The 5+2 Industrial Transformation Plan 「五加二」產業創新計畫

2017/5/3 11:04:27 PM ISSUE SPONSOR May 2017 | Vol. 47 | Issue 5 Issue | 47 Vol. | 2017 May Industrial Industrial Published by the by Published Commerce Commerce In Taipei American Chamber Of NT$150 5+2 「五加二」產業創新計畫 Transformation Plan Transformation The LIFE IN TAIWAN 2017 UNIVERSIADE INDUSTRY FOCUS TRANSPORTATION Read TOPICS Online at topics.amcham.com.tw Online at TOPICS Read 號執照登記為雜誌交寄 THE AMERICAN CHAMBER OF COMMERCE IN TAIPEI TAIWAN BUSINESS TOPICS May 2017 | Vol. 47 | Issue 5 中華郵政北台字第 5000 5_2017_Cover.indd 1

CONTENTS

NEWS AND VIEWS 6 Editorial MAY 2016 VOLUME 47, NUMBER 5 An Unlikely Opportunity 一○六年五月號意想不到的機會 8 Taiwan Briefs Publisher 發行人 By Timothy Ferry Andrea Wu 吳王小珍 Editor-in-Chief 總編輯 12 Issues Don Shapiro 沙蕩 Nuclear Freeze vs. Carbon Abatement; Associate Editor 副主編 Regulating the Workplace Tim Ferry 法緹姆 Art Director/ 美術主任/ 凍核減碳；勞動規範 Production Coordinator 後製統籌 By Timothy Ferry and Don Shapiro Katia Chen 陳國梅 Manager, Publications Sales & Marketing 廣告行銷經理 Caroline Lee 李佳紋 COVER SECTION Translation 翻譯 Jay Chen, Yichun Chen, Charlize Hung 陳正杰, 陳宜君, 洪兆怡 15 The 5+2 Industrial Innovation Plan

American Chamber of Commerce in Taipei 「五加二」產業創新計畫 129 MinSheng East Road, Section 3, 7F, Suite 706, Taipei 10596, Taiwan P.O. Box 17-277, Taipei, 10419 Taiwan The Tsai administration is making a heavy Tel: 2718-8226 Fax: 2718-8182 e-mail: [email protected] commitment of resources to promot- website: http://www.amcham.com.tw ing seven sectors of the economy as the 名稱：台北市美國商會工商雜誌發行所：台北市美國商會 key to transforming Taiwan’s industry. 臺北市10596民生東路三段129號七樓706室 The initial five “pillar industries” were 電話：2718-8226 傳真：2718-8182 the Internet of Things (also referred to Taiwan Business TOPICS is a publication of the American Chamber of Commerce in Taipei, ROC. Contents are independent of and do not as Asia·Silicon Valley), Biomedical, Green necessarily reflect the views of the Officers, Board of Governors, Supervisors or members. Energy, Smart Machinery, and Defense. © Copyright 2017 by the American Chamber of Commerce in Taipei, ROC. All rights reserved. Permission to reprint original material must Added later were high-value agriculture be requested in writing from AmCham. Production done in-house, Printing by Farn Mei Printing Co., Ltd. and the circular economy. The govern- 登記字號：台誌第一零九六九號 ment is counting on the program to spur 印刷所：帆美印刷股份有限公司 Low-carbon Future 經銷商：台灣英文雜誌社台北市108台北市萬華區長沙街二段66號 innovation, create well-paid job opportu- 發行日期：中華民國一○六年五月中華郵政北台字第號執照登記為雜誌交寄 24 Rise of the (Smart) 5000 nities, and bring more balanced regional ISSN 1818-1961 development to Taiwan. Machines By Timothy Ferry with additional reporting by 24 Defense Industry Focus Chairman/ Albert Chang Vice Chairmen/ Dan Silver / Daniel Tseng Philip Liu on Fighter-trainers and Secretary: Vincent Shih Treasurer: Al Chang 21 Asia·Silicon Valley – Don’t Forget Submarines 2016-2017 Governors: Al Chang, Christine Jih, Annie Lee, the Dot! 25 Developing High-value, Edward Shober, Dan Silver, Joanne Tsai, Daniel Tseng, Neil Waters. 22 Biomedical and Taiwan’s Aging Innovative Agriculture 2017-2018 Governors: Population 26 Saving Resources with a Sammy Carolus, Albert Chang, Tim Ju, Seraphim Ma, Rodney Morgan, Vincent Shih, Leo Seewald. 23 Green Energy for a Nuclear-free, Circular Economy

2017 Supervisors: Anita Chen, Nadia Chen, Nick Chen, Bimal Kapoor, Shenoy Raghavendra. COMMITTEES: Agro-Chemical/ Melody Wang; Asset Management/ Christine BACKGROUNDER Jih, Derek Yung; Banking/ Victor Kuan; Capital Markets/ Mandy Huang, C.P. Liu; Chemical Manufacturers/ Charles 27 Taiwan Looks Southward Liang, Michael Wong; Cosmetics/ Shirley Chen, Julien Jacquet, Abigail Lin; CSR/ Lume Liao, Fupei Wang; Energy/ The government is seeking to Tina Chen, C.W. Chin; Greater China Business/ Helen Chou; strengthen trade, investment, tourism, Human Resources/ Vickie Chen, Richard Lin, Monica Han, Seraphim Ma; Infrastructure/ Paul Lee; Insurance/ Paul Low, education, and cultural relations with Dan Ting, Linda Tsou; Intellectual Property & Licensing/ Jason Chen, Peter Dernbach, Jeffrey Harris, Vincent Shih; South and Southeast Asia. Marketing & Distribution/ Wei Hsiang, Gordon Stewart; Medical Devices/ Terry Lin, Raghavendra Shenoy, Joanne By Jane Rickards Yao; Pharmaceutical/ David Lin; Private Equity/ William Bryson; Public Health/ Dennis Lin; Real Estate/ Tony Chao; Retail/ Ceasar Chen, Mark Chen, Prudence Jang; Sustainable Development/ Kenny Jeng, Cosmas Lu, Kernel Wang; Tax/ TAIWAN BUSINESS Stella Lai/ Cheli Liaw, Josephine Peng; Technology/ Revital Golan, Connie Wang; Telecommunications & Media/ Thomas Ee, Joanne Tsai; Transportation & Logistics/ Nick Chen; 41 What Competence do Taiwan Talents Need for Good Jobs? Travel & Tourism/ Anita Chen, Pauline Leung, Achim v. Hake. By William Zyzo

4 taiwan business topics • may 2017

5 Contents.indd 4 2017/5/4 12:17:37 AM may 2017 • Volume 47 number 5 COVER SPONSOR

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5 Contents.indd 5 2017/5/4 12:17:40 AM E D I T O R I A L An Unlikely Opportunity

