in it?

Last year was a very good year for

the Taiwan automotive market, due in large part to the 10-year lifecycle change. 2005-2006 was a peak period for Taiwan’s overall car market, though there weren’t as many premium cars in the market then. Now, 10 years later, those volume-brand customers have come back into the market in a big way and many of them are choosing premium cars. 2015 may see a small decline in the premium market due to various circumstances both domestic and international, but in general the car market should be at about the same level as last year. The premium market should be anywhere between 63,000 and 65,000 motorcars in 2015, and given the positive outlook for Taiwan’s exports, GDP should continue to grow at a solid level in the coming few years, contributing to a good car purchasing cycle. The premium market could grow to 70,000 in the next five years. Audi is looking to take a larger proportion of that market. We already announced that we expect to sell 6,000 cars this year, and we’ve declared our intention to deliver 10,000 vehicles by the year 2017. In a period of less than three years we want to double our volume from where we finished in 2014. That will be made possible by all of our strategies coming to fruition, with marketing, product, network, and aftersales all contributing to that result. We’re confident of reaching that target – and possibly even going beyond that number.

taiwan business topics • april 2015

amcham event

Public Health Workshop on Infection Prevention and Safety

s Taiwan doing enough to prevent hospital infections? It’s no secret that while hospitals are places of healing, they can also be sources of infection and injury, to staff and patients alike. The scale of the problem, however, often surprises even many healthcare professionals. So it came as a revelation to audience participants at AmCham Taipei’s 2015 Public Health Workshop, titled Infection Prevention and Safety, held March 26 and sponsored by Becton Dickinson (BD) Taiwan, that upwards of 200,000 Americans die every year from medical lapses, 75,000 of them from healthcare-associated infections (HAI) alone. Beyond the pain and distress caused to patients and their loved ones, the result is billions of US dollars in medical costs that could be avoided. S a m Wa t s o n , s e n i o r v i c e p r e s i dent for patient safety and quality at the Keystone Center of the Michigan Health and Hospital Association (MHA), informed the audience of these grim statistics in order to highlight the seriousness of the problem, but more importantly, to discuss solutions. The MHA Keystone Center is a pioneer in reducing the most serious type of HAI – Central Line-associated Bloodstream Infections (CLABSI), which are infections associated with catheters placed into veins during hospitalization. The MHA Keystone Center has succeeded in reducing CLABSI rates in more than 70 hospitals in Michigan by nearly 70% over the past decade by instituting a series of procedural reforms that ensure that catheters are always inserted into patients according to strict, sanitary SOPs. On the back of its success 40

taiwan business topics • april 2015

AmCham President Andrea Wu poses with the workshop participants and representatives of the Chamber's Public Health Committee.

in reducing CLABSI rates in Michigan, Keystone is now spreading the word to hospitals throughout the United States and internationally. BD, a leading global medical technology company, joined AmCham Taipei in bringing together leading medical industry experts to discuss how MHA Keystone Center’s experience can be applied to Taiwan. Moderator Wu Jiunn-jong, distinguished professor of microbiology and medical laboratory science and biotechnology, and director of the Center of Infection Disease and Signaling Research at National Cheng-Kung University, introduced the speakers and led the discussion. Dr. Tseng Shu-hui, director of the Division of Infection Control Biosafety at Taiwan’s Centers for Disease Con-

trol (CDC) under the Ministry of Health and Welfare, outlined the actions taken by the Taiwan government towards reducing HAI. She noted that hard lessons learned during the SARS epidemic over a decade ago prompted Taiwan to comprehensively reform its surveillance and control programs around HAI, with positive results for Taiwan’s healthcare professionals and their patients. Dr. Yue-liang “Leon” Guo, distinguished professor in the department of environmental and occupational medicine at National Taiwan University’s College of Medicine, discussed the results of Taiwan’s groundbreaking laws to prevent healthcare staff needles t i c k i n j u r y, a h i g h l y d a n g e r o u s occurrence in which nursing or other hospital staff are injured while performing injections on patients, often

amcham event

resulting in the staff being infected with the same disease as the patient. Taiwan is only the second nation after the United States to mandate the use of safe needles that are designed to prevent needlestick injuries, but so far the results have been disappointing.

Impetus to change Watson observed that while CLABSI is one of the most serious health risks of hospitalization, a decade ago or more, “when a patient caught an infection, people would just say, ‘well, they’re already sick, it just happens.’” That attitude changed with the seminal work by Dr. Peter Pronovost at Johns Hopkins Hospital, where he identified five critical steps in central line catheterization that dramatically reduced CLABSI rates, including properly sterilizing the area where the central line is to be placed, the use of proper instruments, and the use of checklists to ensure that all procedures are adhered to. According to Watson, the medical community was willing to accept such results from a state-of-the-art hospital like Johns Hopkins, but skeptics questioned whether such outcomes could be replicated across a wide range of hospitals. So Pronovost began looking for partner hospitals to demonstrate the validity of his results. At the same time MHA was searching for ways to improve patient outcomes and the overall quality of care. MHA and Pronovost agreed to cooperate, and Watson says that within 40 hours they had already signed up 60 hospitals ready to participate in this program. “Michigan hospitals were eager to improve,” he notes. Gaining commitments from the hospital administrations was a necessary first step, but equally important was ensuring that the clinicians – the physicians and nurses – were also onboard. Watson, an expert in organizational change, observes that people are resist a nt t o c ha ng e fo r a n y n u m b er o f reasons, and that gaining their buy-in requires “finding the levers.” “You engage people emotionally and then you give them the information on

how to make it work,” he explained. “For clinicians, it’s really about doing the right thing, so focus on changes that will give the best outcome for their patients.” Once the will to change is established, Watson says the actual process of change can be broken into four steps. First, summarize the evidence that demonstrates that the intended modifications will result in positive outcomes. Second, identify local barriers to change, which often include a lack of necessary equipment. The Michigan program tackled that problem by devising and distributing “CLABSI bundles” – toolkits containing all instruments needed. Vital to the success of these changes, Watson noted, is measuring performance, which is the third step. “Data is everything,” he observed. In Michigan, the CLBSI numbers at participating hos-

pitals showed almost immediate results, and within three months the incidence of central line infections had plunged 40%, offering a powerful reinforcement to clinicians that their work was proving effective. Finally, a crucial step four entails ensuring that information and practices are applied holistically to all patients, and that this information is shared across hospitals. The results have been impressive. For more than a decade, Michigan hospitals have sustained a 66% drop in CLABSI rates compared to pre-2003 levels, with an estimated 2,000 deaths prevented and more than US$300 million in healthcare costs saved. Could such results be replicated in Taiwan? The evidence so far appears mixed. During her presentation, Dr. Tseng noted that a World Health Organization (WHO) report on the horrors of

Below left, keynote speaker Sam Watson, and right, Deputy Minister Lin Tzou-yien of the Ministry of Health and Welfare, who delivered opening remarks.

taiwan business topics • april 2015

amcham event

The panel discussion was moderated by professor Wu Jiunn-jong, right.

