The Looming Challenge for National Healthcare Insurance 全民健保面臨迫在眉睫的挑戰 TAIWAN BUSINESS TOPICS May 2019 | Vol

May 2019 | Vol. 49 | Issue 5 THE AMERICAN CHAMBER OF COMMERCE IN TAIPEI

The Looming Challenge for National Healthcare Insurance 全民健保面臨迫在眉睫的挑戰 TAIWAN BUSINESS TOPICS May 2019 | Vol. 49 | Issue 5

INDUSTRY FOCUS 中華郵政北台字第 FINANCIAL SERVICES BACKGROUNDER

5000 RECOVERY FROM MORAKOT

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Published by the American Chamber Of NT$150 Commerce In Taipei Read TOPICS Online at topics.amcham.com.tw

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CONTENTS NEWS AND VIEWS 6 Editorial Strengthen the U.S.-Taiwan MAY 2019 VOLUME 49, NUMBER 5 Alliance for the AI Age 一○八年五月號台美攜手共創AI時代新猷 7 President’s View Publisher Check out our updated mission William Foreman statement and take our survey Editor-in-Chief By William Foreman Don Shapiro Art Director/ / 10 Taiwan Briefs Production Coordinator By Jane Rickards Katia Chen

Manager, Publications Sales & Marketing Caroline Lee

Translation COVER SECTION Kevin Chen, Yichun Chen, Andrew Wang 16 The Looming Challenge for National Healthcare Insurance American Chamber of Commerce in Taipei 全民健保面臨迫在眉睫的挑戰 129 MinSheng East Road, Section 3, 7F, Suite 706, Taipei 10596, Taiwan For the time being, Taiwan’s P.O. Box 17-277, Taipei, 10419 Taiwan Tel: 2718-8226 Fax: 2718-8182 highly popular universal e-mail: [email protected] website: http://www.amcham.com.tw healthcare program is still operating in the black. But 050 due to rising costs and a 2718-8226 2718-8182 rapidly aging population, Taiwan Business Topics is a publication of the American Chamber of Commerce in Taipei, ROC. Contents are the system may run out of independent of and do not necessarily reflect the views of the Officers, Board of Governors, Supervisors or members. funds within two years unless © Copyright 2019 by the American Chamber of Commerce in increased premiums and other Taipei, ROC. All rights reserved. Permission to reprint original 24 Can the U.S. Learn material must be requested in writing from AmCham. Production reforms are put in place. done in-house, Printing by Farn Mei Printing Co., Ltd. Something from Taiwan’s 撰文／李可珍 By Jane Rickards Healthcare? 10866 By Jane Rickards 22 Innovations from a Pilot 5000 ISSN 1818-1961 Smart Hospital 27 Kidney Stoned in Taipei By Jane Rickards By Jim Klar Chairman: Leo Seewald Vice Chairmen: C.W. Chin, Petra Jumpers Secretary: Fupei Wang Treasurer: Al Chang BACKGROUNDER 2018-2019 Governors: Anita Chen, C.W. Chin, Petra Jumpers, Leo Seewald, Daniel Tseng, Fupei Wang. 29 Making a Comeback from 2019-2020 Governors: Morakot Al Chang, Albert Chang, Seraphim Ma, Jan-Hendrik Meidinger, Paulus Mok. Some areas of southern

2019 Supervisors: Vincent Shih, Terry Tsao, Dylan Tyson. Taiwan have recovered more rapidly than others from the COMMITTEES: Agro-Chemical/ Melody Wang; Asset Management/ powerful 2009 typhoon with Christine Jih, Derek Yung; Banking/ Paulus Mok; Capital Markets/ Nadia Chen, Mandy Huang, C.P. Liu; Chemical its deadly flooding and land- Manufacturers/ Charles Liang, Michael Wong; Cosmetics/ slides. Shirley Chen, Abigail Lin; CSR/ Lume Liao, Fupei Wang; Energy/ Randy Tsai; Human Resources/ Vickie Chen, By Steven Crook and Monica Han, Carmen Law, Seraphim Ma; Infrastructure/ Eryk Michael Smith Wayne Chin, Paul Lee; Insurance/ KT Lim, Linda Tsou, Dylan Tyson; Intellectual Property & Licensing/ Jason Chen, Peter Dernbach, Vincent Shih; Marketing & Distribution/ Wei Hsiang; Medical Devices/ Jeffrey Wang, Joanne Yao; Pharmaceutical/ Petra Jumpers, Rie Nakajima; Public SPONSORED CONTENT Health/ Joyce Lee, Sophia Lee, Tim Shields; Real Estate/ Tony Chao; Retail/ Ceasar Chen, Mark Chen, Peggy Liao; 8 In Biopharma, Amgen Sets the Pace Sustainable Development/ Kenny Jeng, Cosmas Lu, Kernel Wang; Tax/ Stella Lai, Cheli Liaw; Technology/ Cynthia 14 Zuellig Pharma: Making Healthcare More Accessible Chyn, Hans Huang; Telecommunications & Media/ Thomas Ee, Joanne Tsai; Transportation & Logistics/ (tba); Travel & Tourism/ Gina Tsai. 43 Shangri-La’s Far Eastern Plaza Hotel Italian Cuisine Takes a New Twist at the Marco Polo

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5 contents.indd 4 2019/5/9 下午4:21 MAY 2019 • VOLUME 49 NUMBER 5 COVER SPONSOR

46 Visa Direct – the Safe, Convenient and Cheaper Way to Transfer Money 48 Seeing Taiwan Footsteps Through Old Hsinchu 50 Isa Huang The Coming Antibiotic Resistance Crisis Fubon Financial Holdings Overview

Committed to becoming one of Asia’s first-class financial institutions, Fubon Financial Holdings has built a strong lineup of financial service companies. Its major subsidiaries include Fubon Life, Taipei Fubon Bank, Fubon Bank (Hong Kong), Fubon Bank (China), Fubon Insurance, Fubon Securities. As INDUSTRY of the end of 2018, Fubon Financial Holdings had total assets of US$251 billion, ranking second among Taiwan’s financial F CUS holding companies, and it has been the most profitable A Report on the Financial company in the industry in terms of earnings per share (EPS) for Services Sector ten consecutive years. The company was named to the Fortune By Matthew Fulco Global 500 for the first time in 2018. 34 Does Taiwan Need Virtual Banks? Fubon Financial Holdings’ subsidiaries rank among the top Internet-only banks could poten- performers in their respective sectors. Fubon Insurance has tially serve a credit-strapped consistently led all P&C insurers with an over 23% market young demographic that prefers share. Taipei Fubon Bank is one of Taiwan’s biggest privately to bank online, but what will be the effect on an already saturated owned banks; Fubon Securities ranks among Taiwan’s top banking sector. three securities houses; and Fubon Life ranks second in total 37 Taiwan’s Mobile Payments premium. Market Heats Up The competition for market share Fubon Financial Holdings is now the only Taiwanese financial for mobile-wallet business is institution with banking subsidiaries in China, Taiwan and Hong intensifying as consumers increasingly settle transactions with their Kong, and the company continues to expand its Asian network smartphones. and deepen its presence in Greater China. 40 Taiwan Set to Regulate STOs Regulating security token offerings Looking ahead, Fubon Financial Holdings will continue to could provide a new equity fund- strengthen our presence in Taiwan and pursue stable growth. raising channel for startups, but At the same time, Fubon Financial Holdings will continue to questions remain about the utility of the new rules. search for suitable M&A opportunities in Greater China in order to develop a foothold in the regional market and move closer to AMCHAM EVENTS the goal of becoming a first-class business group in Asia. 44 Hsieh Nien Fan 2019 A Night for Commemoration

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5 contents.indd 5 2019/5/9 下午4:22 E D I T O R I A L Strengthen the U.S.-Taiwan Alliance for the AI Age

rtificial intelligence will be the electricity of the sarily elite – AI algorithm engineers. China has an abundance twenty-first century – a technology that will super- of all of these things, Lee says. A charge industries across the board. That’s just one That may very well be true. But let’s return to Lee’s initial of many bold observations from Taiwanese venture capi- claim that the age of discovery is mostly over. Is that possible? talist Kai-Fu Lee’s new book, AI Super-powers: China, Silicon When has innovation ever ended? Predicting how technology Valley and the New World Order. will evolve is a tricky task, and many of the most brilliant It’s a provocative must-read for anyone who wants to experts have gotten it wrong. better understand the trends in technology that are going to Lee’s arguments feed into a bigger popular discussion transform global business – and our daily lives. about how the world is dividing into two techno blocs, one Lee argues that China will become the dominant power dominated by China and another aligned with the U.S. Amer- in AI. This is a claim that is vulnerable to challenge, but it’s ica’s advantage is that it has longstanding relationships with important not to let any skepticism about his argument feed allies that bring a lot of talent and potential for innovation. complacency. Lee’s book should be read as a loud wake-up Taiwan is one of those key allies, so Washington needs to call for the U.S. and Taiwan. Both need to get their acts have a deeper appreciation of the role the island plays as a together in serious ways and find ways to tighten their alliance U.S. ally. A robust Taiwanese economy that creates interesting so that they can better compete in the age of AI. jobs for young workers and retains talent is squarely in the One of Lee’s bolder and most controversial points is that U.S. strategic interests during the AI era. AI’s “age of discovery” is over. This era was dominated In Taiwan, policymakers need to make sure they’re doing by brilliant elite thinkers, mostly clustered in the U.S. and everything they can to strengthen the country’s position as a Canada. Lee says their research led to the spectacular ramping safe haven for intellectual property. Officials need to be savvier up of what computers could do. But he says the fundamental about attracting the foreign investment that Taiwan desper- AI technology has already been developed and that engi- ately needs if it’s going to be a hub for innovative industries. neering talent has reached its threshold. Now we’re shifting to Both sides have spent far too much time locked in long- a new era – the “age of implementation” – when AI is applied running disputes over issues such as Taiwan’s ban on U.S. to a vast range of products and services. pork. Such squabbles have blocked progress toward begin- Dominating the age of implementation will require lots of ning talks about a free trade agreement and focusing on more data, computing power, hungry entrepreneurs, an AI-friendly pressing issues, such as AI and the rapidly expanding digital policy environment, and a big pool of strong – but not neces- economy.

工智慧會是21世紀的電力，它是驅動百業往前邁境，以及一大群實力堅強（但並非頂尖）的AI演算法工進的科技。這是台灣創投家李開復在新書《AI 新程師。李開復指出，中國擁有上述所有發展要件，而且數世界：中國、矽谷和AI七巨人如何引領全球發量很多。展》（AI Super-powers: China, Silicon Valley and the 這或許是事實。不過，我們何不回頭檢視李開復提出的 New World Order）裡面提出的許多大膽觀察之一。「發現時代已近尾聲」主張。這真的有可能發生嗎？回顧若有人想更精確理解即將翻轉全球商業（與你我日常生歷史，創新可曾終止？預測科技的未來演變，是很複雜困活）的科技趨勢，這是一本引人深思的必讀著作。難的事，況且許多頂尖聰明的預測專家，也曾失敗。李開復認為，中國將成為AI領域的霸權。這個論點很李開復的這些論點，讓時下流行的議論—世界正在分裂可能招致批判，但我們不能因為對這個論點存疑，而對現成兩大科技勢力集團，一個受制於中國，另一個由美國及狀自滿。美國、台灣都應該把李開復這本書，當作聲響巨其盟友組成—更顯真實。美國的優勢，是與結盟夥伴維持大的警鐘，予以正視。無論台、美，都必須認真投入，謀了長久關係，人才庫豐富，深具潛力，有利創新。求強化彼此夥伴關係之道，讓雙方在人工智慧時代，更具台灣正是美國的重要夥伴之一。關於台灣這個夥伴所扮競爭力。演的角色，華府有必要更深入地理解。在AI時代，經濟李開復大膽且富有爭議性的論點之一，是人工智慧的發展強勁、能為青年工作者創造有趣職缺，也能留住人才「發現時代」已經結束。這個已經過去的時代，是由睿智的台灣，絕對符合美國的戰略利益。的菁英思想家們主導，他們大多聚居在美國、加拿大。此台灣的政策制定者，也有必要傾全力守護智慧財產，強一時代的研究成果，使電腦的功能，有了驚人提昇。但是化台灣作為智財避風港的地位。假如台灣把目標放在成為他也說，基礎的人工智慧科技已經被發展出來，電腦工程創新產業匯聚的重鎮，政府官員就要更懂得如何吸引台灣方面的人才也碰到發展瓶頸。如今我們正朝一個所謂「執極其需要的外國投資。行時代」的新紀元轉移，人工智慧的應用範圍，將會大幅台、美在台灣禁止美豬進口等長期難解的爭議上，已經擴張，遍及許多產品和服務。耗費太多時間。這種歧見，阻礙了雙方展開關於自由貿易想在這個「執行時代」稱霸，就需要許多資料數據、協定的談判，也不利雙方針對AI、成長迅速的數位經濟計算能力、飢渴的創業家、有助於人工智慧發展的政策環等更為迫切的議題，進行討論。

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Check out our updated mission statement and take our survey

he Board of Governors recently approved some major updates to our mission statement. The “About the Chamber” page on our T website now says, “AmCham works to improve the business environment in Taiwan, making it more open, innovative and prosperous for all companies that want to be globally competitive. We also serve as a vital bridge with the United States.” What’s different? The new mission statement puts a greater emphasis on our crucial role of driving innovation in Taiwan. Our membership includes the world’s most innovative companies across the business spectrum – from pharmaceuticals and medical devices to asset management, energy, banking, and the digital economy. We serve as a platform for these companies to share information, network, and advocate for a business environment that is more conducive to innovation. The new mission statement also stresses that we’re an international organization serving companies that want to be globally competitive. One common misconception about AmCham Taipei is that our membership only includes American companies. In fact, many of our most active member companies are from Europe or from other parts of Asia. Finally, we still highly value our strong connection to the U.S. – Tai- wan’s most important ally. We cherish our close working relationship with our friends at the American Institute in Taiwan. And we have developed deep ties with our allies in Washington, including members of Congress and senior officials in the White House. Next month, AmCham members will participate in our annual “CEO Mission to Washington,” during which we’ll have nearly 40 meetings with key influencers in the U.S. capital. I would like to close by asking a big favor from our membership. My staff recently e-mailed a survey to all AmCham members. If you can’t find it in your inbox, please check your spam folder. The survey takes less than five minutes to fill out on your phone, tablet, or computer. It will provide us invaluable feedback about what you care about most. What kinds of events are you interested in? Are our advocacy efforts effective? What do you think of TOPICS magazine? If you haven’t taken the survey yet, please fill it out today!