mong the flurry of executive orders signed by U.S. Pres- includes Taiwan, whose surplus last year as calculated by the U.S. ident Donald Trump since taking office was one issued government came to US$13.3 billion. AMarch 31 aimed at reducing the American trade deficit At first glance, inclusion anywhere on the list might be viewed with countries with which the United States runs a significant as a less-than-welcome source of U.S. pressure to make conces- trade imbalance. The order assigns the Secretary of Commerce sions on trade issues. But for Taiwan the spotlight could turn and Office of the U.S. Trade Representative (USTR) – in consulta- out to be an opportunity. Unlike the other major trading part- tion with other U.S. government departments including Treasury ners, Taiwan lacks formal diplomatic relations with the United and Agriculture – to examine, country by country, the degree to States, which keeps Taiwan from receiving as much attention by which bilateral trade deficits are caused by “tariffs, non-tariff U.S. officials as it deserves. High-level government-to-government barriers, injurious dumping, injurious government subsidiza- contacts are severely restricted. tion, intellectual property theft, forced technology transfer, denial At the same time, Taiwan badly needs U.S. support to avoid of worker rights and labor standards, and any other form of marginalization in the international economic arena as rival econ- discrimination against the commerce of the United States.” omies enter into more and more bilateral and multilateral trade The Secretary of Commerce and USTR are then instructed agreements. The dim outlook for the Trans-Pacific Partnership to submit a report on their findings before June 29, providing trade pact following the Trump administration’s withdrawal has the administration with what Commerce Secretary Wilbur Ross dashed Taiwan’s hopes of joining the TPP in a second round, refers to as the “hard facts, not theories” on which to base trade- leading Taiwan to turn its attention to the possibility of a bilateral policy decision-making. Although the appointment of USTR- trade or investment agreement with the United States. designate Robert Lighthizer is still awaiting Senate confirmation, The trade imbalance review over the coming months will at Ross is reported to be energetically taking up his assignment least ensure that Taiwan is on U.S. trade officials’ radar, and under the executive order as a way to improve American trade overall Taiwan should have a positive story to tell about its efforts competitiveness. Ross is also described as showing greater interest to protect intellectual property, promote workers’ rights, elimi- in agricultural trade issues than is typical for Secretaries of nate technical barriers to trade, increase regulatory transparency, Commerce. and cooperate with the United States in other areas of potential The five trading partners with the largest surpluses with the concern. United States in trade in goods are certain to get the most atten- President Tsai Ing-wen hinted as much when she spoke in tion: China with a 2016 imbalance of US$347 billion, Japan with March at AmCham Taipei’s Hsieh Nien Fan banquet. “Faced US$69 billion, Germany with US$65 billion, and Mexico with with the new U.S. administration’s ‘America First’ policy, Taiwan US$63 billion. South Korea’s imbalance was US$27.7 billion. is prepared to make adjustments,” she said, adding that Taiwan But others with more than a US$10 billion trade gap with the supports not only “free trade” but also “fair trade.” That is a United States are also expected to be subject to scrutiny, and that message Secretary Ross should be glad to hear.

意想不到的機會

的不不會的會機不的到的的勞勞動的的的的的的動的意的不的的會的的範；的勞的會到的不會的的會到的不到

6 taiwan business topics • may 2017

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5 Harley.indd 7 2017/5/3 11:42:19 PM T A I W A N B R I E F S

— BY TIMOTHY FERRY —

MACROECONOMICS ECONOMIC INDICATORS

IMPROVEMENT SEEN Unit: US$ billion Year Earlier IN 2017 OUTLOOK Current Account Balance (Q4 2016)p 18.3 19.47 Foreign Trade Balance (Jan.-Mar.) 10.79 12.24 Economists are increasingly bull- New Export Orders (Mar.) 41.12 36.6 ish on Taiwan’s growth prospects Foreign Exchange Reserves (end Mar.) 437.5 431.6 through 2017, with three local forecast-

ing organizations raising GDP growth Unemployment (Feb.) 3.85% 3.96% projections to over 2% for the year. The Discount Rate (Apr.) 1.375% 1.5% Chung-Hua Institution for Economic Economic Growth Rate Q4 2016p 2.88% -0.79% Research (CIER) announced on April Annual Change in Industrial Output (Feb.)p 2.46% -3.81% 19 that it had raised its forecast from Annual Change in Industrial Output (Jan.-Feb.) 10.64% -4.92% 1.73% to 2.11%. “The stronger-than- Annual Change in Consumer Price Index (Feb.) -0.04% 2.41% expected momentum of the global Annual Change in Consumer Price Index (Jan.-Feb.) 1.09% 1.60% economic recovery was the main reason pp eiminay souces moea bascbc bot CIER increased the forecast,” the institution’s president, Wu Chung-shu, said at a press conference in Taipei. He billion favorable balance of trade, higher oil prices. Oil is currently aver- added that first quarter growth is esti- according the Bureau of Foreign Trade. aging some US$50/barrel compared to mated at 2.76%. Earlier the Yuanta- Exports to Taiwan’s largest trading last year’s US$37/barrel, which had a Polaris Research Institute raised its 2017 partners, China and Hong Kong, which strong impact on revenues from related growth forecast from 1.8% to 2.1%, together take 40% of Taiwan’s exports, sectors. The export value of one of those and the Taiwan Institute of Economic surged in Q1 by 22% to reach US$28.81 sectors, plastics, increased by 16% to Research (TIER) similarly raised its fore- billion, while Taiwan’s second largest US$5.1 billion in Q1, but textiles actu- cast from 1.78% to 2.04%. All three export destination, ASEAN, likewise saw ally fell in annual comparisons by 0.5% organizations cited a rebounding global double-digit expansion of 18% year-to- to US$2.37 billion, perhaps reflecting economy as benefitting Taiwan’s export- date to reach US$13.83 billion. Gains shifts in the U.S. retail sector toward oriented economy. The International in exports to other major trade part- cheaper “fast fashion” products, accord- Monetary Fund and Taiwan’s Director- ners were more muted but still positive. ing to industry insiders. ate General of Accounting, Budget and Exports to the United States, which took Taiwan’s vital electronics and Statistics (DGBAS), however, both main- 11.3% of Taiwan’s trade goods, saw machinery sectors also saw double-digit tain their growth forecasts for Taiwan strong gains of 7.6% to reach US$4.81 gains of 16.6% in Q1. At US$39.46 below 2%. Economists across the board billion, while exports to the EU, which billion, the sector accounts for 54.7% of note remaining risks that might dampen account for 8.7% of the total, rose Taiwan’s total export value. The machin- growth, including possible U.S. rate by 5.8% to come to US$6.26 billion. ery subcategory, which has been selected hikes, an economic slowdown in China, Even exports to Japan gained 2.8% to for special support by the government, and volatile political developments in the amount to US$4.81 billion. Japan is the makes up 7.5% of total exports and Asia-Pacific. A spike in oil prices could source for much of Taiwan’s technology gained an additional 11.2% in Q1. also have an impact, but with U.S. shale components, and Taiwan imported some Taiwan’s Purchasing Managers Index oil contributing to global stocks, that US$10.29 billion worth of goods from (PMI), a leading indicator, reached a looks unlikely, according to CIER. Japan in Q1, for a bilateral trade deficit record high of 65.2 in March, up from Taiwan’s exports continued their bull of US$5.47 billion. 55.8 in February. It was the 13th consec- run, reach US$72.11 billion, a gain of Mineral products and chemi- utive monthly gain. Export orders, also 15% for the year up to March in annual cals, which comprise 3.9% and 6% of a leading indicator of future economic comparisons. Imports, 69.5% of which total exports respectively, saw substan- activity, rose 12.3% year-on-year in consist of raw materials that are mostly tial increases in export value, gaining March to reach US$41.12 billion. manufactured into export goods, rose 34.5% and 14.4% respectively in Q1 In response to the strengthening econ- even faster, rising 21.6% through March compared to the same period last year, omy, consumer confidence in Taiwan to reach US$61.32 billion for a US$10.79 reflecting both a stronger market and rose from 78.12 in March to 78.2 in

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April, the highest measure since October 2016, as reported by National Central University. Unemployment declined slightly, from February’s 3.83% to 3.78% in March, while the Consumer Price Index remained steady at 0.18%.