the SARS epidemic in Taiwan, in which the vast majority of infections were HAI (including 68 healthcare workers) pointed to “inadequate hospital infection control” as the main reason why Taiwan was the third most impacted nation in the world. This finding led Taiwan’s CDC and other health agencies to establish new, more rigorous protocols, including CLABSI prevention measures, sanitary hand washing programs, and comprehensive monitoring and evaluation. Many of these new policies and programs are only now starting to be implemented, and so it remains to be seen whether they are having the intended effect of reducing HAI rates. For 2013, the CDC reports that Taiwan suffered 4,643 central line bloodstream infections caught within hospitals, which Watson estimates led to an estimated 800 unnecessary deaths, 60,000 extra hospital days, and an excess NT$240 million in healthcare costs. Considering the perennial financial stress on Taiwan’s National Health Insurance scheme, clearly such cost reductions would be welcome. Unfortunately, as brought out in the presentation by NTU’s Dr. Leon Guo, introducing major change in the system is quite difficult. Guo pointed out that the use of conventional needles exposes healthcare workers to potential injury and serious illness, and is the “most prevalent occupational hazard for healthcare workers.” He noted that nearly 3,000 healthcare workers have been exposed to hepatitis and 100 to HIV in Taiwan’s hospitals due to 42

taiwan business topics • april 2015

needlestick injuries. Guo said that within two years of President Clinton’s signing the Needlestick Safety and Prevention Act in 2000, 40% of healthcare facilities, including hospitals and other medical clinics, in the United States were adhering to the law’s mandate of using safety needles and by 2005 the rate of needlestick injury had also dropped by 40%. The proportion of hospitals adhering to the provisions of the law reached 90% by 2009. When Taiwan enacted similar legislation in 2011, healthcare professionals expected similar results. 2013 data, however, indicates that the rate of needlestick injury has hardly budged, dropping just slightly from 3.9 per 100 healthcare workers in 2011 to 3.4 in 2013. The reason, Guo noted, was that after two years of the act’s implementation, only 5.5% of medical facilities were actually following the law.

Why adherence to the law remains so low sparked consternation and led to lively discussion among workshop participants. Some speculated that hospital administrators have been reluctant to lay out the extra cash to procure safety needles, but government representatives reported that the NHI had already provided extra funds in its budget to cover the costs. Could it be a question of miscommunication? Or does it reflect an overall environment of weaker worker protection in Taiwan compared to the United States? The answer remains unclear, though there is broad consensus on the need for to find a solution. Watson stresses that the issues of improving safety for patients and for healthcare workers are two sides of the same coin. One of the most compelling outcomes of the Michigan CLABSI reduction program was the improved worker morale, prompting “a revival in their joy in their work.” “People don’t go to nursing school or medical school to fix a widget,” he observed. “They’re there because they want to care for patients.” Seeing how their work directly improves patient outcomes reignites the spark that brought people into healthcare in the first place, he says, which in turn brings about further improvement in care for patients. Perhaps Taiwan’s hospitals will recognize that providing a safe environment for their dedicated workers will also lead to better outcomes for patients.

The panelists are flanked by the co-chairs of AmCham's Public Health Committee, Jeffrey Chen (left) and Dennis Lin (right).

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A Report on the Transportation Sector

Keeping Moving

photo : cna

taiwan business topics â&#x20AC;˘ april 2015

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HIgH SpeeD RAIl IN FINANCIAl CRISIS Time is running out for a solution to avert bankruptcy and total takeover by the government.

BY TIMOTHY FeRRY

IN THIS SURVEY

H • High Speed Rail in Financial Crisis

p44

• Controversy over Songshan Airport p46

• Taiwan Embraces No-Frills Air Travel p48

• Taiwan’s eTag ETC System Gains Int’l Fame p51

• Big “Bikes” Remain a Niche Market p52

taiwan business topics • april 2015

urtling along at speeds of up to 300 kilometers per hour, Taiwan’s High Speed Rail is a marvel of modern technology and convenience, shuttling travelers between Taipei in the north and Kaohsiung in the south – a distance of 320 kilometers – in less than two hours for NT$1,630 (around US$52). The seven-year-old rail system is also massively in debt, however. Built at a cost of US$17 billion, it is Taiwan’s most expensive infrastructure project ever, and saving it from insolvency and government takeover has become a political hot potato tossed between the executive and legislative branches of government. A rescue plan devised by then Minister of Transportation and Communication Yeh Kuang-shih was roundly rejected in January by both major parties in the Legislative Yuan, prompting Yeh’s resignation. No one suggests that the high speed rail line will be abandoned, and whatever happens, the entire process will likely take years to resolve. The main current concern is whether a solution can be found that avoids a huge financial burden on the government and reversal of the longstanding

trend toward greater privatization in the interest of corporate efficiency. In the meantime, dozens of lawsuits against the beleaguered Taiwan High Speed Rail Corp. (THSRC) have been proceeding through the courts. In one major case, Taiwan’s High Court on March 3 decided for the plaintiffs – THSRC investors China Development Financial Holding Corp. and Continental Holdings Corp. – ruling that they have the right to redeem billions of NT dollars in premium shares. Redeeming the entire NT$53.3 billion in outstanding premium shares would bankrupt the company, though in that eventuality the claims of holders of premium shares have priority over those of owners of common stock (but behind banks and other creditors). “I’m very pessimistic because the longer it takes to solve the problem, the greater the likelihood that the government will need to take over the company,” Yeh told Taiwan Business TOPICS. “If the government has to take it over, it will be very messy.” The high-speed rail went into service in 2007, after nearly a decade of construction, and from many standpoints has been a great success. On-time performance stands

A Report on the Transportation Sector

at 99.38%, and annual ridership has increased from dismal beginnings to a relatively healthy 58% of capacity, with more than 47.5 billion riders per year. For 2013 (2014 numbers haven’t been released yet), the THSRC reported NT$3.29 billion in profits on NT$36.1 billion in revenues, up 6.24% from 2012. The number of stations is set to be increased from eight to 12, with three new stations coming online in 2015. But ridership has never come close to expectations, averaging 130,000 daily, compared to estimates of 240,000 in the original feasibility study. And only a change in accounting methods – calculating depreciation in proportion to ridership instead of using traditional straight-line depreciation – allows the company to register any profit at all. Yeh says the company cannot continue using that accounting technique indefinitely, and “if you use straight-line depreciation, every year it loses maybe NT$5 billion to NT$10 billion.” Technically, the company is already broke because the net value is below zero, he adds. “It is only solvent because the shareholders say it is.” Moreover, THSRC’s concession – the period in which the company has operational control over the Taiwan’s high speed rail under its Build-Operate-Transfer (BOT) agreement – is set to run out in only 18 years. With the company having NT$457 billion in liabilities, according to the balance sheet THSRC reported for 2013, it is clear that THSRC’s investors will see losses at the end of that period. Yeh’s proposal would have extended THSRC’s concession period by 40 years for a total of 75, easing its depreciation burden and helping the company to get out from under its accumulated debt load. The plan called for THSRC to reduce capital by NT$39 billion by forcing common-stock holders to take a 60% hit on their total of NT$65.13 billion in equity, while also redeeming NT$40 billion in preferred shares and raising NT$30 billion from the sale of new shares. “We wanted to inject NT$30 billion in new capital,” says Yeh, with NT$20 billion injected by government-controlled

financial institutions and “a little bit from the original shareholders.” NT$10 billion in shares would have been open to the public, with “every citizen entitled to purchase some.”

Seeking a balance Yeh says the reason his plan called for most of the new shares to be sold to government financial institutions was to ensure that the original shareholders would not retain their dominance of the company. “If your proposal favors the original shareholders too much, the government and public won’t be very happy,” he explains. “If your proposal favors the government or ordinary people too much, the original shareholders won’t be happy, so I tried to find a compromise.” Unfortunately, Yeh’s attempt at compromise appeared to be the proposal’s undoing. News reports quoted Democratic Progressive Party (DPP) chair Tsai Ing-wen as criticizing Yeh’s proposal as providing “major benefits in the amount of hundreds of billions of Taiwan dollars” to “certain individuals” in a black-box transaction. DPP legislator Kuan Bi-ling labeled the proposal as collusion between government and big business, hammered out in closed door negotiations, that would continue to benefit the five original shareholders at the expense of government and the public.