William Foreman President, American Chamber of Commerce in Taipei

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5 presidents view.indd 7 2019/5/8 下午10:31 ADVERTORIAL

In Biopharma, Amgen Sets the Pace

n the fast-growing, relatively new but also for the manufacturing process. vant to Taiwan, which will soon enter field of biopharmaceuticals, Cali- There are big challenges for the quality the ranks of the world’s “super-aged I fornia-based Amgen has been one control, stability, and sustainability of societies.” One of the dangers of old of the standout performers. Founded the product during manufacturing and age is osteoporosis, a weakened bone in 1980, it earned a record US$23.7 also for the delivery of the product to condition that may make the elderly billion in revenue last year to rank in the patients.” more prone to falling and to suffering a 123rd place on the Fortune 500 list of As a result of Amgen’s proven fracture from the fall. the largest U.S. corporations. It also expertise in biotech, the company “Osteoporosis is a much more seri- ranked within the world’s top 10 drug in 2009 was encouraged by the U.S. ous concern than most people realize,” companies by sales. government to devote some of its Lee says. “If patients lose mobility, As part of a drive to globalize its resources to developing biosimi- it means a big deterioration in their business to the fast-growing health- lar products, which are highly similar quality of life. The social cost for the care region, the company established to and have no clinically meaningful caregiver is also very high.” Amgen Taiwan Ltd. in 2015 with the differences from the reference product. In order to raise public awareness of goal of bringing new innovative drugs Amgen’s first biosimilar was launched osteoporosis, Amgen has been cooper- to Taiwanese patients. in Europe last year, and this March ating with local medical societies and “Taiwan is not among the most it received its first license approval in the Ministry of Health and Welfare’s sizeable markets, but it’s a very impor- Taiwan for a biosimilar, for the treat- Bureau of Health Promotion to try to tant market,” says Joyce Lee, general ment of immune-mediated diseases. promote the prevention and treatment manager of Amgen Taiwan. “Because “Biosimilars are not just another of osteoporosis. For example, they have of Taiwan’s well-established national source of business for Amgen,” Lee devised a simple questionnaire designed healthcare system, there are a lot of says. “Around the world, there are to alert people to the presence of the opportunities for collaboration – for many countries where patients cannot disease. example, utilizing big data to identify afford to be treated with biologics. For Amgen continues to work with potential new treatment areas.” us, producing biosimilars is actually the Taiwan Osteoporosis Association Amgen, the biotech pioneer, special- part of our Corporate Social Respon- and hospitals to develop a network izes in using science and biotechnology sibility. It’s a way to help patients, of physicians and facilities trained to together with living cells to develop physicians, and payer institutions by diagnose and treat osteoporosis. The innovative biologics to treat serious providing treatments with greater program reflects Amgen’s commitment diseases. affordability, while assuring high qual- to promoting a “predict and prevent” “The technology barrier is much ity and reliable supply.” approach to healthcare. Big data and higher than for traditional chemi- A major focus of Amgen’s activ- other new technologies now make it cal drugs, with their simpler molecular ity in recent years has been on health easier to identify high-risk groups and structure,” Lee says. “That’s true not problems associated with an aging then intervene to prevent the disease. just for the product-development stage, population – a subject particularly rele- Describing Amgen as having “a very

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special culture, one that really supports the top-three award winners for a proj- tend to be very visionary, willing to take innovation,” Lee cites a company ect to screen all the elderly in a given a risk.” program under the scope of its Value- town or county for osteoporosis by As Amgen Taiwan enters a new based Partnership that operates like an measuring bone density. The program stage of growth, it is looking both internal angel fund. Employees, either currently serves as a pilot study in to recruit outstanding personnel and on their own or working with an exter- central Taiwan for later expansion to create a robust program to develop nal stakeholder, are encouraged to other localities in Taiwan or abroad to talent inhouse. propose projects based on bold new help promote the prevention and treat- “We want people who are innova- ideas to a global team of evaluators. ment of osteoporosis. tive, like a challenge and have a strong Winning proposals receive funding from “Perhaps because of our California learning ability to enable them to adapt the company headquarters to imple- background, Amgen is more entrepre- to change, and grow along with the ment their projects. neurial than most companies – we have company to serve patients in Taiwan.” A team from Taiwan was among more startup DNA,” Lee says. “We Lee says.

的在的的的全在的全保健的民健的全民健保民的民的全的的的的的的的的的的的全的的挑戰在的的全的的的的的在全臨的的在的的的在全的的全的的的的保的的在的健的的健全健的挑戰的的的

TAIWAN BUSINESS TOPICS • MAY 2019 9

Amgen advertorial.indd 9 2019/5/8 下午10:31 T A I W A N B R I E F S

— BY JANE RICKARDS —

MACROECONOMICS ECONOMIC INDICATORS

MOMENTUM SLOWS US$ billion US$ billion Two key institutions in April trimmed Current Account Balance (Q4 2018)p 18.65 25.64 their forecasts for Taiwan’s GDP growth Foreign Trade Balance (Jan.-Mar.) 9 11.8 in 2019, citing falling exports as global New Export Orders (Mar.) 28.9 42.4 demand for consumer electronics Foreign Exchange Reserves (end Mar.) 464.1 457.2 slumped amid a prolonged U.S.-China trade war. Standard Chartered Bank Unemployment (Mar.) 3.68% 3.7% cut an earlier GDP forecast of 2.5% to Discount Rate (Apr.) 1.375% 1.375% 2.1%, with its chief Taiwan-based econ- Economic Growth Rate 2018p 2.63% 3.08% omist saying that the first quarter’s 4.2% Annual Change in Industrial Output (Mar.)p -9.88% 5.9% year-on-year drop in exports was far Annual Change in Industrial Output (Jan.-Mar.)p -4.58% worse than expected. The Chung-Hua Annual Change in Consumer Price Index (Mar.) -0.58% 1.59% Institution for Economic Research also P=PRELIMINARY SOURCES: MOEA, DGBAS, CBC, BOFT lowered a previous GDP growth forecast of 2.63% to 2.15%. rose by 6.6% from a year earlier to widespread until 2020, Reuters reported. Although the government’s Direc- reach US$25.56 billion, for a favor- Another development is that some torate General of Budget, Accounting able trade balance of US$3.12 billion. China-based Taiwanese businesses have and Statistics continues to put Taiwan’s While exports of information, commu- been moving operations back to Taiwan GDP growth for this year at 2.27%, its nication, and audio-video products grew either completely or partially. Along advance estimate for first quarter GDP by 23.1%, exports of electronic compo- those lines, Standard Chartered econ- growth of 1.72% year-on-year repre- nents – which are frequently shipped omist Tony Phoo notes that imports of sented the slowest quarterly economic to China for reassembly – plunged by capital equipment increased 15.4% in growth in more than two years. Private 13.3%. the first quarter, after flat growth in the consumption at 1.45% was a drop from Export orders, an indication of previous quarter. “The U.S.-China trade the 1.67% of the fourth quarter last the outlook for the next few months, dispute might not be the sole reason year. DGBAS cited a decrease in the sales revealed a grimmer picture. They why Taiwanese companies are returning of cars and information and communica- declined in March by 9% year-on-year to home but acted as a catalyst for those tions equipment, along with a slump in US$38.59 billion, the fifth straight month who were hesitant about moving out of financial services. of negative growth. At 8.4%, export China,” Phoo told local media. Exports in March fell 4.4% year-on- orders posted their biggest annual drop year to US$28.68 billion. Total imports for a first quarter since the global finan- DOMESTIC cial crisis in 2009, when they tumbled TAIWAN STOCK EXCHANGE PERFORMANCE 30%. The weak order book suggests that FOXCONN FOUNDER SET

THE LINE SHOWS CHANGES IN TRADE VALUE AND global electronics demand could remain TO RUN FOR PRESIDENT THE SHADED AREA CHANGES IN THE TAIEX INDEX. lackluster for some time, while machin- Terry Gou, founder of electron- POINTS NT$ BILLION ery orders have also declined due to ics giant Foxconn Technology Co., in 13000 225000 12000 200000 business caution in China relating to the April declared at a temple that Mazu, 11000 175000 trade war with the U.S. the goddess of the sea, had recently 10000 150000 The Ministry of Finance suggests that appeared to him in a dream. “She told 9000 125000 launches of new smartphone models and me to come out and do something,” he 8000 100000 demand for new technologies, such as recounted. That something was running 7000 75000 artificial intelligence and 5G products, for president on the opposition Kuomin- 6000 50000 could support a rebound in electronics tang (KMT) ticket. 5000 25000 4000 0 orders in the second half of the year. 5G Gou, the richest man in Taiwan, M networks are coming online in the U.S., heads the world’s largest contract elec- Canada, China, South Korea, and else- tronic manufacturing company, which DATA SOURCE: TWSE where this year, but probably won’t be makes iPhones for Apple, among other

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things. His wealth and fame make him Gou will “withdraw from daily opera- marched through Taipei and Kaohsiung a strong contender. Voters, tired of sala- tions” at Foxconn if selected as the KMT at the end of April, urging the govern- ries that have stagnated for almost two presidential candidate. ment to put more effort into phasing decades, may think his business acumen out nuclear power plants by 2025, as is what is needed to turn Taiwan’s econ- DPP PRIMARY DELAYED the ruling DPP promised when Presi- omy around. On the other hand, his UNTIL AFTER MAY 22 dent Tsai elected. A cloud of uncertainty close ties to China, where most of his The ruling Democrative Progres- was later thrown over the government’s factories are based, are likely to alarm sive Party has postponed its presidential plans when a referendum passed by a many voters. primary election amid an increasingly wide margin late last year called on the The KMT is expected to pick a bitter rivalry between President Tsai Ing- authorities to reverse the policy of creat- candidate based on an opinion poll to wen and her former premier, Lai Ching- ing a “nuclear free homeland” by 2025. be conducted in June. The two other te. Originally scheduled for mid-April, President Tsai marched with the declared candidates – Eric Chu, a former the contest will now be held after May protesters and vowed at a news confer- mayor of New Taipei City, and Wang 22 when its legislative primaries are ence to reach her targets regarding Jin-pyng, a former legislative speaker completed. DPP Secretary General Lo reducing emissions from thermal power – are not doing as well in current polls Wen-chia said the party is still finaliz- plants and retiring the existing nuclear as Gou is. The more formidable Han ing its primary procedures, with final power plants – although without giving Kuo-yu, the newly elected mayor of arrangements to be announced May 22. any timeline. As the KMT recently has Kaohsiung, has not yet announced Analysts say the delay is due to Pres- supported nuclear power as one of the whether he will seek the nomination. ident Tsai’s influence with the party best ways to provide reliable energy, While many KMT supporters are clam- machinery. She is said to be both still increasingly heated debate can be oring for him to run for the presidency, hoping to talk Lai out of challenging expected as next January’s presidential he may be concerned about disappoint- her and also making moves to boost her election draws closer. ing Kaohsiung residents after just half a popularity before the primary. An angry year in the mayor’s office. Lai, who has been seeking to rally grass- STRONG EARTHQUAKE Gou met with U.S. President Donald roots support, has complained that the HITS EAST COAST Trump in early May in a closed-door party made no effort to discuss changes A powerful 6.1-magnitude earth- meeting at the White House. Afterward to the rules of the game with him. quake that struck Taiwan’s east coast in the Taiwanese tycoon said he told Trump mid-April was responsible for the death he would be a “peacemaker” rather than MASSIVE ANTI-NUCLEAR of a Malaysian tourist injured by fall- “troublemaker” if elected. PROTEST IN TWO CITIES ing rocks while hiking in Taroko Gorge According to a company statement, Thousands of anti-nuclear protesters National Park. Choo Yip Chean died at the end of April after two weeks in critical condition in an intensive-care unit. The quake’s epicenter was more than six miles northwest of Hualien. The tremor also left 17 injured, rattled buildings as far away as Taipei, and temporarily halted subway services in the capital city.

CROSS-STRAIT

CHINESE JETS CROSS STRAIT’S CENTER LINE Two People’s Liberation Army Air Force jets in late March crossed the median line of the Taiwan Strait and flew 80 kilometers into the southwest- ern part of Taiwan’s airspace, causing With some divine encouragement, Foxconn founder Terry Gou has decided to a dangerous 10-minute standoff with seek the Kuomintang's nomination as its presidential candidate. intercepting Taiwanese military planes. PHOTO: AUSTIN CHENG

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It was the first deliberate intrusion from PLAAF aircraft since 1999, when former President Lee Teng-hui defined cross- Strait relations as a “special state-to- state” relationship. Although the median line is not an article of international law and not officially recognized by either side, adherence to the dividing line in the Taiwan Strait has long contributed to stability and mitigated the risk of acci- dents. “This [intrusion] was very much planned, calculated and with the purpose of intimidating Taiwan,” said Randy Schriver, the U.S. Assistant Secretary of Defense for Indo-Pacific Security Affairs.

China continues to regularly deploy Former U.S. Speaker of the House Paul Ryan led the American delegation to warships and fighter jets dangerously ceremonies in Taipei observing the 40th anniversary of the Taiwan Relations Act. close to Taiwan. In mid-April – the day PHOTO: MATTI CHEN before Taiwan was to celebrate 40 years of the Taiwan Relations Act jointly with enacted allowing extradition to the dictions, including China, for trial. the American Institute in Taiwan (AIT) mainland. Lam, who sold books critical – a fleet of Chinese aircraft, including at of China’s leaders and their private lives, INTERNATIONAL least one bomber jet, flew over waters was detained along with five other Hong separating Taiwan and the Philippines. Kong booksellers in 2015. U.S., TAIWAN OBSERVE He was later allowed to return to 40 YEARS OF THE TRA HK BOOKSELLER Hong Kong on bail for a brief visit, To participate in celebrations mark- FLEES TO TAIWAN but stayed on with the status of a fugi- ing the 40th anniversary of the Taiwan A Hong Kong bookseller who was tive, protected by Hong Kong’s lack of Relations Act and establishment of once detained by China is now seek- an extradition law. But the Hong Kong the American Institute in Taiwan, the ing refuge in Taiwan. Lam Wing-kee, legislature is now expected to enact a U.S. sent a delegation to Taiwan led by the former manager of Causeway Bay law in the next few months permitting former Speaker of the U.S. House of Books, says Hong Kong will no longer individuals, including foreigners, to be Representatives Paul Ryan. The dele- be safe after proposed new laws are extradited to a specified number of juris- gation also included Eddie Bernice Johnson, chair of the House of Repre- TAIWAN'S JAN. - MAR. 2019 TRADE FIGURES sentatives Committee on Science, Space, (YEAR-ON-YEAR COMPARISON) and Technology, and AIT Chairman

HK/China Japan ASEAN TOTAL James Moriarty. An AIT banquet at its new office complex in Neihu was attended by digni- 32.9 29.2 taries from both the United States and 13 14.1 13.4 79.7 11 12.4 10.6 76.4 8.1 7.9 Taiwan, including President Tsai, former 5.8 5.5 68 67.4 President Ma Ying-jeou, Legislative 2019 2018 2019 2018 2019 2018 Speaker Su Jia-chyuan, representatives .S.A Europe from the U.S. Congress and Taiwan’s Legislative Yuan, and prominent central 10.7 8.8 8.9 8.5 7.9 8.5 7.6 7.5 and local government officials and business leaders. 2019 2018 2019 2018 2019 2018 Ryan was considered a relatively NIT: S Billion Exports Imports low-profile choice to head the U.S. dele- SO RCE: BOFT/MOEA gation, as he is no longer in office.