DOMESTIC

TAIWANESE TREKKER FOUND ALIVE IN NEPAL A Taiwanese trekker who disappeared in the mountains of Nepal with his girlfriend has been rescued after 47 days in the wilderness, just three days after his girlfriend died. Liang Sheng-yueh, who turned 21 on Friday, and Liu Chen-chun, RECUPERATING — Liang Sheng-yueh talks to a doctor at the Grande Hospital in Kathmandu, Nepal, following his rescue after being lost for 47 days while 19, went missing in early March while trekking. trekking in northwestern Nepal during PHOTO: AP/NIRANJAN SHRESTHA a snowstorm and without a local guide. The pair had little food and survived for with his toes infected with maggots and Court Chief Judge Liao Chien-yu said weeks on water and salt. his hair with lice. Liang was airlifted to that three-judge panel reviewed theories Liang’s family formally requested Kathmandu for hospital treatment and and practice surrounding the concept of help in late March after losing contact Liu’s body for a post-mortem. civil disobedience, and concluded that with the two adventurers, and a search “the defendants’ occupation of the legis- was mounted by the Nepalese govern- MOST SUNFLOWER lature on March 18 was in accordance ment that continued until being ACTIVISTS ACQUITTED with the seven major requirements for suspended in late April due to inclement On March 31, the Taipei District civil disobedience,” including concern weather. The search had only recently Court acquitted 22 defendants on the for the public good and non-violence. been resumed when Madhav Basnet, an basis of “civil disobedience” for the In a separate trial on April 10 involv- official at the Kathmandu-based Asian March 18, 2014 break-in and occu- ing the March 23, 2014 attempted Trekking Agency, and three others found pation of the Legislative Yuan in what break-in at the Executive Yuan, the the pair. Liang was much weakened by came to be called the Sunflower move- Taipei District Court acquitted student the ordeal, having lost 30 kilograms and ment. The student-led movement protest leader Wei Yang along with 10 occupied the legislature’s main cham- others, but another 11 defendants were TAIWAN STOCK EXCHANGE PERFORMANCE ber for over a month to protest the convicted of damaging public property

THE YELLOW LINE SHOWS CHANGES IN TRADE VALUE AND Cross-Strait Service Trade Agreement, and disrupting public services, and were THE SHADED AREA CHANGES IN THE TAIEX INDEX. a trade in services pact between China sentenced to three-to-five month prison 10250 240 and Taiwan that the student protestors terms. The April ruling did not cite the 10000 220 contended was being rushed through principles of civil disobedience. 9750 200 with insufficient debate after having The current government has sought 9500 180 been negotiated without enough public to drop all charges levied against the 9250 160 communication. Sunflower protestors, but some of the 9000 140 The 22, who included protest lead- charges are automatically indictable even 8750 120 ers Lin Fei-fan, Chen Wei-ting, Huang without a complaint. 8500 100 Kuo-chang, and Wei Yang, were charged 8250 80 with inciting others to commit a crime, PENSION REFORM 8000 60 obstruction of police officers in the PROTESTS CONTINUE March discharge of their duties, and other President Tsai Ing-wen’s goals of crimes committed during the break-in comprehensive pension reform are being ata souce twse UNIT: NT$ BILLION at the Legislative Yuan. Taipei District met with passionate and sometime

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violent protests by civil servants, mili- TAIWAN'S JAN.-MAR TRADE FIGURES (YEAR-ON-YEAR COMPARISON) tary officers, and others who will likely

be impacted. On April 17, the Pension HK/China Japan ASEAN TOTAL Reform Oversight Alliance (PROA) 28.8

organized a protest outside of the Legis- 23.6

lative Yuan aimed at blocking a review 72.1 13.8 11.4 10.3 10.3 11.7 9 62.7

of pension reform bills. The protests 61.3 7.6 5.9 4.7 continued throughout the week and 4.8 50.4 turned violent, with several members of 2017 2016 2017 2016 2017 2016 the Democaratic Progressive Party (DPP) U.S.A Europe and its allied New Power Party being assaulted by protestors as they tried to 8.2 7.6 7.6 7.1 6.5 6.7 6.3 enter the legislature on April 19. Premier 6.6

Lin Chuan criticized the protestors for 2017 2016 2017 2016 2017 2016 violence and the National Police Agency UNIT: US$ Billion Exports Imports for its insufficient protection of lawmak- SOURCE: BOFT/MOEA ers. Police are questioning a number of protestors about alleged violent acts. The pension reforms are aimed would apply to personnel from all over ese human rights advocate Lee Ming-che at reducing interest paid out on civil the world (including Hong Kong and was seized by the authorities on March servants’ retirement packages that Macau) except for mainland China. 19 and held incommunicado before are seen as being overly generous and The draft, which would be restricted China finally announced that he had endangering the entire pension system in to workers in designated industries, been arrested for “activities endangering Taiwan. provides for lower tax rates, more national security,” according to media lenient visa requirements, and inclu- reports. As of press time, Lee, an instruc- FOREIGN SKILLED sion in national pension schemes. The tor at Wenshan Community College WORKERS WOOED bill now goes to the Legislative Yuan for and a former DPP worker, remains in The Executive Yuan revealed a draft approval. custody in an undisclosed location in law on April 20 aimed at attracting China. Lee’s wife, Lee Ching-yu, was foreign skilled workers through signif- CROSS-STRAIT blocked from entering China after her icant changes to existing immigration “Taiwan Compatriot” travel document laws. The draft amendments, called TAIWAN HUMAN RIGHTS was abruptly canceled as she was about the “Act for Recruitment and Employ- ADVOCATE HELD IN CHINA to board a flight from Taipei to Beijing ment of Foreign Professional Talent,” While on a trip to China, Taiwan- on April 10. Lee Ching-yu was provided with a photocopy of a letter purport- edly written by her husband stating that he was healthy, but with few details. She was also warned by a go-between that if she insisted on taking the case public, her husband’s videotaped confession would be broadcast on Chinese TV. Lee Ching-yu and supporters remain unclear as to why her husband was targeted at all, as he reportedly kept his views on China’s human rights violations low-key.

TRUMP-XI TALKS TOUCHED ON TAIWAN At an April 7-9 summit between U.S. UNWELCOME — Li Ching-yu, second from right, wife of Taiwanese pro-democ- President Donald Trump and Chinese racy activist Li Ming-che who is being detained in China, prevented from board- ing a flight to Beijing. President Xi Jinping at Trump’s Mar- PHOTO: AP/JOHNSON LAI