According to news reports, reduced depreciation and interest charges as a result of extending the concession by 40 years would save the company up to NT$7.1 billion a year. NT$4 billion of these savings were reportedly intended as investment returns, with the rest benefiting the public through fare discounts. The proposal estimated a 5.9% average annual return on investment for new shareholders, and also included NT$150 billion for new “rolling stock” (locomotives and cars) and NT$200-300 billion for facility maintenance over the next five decades. Despite the stated benefits, the reception the proposal received from Kuomintang (KMT) legislators was not any warmer than from the opposition. Several KMT lawmakers questioned the validity of offering a 5.9% return from investment in the troubled firm, and suggested that any returns should go towards reducing fares further. Yeh resigned from his position on January 9 following legislative review of the proposal, and THSRC president Tony Fan quickly followed suit. In mid-February, the new president of THSRC, Victor Liu, offered his own proposal for restructuring the company. It is quite similar to Yeh’s, but with one important difference: it calls for all of the new shares to be released to the general public. Yeh cautions that this proposal

The Taiwan High Speed Rail has been a success from many standpoints, but its financial structure was too weak from the outset. photo : cna

taiwan business topics • april 2015

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would complicate the process, and that having multitudes of small shareholders might allow the original investors to retain control over the company. Taiwan’s high-speed rail has been contentious from the start. Originally conceived in the early 1990s during Taiwan’s boom era when economic growth rates were in the 8-10% range and the “Taiwan miracle” was in full swing, the project was considered essential to connect the southern industrial sectors in Kaohsiung with the northern management and financial hubs in Taipei. Two consortiums bid on the project: the Chunghwa High Speed Rail Consortium (CHSRC) and the Taiwan High Speed Rail Consortium (THSRC), comprised of such large Taiwanese groups as Continental, Evergreen, Fubon, TECO, and Pacific Electric Wire & Cable. More than NT$250 billion separated the two bids, with the CHSRC version calling for the government to put NT$150 billion into the project, while the THSRC pro-

posal involved no government investment, and in fact promised that the THSRC would pay the treasury NT$100 billion over the course of the concession. Unsurprisingly, the THSRC bid won the day. “On day one, when they won the bid, their financial structure was seriously defective,” asserts Yeh. The consortium injected only about NT$26 billion of its own capital into what was then estimated to be a NT$400 billion-$500 billion project, forcing it to borrow substantial amounts at the high interest rates in effect at the time. But even at those rates THSRC was unable to find lenders for so much capital, and the Taiwan government felt obliged to step in to save the project, offering over NT$300 billion in guarantees for loans and asset purchases. Yeh faults the government for failing to fully investigate the sustainability of the bid. “The reviewing board did not spend enough time to check why these two bids would have a difference of NT$250 billion,” he says. “That was the

CoNTRoveRSY oveR SoNgShaN aIRpoRT The recent plane crash in the Keelung River has renewed calls for closing the airport earlier than the planned target of 2030. BY JeNS KaSTNeR

he existence of an airport taking up 400 hectares of prime real estate right in the middle of Taipei City has for decades annoyed a great number politicians, city planners, opinion leaders, and nearby residents – while also being appreciated by many travelers for its convenience. But after Taipei International Airport (commonly called Songshan) made world headlines on February 4 when

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a TransAsia Airways ATR72-600 turboprop plane crashed into the nearby Keelung River minutes after taking off from its 2,605-meter-long runway, killing 43 people and injuring 17 others, momentum has been growing for closure of the airport earlier than the government’s current target date of 2030. The critics say that the flights served by Songshan should instead be operated from Taiwan Taoyuan International Air-

original mistake.” In addition, the concession time of 35 years, including a decade for construction, was also “definitely not feasible,” observes Yeh, as there was little chance that THSRC could recoup its investment and pay back its loans within only a few decades of operation. The original backers of the project also proceeded on the basis of some wrong assumptions, going forward just as Taiwan’s economic growth was slowing and China was beginning to o p e n u p . M u c h o f Ta i w a n ’s i n d u s trial capacity was being relocated to the China mainland, along with substantial numbers of the business professionals who had been expected to comprise the majority of high-speed rail riders. But all that is clearer in hindsight. Looking ahead, both major political parties and both the Executive and Legislative Yuans seem content to kick the can a bit further down the road for a new government to deal with in 2016.

port, Taiwan’s biggest airfield and only an hour’s drive from downtown Taipei. Flights currently served from Songshan consist of domestic routes, including those to Taiwan’s outlying islands; flights to several mainland Chinese cities, including Shanghai; and such regional destinations as Tokyo, Seoul, and Ho Chi Minh City. Among the most influential figures now calling for an early closure of Songshan is Lai Chen-I, chairman of the General Chamber of Commerce of the ROC. “Songshan is in the center of Taipei, and from the TransAsia crash, we clearly see it’s a very dangerous airport,” he says. “The runway is too short, and the development of our capital city is seriously hindered by height restrictions on buildings because of Songshan.” Lai urges development of the site for offices, shopping malls, and logistics centers, enabling it to become “an Asian operations center for Taiwanese businesspeople and their ethnic Chinese peers from all over the world.” In his opinion, the area should not be used for new

A Report on the Transportation Sector

housing, which “would better be located in such other cities as Taoyuan, New Taipei, and Keelung that have good transportation linkage to Taipei.” Built in the 1930s during under Japanese colonial rule and divided into a civilian sector and an air force base since 1950, Songshan handled all domestic and international flights until the Taoyuan airport’s inauguration in 1979 turned it into a purely domestic hub. The launch of the Taiwan High Speed Rail in 2007 caused a drastic drop in both the passenger and load volume at Songshan, delivering another blow to the rationale for its continued existence. At the same time, the strengthening of social movements in Taiwan emboldened residents of the nearby community to complain about the airport’s noise. The issue tended to heat up shortly before each mayoral election in Taipei and to die down right afterward. A major new development came in the run-up to the 2010 mayoral election, when incumbent Hau Lung-bin and President Ma Ying-jeou, both of the ruling Kuomintang (KMT), announced plans to rejuvenate the aging downtown hub by converting it into a major crossStrait terminal, while also serving other regional “city airports” such as Tokyo’s Haneda and Seoul’s Gimpo. Hau and Ma stressed the benefits for internationally isolated Taiwan of being part of “Northeast Asia’s Golden Business Triangle” and enabling Taipei-based businesspeople to easily make one-day round-trip visits to Shanghai, Seoul, or Tokyo. Hau’s opponent in the mayoral race, Su Tseng-chang of the Democratic Progressive Party (DPP), resorted to citing minor flaws in the airport. He decried slow conveyor belts, overpriced tickets, and cockroaches in the noodle soup at the Songshan canteen, but he lost the election and the upgrading of the airport proceeded. Since then, air traffic at Songshan has grown substantially – from 50,000 flights carrying 3.7 million passengers in 2010 to 620,000 flights carrying 6.1 million passengers last year. “The Executive Yuan in November 2012 approved the ‘Capital City Business Airport – Domestic Flight Hub’ plan to promote the aviation industry, create