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US SHIPS TRAVERSE BUSINESS investment by a foreign company in U.S. TAIWAN STRAIT history and was praised by President The U.S. military sent two Navy GOVERNOR MAY REOPEN Trump as proof of his ability to revive warships through the Taiwan Strait at the FOXCONN NEGOTIATIONS American manufacturing. end of April, reportedly the seventh such Wisconsin’s Governor Tony Evers said transit since July 2018. The two destroy- in mid-April that he wants to renegotiate FACEBOOK OPENS ers were identified as the USS William P. the state’s contract with Foxconn Tech- NEW OFFICE IN TAIPEI Lawrence and USS Stethem. “The ships’ nology Group for investment incentives American social media giant Face- transit through the Taiwan Strait demon- because the Taiwanese company is not book in April opened a new Taiwan strates the U.S. commitment to a free and expected to reach the agreed-upon job headquarters in Taipei’s Xinyi District. open Indo-Pacific,” Commander Clay creation goals. When he took office in Dan Neary, vice president of Asia Pacific Doss, a spokesman for the U.S. Navy’s January, the Democratic governor inher- for Facebook, said his company views Seventh Fleet, said in a statement. ited a deal to give Foxconn around US$4 Taiwan as an important market and A French warship also passed billion in tax breaks and other incentives. that the new office reflects confidence in through the Taiwan Strait at the end Under the agreement, championed by Taiwan’s future. He added that Facebook of April, U.S. officials told Reuters. Scott Walker, Evers’ Republican prede- will continue to invest in Taiwan. Sources close to the French defense cessor, Foxconn had pledged to invest President Tsai toured the office before minister told the wire service that US$10 billion and eventually create the opening ceremony. Vice Premier Chen France conducts such transits about 13,000 jobs in Wisconsin. However, Chi-mai said at the office opening that once a year, but it was highly unusual earlier this year the company disclosed he hopes Facebook will “help create for the U.S. to make it public. It was that it had slowed the pace of hiring more opportunities for local industry a sign that the U.S. and its allies are and was planning to shift the scope of as part of the country’s effects to trans- increasingly asserting freedom of navi- the investment from the manufacture of form its digital economy.” Chen said the gation rights in waterways they consider advanced liquid crystal display panels to Ministry of Economic Affairs has plans international. Sources said the warship, a focus on research. to team up with Facebook to promote the French frigate Vendemiaire, had Foxconn’s Wisconsin project has artificial intelligence, digital marketing, been shadowed by the Chinese navy. been described as the largest greenfield and virtual reality.

President Tsai with a memento of her visit to Facebook's new Taipei offices. PHOTO: FACEBOOK

TAIWAN BUSINESS TOPICS • MAY 2019 13

5_Briefs.indd 13 2019/5/8 下午10:32 ADVERTORIAL Zuellig Pharma: Making Healthcare More Accessible

f you’ve taken any medicine lately groups in Asia, with a distribution – including crucial vaccines – to some in the Asia-Pacific region, it’s highly network that covers nearly 350,000 15,000 drugstores, hospitals, and clinics I likely that Zuellig Pharma delivered clinics, hospitals, pharmacies, and across Taiwan, he says. it to your healthcare provider or phar- modern trade outlets. “We play a very important role in macy. Distributing pharmaceuticals is a Last year (2018) the company cele- the supply chain,” Chou says. “Our complex business involving cold-chain brated its 30th anniversary in Taiwan role is to assure that medicines are management and other massive logisti- – its largest single business unit in securely and safely delivered to health- cal challenges that most of us take for terms of sales. John Chou, Zuellig care providers to ensure there is no granted. Pharma Taiwan’s chief executive, says disruption in patients’ treatment.” The company’s mission is to make the company is Taiwan’s largest phar- But Zuellig Pharma’s role as a healthcare more accessible to countries maceutical and healthcare logistics distributor involves more than just in the region by providing world-class company, serving over 30 multinational simple delivery. distribution, commercial promotion, pharmaceutical and healthcare brands. The company has created an ecosys- and digital services. “Whether it’s drugs or medical tem in Taiwan in which multiple Zuellig Pharma began life in the devices, we have a market share of services, ranging from data analytics to Philippines almost a century ago and almost 50%,” Chou says. Every day, patient care, are interconnected. has since grown to be a US$13 billion Zuellig Pharma delivers an average For example, one Zuellig Pharma business spanning 13 Asian nations. It 5,000 to 10,000 shipments of pharma- service, “Clinical Reach,” provides end- is one of the largest healthcare-service ceuticals and other medical products to-end supply-chain solutions to help ensure that clinical trials and research projects run smoothly. The company’s sophisticated depot services make sure Reflections on the Anniversary Celebration that these advanced medicines are avail- After attending Zuellig Pharma Taiwan’s 30th anniversary event, AmCham able to the island’s medical research Taipei President William Foreman posted the following on his LinkedIn page: teams as needed. Another service, “Data Analytics,” The firm is one of the best examples of an AmCham Taipei member utilizes the data the company has accu- company. It has a long history in Taiwan and is deeply invested in the mulated from its various activities to country’s success. And it understands that Taiwan is an important market create analytical reports and business with plenty of potential. intelligence for its clients. “Our data The Zuellig Pharma Taiwan team pulled off one of the best corporate and analysis service is a big help to the anniversary celebrations that I’ve ever attended. Such events usually manufacturers,” Chou says. “It enables focus on the past and present. But Zuellig Pharma used its celebration them to identify just where they need to to look to the future and describe the company’s exciting new directions. improve their business operation.” For example, the firm just finished its first blockchain project and it’s Zuellig Pharma also helps phar- exploring the potential of AI. maceutical manufacturers conduct John Davison, Zuellig Pharma’s CEO, gave a fascinating talk about the patient support programs. For exam- importance of “thinking beyond the pill.” He described three key areas ple, it trains at least 50 Taiwan-certified that will shape the healthcare industry. They included: nurses each year, educating them on • Predict and prevent, not just cure. the latest medications from Zuellig • Harness and then leverage Big Data. Pharma’s clients, the pharmaceuti- • Partner to connect the healthcare ecosystem. cal companies. The nurses are then Davison said he thinks of Zuellig Pharma as being the “concierge to dispatched to hospitals and local clinics, the healthcare sector” – a connector for the bricks-and-mortar side of the where they can help provide patients business as well as the digital space. It’s going to be exciting to watch with information on the treatments they how the company continues to grow. are receiving, especially when new and innovative medications are involved.

14 TAIWAN BUSINESS TOPICS • MAY 2019

Zuellig advertorial.indd 14 2019/5/10 下午6:24 ADVERTORIAL

“The manufacturers view this be eligible for reimbursement. Zuellig programs. program as a valuable opportunity to Pharma helps manufacturers create and For example, each year the corpo- help patients better understand their manage programs for patients who need ration supports primary schools in disease and any side-effects from the these medications but are unable to remote parts of Taiwan, such as the treatment,” Chou explains. afford for all of them. The drug manu- mountainous areas of Hualien and Medicine for certain illnesses such as facturers either provide these medicines Taitung counties, with donations of cancer can be expensive, and the latest free or with discounts to enrolled and personal computers, laptops, and drugs and therapies may not yet have eligible patients, Chou says. school books. “These activities bring received approval from the National He also stresses Zuellig Pharma’s Zuellig closer to the community,” Health Insurance Administration to many corporate social responsibility Chou says.

的在的挑戰的的在在的保健在的的的台北市美國商會執行長William Foreman 在的（傅維廉）參加了裕利醫藥台灣30週年慶的的祝活動，他在一篇LinkedIn貼文裡寫到：的全在的的的在全的保的的的的的的的的的的在的保的臨的的的在臨的的的的的的在的的thinking beyond the pill的的的面的的的的的健保在的的的的在面在的的在

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Zuellig advertorial.indd 15 2019/5/10 下午6:24 COVER STORY

The Looming Challenge for National Healthcare Insurance 全民健保面臨迫在眉睫的挑戰

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5_CoverStory.indd 16 2019/5/8 下午10:32 NATIONAL HEALTH INSURANCE

For the time being, Taiwan’s aiwan’s National Health Insur- at two different hospitals or identifying highly popular universal ance (NHI) system is currently suspected fraudulent claims from dishon- living beyond its means. For est doctors. healthcare program is still T the last two years, expenditures have “Right now the financial status of solvent. But due to rising outpaced revenues and only a reserve the NHI is in good shape,” says Director costs and a rapidly aging fund is keeping the system afloat. General Lee. “However, due to factors population, the system may The reserve fund is being steadily such as an aging population and recent run out of funds within two depleted, however. Experts say it will be medical advances, financial pressure will years unless increased pre- empty by next year or the year after, at continue to mount in the future.” which point the government will have Cheng Shou-hsia, a professor with miums and other reforms no alternative but to make the politi- the College of Public Health at National are put in place. cally unpopular move of raising premi- Taiwan University, says that Taiwan in ums. Even broader and more fundamen- fact has one of the world’s most efficient tal reforms may be needed. universal healthcare services. “We do not But with a presidential election burn too much money in the healthcare 台灣廣受歡迎的全民健保計畫 coming up in January, for the moment system,” says Cheng, a former deputy 暫時仍有結餘。不過由於成本 the government is holding off on minister of health and welfare under the 上揚和人口快速老化，健保資 announcing any changes to Taiwan’s previous Kuomintang government. compulsory universal healthcare system. Healthcare spending in Taiwan in 金可能會在兩年內用罄，除非 The program enjoys a public satisfaction 2017 amounted to a mere 6.4% of GDP, 政府調漲保費和推動其他改 rating of around 87%, according to the according to the Ministry of Health and 革。 National Health Insurance Administra- Welfare (MOHW). In contrast, health- tion (NHIA). care spending in the United States – the Instead, says NHIA Director General most prominent international exam- Lee Po-chang, the administration’s ple of a multi-payer healthcare system – BY JANE RICKARDS current focus is on improving manage- amounted to 17.2% of GDP, the highest ment efficiency through the use of cloud among OECD countries. At least in part, computing and other advanced technol- the high figure is generally attributed to ogies adopted over the last several years. inefficiencies created by the multitude These systems help reduce waste by, for of public and private health insurance example, raising an alert when a patient systems and the voluminous paperwork takes the same expensive medical test involved (see the accompanying article).

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NATIONAL HEALTH INSURANCE

Switzerland and France, which have their in 2016, in contrast to Taiwan’s GDP ment’s contribution rate to the system to own versions of universal healthcare, growth that year of 1.4%. In 2017, at least 36% and installing supplementary spend 12.3% and 11.5% of GDP respec- expenditures rose by 5.54%, nearly premiums on six categories of non-payroll tively on healthcare. double the 2.84% GDP growth. income, such as stock dividends. “The Still, Taiwan’s system is not with- Starting in 2017, expenditures also supplementary insurance provided a large out its weaknesses, including the pros- began outpacing premium revenues for increase in income,” Cheng says. “That’s pect of insolvency in a few years if the the first time since 2013 when “second- why there’s been a surplus until now.” premium rate, currently 4.69%, is not generation” NHI reforms were insti- NHI expenditures in 2017 accounted raised. According to the NHIA, the tuted to rescue the system from a deepen- for 53% of Taiwan’s total healthcare total national health insurance fund – ing financial hole. The system operated at spending of NT$1,127 billion, indicating including the reserve surplus – stood at a deficit of NT$9.8 billion in 2017, and that Taiwanese still pay for much of their NT$227.6 billion as of the end of June preliminary NHIA data shows further medical care out of pocket or through last year. losses of NT$10 billion for the first six private health insurance. At the same time, NHI expenditures months of last year. have been growing at a much faster clip The second-generation reforms How the system works than the Taiwan economy for at least provided temporary financial relief by, five years. Spending increased by 5.63% among other things, raising the govern- NHI’s structure as a “single-payer system” helps keep healthcare spending relatively low through the power of monopsony – a market situation where there is only one buyer. Every year, the NHIA adopts a system-wide global budget, which this year stands at NT$714 billion. It then uses its powerful market leverage with contracted providers – which include 93% of the island’s hospitals and clinics, as well as pharmacies, drug companies, and medical device makers – to hold spending within budget by playing a central role in setting drug and medical device prices, as well as medical service fees. “Because we control the global

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CUMULATIVE BALANCE BEFORE AND AFTER THE 2ND GENERATION NHI

SOURCE: NHIA

budget, it is easy for our government to ment for dental treatment and Chinese the employer 60%, and the govern- offer [reasonably priced] medical care to medical care is only NT$50 per visit. ment 10%. The total is calculated by all the Taiwan people,” NHIA Director NHI’s income is mainly derived from taking 30% of an employee’s salary and General Lee says. premiums shared by the insured, their multiplying it by the premium rate. The Enrollment in the NHI system is employers, and the government. Addi- government subsidizes the premiums in compulsory for all local citizens. The tional sources of funds include public- full for the poor and for veterans, while program offers a comprehensive set welfare lottery earnings and a welfare veterans’ dependents pay only 30%. of services, including outpatient visits, surcharge on tobacco sales. Each autumn the 35-member National hospitalization, Western and Chinese The amount of premium paid by the Health Insurance Committee meets to medication, and dental treatment. By insured depends on their salaries. Typi- negotiate the following year’s global international standards, these services are cally, employees of private-sector organi- budget, which must fall within an expen- cheap in Taiwan. For example, copay- zations contribute 30% of the premium, diture range set by the Executive Yuan.

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The Committee consists of representa- the number of beneficiaries. The individ- the past, “these adjustments usually were tives from business and labor groups, ual regions manage their budgets through not based on the actual costs of service government officials, academics, and the nationwide point-based fee schedule provision and did not reflect changes in healthcare providers such as hospitals. and a region-specific conversion factor. the Medical Price Index.” Another committee determines a point- Providers bill the regional NHIA accord- The prices of many services have been based fee-for-service schedule for paying ing to the points they’ve acquired and frozen, and the real prices adjusted by providers, such as doctors and hospitals. receive payment equaling the number the Medical Price Index have gone down A budget cap is then set for four of billed points multiplied by a floating over time. sectors: dentistry, Chinese medicine, region-specific conversion factor. This point-based system contrib- Western-medicine clinics, and hospi- “For a medical operation, we may utes to one of NHI’s main deficiencies by tals. Each sector receives a basic benefit give 10,000 points,” explains NHIA incentivizing doctors to take on as many budget (calculated based on such factors Director General Lee. “It doesn’t mean patients as they can and to provide these as the number of insured people and the NT$10,000. Each point could be worth patients with services with a high profit expected aging of the population), along less than NT$1.” margin, including radiologic imaging with a special program budget. An article published in late 2017 such as CT scans and MRIs. The risk also Each sector’s basic benefit budget is in the journal Social Science & Medi- exists that the system encourages doctors then allocated to six geographic regions cine notes that while the point-based fee to prescribe more drugs to patients, as the based on their share of total spending and schedule has been periodically adjusted in clinics and hospitals may also profit from the dispensing of medication. Since the doctors are paid in points converted to fees for each service, the more patients they see, the more money they make. Payment systems in other universal healthcare programs tend to operate differently. For example, the UK’s National Health Service pays a fixed sum to a medical provider or group of providers to cover care provided to a specified population across different medical disciplines. Any money left over is retained in the system. This encourages doctors to limit the number of

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NHI REVENUES AND EXPENDITURES OF THE PAST FIVE YEARS (ACCRUAL BASIS)

SOURCE: NHIA

patients and to keep them healthy by of outpatient visits per person per year pore if a doctor sees 20 patients in a identifying health risks early. reached 15.1. day, it’s considered far too many, but in In Taiwan, a clinic is allowed to accept Taiwan the number can reach 80 to 100. 100 patients for each session, whereas Doctors’ workloads Patients have the advantage of being able doctors in Western countries may see to see a doctor quickly, but in return each just five or ten patients in the same time Joyce Lee, general manager of Amgen patient has much less of the doctor’s time. period. According to the NHI Annual Taiwan and co-chair of Amcham’s Public Heather Lin, chief operating officer of Report for 2017, the average number Health Committee, notes that in Singa- the International Research-based Phar-