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a-Lago resort in Floria, Taiwan was mentioned but was not used as a bargain- ing chip between the two powers, the Ministry of Foreign Affairs said April 12. Vice Minister of Foreign Affairs Leo Lee told the Taiwan legislature’s Foreign Affairs and National Defense Commit- tee that U.S. senior officials had briefed Taipei regarding the summit. Accord- ing to the U.S. officials, Chinese Minister of Foreign Affairs Wang Yi raised the issue of Taiwan with U.S. counterparts, but reportedly were given a reply that expressed the standard U.S. position on China-Taiwan relations and invoked the United States’ Taiwan Relations Act. NEW HIGH — Hon Hai (Foxconn) Chairman Terry Gou at an internet exhibition. The contract electronics company has announced record earnings worth nearly BUSINESS US$5 billion for 2016. PHOTO: CNA TSMC MISSES REVENUE GOALS facture of electronics saw record high fostered by the NDF, TaiMed Biologics Taiwan Semiconductor Manufacturing earnings in 2016 of NT$148.66 billion Inc., has recently begun to book sales of Co. (TSMC), the world’s largest foundry (US$4.9 billion), up 1.22% from last its breakthrough HIV medication, Ibali- chipmaker, missed its first quarter guid- year. Mirroring Taiwan’s overall exports, zumab, but nevertheless analysts remain ance by NT$6 billion (US$196.7 million) Hon Hai had been slumping for the first skeptical that the firm can deliver a on a stronger than expected NT dollar, three quarters of 2016 before a surging profit in the near future. Ibalizumab has according to media reports on April 11. Q4 made up for the previous disappoint- recently been approved under the U.S. TSMC’s posted Q1 consolidated revenue ing results and propelled Hon Hai to its “fast track” process, yet analysts express came to NT$233.91 billion, lower than new high. concern that its high price – US$60,000 the projected range of NT$236 billion to per patient per year – will greatly limit its NT$239 billion. Q1 revenue was up 14% BIOTECH STRUGGLES market. Further, the launch of the drug in annual comparisons, though it saw FOR PROFITABILITY will likely be delayed in Europe due to a quarterly decline of 10.79%. TSMC The struggles of two of Taiwan’s the lack of fast track approval. blamed the strength of the NT dollar for most renowned pharmaceuticals firms the miss, saying that the 2% rise in value, points to the risks involved in biomedi- from NT$32/US$1 to NT$31.16/US$1 cal research. TaiGen Biopharmaceuticals caught the firm by surprise. This was the Holding Ltd., founded in 2001 with biggest shortfall in sales against analysts’ the help of the National Development forecasts since the financial crisis of 2008- Fund (NDF), announced on April 18 2009. TSMC is one of Taiwan’s largest that it had received 137 million RMB companies and is considered vital to the (US$19.9 million) from China’s YiChang health of the overall economy. Despite the HEC ChangJiang Pharmaceutical Ltd. missed guidance, analysts remain bullish to jointly develop a new treatment for on TSMC. chronic hepatitis C. The announcement was reportedly to allay investor concerns HON HAI ENDS that the firm would soon lose funding 2016 ON A HIGH from the NDF, which is reportedly seek- Hon Hai Precision Industry Co. ing to exit its earlier investments in order (also known as Foxconn) reported its to free up funds for investments in new full-year results on April 1, disclosing firms and technologies. that the world’s largest contract manu- Another firm that likewise was

taiwan business topics • may 2017 11

5_Briefs.indd 11 2017/5/3 11:43:22 PM ISSUES

Nuclear Freeze vs. Carbon Abatement

Simultaneously achieving the two goals will be a big challenge.

uclear power, which by law is due to be phased out entirely by 2025, has dropped to less than 6% of total power gener- N ation in Taipower’s grid. With four out of six reactors offline – two because of Legislative Yuan reluctance to approve the resump- 兩個目標欲同時實現將是一大挑戰。 tion of operations after incidents, one due to lack of spent-fuel storage, and the fourth temporarily for refueling – Taiwan is at its lowest use of nuclear power in decades. 據法令，到2025年非全面淘汰不可的核 That may be good news for Taiwan’s adamant no-nukes crowd, but 能發電，在台電總發電量已降至6％以 it’s not so good for carbon emissions reductions. To replace the lost 依下。六座機組已有四座停止運轉，其中 nuclear power, Taiwan has had to turn to fossil fuels, whose share of 兩座為立法院於事件發生後不願恢復運轉，一座 power generation has risen to 90%. 是因為缺乏用過核燃料貯存空間，第四座則是因 On April 10, when Taiwan saw the temperature climb to 35°C, 為燃料填換而暫停運轉。為此，台灣正處於數十 coal generated 40.5% of total power, LNG 39%, fuel oil and diesel 年來核電使用最少的階段。 8.2%, with another 2% from private co-generation sources (mostly 對台灣堅持非核的群眾來說這也許是個好消 coal), according to the Taipower website. Renewables generated some 息，但對減少碳排放量而言就不見得了。為取代 4.6%, and nuclear 5.4%. That same day, power demand rose to record 減少的核電，台灣只能轉向化石燃料發電，將其 highs and reserve power capacity dropped below 6%, prompting Tai- 發電比例提高至90％。 power to issue an orange alert indicating tight supply margins, only the 根據台電網站資料，4月10日那天，台灣氣 second time such an alert has been issued in the month of April (the 溫一路竄升至35°C，煤炭發電為總發電量的 first time was in 2016). 40.5％、液化天然氣為39％、燃油和柴油為 By comparison, in 2014 nuclear accounted for 19% of power gener- 8.2％，另外還有2％來自民營電廠汽電共生（大 ation and fossil fuels for 78%, with reserve margins at around 15%. 多為煤炭發電）。再生能源發電約占4.6％，核 On April 13, the government announced an ambitious NT$36.5 能為5.4％。當天用電量創下歷史新高，備載容 billion effort to clean up Taiwan’s air, which has noticeably dete- 量降至6％以下，台電供電亮橘燈代表供電吃 riorated. At a press conference, Premier Lin Chuan noted that it is 緊，光是4月份已經是第二次發出類似警報（第 difficult to pinpoint the exact sources of air pollution. However, the 一次是在2016年）。 Environmental Protection Administration has estimated that the energy 相較之下，2014年的核能發電量在19％，化 sector is responsible for some 89% of emissions. 石燃料占78％，備用容量在15％左右。 The government touts the introduction of more-efficient ultra-su- 4月13日，政府宣布大規模投入新台幣356億 percritical units in several power plants and increased reliance on 元經費，努力淨化每況愈下的台灣空氣。行政院 plants burning natural gas, but while such units are less polluting, they 長林全在記者會上強調，要查明確切空氣污染源

nevertheless emit tons of CO2. 並不容易。然而，環保署卻評估光國內消費能源 The obvious solution is renewable energy. So far, wind and solar 部門就包辦了89％的排放量。 comprise negligible amounts of Taiwan’s power generation, less than 政府在多個電廠引進更高效率的超超臨界機 1% each, but the administration has ambitious goals to change that. It 組，同時提升電廠對燃燒天然氣的依賴。不過， aims to have 20GW of solar installed capacity by 2025. Of the initial 儘管這些機組污染較低，卻仍大量排放二氧化 1.4GW of installed capacity planned for mid-2018, not a single such 碳。 project is under construction or has even been approved. The reason? 解決方法顯然是再生能源。截至目前為止，風 Many of the potential sites are salt marshes that provide crucial habi- 能和太陽能在台灣發電量的占比微乎其微，各自 tats for rare migratory birds, particularly the black-faced spoonbill. 不到1％，但執政團隊立定志向要改變現況。目 It’s a painful contradiction with no ready solution. Should land- 標訂在太陽能裝置容量到2025年時要達到20GW scapes that support endangered species be sacrificed for renewable （百萬瓩）。最初的1.4GW裝置容量預計在2018 energy, which is being deployed primarily for climate change mitiga- 年6月完成，但上述計畫都未進行或甚至被批 tion – the purpose of which, in part, is to reduce biodiversity loss? 准。為什麼呢？原因在於許多潛在預定場址都屬 Compromises can surely be hammered out, but in the meantime 於能為罕見的候鳥—尤其是黑面琵鷺—提供重要