With the iconic Grand Hotel in the background, a flight lands at Songshan Airport. photo : cna

jobs, and enhance urban competiveness,” says Luo Wen-hui, an officer with the Civil Aeronautics Administration (CAA). “As Taoyuan airport has reached its capacity limits, it is unable to absorb transfer traffic from Songshan, and furthermore it lacks the necessary hangar space and logistics facilities.” Luo notes that the planned construction of Taoyuan’s third terminal and third runway will remedy all these shortcomings, enabling Songshan’s operations to be moved to Taoyuan by 2030. Construction of the new terminal and runway is scheduled to start in 2016 and be completed in 2020. The project is the heart of the proposed Taoyuan Aerotropolis, a massive mixed-use development centered around the Taoyuan Airport. There is no need to demand an even earlier cessation of operations at Songshan, says Iris Hsu, an associate professor at Kainan University’s Department of Air Transportation. Although the illfated TransAsia plane apparently nearly crashed into a cluster of large residential buildings, she stresses that the accident was not about Songshan’s location per se but rather due to other factors including airline management, pilot training, and engine problems related to maintenance. According to preliminary findings, the

plane’s remaining good engine was inadvertently shut off after the other one went idle, meaning the crash was the result of pilot error. “Songshan is a city airport, and there are other safe city airports around the world,” Hsu says. “The CAA’s 2030 timeframe is reasonable because air traffic to and from Taiwan is increasing due to growing cross-Strait tourism, the proliferation of low-cost carriers, as well as the increase in air traffic in Asia in general.” Cherie Lu, associate professor at C h a n g J u n g C h r i s t i a n U n i v e r s i t y ’s Department of Aviation and Maritime Management, agrees that the airport has still a role to play in Taiwan’s aviation landscape “as long as its marketing positioning is done well and environmental limitations are clearly enforced.” Lu has done extensive research on Songshan’s noise pollution issues. “The airport and the CAA have done a lot to alleviate the impact of noise” by adopting noise mitigation measures and imposing fines on violators, she says. She notes that a curfew banning late-night flights has succeeded in curbing the problem of sleep disturbance in the neighborhood. Lu recommends, however, that antinoise insulation work be accelerated in

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buildings near the airport, especially for schools, hospitals, and residential buildings. Subsidies are available for the sound-proofing of doors, windows, ceilings, and air conditioning, paid for with the funds collected through the noise charges paid by airlines.

Impact on health While aviation experts support keeping Songshan in service until the expanded facilities in Taoyuan are ready, healthcare specialists have a different opinion. Peter W.S. Chang, a professor at Taipei Medical University and senior advisor to the Ministry of Health and Welfare, says the problem is not only noise but also air pollution, as “the airplane engines certainly contribute to the high PM2.5 level in the city.” PM2.5 stands for particles small enough to penetrate deeply into the lungs. Chang says he hopes a comprehensive scientific study will be conducted on Songshan’s impact on public health, espe-

cially in the aftermath of the TransAsia accident. Besides the anxiety long induced by the noise from aircraft, he notes, now people worry about the possibility that a plane may crash into their building. “This is a development that clearly affects the health of many residents, and Songshan should be moved earlier than 2030 because of this.” Chairman Lai of the General Chamber of Commerce agrees that another 15 years of operations at Songshan, as the CAA plans, would be way too long. Given that the Taipei MRT system will connect to the Taoyuan airport at the end of this year, allowing passengers to get from Taipei Main Station to the Taoyuan Airport in 32 minutes, “Songshan can be closed within the next five years,” he contends. Lai adds that the closure of Songshan could even help in narrowing the regional wealth gap in Taiwan “if Songshan’s air traffic is diverted not only to Taoyuan but also to Taichung and Kaohsiung.” He also cites the estimated NT$100 billion that sale of the Songshan Airport

TAIwAN eMBRACeS NO-FRIllS AIR TRAvel BY pHIlIp lIU

photo : V air

taiwan business topics • april 2015

land would bring into the cash-strapped national treasury. “After closure, the land should be auctioned off to all sectors of our economy, but not under the Build-Operate-Transfer (BOT) contract model for public works,” he stresses. “BOT has become widely mistrusted in our society, as it entails deals between the government and enterprises that the public and the media misunderstand because they do not understand the related laws.” L a i ’s c o m m e n t s c o m e a m i d n e w Taipei City Mayor Ko Wen-je’s efforts to investigate local BOT projects for malfeasance. Since taking office, Ko has reopened contract terms on the Farglory Construction Company’s Taipei Dome project and other BOT cases that had been negotiated under his predecessors. BOT deals elsewhere in Taiwan that have been causing headline-grabbing controversy include the Taiwan High Speed Rail, the Aerotropolis project around the Taoyuan airport, as well as Taichung’s planned Taiwan Tower.

he proliferation of low-cost carriers (LCCs) is transforming the aviation business – in Taiwan as well as elsewhere around the globe. Although the first budget airline to serve Taipei, Jetstar Airways of Singapore, entered the market a decade ago, the local LCC business has been expanding rapidly in just the past few years. There are now 17 LCCs flying the Taiwan route, including two new domestically based carriers in addition to foreign airlines from Singapore, the Philippines, Japan, South Korea, Hong Kong, and China. Last year the 3.2 million LCC passenger-trips – an increase of 12 times in six years – accounted for 7.3% of Taiwan’s international travel. 2013 was a milestone year, with a number of major players, including Peach Aviation and Vanilla Air, both of Japan, and Scoot Airlines of Singapore, setting up in the local market. All three are offering flights between Taipei and Japan, sparking a travel craze bringing

A Report on the Transportation Sector

Japanese backpackers to Taiwan, and – helped by the sharp depreciation of the Japanese yen – Taiwanese backpackers t o J a p a n . S p r i n g A i r l i n e s , C h i n a ’s leading LCC, also kicked off cross-Strait service in 2013. Last year saw the entry of more players, including the first two indigenous LCCs. One of them is Tigerair Taiwan, a 90/10 joint venture between Taiwan’s China Airlines and Tiger Airways, a subsidiary of Singapore Airlines that was established in December 2003. “In principle, Tiger Airways will focus on Southeast Asia, including India, leaving North Asia, including Japan, Korea, and China, to Tiger Taiwan,” explains Tigerair Taiwan CEO Kwan Yue. The second indigenous LCC is V Air, a 100%-owned subsidiary of TransAsia Airways. Another recent entrant to the market is VietJet of Vietnam, which inaugurated its service on December 12 last year, mainly serving Taiwanese businessmen with investments in Vietnam and Vietnamese women married to local husbands, returning on family visits. T h e L C C s s e r v i n g Ta i w a n a r e enjoying a booming business, with the average load factor reaching nearly 90% on flights to Singapore and 80% to Tokyo and Osaka, according to Civil Aeronautics Administration (CAA) data. Spring Airlines’ flights from Shanghai to Taoyuan and Kaohsiung average load factors of more than 97%; of the passengers, 70% are from China and the rest from Taiwan. Many of the Chinese travelers are members of group tours organized by Shanghai Spring International Travel Services, the parent firm of Spring Airlines. For many of the first-time Taiwanese travelers on an LCC flight, the no-frills nature of the service has required some getting used to. When the inaugural Tigerair Taiwan flight took off on September 26 last year from Taoyuan International Airport bound for Singapore, representatives of the Taiwan media were waiting at Changi Airport to interview the passengers about their reaction to budget travel. Taller passengers reported feeling cramped during the more than four-hour flight, especially when those directly in front of them reclined their seats, and in