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maceutical Manufacturer’s Association, money for their services owing to the fall- ty’s Institute of Health and Welfare Policy notes that the easy access to doctors can ing value of the points, they may compen- and a former deputy minister of health lead to wasted resources, as it encour- sate by seeing more patients. In a vicious and welfare. ages patients to go to the doctor for even circle, that causes the payments for their In an effort to address these prob- trivial ailments rather than rely on self- services to fall even further. lems, Taiwan in recent years has intro- treatment. In the U.S., she says, someone NHIA’s Lee also cites a problem of duced some alternative options in the with a headache might first take over-the- some hospitals performing extraneous way medical providers are compensated, counter medicine and rest for a few days, tests to take advantage of the profitable but so far these proposals have not been before deciding if it is necessary to see a reimbursements. When a patient comes broadly adopted. One example is a “pay doctor. in with a mild ailment, “they may be told for performance” approach to disease Incentives for doctors to see multiple ‘You have to do a check as to whether management for conditions ranging from patients are further exacerbated by the it is lung cancer or tuberculosis and we tuberculosis to schizophrenia. The intent point system. In order to keep regional have to do a CT scan,’” Lee says. There of the program is to promote a holistic healthcare spending within the specified are no co-payments specifically for these approach in which the quality and effec- budget, the dollar value of a point falls kinds of expensive tests. tiveness of the treatment are used as the when the total number of points billed in “There’s an incentive for the physician basis for reimbursement. a region increases. to provide more medicine and tests than So far, NHIA’s main strategy for As a result, when medical provid- necessary,” says Lee Yue-chune, a profes- controlling inefficiencies has been to digi- ers in the region find they are getting less sor with National Yang Ming Universi- talize medical reports to create data-

Innovations from a Pilot Smart Hospital

he robot smiles broadly when “clean, smart and green,” it focuses “From the beginning, we discussed it isn’t carrying a load, but as on emergency and critical care in with the architect about lots of smart the load gets heavy, it starts to a part of Taiwan where emergency designs for the hospital,” Lee says. Tlook downcast. Electronic sweat drops resources are scarce. The hospital The building’s design was awarded even appear on its monitor, designed opened in 2015, and with nearly 500 “gold honors” in 2015 under the U.S. in the style of a cartoon face. beds, 70 attending doctors, and more Green Building Council’s Leadership Meet ORber, a medical transport than 500 nurses, it can treat major in Energy and Environmental Design robot created through collaboration traumas. It also offers emergency and (LEED) rating system. The hospital between Taiwanese ICT company inpatient treatment for children and then obtained the “Green Building BenQ and the Yuanlin Christian Hos- various gynecological services. Gold Label” by Taiwan’s Ministry of pital, a branch of the Changhua Chris- Interior in 2017, making it the first inte- tian Hospital. It’s one of many new grated medical building in the nation smart technologies that the hospital is to possess the two certifications. creating – with support from the Minis- Some of the building’s innovative try of Health and Welfare – toward the energy-saving interior designs seem objective of making health services in like common-sense planning, such Taiwan safer and more efficient. as a section that groups together an The autonomous ORber can carry intensive-care unit, cardiac catheter- up to 150 kilograms of contaminated ization operating rooms, other operat- surgical materials and supplies out of ing rooms, and recovery rooms, each an operating room for sterilization or with its own visitors’ waiting room. disposal once a surgical procedure is Placing these facilities so close to one completed. By using a robot, hospitals another saves healthcare workers’ time can reduce the risk of staff injuries or and energy. cross-infection while pushing a trolley In other Taiwanese hospitals, these full of surgical waste, says Lee Kwo- four units tend to be in separate areas, whei, superintendent at the Yuanlin each with its own waiting room, Lee Christian Hospital. says. To reach recovery rooms, as a The pioneering smart hospital locat- result, post-surgery patients must reg- ed in heavily rural Changhua County Dr. Lee of the Yuanlin Christian Hospital. ularly be pushed on a gurney through is Lee’s brainchild. With a mantra of PHOTO: YUANLIN CHRISTIAN HOSPITAL public areas. The Yuanlin design

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bases that can identify wastage. These share the NHIA reimbursement. Another PharmaCloud system, which allows vari- databases are also useful in guiding the example, cited by NHIA Director General ous medical organizations contracted direction of government policies, as they Lee, is when procedures are conducted with the NHIA to view the medications offer valuable insights into the state of by robotic surgery, which NHI does not prescribed to a patient over the previ- health of the population region by region. cover, but the surgeons still apply for ous three months. The goal is to prevent The NHIA’s advanced information and reimbursement by claiming he or she actu- doctors from prescribing duplicate or communications technology makes it ally performed the operation themselves. excessive medication. possible to continuously review the “I am not happy about this,” he says. Joyce Lee of Amgen says that she’s records of all providers and patients. One of the NHI’s support programs aware of the government’s moves to For example, the “Central Intelligence is the MediCloud System, which was “input all your history and charts in the System,” an automatic auditing system created in 2013 and strengthened last cloud” and that “we expect more inter- developed in 2014, can help in detecting year when CT, MRI, ultrasound, micro- ventions from government to make sure suspect claims for reimbursement from scopic exams, and other medical imaging the healthcare system can be sustainable.” healthcare providers. The computer auto- features were added. MediCloud enables In another recent effort to control matically flags anomaly cases, which are any physician to view examination waste, MOHW and NHIA are promot- then sent for professional review. images and reports from major hospitals. ing a referral system to create a division A typical example of fraud is when This sharing of data aids in preventing of labor among medical institutions. The doctors falsely claim they treated a duplicated tests. aim is to prevent major hospitals from patient, usually a friend with whom they Also created in 2013 was the NHI being overcrowded due to the presence of

eliminates that exposure by providing electronic whiteboards. A wireless private corridors to connect the four vital-signs monitoring system sends areas. Visitors in the waiting rooms are a patient’s vital signs – including res- thus far less likely to be vulnerable to piration, heart rate, and blood oxygen infection. – to the monitor at the nursing sta- At the Dentistry Department, a rail tion and to the primary nurses’ work system attached to the ceiling trans- cellphones, enabling them to respond fers contaminated dental instruments quickly if needed. to the cleaning and sterilization room Lee reports that the hospital has in another move to save manpower. also developed smart phone-apps Lee also points to the nanotechnol- for long-distance monitoring of some ogy coating used for the water and air- patient conditions, saving time for conditioning filters. “When the air and both patients and doctors as patients water flow through filters, there are can stay at home and be called back lots of tiny particles with spikes,” he to the hospital only if their situations says. “They rupture the cell wall mem- look dangerous. brane of the bacteria and viruses.” Taiwan’s ICT companies, keen to Physically preventing the spread move out of basic contract-electronics of germs is more efficient than trying Use of this medical-transport robot manufacturing, frequently approach to kill them with chemical detergents, helps safeguard worker health and Lee to discuss ideas for joint projects. Lee notes. He says he hopes to intro- safety. “The big IT companies want to jump PHOTO:YUANLIN CHRISTIAN HOSPITAL duce this technology – first used in the into the healthcare pond,” he says. international airport and hospitals in However, Lee and colleague Nina Singapore – to other Taiwanese medi- matically uploaded into the hospital’s Kao, CEO of the Changhua Christian cal institutions. system. Besides avoiding the use of Hospital's Overseas Medical Mis- Outpatient registration, including paper, Lee notes, this invention is par- sion Center, note that the broadened payment of fees, is being expedited ticularly helpful in Taiwan where doc- usage of technology in the hospital by technology in the form of automatic tors generally see more patients than does not minimize the need for a registration machines. And hospital in the West and may not have time to human touch in treating the ill. Tech- visitors can get a basic health check at take every patient’s blood pressure. nology is used mainly to reduce trans- a “vital signs measuring kiosk.” After The hospital also contains smart portation time and improve auditing they insert their National Health Insur- patient rooms with such solutions features, giving doctors more time for ance identification cards, their body as solutions as bedside touchscreen patients, they explain. temperature, height, weight, and blood patient-education systems, as well pressure will be measured and auto- as nursing stations equipped with — By Jane Rickards

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NATIONAL HEALTH INSURANCE Can the U.S. Learn Something from Taiwan’s Healthcare?

everal of the candidates for the Democratic nomination for U.S. president are advocating a government- run plan to provide health-insurance coverage to all Americans,S sometimes referred to “Medicare for All.” As a single-payer healthcare system, this type of plan is similar to Taiwan’s National Health Insurance (NHI). Could the Tai- wan experience serve as a practical reference for the U.S. to study? For two reasons, the answer is probably “no.” First, while private health insurance companies are firmly entrenched in the American market, there were hardly any private health- insurance companies in Taiwan when the NHI was introduced in 1995. In the U.S. the insurance industry strongly opposes adoption of a single-payer system, and many citizens are quite satisfied with their current private coverage In this 1995 photo, President Lee Teng-hui receives the first NHI card from Minister of Health Chang Po-ya (left) and and would object to having to give it up. Bureau of National Health Insurance president Yeh Chin- Second, in the 1990s Taiwan had a super-strong govern- chuan. PHOTO: CNA ment in the form of a one-party authoritarian political system. As the NHI system was being designed, technocrats public health at National Taiwan University. pretty much had a free hand. Aside from reservations raised And because the pie had been expanded, doctors and by some disgruntled bureaucrats and the drug industry, other medical providers were happy to get the extra busi- there was hardly any resistance to universal health coverage. ness, Cheng adds. “They could see more patients, espe- In the U.S., in contrast, the way the healthcare system cially those older patients or the very young, who tended to should be structured is a highly contentious political issue. have greater medical needs.” Planning for Taiwan’s NHI system began in 1988, a year In addition, in that era private insurance in Taiwan was after martial law ended but eight years before the first direct mainly focused on life insurance. “There wasn’t much resis- presidential election. tance from insurance companies because health insurance The government’s Council for Economic Planning and was only a small slice of their income,” Cheng says. Development, the forerunner of the current National Devel- After the NHI’s establishment, private health insurance opment Council, assembled a task force composed of Tai- actually increased rather than decreased, says Lee Yue- wanese public-health scholars to design the system. After chune, a professor of health and welfare at National Yang soliciting advice from foreign experts and studying the best Ming University. Previously, families relied mainly on their foreign practices, they settled on a single-payer system with savings and never considered private health insurance, but a global budget because of its efficiency. the NHI’s inception raised awareness of the need for health The proposal had wide public acceptance. Taiwan’s coverage, she explains. economy at the time was booming, with average GDP Even if U.S. policymakers can draw few lessons from the growth in the 1980s of 7.7%. In that environment, both way Taiwan set up its single-payer system, they might learn employers and workers were willing to contribute to funding something from the results it has produced. the plan. Employers were motivated by the tight labor mar- The U.S. has a complicated, multilayered system that ket, while employees did not mind paying higher premiums eats up almost 18% of GDP and, according to many ana- because of steadily rising wages. lysts, results in billions of dollars of waste each year. Lee Before 1995, the government had established four major Yue-chune says the major problem in the U.S. is the admin- social insurance programs: Labor Insurance, Government istrative costs incurred as hospitals contend with paper- Employees' Insurance, Farmers’ Insurance, and Low- work from numerous different insurance systems. In con- Income Household Insurance. These programs mainly cov- trast, healthcare spending in Taiwan as a proportion of GDP, ered wage earners but not their dependents. In total, they at 6.4%, is considered by many to be too low. covered only 57% of the population and excluded many of Citing another problem with the U.S. arrangement, Lee those who were most at risk. notes that the multiple systems in place make it difficult for The NHI program rolled these four systems together and policy makers to see the national health picture as a whole. extended coverage to the remaining 43% of the population. On the other hand, the Taiwanese government has health As the new system was so similar to the old Labor Insur- information about its entire population, which helps direct ance system, “the transition was quite smooth without any policy. structural changes,” says Cheng Shou-hsia, a professor of — By Jane Rickards

24 TAIWAN BUSINESS TOPICS • MAY 2019

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out-patients with minor afflictions, which of a bowl of noodles. Target System (known as DET), which might prevent or delay emergency-room Lu suggests that a better approach sets yearly targets for prescription medi- patients and the critically ill from receiv- would be to make referrals compulsory, cation expenditures. If actual expendi- ing treatment. allowing patients to see a specialist only tures exceed the annual target, a process The government is encouraging when the family doctor feels it is clinically to lower drug prices is automatically initi- patients to go for treatment first to a necessary. This method has been adopted ated the following year. local clinic, the lowest-level medical insti- by the UK’s National Health Service. For years, drug companies have been tutions in a four-tier system, followed by “Maybe people would be willing to warning that low prices discourage the community hospitals, regional hospitals, sacrifice freedom of choice in exchange launch of new, innovative products in and then medical centers. for cheaper prices,” Lu says, while Taiwan, or even the retention of exist- IRPMA’s Heather Lin notes that acknowledging that government officials ing products on the market. The situa- medical-center physicians are currently may regard any restriction on freedom tion is said to be part of the reason why very overworked, seeing scores of of choice for healthcare services to be two medications recently left the market. patients and spending time register- “political suicide.” Distributor Zuellig Pharma announced ing and uploading prescriptions. “How that it would stop selling famed antide- can they do research as a medical center Impact on new drugs pressant Prozac starting April 1, while should do?” she asks. U.S. pharmaceutical company Merck Under the new system, co-payments Another controversial aspect of the Sharp & Dohme has ceased providing the for visiting a medical center without NHI system has been the impact on drug antibiotic Tienam. referral from a local clinic have recently prices, especially for new and innovative “The speed with which we introduce been increased from NT$360 to NT$420. medicines. Reimbursement prices tend new drugs to Taiwan is much too slow,” Some observers consider that the to be much lower than in OECD coun- says Amgen’s Joyce Lee. “That’s not higher charge is still not steep enough tries because of the government’s single- because of the license approval process. to deter people from going straight to a payer status, and the hospitals then typi- The main reason is reimbursement.” medical center. Rachel Lu, dean of the cally negotiate with the pharmaceutical When any existing therapy is replaced, Department of Healthcare Management companies for discounts. the price of the new medication is likely at Chang Gung University, notes that the Five years ago, the NHIA introduced to be high because it is innovative, she NT$60 increase is equivalent to the cost the Drug Expenditure Allocation Ratio says. Frequently NHIA takes a long time

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to determine the price it is willing to Kong, Lin says, and sufferers in Taiwan reliant on purchasing drugs at prices pay. That can be “really, really unfair to may have to wait months to access the below the NHI reimbursement level as a patients in Taiwan” who are kept waiting medication. If the situation worsens, source of income. for the latest treatment, Joyce Lee says. she adds, it may become common to see “Medications have become a major Without a reimbursement price, she patients flying to Hong Kong or Singa- source of profits for providers in notes, “a drug can be idling for many pore to get needed medicine. Taiwan,” concludes an academic arti- years in the self-pay market” if the Joyce Lee points out that many multi- cle co-authored by Lee Yue-chune. That’s government lacks enough budget or national pharmaceutical companies why you often receive a big bag of pills hasn’t made preparations for a special hope the government can find a way to when you see a doctor in Taiwan for an budget. substantially increase funds allocated for ailment like the common cold. Another impact of the low reimburse- new drugs. These companies “work for Joyce Lee says that some manufac- ment prices is that new drugs tend to innovation, so of course in a market like turers are having trouble breaking even be launched in Taiwan much later than Taiwan we don’t want it to be a tier 2 or in Taiwan because the bigger hospitals certain other markets, says IRPMA’s Lin. tier 3 market.” possess so much bargaining power. In Pharmaceutical companies want to avoid As mentioned above, a complicat- urging the government to require hospi- having a low price in Taiwan that other, ing factor is that the drug reimbursement tals to stick to the listed drug prices or larger markets might use as a reference price set by NHIA is hardly ever the price defined minimal discount, she notes that point in setting their own pricing. at which the drug is purchased by the “in Japan, with the government’s involve- In this region, oncology and other hospitals. The hospitals normally insist ment, it took 10 years to reduce drug drugs are often launched first in Hong on additional discounts, and have grown discounts to within 2%.”