emissions continue to rise, and CO2 emissions remain in the atmosphere 棲息地的鹽沼地質。

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anywhere from 20 to 200 years. The short-term remedy would of 這個矛盾麻煩且無法可解。是否該犧牲哺育瀕 course be to restart nuclear reactors that have been idled due to political 臨絕種動物的環境，只因再生能源主要作用就是 opposition. Jinshan (NPP1) reactor 1 and Kuosheng (NPP2) reactor 2 為了減緩氣候變遷，且其部分目的是為了減少生 both experienced incidents – in December 2014 and May 2016 respec- 物多樣性的流失呢？ tively – that forced them to shut down for repairs. Both reactors have 妥協是無庸置疑的，但同時間碳排放量持續擴 been repaired to the satisfaction of the Atomic Energy Council (AEC), 大，而且排放出來的二氧化碳會存留在大氣之中 but the legislature has blocked their restart. 20到200年之久。短期補救措施當然是重啟因政 Reactor-1 at Kuosheng has also been shut down since November 治干預而閒置的核子反應器。核一廠（NPP1）1 last year when it maxed out its spent fuel storage pools. Taipower 號機和核二廠（NPP2）2號機在分別歷經2014年 has a plan to get around the problem by converting a loading pool 12月和2016年5月事件已被迫停機修理。兩座機 into a spent fuel storage facility. The conversion plan, which has been 組雖滿足原子能委員會（AEC）條件下修復，立 approved by the AEC after an 11-month review, would create enough 法院卻阻止重啟。 spent fuel storage capacity for the reactor to be refueled and restarted 核二廠1號機也在用過燃料貯存池填滿後自去 by July, which would help with the summer peak demand. 年11月起停止運轉。台電預備透過把裝載池轉 But legislators from the New Power Party have objected that the 換為用過燃料貯存設施來解決問題。轉換計畫歷 project was done in an opaque manner and ignores the will of the 經原能會11個月的審查已獲得批准，將於7月重 public. Taipower responded that it held several town halls about the 啟，為反應爐提供足夠的用過燃料貯存能力，有 project and that even some environmental NGOs have recognized the 助緩解夏季用電高峰的需求。 need for the construction and eventual restart of Kuosheng-1. 但時代力量立委反對計畫黑箱作業，未顧及大 Yet even this construction would only enable the Kuosheng-1 unit 眾想法。台電則回應該計畫舉辦過多場公聽會， to run for two more fuel cycles, not enough to carry it to the end of 就連部分環保非營利組織也認同轉換計畫及最終 its licensed lifecycle in 2021. Meanwhile, Jinshan’s single operating 重啟核二廠的必要性。 reactor will shut down next month as its spent fuel pools likewise will 不過就算轉換計畫能讓核二廠1號機再支撐兩 be filled to capacity. The Jinshan facility is scheduled for retirement in 個燃料循環，也撐不到原定除役的2021年。同 December 2018. 時，核一廠單一運轉機組也因用過燃料貯存池即 Assuming that New Taipei City doesn’t rescind its ban on dry 將填滿，而將在下個月停止運轉，核一廠設備預 cask storage, which would enable enough space to be cleared in the 定在2018年12月除役。 cooling pools to allow the reactors at Jinshan and Kuosheng to be 假設新北市不撤銷乾式貯存桶禁令，乾式貯 refueled, Taiwan’s options are scant. One possibility is for construc- 存桶就能提供冷卻池足夠空間清理，讓核一廠與 tion of Kuosheng’s loading pools to allow this reactor to restart, 核二廠機組做燃料填換，台灣的選擇有限。一個 while also restarting the reactors that remain offline due to polit- 可行的辦法是建造核二廠的裝載池，讓機組得以 ical interference. Due to the lack of spent-fuel storage capacity, all 重啟，同時重啟因政治干預而停止運轉的剩餘機 of these reactors would still be unable to operate until their original 組。因為缺乏用過核燃料貯存能力，所有機組到 decommissioning dates, but they would at least provide some relief 原定除役日期前都無法運轉，但至少有助減輕碳 from spiraling emissions. 排放量。 Beyond that – until renewables can take up a major portion of 除此之外，在再生能源成為台灣發電主體之 Taiwan’s energy mix – the Taiwan public may have to decide between 前，台灣大眾可能得在照表廢核與空氣品質惡化 discontinuing nuclear power on schedule and the prospect of wors- 之間做出決擇。 ening air quality. — By Timothy Ferry — 撰文／法緹姆

Regulating the Workplace

Company HR representatives cite an urgent need for greater flexibility.

hen Deputy Labor Minister Liau Huei-fang accepted an invitation from AmCham Taipei’s Human Resources W Committee to exchange views with Committee members about recently implemented amendments to the Labor Standards Law (LSL), more than 100 HR specialists showed up for the meeting on

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April 19. The record attendance for an HR Committee event reflected the broad concern across foreign-invested and domestic industry in Taiwan about the ramifications of the new amendments, which include provisions covering working time, rest days, public holidays, annual leave, and overtime compensation. 企業人資代表強力呼籲提供較大彈性 The bill was passed by the Legislative Yuan on December 6 last year and promulgated by the President on December 23, with some articles going into effect on that date and some on January 1, 2017 – in either case providing employers with barely 動部次長廖蕙芳在4月19日應台北市美國商 any time to adjust their personnel policies and systems. The 會邀請，與商會人力資源委員會成員針對最 key feature of the revisions was to establish a five-day work- 勞近施行的勞動基準法修正條文交換意見時， week, with one mandatory rest day per week and one flexible 有100多位人力資源專家出席會議。這是人力資源委 day-off on which employees may agree to work overtime – with 員會歷年會議出席人數最多的一次，它反映台灣許多 increased rates in effect when workers put in four hours or more 外資與本地企業對於涉及工時、休假天數、國定假 of overtime. 日、特休假以及加班費的勞基法修正條文感到關切。 While stressing their commitment to a proper work-life 修正條文去年12月6 日在立法院通過，12月23日 balance for employees, attendees at the meeting stressed to the 便由總統明令公布，部分條文在當天生效，部分在今 Deputy Minister that the rigid personnel practices mandated by 年元旦生效，讓企業主幾乎沒有時間調整人事政策與 the law may be appropriate for traditional manufacturing oper- 制度。修正條文主要內容在於確立週休二日，即每週 ations, but are detrimental in the modern performance-based 有一天例假日，另有一天休息日，員工可在休息日依 workplace – especially when Taiwan is seeking to promote an 雇主要求加班，但加班費比平日加班高出許多。 innovative, knowledge-based economy. Professional and tech- 與會者強調重視員工工作與生活的適當平衡，但也 nical personnel tend to resent the paternalistic constraints 向廖次長強調，勞基法修正條文的嚴格規定也許適合 imposed on their working time, such as the need to keep and file 傳統製造業，但對於以績效為指標的現代職場會有不 attendance records. 利影響，特別是在台灣在努力推動創新、知識型經濟 Among the suggestions raised at the meeting by HR represen- 的此刻。專業與技術人員一向厭惡有人擺出父執輩的 tatives were: 姿態，對他們的工作時間設定限制，例如記錄並且申 • Exempting high-level personnel whose salaries are above a 報出勤狀況。 stipulated amount (for example, more than three times the 在當天會議中，各企業人力資源部門代表提出的建 industry average) from the relevant provisions of the LSL 議如下： amendments. • 讓薪資超過特定金額（例如達到業界水準3倍以 • Giving employers more staffing flexibility by allowing the 上）的高階人員免受勞基法相關修正條文的限 option of a four-week period (instead of a single week) for 制 calculating work and rest days. • 讓企業可以選擇以4個星期（而非單週）做為一 • So as to avoid undeserved reputational damage, publishing 個週期，以計算上班與休假天數，以便在安排 the names of companies – and the chief executives of those 人力方面有更大彈性 companies – found to be in violation of the LSL only after • 為了避免無謂的名譽損害，不要在稽查人員剛 violations have been confirmed, not when the inspectors 提出違規報告時，就公布企業名單與企業主管 first file their reports. It was also suggested that the names 的姓名，要在違規情節獲得確認之後才公布。 of first-time offenders not be made public unless they fail 與會者也建議，除非初犯者未能在合理的期限 to correct their deficiencies in a reasonable amount of time. 內改善，否則不要公布初犯者名單。 • Specifying in the later enforcement rules that the burden • 在隨後訂定的實施細節中載明，證明經核准的 of proof that authorized overtime work has in fact been 加班確實有按時進行的責任，要由員工來承 carried out should rest with the employee. 擔。 • Providing a 30-day buffer at the end of the one-year period • 在年度結束時提供30天緩衝期，讓員工使用未 for employees to utilize any unused leave time, whether by 用完的休假天數，或放棄休假，領取相對的工 opting for cash or days off. 資。 • Ensuring that labor inspectors, many of whom are newly • 許多勞檢人員是新聘，要確保負責勞檢的人員 hired, are properly trained so as to minimize inconsistent 獲得妥善訓練，使彼此對於相關法規出現不同 interpretations of the rules from one inspector to another. 解釋的情況減少到最低。 Deputy Minister Liau gave assurances that the inspectors are 廖次長保證，在新的規定生效之前，勞檢人員會接 receiving rigorous training before enforcement of the new rules 受嚴格的訓練。她感謝與會人士的建言，她說，勞動 begins. She thanked the attendees for their comments, some of 部將把其中若干建議納入考量，但也指出，目前沒有 which she said the Ministry would consider, but noted that there 計畫要進一步修訂勞基法，以放寬規定。 is no current plan to further amend the law to relax any of its provisions. — 撰文／沙蕩 — By Don Shapiro