the absence of an in-flight entertainment system, some passengers said that they had passed the time watching videos on their own tablet PCs or listening to music on an MP3. About half the passengers had ordered meals from a menu featuring traditional Taiwanese dishes, including braised tender pork chop with rice (NT$200 or US$6.70) and pumpkin rice noodles (also NT$200). Some ate their own lunchboxes or snacks, expressing some embarrassment when reminded by flight attendants of the airline’s policy prohibiting customers from bringing their own food and drink aboard. But the flight was certainly a success in terms of load factor – the 180seat cabin was just three passengers short of being fully occupied. When the plane returned to Taipei after refueling, there were 176 passengers on board. That both flights were nearly full was undoubtedly the result of the airline’s vigorous price promotion. Within three and a half hours of the online rollout on September 2, 10,000 tickets for flights departing Taipei up to March 28, 2015 had been snapped up at the incredibly low price of NT$888 (US$30), including tax, one way. The NT$1,445 (US$48) charged for the return leg was higher due to the more expensive airport tax in Singapore, and the round-trip cost came to only NT$2,350, less than half the fares of other LCCs for the route and lower than a round-trip ticket on the High Speed Rail between Taipei and Kaohsiung. Since starting business, Tigerair Taiwan has been expanding its reach quickly, taking advantage of Thailand’s open-sky policy to inaugurate flights to Bangkok and Chiang Mai in November, and launching service to Macau in December from both Taoyuan and Kaohsiung, thanks to a new aviation agreement between Taiwan and Macau that removes restrictions on the number of airlines and flights on the route. The airline plans to open service to Tokyo in April, and to South Korea and Vietnam within this year. It also plans to expand its fleet from the current three aircraft to six before the end of this year and to 12 within three years. “We blend localized service with an

international brand,” says Kwan Yue. He notes that Taiwanese passengers, who account for half the customers, appreciate such localized service as “Taiwanese foods, communication in local language, and hospitality, the hallmark of Taiwanese people.” After arrival in Singapore, passengers can transfer to Tiger Airways flights headed for 37 other destinations, including Indonesia and Australia. Kwan points out that Tigerair Taiwan is mainly targeting cost-conscious customers, including young people, junior businesspeople, and retirees. “In view of their educational level, there should be no difficulty for many Taiwanese people to understand the merits of LCC service,” says Kwan. The inaugural flight of V Air for Bangkok on December 17 last year also caused quite a stir, as the company had run a vigorous online campaign to boost its public profile. The promotion invited visitors to the website to pile up icons representing the airline’s mascot, the Taiwanese black bear, with the company pledging to cut the ticket price in proportion with the number of participants. Eventually, 200,000 persons took part and the company slashed the fare for the first batch of 15,000 tickets to Bangkok to a mere NT$520 each, excluding airport tax. The volume of would-be buyers was so high that for a time the ticketing system was paralyzed. The inaugural flight carried 185 passengers in its 194-seat cabin. Passengers had rather large space, as the seats were 32 inches away from the one in front, similar to the economy-class seats of conventional airlines. Many relished the in-flight Taiwanese delicacies available, including rice with pork chop (NT$250), fried salty chicken (NT$150), and meat balls (NT$150). The plane landed at Don Mueang Airport, Bangkok’s older airport used mainly for domestic and LCC flights, after the three-hour flight. The passengers spent less than NT$2,000 for the round trip, compared with the normal rate of over NT$10,000. Early this year V Air kicked off flights to Chiang Mai and charter flights to Cambodia’s Angkor Wat and it plans to open service to South Korea and Japan in

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Tigerair Taiwan is one of two locally based budget carriers now serving this market. photo : tigerair

the second quarter after taking delivery of its second plane. The company intends to expand its fleet to four or five planes flying to eight or 10 destinations within this year before adding another two or three planes next year. The foreign LCCs welcome the participation of the two indigenous newcomers, saying they can help enlarge the pie, as the share of local LCC service is still far from the global average of 30%, with the rate in some mature markets even topping 40%. The LCC share in Europe reportedly now stands at around 35% and in Singapore about 30%. “The entry of multiple LCCs can expand the pie of the Taiwanese market,” says Liu Pei-chi, Jetstar Airways’ market superintendent for greater China. “Taking short overseas trips on LCCs may become a fashion among Taiwanese people in the future.” For his part, Tigerair Taiwan’s Kwan expresses confidence that LCCs can achieve a 25% market share in Taiwan within the next five years or so. Han Chen-hua, deputy chief of the CAA’s air transport section, says that the launch of Taiwan-based budget carriers will give a strong boost to the local LCC market, though he stresses that local carriers will have to develop their own special features in order to attract business beyond Taiwan.

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Another CAA official, also upbeat about the prospects of LCCs in Taiwan, points to Taiwan’s advantageous location with convenient access to major Asian cities: a mere 90 minutes for flights to Macau and four and a half hours to Singapore, the farthest away. Although the recent drop in international oil prices has slashed fuel costs for both LCCs and conventional carriers, observers see it as particularly helping the LCCs by increasing their ability to solicit customers with low fares.

The lCC experience In order to bring down costs, LCCs minimize service. All tickets are sold online and customers cannot return tickets or change flights, nor can they designate seats without paying an extra fee. Most in-flight services, including drinks and meals, are chargeable options, and passengers must pay for carry-on luggage that exceeds a certain weight, normally 15 kilograms. All checked luggage is chargeable. There is only one class of service, and the space is usually rather narrow so as to accommodate the maximum number of passengers. On the other hand, LCCs generally fly new planes to assure safety and cut maintenance costs, and the fares

typically amount to only 40-50% those of conventional flights. LCC service has become popular mostly in regional markets, for flights of up to four to five hours. Due to the shorter flight time, the inconvenience of bare-bones service and narrow seat space is more bearable. “LCCs provide a vehicle for passengers to arrive safely at destinations on time, while generating savings allowing people to have an extra day of travel,” says Kwan Yue. “LCC s only offer you what you really want and need, while regular airlines provide a comprehensive package, no matter whether you actually need every component.” In recognition of the growing role of LCCs, some countries have built airports dedicated to LCC service. Kuala Lumpur International Airport 2, opened in May 2014, claims to be the largest LCC airport in the world, and the Kansai International Airport in Osaka constructed a second terminal for the dedicated use of Peach Aviation, Japan’s largest LCC and fourth largest airline. Many LCC airports look more like a bus terminal than an airport, lacking the luxury-goods shops, VIP lounges, and other facilities usually seen at larger airports. Some 20 LCCs, including the three indigenous carriers of Spring Airlines, West Airlines, and 9 Air, are serving the Chinese market, where they have a 7% market share. Spring Airlines, launched in May 2004, now owns a fleet of 32 A320s with an average age of four years and serves 76 domestic and seven international routes. The company expects to expand its fleet to 60 planes by the end of 2015 and 100 by 2018. The rapid growth of the LCC business has meant increasing pressure for the fullservice carriers (FSCs) in Asia. Singapore Airlines, for example, saw net profits drop to US$288 million in 2013, onesixth of the peak level in 2006, and spent 150 million Singapore dollars in 2013 to renovate eight planes by increasing the number of first- and business-class seats to retain premium business travelers, who now generate 40% of its ticket sales. In recognition of the LCC trend, the airline in November 2011 had also set up an LCC arm, Scoot, which now has a fleet of six planes flying to 12 cities.