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Heather Lin notes that IRPMA has introduced to Taiwan the concept of risk-sharing mechanisms – also known as managed entry agreements (MEAs) – which allow pharmaceutical companies to share with the government the financial risks of introducing new advanced drugs to the market. The aim is to enable doctors to prescribe drugs as needed, without having to consider the financial implications. One way of accomplishing this, she says, is for the government to first reimburse the cost of a new drug, but if the hospitals then find the treatment to be ineffective, the pharmaceutical supplier must pay back the amount that was spent. MOHW last September set Lee Yue-chune also points to a rise in which have been raised just twice since out guidelines for entering into MEA private health insurance to cover services NHI’s inception in 1995, will most schemes. excluded or not fully covered by the NHI likely be raised two years from now. Another healthcare-related issue program. According to the academic arti- “If we cannot control this condition, a concerns the reported exodus of Taiwan’s cle she co-wrote, “If this trend persists premium rise is the next step,” he says. chronically overworked doctors. “We’re and results in a two-tier system, Taiwan’s He also downplayed the likelihood of seeing a brain drain,” says Lu of Chang NHI may risk compromising the [social] any cuts to services, while raising the Gung University. She notes that many equity it has achieved over the last two possibility that patients may need to pay physicians have been hired away by decades.” out of pocket for more drugs, either in hospitals in Hong Kong, China, and In the end, to bolster the NHI whole or in part. Singapore that pay significantly higher finances, Taiwan may have to institute In any case, reform is needed, says salaries than available in Taiwan. Skilled broad-reaching third-generation reforms, Joyce Lee, as by 2026 Taiwan will be medical professionals who stay in Taiwan but “so far there is no formal discussion a super-aged society, sending medical do so either out of a sense of commitment of a 3G NHI system,” NHIA Director costs soaring. Without major changes by to this society or a desire to be close to General Lee says. that time, the outlook is “very scary,” family here, she says. Still, he predicts that premiums, she says.

Kidney Stoned in Taipei: My Emergency Sojourn at Veterans Hospital

t’s high on every expat’s nightmare I called a friend fluent in Chinese “Yes!” I replied. Satisfied I wasn’t faking, list – needing emergency medical care and begged him to call me an ambu- they took me in. I in a country where you’re an outsider lance. When it arrived, the ambulance The ambulance ride down our steep, and don’t speak the language beyond tell- team asked me, “Are you the person who winding mountain road was a painful ing a cab driver where to turn. called for an ambulance?” Engulfed in comedy of errors. I writhed and moaned I was home alone, my wife and chil- my suffering, I answered “No,” since I on the gurney while medical supplies dren off visiting family in the UK, when wasn’t the one who actually made the tumbled off the shelves during our twisty I was struck with a sudden, searing pain call. As they turned back to their vehi- descent. The attendant, limited in his in my abdomen, feverish sweats, and the cle as if to leave, I cried out in my lousy English skills, did his best to take care of urge to vomit and defecate simultane- Mandarin, “Wait!” They turned back to me. I tried to explain that I felt the need ously. Every internet search result turned me as I bent nearly double and grasped to vomit but he didn’t understand, so I up appendicitis and all recommendations my gut in pain. “Are you the person who mimed a powerful expulsion. But once were consistent: seek emergency care. called for an ambulance?” they repeated. I had a bucket under my chin, nothing

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would come out. Arriving at Taipei Veter- stone to pass. a bit of pride along with the relief. ans General Hospital, I requested the The physician who treated me spoke Soon able to be discharged, I prepared bathroom with the same result while both fluent English and had a bedside manner to face the bill. There were two columns urges remained undeniably strong. that was warm, reassuring, and support- – one indicating the costs if you have The hospital atmosphere was rough ive. The staff was professional, courteous, Taiwan’s National Health Insurance, one around the edges and very public. I and highly skilled — lacking nothing I if you don’t. The total without insur- waited on my gurney in a large room, might expect in America. Next stop, a CT ance was NT$11,000 – just over US$350. exposed to the other sufferers in the ER scan to get a look at my insides. Then we With insurance it was only NT$750 – a on that Saturday morning. The pain came waited for an interpretation by the radi- grand total of US$25. I silently blessed and went in waves, but when it peaked, I ologist on duty. We also needed a urine my National Health coverage and dug the squirmed and moaned like a spoiled brat sample, but that was another issue as I required cash from my pocket. throwing a tantrum. No one else made a was dehydrated. A bit of research reveals that in the sound other than low murmured conver- Though this was one time when it U.S. the ambulance ride alone could be sation. possibly did, I couldn’t pee if my life over US$1,000. A CT scan can run up The others glanced at me, but most depended on it. I asked for water, but to US$3,000. All told I was there for were too polite to point or stare. As an it wasn’t allowed in case the problem about six hours, and the average cost expat, your behavior is often viewed as turned out to be appendicitis and I would for a day in the hospital is US$4,700. representative of your country’s entire need to have an empty stomach for emer- The total bill without insurance in “the population, and surely they deduced from gency surgery. greatest country in the world” could my histrionics that Americans are weak, So we waited until I felt like I could have been US$8,000-$10,000. Compar- prone to tears and screaming. provide a sample. And when I did, lo and ing that to US$366 or the US$25 I An ER technician took my vitals as I behold, there in my urine sample rested paid, I’m convinced Taiwan’s system is described my symptoms. They narrowed the offending stone. The endocrinolo- better. Quality care, expertly provided it down to appendicitis or a kidney stone. gist congratulated me: “You have a very at a price that won’t bankrupt even the The former required emergency surgery, efficient urinary system. People can take uninsured. the latter required merely waiting for the weeks to pass a stone.” I admit to feeling — By Jim Klar

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American Chamber of Commerce in Taipei Tel : 886-2-2718-8226 E-mail: [email protected] BUSINESS TOPICS • APRIL 2019 28

5_CoverStory.indd 28 2019/5/8 下午10:32 BACKGROUNDER

MAKING A COMEBACK FROM MORAKOT

Some areas of southern Taiwan have recovered more rapidly than others from the powerful 2009 typhoon with its deadly flooding and landslides.

BY STEVEN CROOK AND ERYK MICHAEL SMITH

yphoon Morakot, which were banner years and the area has con- established the Morakot Post-disaster smashed into central and tinued to be a strong attraction. This Reconstruction Council, while the Leg- T southern Taiwan on August 8, April, Kaohsiung’s Namasia District islative Yuan approved a Special Act for 2009, was the deadliest, most destruc- enjoyed perhaps its largest-ever influx Post-Typhoon Morakot Disaster Recon- tive storm in Taiwan’s recorded history. of visitors when firefly-chasing tourists struction. On top of NT$22 billion The typhoon dumped 2,361 millime- made the most of a four-day weekend. diverted from other central-govern- ters (93 inches) of rain onto the island’s In the wake of the 2009 disaster, the ment programs, the lawmakers made mountains in 48 hours – a near global government sprang into action mobi- available a special budget of NT$116.5 record. lizing the military for search-and- billion for reconstruction. The flooding and mudslides killed rescue and cleanup operations. It also The government moved with 681 people and caused billions of New Taiwan dollars in property damage. Thousands were forced to abandon homes on or beneath fragile slopelands. Three-quarters of those displaced were members of the indigenous minority, Taiwan’s most disadvantaged ethnic group. Now, nearly a decade later, some communities devastated by the disaster are still struggling to recover, while others have experienced a speedier return to prosperity. The hot springs town of Baolai in the mountains of Kaohsiung, for example, has seen local commerce return to only about 60% of pre-storm levels. More fortunate has been the Alishan National Forest Recreation Area in Chiayi County. Although visitor numbers plunged in 2010 due to storm damage Typhoon Morakot was one of the worst natural disasters ever to hit Taiwan. to the main access road, 2011 and 2012 PHOTO: PICHI CHUANG

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Recurring mayhem: In 2012, heavy rains swept away makeshift bridges made of freight containers that had replaced bridges destroyed in 2009’s

Typhoon Morakot. PHOTO: STEVEN CROOK

unusual speed to alleviate the suffering More than 80% of the 3,500-plus per- nize relocation,” he says. But because of those who had lost relatives, homes, manent-housing units – abodes that can indigenous village meetings are gov- or livelihoods. The year’s typhoon be passed on to descendants, remod- erned by custom rather than clear rules, season was far from over, and the eled, or even rebuilt, but never sold or achieving a final decision was very diffi- danger of another storm compounding rented to outsiders – were completed by cult, he notes. the damage was very real. “If there had the second anniversary of the disaster. The government came under fire for been another disaster, the public would Recognizing that relocation is invari- how it handled the relocation of moun- rightly have blamed the government for ably dislocation, Chern explains that tain villages. The speed of the process moving too slowly,” says Chern Jenn- the authorities resettled households meant that villagers were pushed to chuan, who served as deputy CEO and within their village of origin whenever make decisions “at a chaotic and trau- then CEO of the Morakot Post-Disaster possible (some “villages” in the moun- matic time, while some of them were Reconstruction Council. tains cover over 80 square kilometers). still searching for family members,” Chern, who had played a key role in If that was impossible, they were relo- says Jeanette Yi-Jen Shie, an assistant the rebuilding that followed the severe cated within the same township. And if professor at the National Kaohsiung September 21, 1999 earthquake [known that could not be done, a site was found University of Hospitality and Tourism. as the 9-21 quake], says the Morakot as near to their previous living areas as Rumors and misinterpretations of Post-Disaster Reconstruction Council feasible. the rules interfered with villagers’ deci- managed to avoid some of the mistakes Immediately after Morakot, thou- sion-making, and the authorities’ habit that were made after that incident. sands of residents were evacuated to of dealing with individual families at “After 9-21, we arranged for people military bases and other temporary a time when many communities had to stay in temporary houses, but after shelters. According to Chern, reset- been scattered damaged tribal cohesion, 10 years some people were still living tlement negotiations were grueling. explains Shie, who has been conducting in those substandard structures. Those “Indigenous people don’t trust the gov- research in indigenous communities in people were poor, so they weren’t able ernment very much, and they don’t Kaohsiung and Pingtung since 2006. to move out,” says Chern, currently trust Han people very much,” he says, “A few villages decided to raise CEO of the Tang Prize Foundation and adding that he understands their anger funds within their own communities Distinguished Professor of Civil Engi- when it seemed the government wished to buy their own land and to rebuild neering at National Taiwan University. to take away their ancestral lands. their second homes as a community, The Reconstruction Council moved The authorities were bound by law without giving up their mountain quickly to identify which communities to respect the culture and social struc- homes so as to avoid government were in danger, and to plan their reset- ture of the affected communities, most interference,” she says. tlement in conjunction with the NGOs of which were indigenous. “We had “Government agencies also failed and private enterprises that had prom- to talk to them until we’d reached to realize that the issue of relocation ised to help build the new villages. a consensus. Then we could orga- harmed not only those villages, but also

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Cherry blossom season in Kaohsiung's Baolai Flower and Hot Spring Park.

PHOTO: ERYK MICHAEL SMITH

mountain ecology,” as poachers took are more likely to return home to tion, facilities, and community identity advantage of the sudden abandonment explore opportunities for cultural and than they had been before the disaster. of mountain villages. “However, a series culinary innovation relating to commu- Household-registration statistics of organic farming and ecotourism pro- nity-oriented tourism,” Shie says. suggest that some Morakot-impacted grams have helped villagers return to According to Shie, reliance on gov- districts have recovered much better their mountain homes and establish ernmental or other forms of external than others. The population of Namasia livelihoods,” she says. aid “probably slows down the process has not quite returned to pre-disaster According to Shie, one of the most of recovering” because “external rules levels, but it seems to have stabilized. successful resettlement efforts was at and policies disrupt village leadership Wutai Township in Pingtung County, Rinari in Pingtung County’s Majia and opportunities to reach commu- which like Kaohsiung’s Maolin District Township. “First, the three villages that nity consensus for long-term progress. is a stronghold of the Rukai tribe, has relocated here acted mainly on their This deprivation of self-determination bounced back after a post-Morakot dip. own decisions. Second, after World continues with respect to job oppor- In February this year, Maolin had Vision helped build the new houses, the tunities.” Morakot victims, she points 1,977 residents, more than at any time NGO stopped any form of intervention, out, are often left with very few options since 1981, even though one of its and left the villagers to decide how to apart from working on farms owned major tourist attractions – the natural arrange their homes and their common by private companies or for NGO-led hot springs at Duona – was destroyed future,” she says. tourism projects. by the typhoon. But according to staff Shie contrasts this approach with Chern agrees that Rinari is perhaps at the Maolin National Scenic Area how the Buddhist Compassion Relief the most successful resettlement com- Administration – the government unit Tzu Chi Foundation managed the Da-ai munity, while pointing out that many overseeing tourism in Maolin, Liugui, Village it built in Kaohsiung’s Shanlin of the other new villages are fully occu- and nearby areas – an aboriginal- District. “As a religious group, they pied. Survey results compiled by the themed open-air bathing center will one employ strong compulsory discipline” National Science and Technology day be managed by local residents. It is which tends to disregard indigenous Center for Disaster Reduction, which still reportedly “in the very beginning culture, she says. The result is that “the is supervised by the Ministry of Sci- stages of construction,” however, and villagers continue to see themselves as ence and Technology, indicate a sense no completion date is available. victims, reflecting how outsiders view of satisfaction among those affected Liugui – the district that includes them, and this has led to a passive atti- by Morakot. According to survey data Baolai and the smaller hot-springs vil- tude toward community-rebuilding and published in 2017, it took more than lage of Bulao – has seen its population regaining their identity,” she says. two years before disaster victims con- drop from 20,786 in 1981 to 12,881 in Because Rinari’s community- sidered their general situation to be February 2019, but the typhoon does rebuilding process has greater autonomy “OK” – but by 2015, they were even not seem to have accelerated the rate and is more respectful, “Young people more satisfied in terms of transporta- of decline. Kaohsiung’s Jiaxian District