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5_Issues.indd 14 2017/5/3 11:49:43 PM COVER STORY 5+2 INNOVATIVE INDUSTRIES

The 5+2 Industrial Transformation Plan 「五加二」產業創新計畫

BY TIMOTHY FERRY

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5+2 INNOVATIVE INDUSTRIES

The Tsai administration is making a heavy commitment of resources to promoting seven sectors of the economy as the key to transforming Taiwan’s industry. The initial five “pillar industries” were the Internet of Things (also referred to as

Asia·Silicon Valley), Biomedical, he Tsai Ing-wen administra- campaign – focusing on the industrial tion is hoping that five plus two sectors of the Internet of Things (also Green Energy, Smart Machinery, T equals industrial transforma- referred to as “Asia·Silicon Valley”), and Defense. Added later were tion. In what it is calling the 5+2 Major Biomedical, Green Energy, Smart Innovative Industries policy, the admin- Machinery, and Defense – subse- high-value agriculture and the istration aims to shift Taiwan’s indus- quently was expanded to include “new trial base away from its traditional agriculture” and the “circular econ- circular economy. The govern- concentration on contract manufac- omy” as the “+2.” The program was ment is counting on the pro- turing and gear it towards high-value- then broadened even further to include added, service- and solutions-oriented the Digital Economy and Cultural gram to spur innovation, create business models. It envisions the result Innovation, with even Semiconductors as spurring innovation, job creation, and IC Design included, although the well-paid job opportunities, and and more equitable wealth distribution name of the policy remains 5+2. bring more balanced regional by region. “Before the election you talk about What started out as the “5 Pillar what will be the focus, and there are development to Taiwan. Industries” during Tsai’s presidential ideas for what should be added, but

蔡政府準備投入大量資源推動英文政府希望「五加二」前，他們討論要拿什麼當主軸，有產業創新計畫能帶來台灣人說應該要加上哪些項目，但到了七項產業，做為使台灣產業轉蔡產業的轉型。藉著這項政選後，就很難說要把什麼拿掉。」策，政府的目標是把台灣產業從傳這項政策需要的預算達數百億新型的關鍵。原本的五大產業包統上以代工為主軸，轉為高附加價台幣，此外還需要推動重要計畫，括物聯網（也稱為亞洲‧矽值、以服務與解決方案為導向的商以配合這項政策的推動，包括擴業模式。它期望這項政策可以激發充基礎設施和修訂法規。在施行之谷）、生物醫學、綠能科技、創新、創造就業機會，並使台灣各後，需要跨部會合作的「五加二」地區的發展更為均衡。計畫可望使台灣產業與全球市場及智慧機械與國防產業，後來加「五加二」的起源，是蔡英文全球性的企業連結，而且因為計畫上高附加價值的農業與循環經在競選總統期間提出的五大產業創以創新為重點，因此也可望使台灣新研發計畫，包括物聯網（也稱為的產業與未來的科技和市場發展連濟。政府希望這項計畫能帶動亞洲‧矽谷計畫）、生物醫學、綠結。「五加二」計畫也可能讓台灣能科技、智慧機械、國防產業，後降低對於兩岸貿易的依賴程度，發創新、創造高薪就業機會，來加上新農業與循環經濟，也就展與更先進經濟體之間的關係。並使台灣各地區能有均衡的發是「五加二」。這項計畫後來又進這項計畫將獲得1,000億新台幣一步擴充，納入數位經濟與文創，（33億美元）的產業創新轉型基金展。甚至半導體與積體電路的設計也包支持，另外有100億新台幣將來自括進去，不過政策仍維持「五加新成立的國家級投資公司。產業創二」的名稱。新轉型基金的經費是用來取得新的公私合營的工業技術研究院產科技。經中心主任蘇孟宗表示：「在選舉國家發展委員會副主任委員龔

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after the election it’s very hard to talk plan and plays a major role in the other for businesses in these sectors, and will about what to subtract,” says Stephen sectors. Kung says that Taiwan’s long- involve amending existing statutes and Su, head of the Industrial Economics standing position as an OEM provider of regulations that are seen as standing in Knowledge Center (IEK) at public/private commodity goods to the world’s supply the way of industrial transformation. For Industrial Technology Research Institute chains has pushed industries to compete instance, the Executive Yuan recently (ITRI). on cost rather than value, which diverts released the draft of a bill to extend With budgets in the tens of billions of business development away from R&D substantial perks and privileges to highly NT dollars and grand plans for support and investment, preventing compa- skilled foreign talent, as the dearth of in terms of infrastructure build-up and nies from entering higher value-added such talent is seen as a major obstacle to regulatory and legal reform, the cross- segments of industry. Taiwan’s economic progress. The govern- ministry initiative promises to link “The purpose of this 5+2 indus- ment is seeking to amend the Company Taiwan local industries to global markets tries plan is to face the problems that we Law, the Basic Law on Technology, and and corporations – and, through its have seen so far in our economic devel- several other laws along with a host of emphasis on innovation, to future tech- opment,” he says, describing the plan as regulations. nological and market developments. The the direction for the “next generation of “The laws that exist right now are 5+2 plan also holds the promise of reduc- national development.” based on the development model of the ing Taiwan’s dependence on trade with The 5+2 plan calls for huge invest- past,” says Kung. “We need new think- China while developing ties with more ments in building research facilities and ing, a new approach to meet the needs of advanced economies. other infrastructure in regions where industrial development for the next 10 or The proposal will be backed by the industry clusters already exist. Taiwan’s 20 years.” government’s NT$100 billion (US$3.3 economy is primarily driven by small and billion) Industrial Innovation and Trans- medium enterprises (SMEs), which are Not everyone is persuaded formation Fund to be used for invest- effective at trimming costs but lack the ment in new technologies, with another resources to invest in R&D, stymieing Darson Chiu, a research fellow at the NT$10 billion from the newly established innovation. Taiwan has long employed Taiwan Institute of Economic Research National Investment Corporation. the strategy of funding public-private (TIER) and a professor at Tunghai “The 5+2 industries plan focuses on research institutes to facilitate R&D, and University, is among those question- the transformation of Taiwan’s industrial the 5+2 plan expands on this strategy for ing whether the 5+2 plan will have the development,” explains Kung Ming-hsin, the specified industries. impact that the government desires. “Will deputy minister for the National Devel- Equally important, the 5+2 plan – it be able to resolve the structural issues opment Council (NDC), which is lead- in concert with several other programs facing Taiwan’s economy?” he asks. “I ing the Asia·Silicon Valley/Internet of initiated by the Tsai administration – don’t think this is the right policy to cure Things and Biomedical elements of the provides funding and capital-access these problems.”