A Report on the Transportation Sector

TAIwAN’S eTAg SYSTeM gAINS ACCepTANCe BY pHIlIp lIU

hen the distance-based “eTag” electronic toll collection (ETC) system for Taiwan’s freeways was first launched in January 2014, it was the subject of heated criticism for alleged unreliability. Now, more than a year later, it is not only running smoothly but has won international acclaim as a model intelligent transportation system. The number of cars bearing an eTag, an electronic tape installed on windshields, already exceeds 6 million – equaling 94% of registered automotive vehicles. Motorists whose cars are equipped with an eTag no longer have to slow down to pay tolls at toll stations. Instead, a total of 319 overhead electronic gantries use RFID (radio frequency identification) technology to track vehicles’ progression along the freeways, automatically deducting tolls – minus a 10% discount – from the eTag account’s pre-stored value according to the distance traveled. The first 20 kilometers traveled each day are free of charge, and car owners can add money to their eTag accounts at 11,000 outlets throughout the island, including major convenience-store chains. Cars lacking an eTag can still travel on the freeways, but the owners need to go to the designated outlets to pay the tolls after receiving bills by mail. The fully automated system has achieved a 99.9998% accuracy rate, despite the heavy freeway traffic averaging 14 million trips each day. The task is also complicated by the different rates charged to passenger cars, buses, and trucks, as well as adjustments made in the rates at certain times and for certain sections for the purpose of reducing traffic at peak times or in congested areas.

The ETC network covers 1,050 kilometers of freeway, making it the world’s largest system of its kind. Since its introduction, the eTag has cut driving time by five to 30 minutes for most motorists, leading to considerable fuel savings. Combined with the elimination of printed toll tickets, the total savings from introduction of the new system is calculated at about NT$2 billion (US$66 million) annually. Besides its length, the ETC system is also the world’s first national ETC network featuring toll collection based entirely on travel distance, as well as the first successful conversion from a system based mainly on the number of trips. Following the launch of free eTag installation in 2012, it took only two years for the system to achieve a 94% usage rate, far superior to the 11 years needed in Japan to attain a comparable rate. The system was developed by the operator, the Far Eastern Electronic Toll Collection Co. (FETC), part of the domestic Far Eastern Group.

The achievement has attracted the attention of many countries – including Vietnam, Malaysia, Italy, and Russia – which intend to adopt the system for their freeways. Vietnam, for instance, is currently testing a system built with FETC’s assistance and scheduled to be implemented by 2016. The widespread acclaim is a far cry from the initial extensive mistrust of the system in early 2014 due to a number of glitches, notably erroneous or repeated collection of tolls. On a single day, January 3, 121 wrong tolls were charged, spurring a media and public outcry. To regain public confidence in the s y s t e m , t h e Ta i w a n A r e a N a t i o n a l Freeway Bureau late that month announced an intensified program to monitor the performance. An auditing committee consisting of seven scholars and experts was tasked with checking the system’s key performance index (KPI) for a 90-day period starting February 1. During that period, the auditors spotchecked seven toll gantries daily, and the

Cars pass under one of the gantries holding sensors to measure the distances traveled. photo : FEtc

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Freeway Bureau announced that it would fine FETC NT$500,000 and possibly revoke the contract if there were four wrong toll collections at the seven gantries or three wrong toll collections at any one of them. The requirement meant an accuracy rate of 99.999%, even higher than 99.8% required by the contract. But FETC passed the test thanks to the strenuous effort of the company’s technical team in debugging the system. Until conversion to the eTag system, FETC had been unable to meet the requirement that at least 60% of the freeway traffic use the ETC system, as stipulated under the 20-year build-operate-transfer (BOT) contract. Many motorists had balked at paying the NT$680 needed to install the transponder or OBU (on-board unit) needed for cars to pass directly through the ETC lanes rather than slowing down to pay ticket collectors at the now dismantled toll stations. By mid-2011, five years

after the inauguration of the original infrared technology-based ETC system, the usage rate had reached only 35% and FETC was facing potential bankruptcy due to fines of NT$500,000 a day. Chang Yung-chang, president of FETC, hit upon the solution during an ITS (Intelligent Transport Systems) World Congress in Busan, Korea, where he spotted an eTag on display. It occurred to him that the adhesive electronic tape could be used as the backbone of the ETC system, and the FETC R&D team then took up the idea and perfected the technology. The Freeway Bureau accepted the proposal on condition that ETC service not be disrupted during the process of system conversion, that the system’s accuracy be verified, and that consumer interest not be compromised. After repeated testing, the feasibility and reliability of the program was confirmed. In order to assure success of the new system, FETC – despite its accumulated loss of NT$3.8 billion – agreed to

provide customers with free eTag installation and to buy back the 1.2 millionplus OBUs in use. In addition, in compliance with Freeway Bureau requirements, FETC agreed to help find employment for the 942 toll collectors, mainly in Far Eastern Group companies or state enterprises under the jurisdiction of the Ministry of Transportation and Communications, such as the Taiwan Railway. In addition, the collectors were assured of receiving their original pay levels at the new positions for five years, on top of severance compensation equivalent to 12 months’ pay. Complaining that hundreds of them were still without adequate new jobs, dissatisfied ex-collectors have repeatedly staged protest demonstration, at times blocking freeway traffic. In mid-March, a group protested outside the residence of Premier Mao Chi-kuo and threw shoes and water bottles at him when he emerged on his way to work.

BIg “BIKeS” ReMAIN A NICHe MARKeT Taiwan has opened to large-displacement American “cruiser” motorcycles, though many obstacles remain. BY SeAN SCANlAN

A Victory Model. photo courtesY o F hYDerson MotorYcles

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he rumble of a Harley Davidson or an Indian Chief still turns h e a d s i n d o w n t o w n Ta i p e i . Despite an over-abundance of twowheeled powered vehicles in every street and alley, these American-style “cruiser” motorcycles are still a rarity in Taiwan due to prohibitive import taxes and stringent emissions testing. In a concession made when joining the World Trade Organization in 2002, Taiwan permitted the import of motorcycles with a displacement in excess of 150cc. However, it only opened the door halfway, as a series of import duties and taxes as well as safety and emissions regulations were put into place and continue to apply. In 2003, the first year in which

A Report on the Transportation Sector

imports of large engine displacement motorcycles were permitted, the Ministry of Economic Affairs hugely overestimated the demand. It forecast sales of 40,000 such vehicles, while foreign motorcycle brands put the number at 10,000 units and actual sales reached just 1,000. Despite the eagerness of foreign motorcycle exporters to be early entrants in the Taiwan market a decade ago, such foreign brands as BMW, Triumph, Ducati, Suzuki, Yamaha, and Honda continue to struggle to overcome Taiwan’s prohibitive taxes and regulations. While many companies have scaled back their expectations, Taiwan’s market for large-displacement heavyweight motorcycles continues to be a niche market. According to Yamaha Taiwan, the two top-selling models of large scooters in Taiwan in 2014 were its TMAX 530 with 1,680 units sold and the Suzuki Burgman 650 with 673 units. Comparatively, American motorcycles have benefited from a delayed entrance into the market. U.S. companies specialize in large engine displacement “cruiser” models, and even a subset – designed with side compartments called “baggers”– that is more suited to highway cruising than daily commuting. Harley-Davidson opened its first shop in 2008 in Taipei, and has since expanded to Taichung and Kaohsiung. Its annual sales volume is estimated to be around 1,000 units. Hyderson Motorcycles, the importer of the two American motorcycle brands Indian and Victory, opened its doors in 2013 offering just three models. According to Sales Manager David Chang, the company sold 180 units in 2014 and is planning to expand to Kaohsiung this year. Chang says Hyderson is already having trouble procuring enough supply of its most popular model, Indian Scout. Though sales of large-displacement motorcycles are picking up, the volume continues to be a disappointment to many who believe that Taiwan should be a paradise for motorcycle riders, given its many coastal highways and scenic mountain roads. Furthermore, with generations of Taiwanese already accustomed to scooters and motorcycles, it would seem