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also struggles to keep inhabitants from Jiaxian also benefited from way-station 133 between Baolai and Bulao still moving away, though it has no problem business. nowhere near reopening. But those who attracting day-trippers. Throughout a Asked if the NT$2 billion report- do make it to this part of Taiwan can recent long weekend, the town center edly being spent to reopen the South often find accommodations for as little was packed with visitors buying taro- Cross-Island Highway could be better as NT$1,500 per night. flavored ice creams and pastries. The spent elsewhere, Chern says: “At first, The recent reopening of Liugui’s population was falling well before mud- we didn’t intend to spend much money Tengjhih Forest Recreation Area is slides caused by Morakot obliterated there. Instead, we just waited for ‘nature another reason for businesspeople in the district’s Xiaolin Village, killing to calm down.’ But many people earn Baolai and Bulao to feel optimistic. 491 of its residents, and the downward their livelihoods along that road, and for Prior to Morakot, the 770-hectare spiral continues. the government it’s a strategic road.” forest area was popular with hikers, The greater outward migration from many of whom like nothing more than Han-dominated areas like Liugui and Return of the hot springs soaking in a hot spring after tramping Jiaxian than from indigenous communi- up and down a trail. ties like Namasia could be explained in Zhong can take some of the credit Zhong is not the only local to part to the generally higher educational for Baolai making a partial recovery, praise the replacement of washed-away levels of the Han Taiwanese, better pre- even without the South Cross-Island bridges with structures notable for their paring them for careers in urban areas. Highway. “The floods buried the old higher piers, deeper foundations, and There is also anecdotal evidence sug- hot springs under two or even three sto- longer spans – all features making them gesting that many indigenous people ries of mud and rock,” he says. After less prone to collapse. But the allocation prefer to live in their tribal communi- Morakot, the Kaohsiung City gov- of other funds has been more controver- ties, rather than in cities where they ernment spent a great deal of time sial. The privately-run Eighteen Arhats would be a minority that – in the past if and money drilling around the town, Rest Area, which takes its name from a not now – has suffered discrimination. searching for geothermal waters. string of hills said to resemble Buddhist One of the few indigenous areas “Nothing came of their efforts,” saints, received government money to where the population continues to be Zhong says. “There was definitely some construct a campground and a bridge. lower than it was a decade ago is Kao- selfishness involved. Hotel owners lob- The area’s management say the arrange- hsiung’s Taoyuan District. The only bied the government to dig near their ment was above board, but some access to Taoyuan is via Highway 20, places of business. Finally, I went to wonder if the reported NT$20 million a road also known as the South Cross- the authorities and said, ‘I don’t own a was a wise investment. Island Highway. spa or a hotel, so I’m a neutral arbiter.’ It is hard to see why campers would Before Morakot, it was possible to We then went and talked to elders pick this campsite over spots deeper in drive on Highway 20 from Tainan to throughout the area, and finally a spot the hills. It is just meters from a busy Taitung. The road traverses Yushan was located.” road, and was empty when last visited. National Park, and its highest point is Since early 2017, hot-springs water The dead-end bridge is pleasant enough, 2,731 meters above sea level. In addi- has been pumped from the new well, but it merely crosses a gully and does tion to tourists eager to see spectacular and piped to local businesses for a fee not appear to be attracting visitors. mountain vistas, it was used to trans- that one hotel owner said came to only Lacking even an elevated spot from port farm produce from East Taiwan NT$100 per tonne. which sightseers can take pictures, it to markets on the western side of the Zhong still mourns the loss of the serves no function. The economic logic island. free riverside hot springs, which drew behind the government’s funding of this Landslides in the wake of Typhoon people keen on bathing and barbe- project is far from obvious. Morakot buried much of the highway, cuing. A replacement of sorts is Baolai Still, Chern finds much to be proud and the central government’s enthu- Flower and Hot Spring Park, a cozy of in the response to the Morakot siasm for rebuilding it has waxed and place where you can soak your feet for disaster. “Our post-Morakot recon- waned in the years since. Officials have NT$50. The park opened in December struction efforts are renowned around said the road could be reopened to 2017, but Zhong admits it has yet to the world,” he says. “Before Mor- through traffic in early 2021, but res- become a big tourist draw. akot, Linbian and Jiadong in Pingtung idents of the area worry that another Legal issues are holding Baolai back, County, and Qishan in Kaohsiung, storm could push the date back. Zhong asserts. “Over 40 bridges in suffered frequent flooding. Since recon- “After 4 p.m., fog often blankets the area were washed away during the struction, it seldom happens, because the mountains and makes diving dan- floods, and I commend the government we sought long-term solutions.” gerous,” says sexagenarian Zhong for rebuilding them pretty quickly. But At the same time, there is a limit to Xiang-gui, a former chairperson of the you’re not going to see real investment his optimism. “This kind of disaster will Liugui Tourism Recreation Association. until potential investors are sure who come again and again in the future – of Before Morakot. owns the land.” that I’m sure,” he says. The only ques- “A lot of money used to come into Inconvenient transportation is tion is how well-prepared Taiwan will Baolai just from stopovers,” he recalls. another factor, with Kaohsiung Road be the next time.

32 TAIWAN BUSINESS TOPICS • MAY 2019

morakot.indd 32 2019/5/8 下午10:33 INDUSTRY F CUS

A Special Report on Financial Services

Virtual Banks, Mobile Payments, and Security Tokens

TAIWAN BUSINESS TOPICS • MAY 2019 33

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DOES TAIWAN NEED VIRTUAL BANKS?

Internet-only banks could potentially serve a credit-strapped young demographic that prefers to bank online, but what will be the effect on an already saturated banking sector?

BY MATTHEW FULCO IN THIS REPORT

aiwan is overbanked. Its 37 of the new market entrants’ arrival banking institutions operate on the already saturated banking T roughly 5,000 branches for market, Commission Chairman Wel- a population of about 23 million lington Koo said at a news conference people. Because the sector’s US$1.6 last year. He added that the exit of trillion in assets are spread among two banks from the market in recent so many different banks, no indi- years opened up two slots for virtual • Does Taiwan Need Virtual Banks? p34 vidual institution is big enough banks. China Development Finan- to compete regionally with global cial Holding Corp. acquired Cosmos heavyweights. Bank in 2014 and Yuanta Financial Given the surplus of banks here, Holding Corp. purchased Ta Chong it may seem surprising that the gov- Bank in 2016. ernment has been encouraging new The first two licenses will serve as • Taiwan’s Mobile Payments Market market entrants, but there’s a reason a trial to create new financial services Heats Up p37 for it. Taiwan’s traditional lenders platforms for Taiwan, says attorney aren’t necessarily able to meet the Jaclyn Tsai, chair of the Taiwan needs of young entrepreneurs and Fintech Association and a former consumers, both of whom struggle minister without portfolio. • Taiwan Set to Regulate STOs p40 to access credit and prefer to do their Since the banks will be virtual banking digitally. Virtual banks could – and in need of digital expertise – fill that void from digital-first plat- the FSC is permitting tech firms to forms tailored for users in their 20s take up to a 50% stake in them. The and 30s. They could offer everything other half will be held by either a tra- from micro-lending to artificial intel- ditional bank or financial holding ligence-powered wealth-management company. services. “Taiwan needs a relatively safe The Financial Supervisory Com- way to provide digital financial ser- mission (FSC) plans to issue the vices that allows the traditional first two virtual-banking licenses banks to participate,” says Hank in June. The FSC decided to issue Huang, president of the Taiwan just two licenses in the first round Academy of Banking and Finance of approvals to mitigate the effects (TABF), a think tank and training

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center for finance professionals. (25.1%) has applied to set up Next credit score. Huang said that Line Bank The presence of traditional lenders as Bank, which would offer deposit and planned to develop its own method for shareholders in the virtual banks could lending services, insurance policies, and evaluating the credit of users. mitigate real risks as well as the per- wealth-management services. Japanese “It is a sore point for young con- ception of risk, Huang says. “Would e-commerce giant Rakuten (51%) and sumers, so we will take the initiative by you want to put all of your money Taiwan’s Waterland Financial Holding inviting them to use our model,” Huang in an internet-only bank?” he asks. (40%) are leading a second group. The told the media. “Some young people might, but a lot third consortium is headed by Line Finan- Line Bank also plans to offer wealth- of other people would hesitate – unless cial, the financial-services arm of Japan’s management services powered by robo- a traditional bank that they trust were Line messaging app, which has applied to advisers. The virtual financial consultants involved.” hold a 49.9% stake in Line Bank. Four use algorithms to provide simple port- Still, the internet banks’ business banks – Standard Chartered, Fubon, folio management solutions for individual model will differ from that of traditional CTBC, and Union Bank – would take a investors. The service is popular among banks, analysts say. “They do not intend joint 40.1% stake in the venture. millennials for its ease of use and lower to operate the online-only businesses Among the three groups, Line Bank cost compared to traditional wealth-man- from a traditional bank perspective,” says has been lobbying especially vigorously agement advisors. Lee Cheng-hwa, a senior industry analyst to win the license. At a November 2018 In applying for a virtual bank license, at the Market Intelligence & Consulting press conference, Line Taiwan’s general Line Bank has many strengths working in Institute (MIC), a semi-governmental manager, Roger Chen, said that the com- its favor, says MIC’s Lee. They include “a research house. “Instead, they aim to pany supports the FSC’s goal of using strong shareholder structure” given the leverage large amounts of consumer data digital banking to boost financial inclu- participation of the four banks, as well as to precisely target different market seg- sion. The company’s large user base, a large user base thanks to the popularity ments with digitally based products.” which includes 21 million accounts in with Taiwanese of its messaging app. In Taiwan, would help it provide financial addition, “Line has already tested the License to bank services to more people, Chen said. waters in the financial sector” through At a March press conference, Line Line Pay, which is Taiwan’s top mobile Three consortiums have applied for Bank’s chief executive officer, Morris payments app, Lee says. the first virtual-banking licenses. A group Huang, noted that traditional lenders For its part, the Rakuten-Waterland led by Chunghwa Telecom (with a 41.9% are reluctant to extend loans to young group can draw on the Japanese com- stake) and Mega Financial Holding people, who have yet to build a strong pany’s deep pockets and experience in

TAIWAN BUSINESS TOPICS • MAY 2019 35

5 IF.indd 35 2019/5/8 下午10:33 INDUSTRY F CUS internet finance, Lee says. For instance, private lending. job losses could occur if virtual banks Rakuten has a US$100 million fin- Still, Lend & Borrow says that its take business away from traditional tech fund that leverages the company’s loan application process is even stricter lenders. expertise in card and payments services, than the banks. Web-only banks could Prior to adopting many web-only banking, insurance, securities, and asset find a niche market among small and banks, Taiwan should consider pushing management. medium enterprises and individuals to consolidate the banking sector, Wegner The Chunghwa Telecom group, mean- whose profiles seem too risky for the says. “Most other markets in Asia have while, is following a tried-and-true path banks or P2P lenders. already consolidated their banking sec- of integrating telecommunications with Whether they succeed will depend in tors,” he says. “It’s helpful from the financial services, Lee says. He notes that part on whether the FSC lets them use standpoint of building banks with scale companies in Europe, South Korea, and less stringent criteria for evaluating bor- and improving the competitiveness of India have all been successful with this rower risk. Line Bank has said that its individual banks.” business model. model will calculate an applicant’s credit- Kuomintang legislator Jason Hsu, a worthiness differently from the standard key fintech proponent among Taiwanese Not an easy sell process used by the Joint Credit Infor- politicians, also regards consolidation mation Center, which is based on an as a priority. “Virtual banks that offer Despite the apparent demand in applicant’s payment and borrowing the same services I can access from my Taiwan for internet banks, the new- record. Banks typically refer to the JCIC’s existing bank on my smartphone don’t comers will face some significant rating when deciding whether to issue a offer a compelling value proposition, challenges, experts say. For instance, credit card or loan to a customer. especially given how overbanked Taiwan the virtual banks will have to differen- Line Bank has not explained quite already is,” he says. tiate themselves clearly in a market that how its evaluation process will differ Rather than issue full banking licenses already offers a large variety of financial from the JCIC’s. to internet banks, the FSC should issue services from different providers. Carl Wegner, head of Asia business limited licenses that allow fintech startups “Most Taiwanese banks already pro- development for U.S. blockchain firm R3, to offer select services to consumers and vide a significant number of web-based says that virtual banks can provide useful businesses, Hsu says. He adds the caveat services,” says TABF’s Huang. “What digital financial services, but may have that the financial regulators appear new services can virtual banks provide?” trouble competing in a market as satu- squeamish about allowing technology In fact, none of the web-only banks rated as Taiwan’s. He describes Taiwan as firms to play a major role in Taiwan’s has proposed anything not already avail- “one of the toughest banking markets in banking sector. “They’re really hesitant to able in Taiwan. For people seeking small the world.” let tech into finance,” he says. loans via an efficient online process, On the other hand, if the new virtual TABF’s Huang acknowledges that Taiwan has online peer-to-peer lenders banks are highly successful, the resulting requiring virtual banks to partner with like Lend & Borrow. As of mid-2018, pressure on traditional banking could traditional banks could ultimately restrict Lend & Borrow had extended more than prove disruptive. Indeed, given the large the scope of the web-based banks’ busi- NT$5 billion in loans, according to Busi- number of people employed in retail ness. “Taiwan wants to be creative in ness Next. The company doesn’t need a banking in Taiwan – many observers say banking – but it doesn’t want to take any banking license because it is engaged in there is overemployment – significant real chances,” he concludes.

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I’ I

The competition for market share for mobile-wallet business is intensifying as consumers increasingly settle transactions with their smartphones.

BY MATTHEW FULCO

aiwan’s convenience stores have provided by the merchant. “critical to developing a digital economy,” always lived up to their name – Mobile-payment transactions reached former Premier Lai Ching-te said just T with one exception. They refuse NT$47.8 billion in 2018, more than a before leaving office earlier this year. to take most debit or credit cards. Besides threefold spike over NT$14.8 billion “By both meeting the needs of society cash, for years the only way to pay at a a year earlier, according to Financial and helping expand the scope of e-com- convenience store was the stored-value Supervisory Commission data. Analysts merce applications domestically, mobile EasyCard. attribute the steep increase to changing payments carry great significance for Today the convenience stores still consumer behavior – especially a Taiwan’s emergence as a smart digital won’t take credit cards, but they do growing ease with mobile banking – plus nation,” Lai added. increasingly welcome mobile payments. aggressive promotion by digital wallet To persuade small businesses – those Digital wallets from Apple Pay and providers and government support for with sales of less than NT$200,000 a Google Pay to homegrown JKoPay and mobile payments. month – to accept mobile payments, the Japan’s LinePay are now widely accepted The government has set a goal of 90% government is providing a tax incentive. at the major convenience-store chains. mobile-payment penetration by 2025, Small businesses can continue paying Consumers pay for a transaction either an ambitious target given that the rate in just 1% in business tax until the end of by swiping their phones over a contact- early 2018 was just 13%. 2020 even if their revenue grows, pro- less terminal or scanning a QR code Making mobile payments ubiquitous is vided that they offer mobile payments