明鑫說明：「我們希望透過『五加二』未來性產業的布金管道，並且要大幅修訂被認為阻礙產業轉型的現行法局，翻轉台灣整體的投資與產業發展環境。」國發會負規。例如行政院最近公布一項草案，要對具有高等技術責「五加二」計畫亞洲‧矽谷／物聯網與生物醫學的部的外國人才提供多項優惠，因為這類人才短缺被認為是分，在其他部分也扮演重要角色。龔明鑫說，台灣在全台灣經濟發展的重大障礙。政府也準備修訂公司法、科球供應鍊當中長期扮演簡單商品供應者的角色，因此本學技術基本法等好幾套法律和許多條例。地產業是在成本上競爭，而不是追逐產品的價值，這使龔明鑫說：「目前很多的法規是根據以前的發展模式得本地企業不重視研發與投資，無法打進高附加價值的所設定，而且法規通常落後於產業的發展。因此我們必產業別。須要有新的思維，來思考台灣未來5年甚至10年、20年他說：「『五加二』產業創新計畫的目的，是要因應可能面對的產業發展環境。」我們經濟發展到目前所出現的問題。」他並說，這項計畫是「新一代國家發展」的方向。質疑的聲音在「五加二」計畫之下，要在產業聚落已經存在的地區大量投資興建研究設施，並且從事其他基礎建設。台部分人士懷疑「五加二」計畫能否達成政府期望的灣經濟主要靠中小型企業推動，它們擅於降低成本，但目標，其中包括台灣經濟研究院研究員和東海大學教授缺乏資源在研發方面進行投資，因此難有創新。台灣早邱達生。他問道：「它能夠解決台灣經濟結構型的問題就有利用政府與民間資金成立研究機構以進行研發的策嗎？我不認為這是解決這些問題的好政策。」略，「五加二」計畫是要擴充這項策略，以服務特定產台灣經濟持續面臨的挑戰，包括欠缺自由貿易協定，業。例如計畫中智慧機械的部分提到要在台中建立研發人才大量外流，薪資凍漲以及投資低迷。根據台灣經濟與生產中心，而台中正是台灣工具機產業的重鎮，而且研究院的數據，台灣從2010年以來的年經濟成長率，業者幾乎全都是中小型企業。平均不到2%。同樣重要的是，「五加二」跟蔡政府推動的其他好幾台灣2015年的名目國內生產毛額（nominal GDP）為項計畫的內容，都包含為相關產業的公司提供經費與資 5,300億美元，其中62%來自服務業，但根據美國中央

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The lack of Free Trade Agreements retarded growth. Industry, which gener- has become more and more aligned with (FTAs), largescale outflow of talent, stag- ates 36.1% of GDP, remains the primary the global growth rate, with the correla- nant wages, and low investment levels growth engine. Yet exports declined tion coefficient reaching 80%. “When the continue to challenge the island’s econ- by 1.7% in 2016 to come to US$280.4 correlation coefficient is 80%, that means omy. Taiwan’s economic growth rates billion, according to Bureau of Foreign that there is 20% room for government during this decade have so far aver- Trade (BOFT) statistics, and Taiwan to do something,” he notes, contrasting aged less than 2% annually, according to narrowly avoided going into recession this situation with Taiwan’s era of high TIER data. thanks to a strong fourth-quarter export growth from the 1970s to the 1990s, Although 62% of Taiwan’s nominal performance. when the correlation coefficient was less 2015 GDP of US$530 billion was gener- Reliance on exports has led to Taiwan than 40% and government action could ated by the service industry, according to becoming increasingly integrated into have far more impact. the CIA WorldFactbook, low wages and the global economy. TIER’s Chiu says World Bank data shows global GDP an underdeveloped service sector have that the economic growth rate in Taiwan growth averaging 2.23% since 2008, down from an average of 3.41% in the decade preceding 2007. Chiu says that this rising correlation has resulted from Taiwan’s increased reliance on selling intermediate goods such as electronic components and petrochem- icals to global supply chains. According to the OECD participation index, 71% of Taiwan’s exports are in intermediate goods, which are vulnerable to abrupt changes in global supply or demand. The lack of FTAs with significant trade partners likewise hinders growth, particularly in comparison with Taiwan’s main competitors such as South Korea. About 80% of Taiwan’s exports are similar to Korean exports, but while Taiwan’s FTAs are limited to New Zealand, Singapore, REMINDER — Taiwan Semiconductor Manufacturing Co. (TSMC) Chairman Morris Chang notes that while new and innovative industries benefit the economy, the and diplomatic allies in Central Amer- value of existing industries should not be forgotten. ica, South Korea has signed many FTAs PHOTO: CNA

情報局介紹各國國情的WorldFactbook，薪資偏低與未充需突然波動的衝擊。分發展的服務業使台灣的成長受到限制。工業僅占台灣台灣跟主要貿易夥伴之間沒有自由貿易協定，也阻 GDP的36.1%，但依然是經濟成長的主要動力。不過，礙了經濟的成長。這情況若跟台灣主要競爭對手南韓來根據經濟部國貿局統計，台灣去年出口減少1.7%，總金做比較，影響尤其明顯。台灣有大約80%的出口產品跟額為2,804億美元，幸好第四季出口表現強勁，台灣經南韓相近，但台灣只跟紐西蘭、新加坡和中美洲友邦簽濟才沒有出現衰退。署自貿協定，南韓則已跟許多重要貿易夥伴簽署，包括對出口的依賴，使台灣越來越融入全球經濟體系。美國和中國在內。邱達生說：「我們的貿易障礙（比南邱達生說，台灣的經濟成長率與全球的成長率越來越相韓）大很多。」近，二者的相關係數達80%。他指出：「相關係數達到前任馬英九政府為了克服貿易障礙，與中國簽署了 80%，表示政府有20%的空間可以做一些事。」他說，經濟合作架構協議（ECFA）。中國是台灣最大的貿易台灣經濟在1970到1990年代呈現快速成長，當時台灣夥伴，台灣有大約40%的出口是以中國和香港為市場。經濟與全球經濟的相關係數不到40%，政府的作為所能 ECFA的「早期收穫」清單降低了台灣若干重要出口產產生的影響要大得多。品的關稅，但批評者說，這項協議使得台灣更加依賴中世界銀行的資料則顯示，2008年以來，全球GDP每國，而且使台灣產業進一步走向代工生產，而這個行業年平均成長2.23%，低於1998年到2007年的平均成長率在持續走下坡。 3.41%。幾個主要的預測機構預估台灣2017年的經濟增長率落於2％左右。跨越障礙邱達生說，相關係數提高的原因，在於台灣越來越走向提供半成品給全球供應鍊，例如電子零組件和化工原龔明鑫說，「五加二」計畫推動的產業轉型不是要料。經濟合作發展組織的參與指標顯示，半成品占台灣正面迎戰貿易障礙，而是要讓台灣企業跨越障礙。他外銷的比例達71%，這表示台灣經濟與全球GDP成長之說：「過去是以貿易為主，因此關稅及交易和運輸成本間的關係比過去更為緊密，也比過去更容易受到全球供是很重要的議題，但『五加二』產業偏重應用與服務，