Relatively few in Taiwan have so far been partaking of the Big Bike culture common in the United States. photo : h YDerson MotorcYcles

natural for many of them to upgrade to more expensive models. Jeremy Osterman, owner of Luck 13 Bikes, a company specializing in customizing and repairing Harley-Davidsons in Taiwan and the United States, says “demand is definitely there, but the government needs to change some regulations.” For now, large-displacement motorcycles largely remain a “rich man’s game” or a symbol of wealth and status, even if the motorcycle languishes in a garage. In a market already saturated with expensive cars, one way to impress your neighbors is showing off a big bike. Naturally, there are also some regular daily riders, such as 42-year old Luo Ren who purchased his first large-displacement motorcycle six years ago, a 2003 Harley-Davidson V-Rod anniversary edition imported from Japan. He’s also owned as Suzuki m109R and is a member of the Cruiser Riders Club. For him, the ability to travel on local highways with these motorcycles cuts down his daily commute. He estimates his otherwise hour-long ride to work at just 30 minutes because he is able to take the expressway and bypass the stop-and-go traffic on local streets. But should a large-sized motorcycle break down on an expressway, it is for-

bidden under the law for it to be loaded onto a van or tow truck at that site. Rather, it must be pushed to the nearest off-ramp and loaded onto a truck on a local road. Luo also notes that although the Legislative Yuan passed amendments in 2012 authorizing the Ministry of Transportation and Communications (MOTC) to allow heavy motorcycles to travel on National Freeways 1 and 3, the proposed change was never put into effect because of opposition from a number of local governments. A public opinion survey conducted by the MOTC also found relatively little public support for opening the Freeways to heavy motorcycles.

early history The earliest motorcycles were merely bicycles fitted with an engine. Given Taiwan’s prominence in the bicycle industry, it might be reasonable to expect the island to similarly thrive in the production of motorcycles and scooters. Like bicycle production, motorcycles and scooters are “cluster industries” that rely on a tight network of parts suppliers, since no single company can produce items as divergent as rubber tires and headlights, or leather bike seats and han-

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In Taiwan, heavy motorcycles are subject to heavy import duties and various restrictive regulations. photos: inDian chieF

dlebars. The type of SME industry in which Taiwan excels is well-suited to such close cooperation. And given 50 years of government protection, Taiwan’s motorcycle industry had adequate opportunity to flourish, especially the three leading domestic firms of Kymco, Sanyang, and Yamaha, who enjoy near total dominance of the local market. After World War II, the import of foreign motorcycles was quite common, with many of Taiwan’s educated and entrepreneurial class riding around on imported motorcycles. Though pedicabs ruled the road in those days, motorcycles were a luxury the middle class could afford if an automobile was out of their reach financially. When a foreign exchange shortage in 1952 led to a temporary ban on the import of motorcycles but not of parts, quick-thinking motorcycle distributors saw a chance to begin local assembly. The prohibition on motorcycle imports would eventually end in 1959 due to an improved economic situation and complaints about the poor quality of the locally made product. But the Taiwanese motorcycle makers had already gained a foothold in the market, and in the coming years many would continue cooperating with Japanese firms to produce low-cost, small-sized motorcycles.

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One Taiwanese maker, Kwang Yang began cooperation with Honda, but split from the Japanese giant in 1963, though it continues to produce parts for Honda. In 1970, Kwang Yang assembled its own complete motor scooter and marketed its Kymco brand for export in 1992. Sanyang did something similar, and Yamaha naturally shares a relationship with its Japanese namesake. Government regulation had an impact again in 1979 during the oil crisis when the Energy Conservation Act led to the termination of license plate issuances for motorbikes over 150cc. This move provided the domestic industry with even more market protection from foreign competitors specializing in larger-engine motorcycles ideal for cruising highways and roads. Today there are 13.75 million registered motorcycles and scooters in Taiwan, one for every 1.56 people, according to the MOTC. The Japan Automobile Manufacturers Association calculates that Taiwan has the highest ownership rate in the world. By comparison, the rate in some neighboring countries is one motorcycle or scooter for every 3.5 people in Malaysia, 4.2 in Thailand, and 5.9 in Vietnam. The cold winters in places like Korea and Japan discourage widespread motorcycle ownership.

Taiwan’s motorcycle manufacturers employ an estimated 10,000 people and export about half of the annual output of 1.3 million units. The total production value is some NT$85 billion (US$2.7 billion) a year. But the industry is now facing stagnating domestic demand due to the obvious market saturation and the increased availability of convenient public transportation. According to the MOTC, domestic sales have seen little growth in recent years, with annual sales ranging from 650,000 to 700,000 units.

Tariffs and regulations For imported large-displacement motorcycles, the biggest obstacle is steep import duties and other taxes, which can bring the retail price of a motorcycle to around 180% of what a customer would pay in the United States. “This Harley-Davidson Sportster sells for around $8,000 in the U.S. but by the time it gets to Taiwan the price is about $20,000 – more than double the price when you

A Report on the Transportation Sector

include import tax and the testing that needs to take place,” says Osterman of Lucky 13 Bikes. While the declared import duty is just 17%, this rate is assessed on a motorcycle’s total value, which includes taxes paid in the country or state of origin and also the cost of shipping and insurance. After that, a commodity tax, a business tax, and a trade promotion fee are assessed. While import taxes can be passed on to the consumer, a bigger hurdle is the passage of stringent safety and environmental checks. Each imported motorcycle must pass tests conducted by the Automotive Testing and Research Center (ARTC) and then the Vehicle Safety Certification Center (VSCC). This process can be long and drawn out, with the average imported motorcycle taking two to six months for passage. Some larger importers have been able to arrange for automatic passage for all subsequent vehicles of a given model after the first unit has been certified, but more often than not, each individual motorcycle must be tested. The tests range from engine noise to emissions of hydrocarbons and nitrogen oxide. Taiwan has largely followed the European Union’s sixth-stage standards, which mean that only electronic fuel-injected (EFI) motorcycles are allowed, with older carburetor models having no chance of passage. Although motorcycle enthusiast Luo Ren says he understands the government’s concern with protecting the environment of a small island with limited resources, he notes that the regulations prevent a number of popular

motorcycle models from being imported into Taiwan. Luo and Osterman reserve their main criticism for the lengthy testing process carried out by ARTC and VSCC. While part of the problem is that the ARTC facility is understaffed, Luo says another issue is general indifference to owners of such motorcycles. For example, should a motorcycle fail passage in one category, it automatically goes to the back of the line. Osterman believes the ARTC should be able to process a vehicle within a month’s time, including providing opportunities to re-check or undergo repeat inspection of areas in which a motorcycle has failed. Lengthy delays in testing can hurt dealers and motorcycle importers, potentially leading to lost orders. Multiple attempts at passing emissions can be expensive. If a vehicle passes on the first attempt, total ARTC and VSCC fees are estimated at around NT$100,000, though if multiple attempts are needed, the charge can easily rise to NT$200,000. To ensure that motorcycles can go through the process as quickly as possible, Osterman has employed a thirdparty inspection group to undertake preliminary tests. Only those vehicles passing the preliminary test will be sent to ARTC. However, the emissions standards are so exacting that atmospheric conditions at each of the two different ARTC centers (Hsinchu and Changhua) must be taken into account and replicated at the third-party testing center. Once a vehicle passes ARTC and VSCC inspection, it is qualified to be