TAIWAN BUSINESS TOPICS • MAY 2019 37

5 IF.indd 37 2019/5/8 下午10:33 INDUSTRY F CUS options to customers. Under ordinary payments, according to a Visa survey circumstances, if revenue increased to published in September 2018. The recent more than NT$200,000 monthly, the launches of contactless payments for small businesses would need to pay a 5% smartphones and fitness wearables have tax rate. The government estimates that increased the popularity of “tap and 400,000 small businesses will benefit pay,” the survey found. from the program. Use of the EMV (Europay MasterCard Mobile payment in Taiwan is Visa) standard QR code is also helping becoming more popular in a variety of to boost mobile payment adoption in channels that used to have low adop- Taiwan, Ma says, referring to the global tion rates, notes Robin Hu, a senior standard for payment cards that ensures industry analyst at the semi-governmental interoperability between all cards and Market Intelligence & Consulting Insti- acceptance networks. “QR code is a cost- tute (MIC). The use of mobile payment in effective and secure alternative to POS convenience stores jumped to 75.6% of terminals and better suits small merchants transactions in 2018 from 62.3% a year who aren’t currently offering digital pay- earlier, MIC found. ments,” he says. In supermarkets, the rate rose to Visa launched the EMV QR Code in 42.5% last year from 32.3% in 2017. In Taiwan in November 2018, focusing on online sales, the frequency of usage nearly merchants who traditionally favor cash. doubled to 36.2% in 2018 from 19.8% It is working with Taishin Bank, Bank the previous year. Sinopac, Standard Chartered Bank, Hua Contactless point-of-sale terminals Nan Bank, and Mega Bank, as well as the have been another factor facilitating Taiwan Mobile Pay wallet, to facilitate mobile-payment adoption in Taiwan. digital payment adoption by wet-market According to credit-card giant Visa, such stalls, taxis, vending machines, and retail terminals account for 62% of the accep- stores in Ximending and on Yongkang tance points in Taiwan, more than in Street, Ma says. Singapore (57%) and Hong Kong (39%). “Contactless payments continue to be A three-horse race an integral part of the Taiwanese way of life, which makes going cashless easier While Taiwan’s mobile-payments and supports the government’s national market remains fragmented, three digital- agenda to expand digital payments,” wallet services together hold more than says Marco Ma, general manager of Visa 60% of the market: Line Pay, Apple Pay, Taiwan. and JKoPay. As of January 2019, Line A total of 74% of Taiwanese want was still No. 1 with a 22% market share, to see more retailers accept contactless while Apple Pay and JKoPay each had almost 20%, according to MIC. But JKoPay’s popularity is growing faster than the other two. In the past year, it has almost doubled its share of Tai- wan’s mobile-payments market, while Line lost 3% and Apple gained just 2%. JKoPay has used a unique strategy to build scale, analysts say. Compared to Apple and Line, it has focused much more on Taiwan’s small merchants, notes Jaclyn Tsai, chairwoman of the Taiwan Fintech Association. “JKoPay has done a good job of tying itself in with the daily lives of Tai- wanese,” she says. “For small everyday transactions like breakfast or snacks at the night market, it’s the go-to mobile payment provider.” JKoPay has used a variety of incentives to build its user base. For instance,

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the company offers users free tokens that subsidize up to 20% of a given transaction, says Ken Chen, co-founder and chief marketing officer of iCHEF, a Taiwan-based restaurant POS system. In addition, the company incentivizes merchants by offering their customers discounts if they pay with JKoPay. And it helps the shops with online promotion and the sharing of location notification – tasks that small mom-and-pop stores usually aren’t well-equipped to handle themselves. “By integrating a bank account with its payment-service platform, JKoPay is able to lower costs incurred from handling fees and consistently offer pref- erential discounts,” says MIC’s Hu. Critically, JKoPay is able to persuade Although some taxis are beginning to offer a variety of payment options, most drivers are still small merchants – who have tradition- partial to cash. ally handled transactions only in cash – PHOTO: MATTHEW FULCO that it’s in their interest to accept JKoPay. “Small merchants are signing on with back of credit points. CTBC’s fee income ernment-backed Taiwan Pay. JKoPay because they feel that it’s helping declined in the third quarter of 2018 Hu notes that fierce market compe- them drive business in a way they couldn’t because of the high cost of the rewards tition is resulting in new demographics by themselves,” iCHEF’s Chen says. program, media reports have said. embracing mobile wallets. Mobile-pay- Line Pay has used a very different With their high profiles, Line Pay and ment providers are expanding beyond strategy than JKoPay to develop its dig- JKoPay are the most visible of Taiwan’s their traditional customer base of adults ital-wallet business here, focusing more digital wallets, but Apple Pay still com- aged 26-55 to younger adults aged 18-25, on tie-ups with financial-services incum- mands an almost 20% market share. and even older adults, he says. bents and big retail outlets. MIC’s Hu Analysts say that Apple benefits from the Still, some small businesses remain attributes Line Pay’s success to its mas- high penetration of Apple products in resistant to non-cash payments. In recent sive user base of 19 million people – Taiwan and the iconic tech giant’s strong weeks, Taiwan Business TOPICS vis- about 80% of the Taiwanese population brand cachet here. Apple is currently ited several retail outlets that ostensibly – as well as its launch of credit cards, co- the top smartphone seller in the Taiwan accept credit cards and mobile payments, branded with banks, which offer users market, with an almost 25% market only to discover that cash was required to “attractive discounts” on purchases. share, according to German research firm purchase specific items. Line’s large user base “facilitates GFK. At an outlet of the Mama How baby cooperation with channel operators and iCHEF’s Chen says that Apple Pay is goods store, a clerk insisted that only gives Line an advantage” in the mobile- handy for online transactions but doesn’t cash could be used to purchase certain payments market, Hu says. “Every Line incentivize its users to make offline pur- diapers. The clerk said that by accepting user is a potential Line Pay user.” chases with the platform. only cash for the product, the store could Line’s co-branded credit card with Still, Apple Pay does offer a “smooth offer a lower price to consumers. Simi- CTBC Bank, launched in 2016, has been user experience” and benefits from the larly, at the 29.com Wine Cellar, some a big hit. The card is considered a mobile “aggressive promotions of its bank part- champagne was cash-only. The staff payment because it is tied in with the ners,” says MIC’s Hu. members said that because the price was Line app on smartphones. Initially, card- Analysts expect that Taiwan’s mobile a special offer, transactions had to be set- holders received three Line Pay credit payments market will continue to tled in cash. points (with each point equivalent to develop steadily in the coming years, as Taxis are another problem area. NT$1) for every NT$100 spent, although both consumer and merchant acceptance Drivers are often reluctant to accept dig- CTBC has since reduced that to just 1 is rising, while the government has been ital payments, sometimes claiming that credit point. From December 2016 to supportive. Over the long term, consol- their POS machines are out of order. September 2018, CTBC reportedly issued idation is expected to ease the market Charles Wei, a taxi driver in Taipei 1.83 million of the cards, making it the fragmentation problem, says MIC’s Hu. City, says it takes five days for him to bank’s most popular credit card. Besides market leaders Line Pay, get paid for a fare settled with JKoPay, a However, subsidizing users’ purchases Apple Pay, and JKoPay, other major dig- delay he finds irritating. so heavily may not be a feasible long- ital wallets in Taiwan include Google Pay, “Of course, most drivers prefer cash,” term strategy, hence the bank’s scaling Android Pay, Samsung Pay, and the gov- he says. “It’s just easier.”

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TAIWAN SET TO REGULATE I I

Regulating STOs could provide a new equity fundraising channel for startups, but questions remain about the utility of the new rules.

BY MATTHEW FULCO

ust a few years ago, some virtual ratize investing. They enable a wider fraudulent behavior because they often currency advocates were suggesting range of parties to invest early in com- raised funds for digital assets that had J that Taiwan could become a hub for panies without requiring accreditation the attributes of a security but were not all things crypto in Asia. Given the con- (as needed for IPOs) or giving money to bound by any of the regulations gov- servative nature of Taiwan’s financial a risky initial coin offering (ICO), the erning securities. industry, the thought of Taiwan becoming crypto equivalent of a company going Wegner advises Taiwan to “manage “crypto island” was a bit of a stretch. But public. Indeed, unbound by regulations, STOs as a tool to help business, not with Bitcoin’s value in December 2017 ICOs require little more than “an alluring just as a tool to make money for a few hovering at around US$20,000 (it has white paper...to raise millions of dollars people.” since fallen by almost 75%), irrational with little-to-no accountability,” notes the “The token-market infrastructure, exuberance was in the air. Blockgeeks crypto research website. now led by STOs, is being built from Once the risks of a full-throated For their part, traditional exchanges both sides – the disruptive startups that crypto embrace became apparent, Taiwan keen to tap blockchain opportunities are now realize that some regulation is nec- put some daylight between itself and dig- seeking to boost the liquidity of tokens, essary and the more traditional financial ital currency. Don’t expect Taiwan to analysts say. The U.S. and Japan have sector that is beginning to appreciate the establish massive crypto exchanges like taken steps to regulate STOs, while Sin- benefits of tokenization and blockchain,” Japan has. Nor is Taiwan accepting Bit- gapore and Thailand also are moving in he says. “Both have to be involved in the coin as a legal tender. that direction. conversation.” But by the end of next month the The FSC is “oriented towards STOs as Jason Hsu, a Kuomintang legislator government does plan to establish a a new equity crowdfunding model,” says and one of Taiwan’s leading fintech advo- mechanism for security token offer- Ryan Terribilini, chief executive officer cates, says that STOs could help young ings (STOs), designed as a fund-raising of Formosa Financial, a Taipei-based Taiwanese become more involved in channel for startups. The move is in line startup that manages digital assets. He is Taiwan’s capital markets. In general, with Taiwan’s gradualist acceptance of also a research associate at Britain’s Uni- younger Taiwanese are not interested in digital financial technology, including versity of Oxford focusing on blockchain the traditional stock market, he says. He adoption of a fintech “sandbox” that (distributed ledger) technology. “There’s recommends that the FSC develop new allows firms to experiment with innova- a gap in the market for financing small exchanges for STOs. tive business models without violating businesses,” he says. Alex Liu, co-founder and chief exec- existing regulations. Compared to ICOs, STOs are a less utive officer of Maicoin, a Taiwan- A securities token is a digital asset risky financing channel, says Carl Wegner, based digital asset exchange platform, launched by a company aiming to raise head of Asian business development views the forthcoming STO regulations funds. In theory, any type of asset traded for U.S. blockchain firm R3. “If you’re as a significant step in Taiwan’s gradual as a security on a traditional exchange raising funds with an STO, you’ve got adoption of fintech and blockchain tech- could be tokenized: stocks, bonds, mutual the advantages of blockchain technology nology. However, he regards the FSC funds, or gold, to name a few. but you still need to follow securities reg- as being more focused on protecting STOs have the potential to democ- ulations,” he says. ICOs were prone to domestic investors than developing a

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thriving STO ecosystem. Sandbox investments will be limited to The FSC’s proposed regulations “are “The challenge for regulators – in NT$200 million. probably too restrictive at this point to be Taiwan and elsewhere – is that that they Hsu is skeptical about the effi- of market interest,” says Maicoin’s Liu. see blockchain as an alien technology that cacy of that approach, given the long While final STO regulations are we’re trying to map back into traditional consultation period for applicants (usu- pending, the FSC plans to set up a asset classes,” he says. ally 4-6 months) before they can enter dedicated security token trading plat- the sandbox. “This isn’t a sandbox for form separate from the Taiwan Stock The right regulation experimentation – it’s more like a baby’s Exchange and the over-the-counter Taipei crib,” he says. Exchange. Companies operating vir- Despite general agreement about Tai- At the same time, the FSC’s plan tual currencies will need special licenses wan’s need to regulate STOs, the fintech would restrict non-accredited investors to accept orders, the FSC says. Still community and the FSC differ on how to from participating in STOs, although undecided is whether tokens will be stan- do so. The financial regulator has pro- critics say such a provision would run dardized and whether they will need to be posed setting the normal fundraising counter to the spirit of STOs, which secured by collateral. ceiling for an STO at NT$30 million are supposed to allow a wider range of In general, while less risky than ICOs, (about US$1 million), which could be people to participate in capital markets – STOs are far more complex and costly to insufficient for startups. not just institutional heavyweights. launch. Noted a post on the website The Reflecting a fintech industry point of And yet the regulator is taking a Crypto Law Insider: “This higher bar- view, Legislator Hsu advocates raising conservative approach even toward rier to entry will limit which projects can the limit to NT$150 million. He says that accredited investors, permitting them enter the market and unfortunately some startups typically need to raise between to allot just NT$100,000 for an STO, good projects may never take off because US$3 million and US$5 million in their a miniscule amount by the standards of they can’t get the funds together for a first round (Series A) of fundraising. institutional investors. “The FSC appears registered securities offering.” In a statement on its website, the FSC to be telling investors, ‘You can play, but If Taiwan’s STO regulations are too says that it decided on the NT$30 mil- you can’t really play,” Hsu says. restrictive, there is a risk that companies lion threshold after soliciting a number of “If we’re going to regulate STOs, will choose to operate outside the reg- expert opinions. The statement also notes the regulation should be useful,” says ulations, which is feasible in the largely that STOs would be exempt from some attorney Jaclyn Tsai, chairman of the uncharted virtual currency space, Terri- unspecified administrative requirements Taiwan Fintech Association and a former bilini says. They could do so by issuing that IPOs must undergo, allowing them minister without portfolio. She notes tokens that they do not classify as “secu- to proceed faster than IPOs. that since the proposed regulations pro- rity tokens,” a practice common in many The FSC proposes to permit compa- hibit non-accredited investors from ICOs. nies to raise more than NT$30 million participating in the STO market, funding “If companies see that it’s not worth with an STO if they do so through Tai- options for startups may be dramatically the headache of registering to do an STO, wan’s fintech regulatory sandbox, where reduced. “Most target investors of STOs Taiwan isn’t going to have much of an the commission can monitor risks. are non-accredited,” she says. STO market,” he says.

TAIWAN BUSINESS TOPICS • MAY 2019 41

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Am(h.>m T,,ipci topics.amcham.com.tw ADVERTORIAL Italian Cuisine Takes a New Twist at the Marco Polo

The new chef de cuisine at Shangri-La’s Far Eastern Plaza Hotel hails from the Amalfi Coast and proudly presents innovative gourmet Italian fare.

hef de cuisine Fabio Stram- menu at a major establishment, or as he In a way it’s great to follow tradition but miello has been traveling bluntly puts it, “Telling people what to in another way, it restricts creativity.” C the world, learning from the do rather than being told what to do.” Another learning curve for Fabio masters, and presents Italian food with His philosophy is simple and was working as sous chef at the Emir- a twist at the Marco Polo Restaurant on effective. “I just want to make good ates One&Only in Australia’s New the 38th floor of the Shangri-La’s Far food and make people happy. The South Wales. He calls it a “beautiful Eastern Plaza Hotel. awards will follow later.” Naturally experience,” cultivating and sourcing Hailing from the Amalfi Coast based on traditional Italian cuisine, ingredients on the stunning 7,800-acre region of Italy, the spiritual home of Fabio’s approach is creative and unique, estate and producing exciting new food Mediterranean cooking, Chef Fabio’s fresh and balanced. “I don’t like to use combinations. first job after cooking school was an too many ingredients because good and Moss is not on the menu at Marco eye-opener. His cousin helped him secure fresh always tastes better” and doesn’t Polo, but a lot of care and attention has the role of chef de partie responsible for overpower the palette, he says. gone into the dishes that Fabio is now making pasta, risotto, and soups at the A fan of organic ingredients and presenting. For example, his agnolotti Heinz Beck-helmed restaurant Café Les biodynamic sourcing, Fabio learned to filled with smoked eggplant, combined Paillotes in Pescara. The restaurant has push the envelope of classic French and with creamy burrata cheese and golden had a Michelin star since 2009. Italian gourmet cooking after working Ossetra caviar, is wonderfully balanced. Beck, founder of The Order of the in Denmark at two of the world’s most The ingredients complement one another Knights of Italian Cuisine, is a notorious famous “new cuisine” restaurants. He wonderfully, and using the charcoal perfectionist. Fabio was not only intro- first worked as a stager at the three- Josper, a combination grill and oven, duced to the demands of being a top star Geranium before joining the brings out the best in the dish. chef – long hours and a demanding work high-concept cooking establishment His amuse bouche was an egg yolk environment – but also to the incredible Noma, also in Copenhagen. The confit with seasonal green asparagus, experiences that food can provide. latter’s 20-course meals based on Italian truffles, and lemon zest for a little Fabio calls Beck’s signature restau- seasonal produce have revolutionized acidity. “I come from Amalfi so I use a rant in Rome, La Pergola, the “temple of gastronomy, and the establishment is lot of lemons,” Fabio says. cuisine,” because of its high-tech kitchen, often cited as the world’s best restaurant. A lot of attention to detail goes into incredible standards, and level of service. “It completely changed my way of this ostensibly simple dish, such as sliv- “I learned that performance is important thinking about cooking,” Fabio says, ers of French bread that are frozen and and consistency is crucial,” he says. recalling one occasion when the head sliced, before being baked in the oven. Fabio left Italy’s shores for another chef told everyone they would not be Or the red sorrel and edible flowers Beck restaurant, the Venetian-styled, working in the kitchen that day. Instead garnish, with the fresh parmesan bed. Michelin-starred Apsleys in the elegant they went foraging in the forest and The result naturally impresses with its hotel setting of The Lanesborough in learned how to cook moss. “There are a freshness and piquancy. London. In addition to making garni- lot of rules in French and Italian kitch- Another of the lessons learned on ture for meat and fish dishes, he learned ens, but here they stripped it right back. Fabio’s decade-long culinary tour of that food should also be an expe- the world’s greatest restaurants rience. “I will always remember is the importance of the personal Beck’s advice to me: `Make the touch, interacting with guests guest remember the taste.’” It’s and going the extra yard to advice that set him on the road to create happiness. success in his own right. He recounts the story of one Sitting in the stylish environs vegetarian guest who wasn’t keen of the Marco Polo Restaurant, on eggplant. “We spoke for a with Taipei dreamily stretch- little while [about other options] ing out into the distance far and she simply said, `I trust you.’ below, Fabio admits that despite So I made a zucchini with truf- a decade of culinary experi- fles and parsley oil. She was very ences he is a relatively young happy and said she would be chef de cuisine at 29 years old. back. This made me very happy. This is the first time he has been As I say, this is my philosophy for in charge of the kitchen and For reservations, call (02) 7711 2080 good food.”

TAIWAN BUSINESS TOPICS • MAY 2019 43

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2019 Hsieh Nien Fan A Night for Commemoration

mCham Taipei’s 2019 Hsieh ernment for its cooperation in the past Kaine (D-VA), Pat Roberts (R-KS), and Nien Fan banquet, held April year. This year’s event was attended Marco Rubio (R-FL). A 10 at the Grand Hyatt Taipei, by 682 AmCham members and guests, Besides the President, the high- paid tribute to the Taiwan Relations including 143 government ofﬁcials. ranking Taiwanese officials in Act on its 40th anniversary. The law, The keynote speakers were President attendance included Secretary General which has enabled U.S.-Taiwan rela- Tsai Ing-wen and U.S. Deputy Assis- of the National Security Council David tions to continue smoothly without tant Secretary of State David Meale, Lee, Minister without Portfolio John formal diplomatic recognition, was with additional remarks by AmCham Deng, Foreign Minister Joseph Wu, signed by U.S. President Jimmy Carter Chairman Leo Seewald and Amer- Minister of the National Development on the same date in 1979. ican Institute in Taiwan Director Brent Council Chen Mei-ling, Chairman of The banquet has been held annu- Christensen. Video messages of con- the Financial Supervisory Commission ally since 1970 as a way to express gratulations were shown from four U.S. Wellington Koo, Minister of Health and AmCham’s thanks to the Taiwan gov- Senators: Corey Gardner (R-CO), Tim Welfare Chen Shih-chung, Minister of

U.S. Deputy Assistant Secretary of State President Tsai Ing-wen. AIT Director Brent Christensen. David Meale.

44 TAIWAN BUSINESS TOPICS • MAY 2019

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that Taiwan is the eleventh largest trading partner of the United states, and also “one of the key players in the high- tech global supply chain.” The Master of Ceremonies for the evening was Peter Dernbach. A host of generous sponsors helped make the event possible: Platinum Sponsor Citi; Gold Sponsors Corning, Franklin Templeton Investments, and Standard Chartered Bank; Wine & Liquor Sponsors Diageo and Sergio Valente; Silver Sponsors 3M, HSBC, Toasting, from left to right: AIT Director Christensen, Deputy Assistant Secretary Meale, JTI, and Micron; Bronze Sponsors Air President Tsai, and AmCham Taipei Chairman Leo Seewald. Canada, Air Products, Bechtel, Dun & Bradstreet, GE, Philip Morris Interna- Science and Technology Chen Liang-gee, such an important trade and investment tional, Semi, and Versum Materials; and Minister of Justice Shawn Tsai, and sev- partner that is notable both as a democ- General Sponsors Invisalign, Amgen, eral members of the Legislative Yuan. racy and as a well-run economy,” he Grand Hyatt Taipei, IBM, Johnson & The New York Times reported on told the audience. Johnson, P&G, and the Tobacco Insti- President Tsai’s comments in her speech In his comments, Christensen noted tute of the Republic of China. that Taiwan needs to continue diver- sifying Taiwan’s economy to prevent over-reliance on China. “We must make sure Taiwan’s economic and security position remains on the right track,” it quoted her as saying. The President’s speech also stressed the importance of the government’s relationship with AmCham Taipei. “We will continue to work hand-in-hand to ﬁnd ways to bring more jobs and investment to Taiwan,” she said. Meale’s remarks cited the remark- ably strong commercial relationship between the U.S. and Taiwan. “It is in AmCham Taipei Chairman Leo Seewald (left) and President William Foreman make the the interest of the United States to have rounds to greet members and guests.

TAIWAN BUSINESS TOPICS • MAY 2019 45

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Visa advertorial.indd 47 2019/5/8 下午10:35 SEEING TAIWAN

Hakka immigrants from southern China were also among the area’s early settlers. A scion of one Hakka clan, Footsteps Through Zheng Yong-xi, in 1823 became the first Taiwan-born candidate to succeed in the highest-level imperial exami- Old Hsinchu nation for scholar-bureaucrats. This earned him and his family massive pres- tige, which they utilized a few years later when lobbying the Qing court in Beijing for permission, which was granted in 1826, to build a 2.7-kilometer-long wall around the town. In the late 1870s, Tek-kham was renamed Hsinchu (meaning “new bamboo”) and promoted to the status of a sub-prefectural capital. Soon after Japan took control of Taiwan in 1895, the island’s new rulers decided that the brick-and-stone defenses Zheng Yong-xi had considered necessary were imped- ing the town’s development. Except for one of the gates, they had the entire wall torn down. Yingxi Old East Gate is now trea- sured as a symbol of Hsinchu. Like almost every point of interest in the city, it is less than a mile from the railway station, which itself is a 106-year- old baroque-gothic beauty. If you prefer to travel by high-speed train, the Liujia Branch Line makes getting between Hsinchu HSR Station and the down- town quick and easy. Near the old gate, a section of what isitors eager to get a glimpse obscured by the latest business head- used to be the moat has been tidied of the Taiwan of yore can lines. Every C-level executive in the up and beautified with banyan trees V easily devote an entire day to Asia Pacific has heard of the Hsin- and flowerbeds. Wandering in a west- Lukang and at least two days to Tainan. chu Science-based Industrial Park and erly direction from here, you will come Lukang, a small town on the west coast, the semiconductor fabs and optoelec- across the Hsinchu Contemporary Art in its 18th-century heyday was one of tronics companies based there. Few of Gallery, Hsinchu City Hall, and the the island’s foremost centers of trade, those executives, however, are aware Hsinchu City Fire Museum, which is while Tainan was Taiwan’s capital for that over the past three centuries Hsin- located in an old fire station. All three over 200 years. chu has been shaped by a mingling of these buildings are Japanese-era land- But those who enjoy quaint urban of Fujianese, Hakka, indigenous, and marks. backdrops and timeworn yet elegant Japanese influences. The art gallery boasts a gorgeous architecture should also make a stop in Hsinchu’s history extends back at if tiny porch-like structure known as Hsinchu, 70 kilometers southwest of least 400 years. Early pioneers from a porte-cochère or coach gate. The Taipei. The majority of tourists bypass the Chinese province of Fujian called stucco-redbrick city hall is of simi- this city of 445,000 people, largely the settlement Tek-kham, meaning lar vintage. More engaging than the because Hsinchu has been a victim of its “bamboo barricade.” Yet there was no displays inside the Fire Museum is the non-tourism success. barricade. Rather, Tek-kham is likely photogenic well outside, from which The city’s association with Taiwan’s a place name of indigenous derivation, pre-World War II firefighters drew high-tech industries is so strong that possibly from the word for “seashore” water before setting off to battle fires in details of its long history and descrip- in the language of the Taokas people, precincts that lacked hydrants. tions of its attractions tend to be Hsinchu’s first settlers. Continue westward and you enter a

廣

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neighborhood that fascinates connois- seurs of the past. Aiwen Street, Beimen Street, and Chengbei Street still feature many two-floor, colonial-era merchant houses, and several of them still contain traditional businesses. A five-courtyard mansion complex commissioned by Zheng Yong-xi in 1838 adds a touch of dilapidated magnificence to the northern end of Beimen Street. The mansion has never been formally opened to the public, but it is worth detouring here to see the exquisite wood and stone carvings that decorate the facade. The mansion is somewhat forlorn, and as it may already be lunchtime DRYING VERMICELLI you may wish to head to the city’s foremost cluster of snack stands for some Taiwanese-style comfort food. personalities. As in many other city- overnight. If you seek even more scenes The 40-plus vendors who do business god shrines, a huge iron abacus reminds of old Taiwan, pick up spare memory around Du Cheng Huang Temple serve people that the gods keep a tally of both cards for your camera and make excur- a decent range of tasty foods, includ- their good deeds and their sins. sions to nearby Hukou and the inland ing two dishes for which Hsinchu is If you fancy nibbling on some- town of Beipu. renowned: pork meatballs in clear soup thing during the bullet-train ride back An additional 24 hours in the city () and rice vermicelli (). to Taipei, cross the road in front of will also give you time to explore its Du Cheng Huang Temple is dedi- the temple to a bakery that has been markets. The Central Market occupies cated to Cheng Huang Ye, “lord of the in business since 1898. International a maze of alleyways behind Du Cheng city walls and moat,” the deity believed visitors are welcomed with English- Huang Temple. Walk past the fortune- to protect Hsinchu and its inhabit- language leaflets and free samples of the tellers and you will find yourself among ants. It has been the city’s busiest place store’s signature product, a flaky pastry butchers, grocers, and tiny shops offer- of worship since the mid-18th century filled with ground pork and piquant ing tailoring services. and contains effigies of Cheng Huang green onions. The ocean is less than seven kilo- Ye, his wife and two sons, a fertil- Greater Hsinchu has more than meters from the city center, and what ity goddess, and several other divine enough to occupy travelers who stay Hsinchu promotes as the 17-kilometer Coastline Scenic Area stretches from the old fishing settlement of Nanliao in the city’s north to the boundary with Miaoli County to the south. Many tourists enjoy exploring the coastline on rented bicycles. During wintertime, birdwatch- ers come here to see Kentish plovers, Saunders’s gulls, and other species. When planning your trip to Taiwan, visit the Tourism Bureau’s website (www.taiwan.net.tw) for all kinds of useful information. The 24-hour tourist information hotline (0800-011-765) is toll-free within Taiwan. The Hsin- chu City Government’s travel website is at https://tourism.hccg.org.tw. The visitor information centers inside Hsinchu railway station and at Liujia Station (next to the high-speed rail station) can answer questions and provide free maps PORK MEATBALLS AND VERMICELLI and leaflets in various languages.

TAIWAN BUSINESS TOPICS • MAY 2019 49

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much, and I have been investing more and more manpower and resources, hoping to win this tough battle.” The Coming Antibiotic “AMR is a very complicated issue,” adds Dr. Chiu Cheng-Hsun, Professor Resistance Crisis and Director Molecular Infectious Disease Research Center, Chang Gung Memo- It’s imperative to devote more resources to infectious-disease rial Hospital, Linkou. “In 2000, I had control, leading to the development of new antibiotics. just come back to Taiwan from abroad and was cooperating with veterinarians to identify the common genotypes of Salmonella infection in Taiwan. I found n 2015, the U.S. White House attacks in the U.S., has also been found that the Salmonella cholera virus not launched a national action plan in Taiwan. At the same time, WHO has only infected pigs, but also people. In I against antimicrobial resistance called attention to multi-drug resistant fact, it is a common infection between (AMR), also commonly known as Acinetobacter baumannii and Pseudo- humans and animals. antibiotic resistance. In 2017, the monas aeruginosa, which also present a “When people are infected with the World Health Organization (WHO) deadly threat in Taiwan’s intensive care drug-resistant Salmonella choleraesuis, announced the 12 types of highly resis- units. the condition will be quite serious,” Dr. tant bacteria that pose the biggest Chiu says. “This study was published threats to human health. Given the AMR advances; the infectious-disease in the well-known New England Jour- global nature of this life-critical public doctor is not a god nal of Medicine and caused quite a health issue, there is no way for Taiwan Dr. Huang Li-Min, Board Direc- shock. Once a strong drug-resistant to escape the consequences. tor, The Infectious Diseases Society of strain enters the environment or the Bacteria, viruses, molds... These Taiwan, notes that the drug resistance food chain – whether by human trans- microbes that are invisible to the naked problem is not confined to bacteria. For mission or a combination of humans eye are ubiquitous in the environment example, flu is a virus and Candida albi- and animals – it is very difficult to we live in. Many bacteria with multiple cans is a mold. These microbial threats completely eradicate.” drug resistance are considered to be life- with multiple resistances can be found threatening super bacteria. all over the body and cannot be erad- Resources are needed to support the Don't be fooled into thinking that icated in the short term. “Once it has development of new antibiotics and new AMR is inconsequential! Japan, the become resistant, it is very difficult to vaccines most popular overseas tourist desti- treat,” Dr. Huang stresses. “The original At present, the biggest AMR-related nation, this year has experienced the antimicrobial drugs will fail. When no challenge is that the development of most serious flu epidemic in its history, medicine is available, some patients will new antimicrobial drugs cannot keep leading to the emergence of resis- not survive. In a world that has become pace with the speed of microbial muta- tant strains. The multi-drug resistant a global village, no one can find a way tions. Compared with other treatments Candida albicans, which caused panic to escape. This problem worries me very for major diseases, the introduction of new antibiotics in Taiwan is just as fast. But even when a new drug is launched, its use is heavily regulated as to avoid the emergence of resistance, resulting in many restrictions. Vaccines are useful in helping to reduce drug resistance, but there are challenges in terms of their popular acceptance and the speed of development of new vaccines. “In order to defeat AMR, the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA) have created a new antibiotic rapid-review pipeline to encour- age research and development,” Dr. Chiu points out. “Everyone hopes that we will now have more weapons on hand to save lives.” WHO is encouraging cooperation among all member

50 TAIWAN BUSINESS TOPICS • MAY 2019

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countries to work toward that introduction of new antibiot- objective. ics and new vaccines, improving Dr. Huang emphasizes that the social status and income of “infection is an emergency doctors specializing in infec- disease” since “once there is a tious diseases, and providing multi-drug-resistant infection, enough resources to bring infec- it may take days to kill it.” He tions under control,” Dr. Huang notes that currently no perma- says. “Then more young doctors nent infection-control mechanism will be willing to join infectious is in place in Taiwan. It is only disease departments to maintain activated when an epidemic a good infectious-disease control arises. “We need to follow team, enabling us keep pace with the lead of advanced coun- international developments to

tries like Europe and America in defend the lives and safety of our supporting the development and people.” Cheng-Hsun Chiu Li-Min Huang

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