photo : Scout

licensed and won’t need to be retested for another five years. After that it will need to be tested annually, and after 10 years it needs to pass inspection twice a year. Another aspect of the stringent testing is that no modifications are allowed for large-displacement motorcycles. While that may not be a problem for the sport cycle market, it is a big issue for American “cruisers,” which are seen as a symbol of individuality and uniqueness. The saying that “no two Harleys are the same” is nearly true, as the vast majority of owners of American cruiser motorcycles change the exhaust system even before the bike leaves the dealership. Osterman says the percentage of exhaust modification in the United States is nearly 100%, whereas in Taiwan it is around 70%. The reason many change the exhaust system is to give their motorcycle a louder, more distinctive sound or “bark.” Many motorcycle riders believe a louder sound from the exhaust system improves safety by allowing automobile drivers to know they are in the vicinity. Changing the exhaust and the air filter system also allows the engine to operate more efficiently, opening it up and allowing the engine to experience peak performance. Other modifications include changing the handle bars to make the motorcycle a chopper, as well as adding customized mirrors and removing fenders or “bobbing” the motorcycle. In fact, the array of Harley-Davidson aftermarket parts is staggering, and annually is compiled into a Harley-Davidson parts bible. Under Taiwan law, none of these modifications is permitted. Therefore, when motorcycles go for annual inspection, they need to be returned to their original state as specified on documents submitted to ARTC and VSCC, and more importantly must match a series of photographs taken by these testing organizations. Given the high price of largedisplacement motorcycles and the restrictions on modifications and other cumbersome regulations, the industry largely remains a niche market serving a hardcore group of dedicated motorcycle riders. Many changes would have to take place before this market segment becomes mainstream.

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Shining a Light on Taipei’s Treasures

f you have only a few days in Taiwan and want to see as many of its gorgeous temples, engrossing museums, and breathtaking mountains as possible, signing up for a tour could be a wise move. But traveling long distances on a bus, with fellow tourists who spill out like soldiers storming a beach each time a stop is made, is not for everyone. If you are the kind of person who prefers to focus on a smaller area but get to know it in real detail, Taiwan can be an exceptionally rewarding destination. With such visitors in mind, Taiwan’s Tourism Bureau is promoting a series of International Spotlight itineraries. These are ideal for visitors who prefer walking and cycling to faster means of transportation, and who would rather acquire cultural knowledge than souvenirs; in other words, those who embrace the “slow travel” ethos. The program hopes to encourage discerning travelers to go beyond obvious attractions like Taipei 101 and the National Palace Museum. In the words of the International Spotlight’s ChineseJapanese-English website (http:// intlspotlight.taiwan.net.tw), the key aim is “to let travelers get a sense of the lifestyle.” 交通部觀光局廣告 TTB AD

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This year, there are five regional programs plus two nationwide itineraries. Two of the former focus on the Taipei area. With a population of 2.7 million, Taiwan’s capital is big enough to contain everything a discriminating visitor might require, whether a wide variety of excellent cuisine, an invigorating foot massage, or coffee good enough to keep everything on track. Getting from one side of the city to the other is quick and easy thanks to an ultra-efficient MRT (metro), good bus system, and inexpensive taxis. There is plenty to see and do: Fascinating art galleries, picturesque temples, bustling shopping districts, and a ring of mountains where hikers can find hot springs

and fabulous birdlife. The Northern Region I program highlights four districts of Taipei: Chengzhong, Dadaocheng, Da’an, and Beitou. All but Beitou are central, and in fact Chengzhong means “in the middle of the area surrounded by the city’s walls.” Taipei’s walls were demolished before World War I to make space for urban renewal. Chengzhong has been dominated by government offices for over a century. B u t l i k e We s t m i n s t e r i n L o n d o n , between the ministries lie culinary hot spots, an abundance of bookstores, and architectural-historic gems. Futai Street Mansion, Taipei’s old North Gate, and Zhongshan Hall are here. The last, built in the mid-1930s by the Japanese colonial authorities then ruling Taiwan to honor their young emperor, is now a concert venue bearing the honorific name of Dr. Sun Yat-sen, the founding father of the Republic of China (Taiwan’s official name). Tourists with a fondness for color and vitality will adore the nearby Ximending section of the city, where the young go to see and be seen. In the late 19th century, Taiwanese oolong tea was in great demand in foreign markets, and Dadaocheng’s

s e e i n g ta i w a n

merchants grew prosperous supplying buyers as far afield as New York. Tea merchants still do business hereabouts, but it is the colorful stores on Dihua Street that best embody this riverside neighborhood’s traditional character. Dadaocheng’s single most impressive building is devoted to religion rather than commerce. Bao’an Temple, a 200-year-old shrine where Taipei folk venerate a medicine god, is a treasure-house of art. The quality of its 1995–2002 restoration received an honorable mention in the 2003 UNESCO Asia-Pacific Heritage Awards for Culture Conservation. If possible,

visitors should time their visit to coincide with the Baosheng Cultural Festival held each spring. A stone’s throw away, Taipei Confucius Temple is an excellent place to learn about the philosophy that underpins the ancient culture of Taiwan’s Han Chinese majority. Da’an District, two kilometers to the east, is noticeably more modern. Packed to the gills with stores and eateries, Da’an’s Zhongxiao East Road is Taiwan’s busiest shopping zone. Many excellent meals can be enjoyed in the compact Kang Qing Long neighborhood, so called because it includes Yongkang, Qingtian, and Longquan Streets. Here the streets are narrow and the buildings low-rise. Around every corner is an inviting tea house or secondhand bookstore. A branch – in fact, the original location – of acclaimed

dumpling restaurant Din Tai Fung can be found a few meters from the northern end of Yongkang Street. The name Beitou derives from the language of the Ketagalan people, an Austronesian tribe that dominated the Taipei basin until the 18th century. They called this area “Paktaaw,” meaning “witch,” perhaps because of the spooky clouds of steam that rise from the area’s geothermal springs. Invigorating hot springs can be enjoyed in more than a score of Beitou and Xinbeitou hotels, from the affordable to the super-luxurious. For an inexpensive hot-springs experience, head to Longnai Tang, a Japanese-era bungalow with two small indoor pools (one for men, one for women). Senior citizens soak here on winter afternoons; office workers come just before dinner. To l e a r n a b o u t t h e g e o l o g i c a l processes that created these spas, visit the Beitou Hot Springs Museum. The design of this hundred-year-old building was based on one of Japan’s most famous bathhouses, and the original bathing pool (no longer used) can be seen downstairs. It is one of very few buildings in Taiwan with stained-glass windows. The Northern Region II program embraces Taipei’s Zhongshan and Datong districts, both of which offer much of what makes Taipei such a wonderful place to visit, including superb shopping opportunities and a splendid array of restaurants. The area also contains such attractions as the Taipei Museum of Fine Arts, the Museum of Contemporary Art Taipei, and the Lin Liu-hsin Puppet Theater Museum. However, it is the further-flung elements of the program that will likely catch the most notice. In Xizhi, part of New Taipei City, visitors are introduced to the Shi-Yang Culture Restaurant. “Creative Taiwanese cuisine meets rustic tranquility” is how the Taipei Times summed up this revered establishment, noting that “the lush forest grounds… look more like a quiet spiritual retreat” than a conventional dining place. Those who find the sheer variety of eating options in Taipei to be a burden

will relish surrendering to the expertise of Shi-Yang’s chefs. Scrutinizing the availability and quality of fresh ingredients, they design multi-course set meals every bit as delectable as the surrounding mountain scenery. Muzha, home to the Taipei Zoo and Maokong Gondola, is also where U-Theatre Ensemble performs at a hilltop venue reachable only by a steep footpath. This internationally acclaimed troupe has won rave reviews for mesmerizing drum-centered performances magnified by the natural setting. For information about U-Theatre shows and other cultural events, plus all kinds of travel information, visit the Tourism Bureau’s website (www.taiwan. net.tw), or call the 24-hour tourist information hotline 0800-011-765 (toll free within the country).

taiwan business topics • april 2015