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with substantial trade partners, includ- Kung explains that instead of simply lar efforts by earlier administrations to ing the United States, EU, and China. “We making an individual product, smart restructure Taiwan’s industries. The Ma deal with a much heavier trade barrier,” machinery or green-energy firms offer administration, for example, pushed the observes Chiu. total solutions that includes the prod- development of green tech, and Taiwan The previous Ma Ying-jeou adminis- uct, the software and control systems, was an early powerhouse in solar cell tration sought to overcome these obsta- servicing, and more. In addition, Taiwan- and LED manufacturing during his pres- cles to trade by signing the Economic ese machinery-makers can benefit from a idency, while Chen Shui-bian’s adminis- Cooperation Framework Agreement ready market in the widespread network tration placed considerable emphasis on (ECFA) with Taiwan’s largest trade part- of Taiwanese firms with manufactur- biotech during the 2000s. Taiwan’s solar ner, China, which along with Hong ing sites in other countries, while solar- cell and LED makers, however, continue Kong takes some 40% of Taiwan’s total power providers may consider re-orient- to rely on a cost-cutting OEM model that exports. Although the “early-harvest” ing trade towards Southeast Asia in line earns extremely low margins in a satu- portion of ECFA lowered tariffs on some with the administration’s “New South- rated global market, while biotech’s long important exports, the agreement was bound Policy.” development cycles mean that Chen’s criticized for increasing Taiwan’s reliance “Indonesia has 18,000 islands, and biotech bets have yet to pay off. on China and for doubling down on a they may need a solar power gener- business model of contract manufacturing ation station for each island,” Kung Criteria for inclusion that continues to sputter. says. “What they want is for a Taiwan- ese company to provide the solar panels Many also wonder why certain indus- Jumping over barriers and to make sure that they have a stable tries and not others were chosen for energy supply. The price is for the total inclusion in the 5+2 plan. Kung says that Instead of confronting trade barri- solution, not just the components.” determination was based on “the vision ers, Kung says that the industrial trans- Previous governments have similarly of what Taiwan will be in the future, formation set out by the 5+2 plan will talked up industrial transformation as the and what kinds of industries reflect that enable Taiwanese firms to leap over them. key to economic development, however, vision.” The inclusion of Green Energy, “In the past, the focus was primarily on only to see Taiwan continue to depend for example, reflects the longstanding trade, so tariffs and trade costs were a heavily on commodity manufacturing. goals of the ruling Democratic Progres- very important factor,” he says. “But now The general business model of OEM sive Party (DPP) “to create a nuclear-free the 5+2 industries focus on applications contract manufacturing has stagnated and low-carbon country,” he notes, while and services – total solutions. The pric- over the past 15 years in the wake of a Biomedical can stimulate R&D and spur ing of these solutions includes both hard- rising China and slowing global growth innovation in caregiving in an aging soci- ware and software, so it’s different from and trade, and many of the programs ety. “Another thing we considered is that the past.” coming under the 5+2 plan resemble simi- we need to reflect international trends in

因此它是系統性的，輸出的是完整的解決方案。這些方模式，在飽和的全球市場上賺取非常微薄的利潤，而案的訂價包括硬體和軟體，因此跟過去很不一樣。」生技的發展週期很長，陳水扁政府時期在這方面的投他說明，智慧機械或綠能科技公司不是只製造單一資尚未回收。產品，而是提供完整的解決方案，包括產品、軟體和控政治大學經濟學教授和國民黨智庫國家政策研究基制系統、服務等等。此外，台灣機械製造商有現成的市金會研究員林祖嘉說，計畫中智慧機械的部分也是馬政場，就是在其他國家有生產基地的台灣企業網路，同府先提倡的，而且亞洲‧矽谷也跟馬政府的一項計畫十時，配合蔡政府的「新南向政策」，太陽能廠商可以考分相近。馬政府當年曾推動改善台灣的新創企業環境，慮把市場轉向東南亞。並且要在正在萌芽的物聯網產業占一席之地。林祖嘉龔明鑫說：「印尼有1萬8,000多個島嶼，每個島都可說：「他們把名字改了一下，中間加一個點，但實際內能需要太陽能發電廠。他們不會想要買太陽能板，而是容跟之前的差不多。」要完整的解決方案，也就是穩定的電力。價格是包括完整的解決方案，不只是零組件的價格。」「五加二」計畫的標準前幾任政府也曾高談產業轉型，指出那是台灣經濟發展的關鍵，結果卻是台灣繼續高度依賴簡單商品的也有許多人質疑，為何若干產業納入「五加二」計生產。在中國崛起與全球經濟成長和貿易雙雙走緩之畫，有些產業卻未納入。龔明鑫說，這項產業發展計畫後，台灣代工生產的商業模式在過去15年停步不前，的方向和標的，「要跟國家發展的願景相符合」。他舉而且「五加二」計畫的多項措施跟前幾任政府改變台例指出，把綠能科技納入，就反映了執政黨民主進步黨灣產業結構的努力相雷同。例如馬政府就曾推動綠能長期以來的國家發展願景，也就是「要打造非核、低科技的發展，台灣在馬英九擔任總統期間，也率先成碳的家園」，而台灣人口正在老化，生物醫學可以刺激為太陽能電池與LED照明的重要生產國，陳水扁政府在醫療照護方面的研發與創新。他說：「我們考慮的另一本世紀的前幾年，也把生物科技當做發展的重點。但項因素，是要能呼應全世界發展的潮流，例如數位經台灣的太陽能電池與LED製造商繼續走降低成本的代工濟。」

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technology, such as the digital economy,” the local parties,” says TIER’s Chiu. will be built in Tainan, and will fall under he adds. ITRI’s Su admits the industries the supervision of both the MOEA and According to NDC publications, selected do in fact benefit DPP-con- the Ministry of Science and Technology balancing regional development is yet a trolled regions, but explains that deep (MOST). third consideration, and for most of the local involvement in the programs is a Critics also question the 5+2 plan’s industries selected there are existing indus- key difference distinguishing Ma-era goals for Green Energy and Defense. try clusters in various parts of Taiwan. initiatives from the 5+2 plan. “Whereas “Once you start a national defense indus- For example, the machinery makers are most of the time the drivers are at the try, you have to put up with a lot of fixed famously clustered in Taichung, while central government, now each sector has costs and lots of ongoing variable costs,” green energy installations are found a collaborator or owner from one of the says TIER’s Chiu. To recoup these costs, primarily in the south of Taiwan. cities,” he says. “Local city ownership “you have to have a channel to sell those Yet this approach has also led to accu- hand in hand with the central govern- products to overseas markets, and that’s sations of political favoritism. “If you ment – this is a big change.” not going to happen because China will look more closely at those industries Su says that collaboration between protest. So allocating budget in this area selected you can see that they are clus- the local mayor or administrator and the could be a problem.” tered in DPP counties for the benefit of central government leads to more effi- The Green Energy sector, for its part, cient implementation, which he sees is developing too slowly and will not as a big improvement over the previ- provide sufficiently reliable and afford- ous government’s tendency to dictate able power, according to various critics. policy from above. On the other hand, Yet ITRI’s Su sees the 5+2 plan’s goals “the minus is that the city mayor will in these two sectors as emblematic of its need to look beyond his jurisdiction and overall strengths: clear articulation and think about the whole of Taiwan,” he firm commitment. With the government’s notes, citing that as a reason why central pronounced goals on Green Energy government oversight is necessary. and National Defense, “it’s pretty clear The Asia·Silicon Valley program where they want to go,” he observes. “If thus comes under the NDC but with the it’s clearly said, ultimately government, enthusiastic support of Taoyuan Mayor industries, and research institutes such Cheng Wen-tsan, while Smart Machinery as ITRI will find a way to overcome the is under the joint auspices of the Minis- challenges. The question is whether they try of Economic Affairs (MOEA) and can sustain this direction for five to ten the Taichung city government. A dedi- years without major changes – that will cated research institute for Green Energy be the big challenge.”

根據國發會的刊物，平衡區域發展是另一項考慮因園市長鄭文燦的熱心支持，智慧機械則由經濟部與台素，而多數納入「五加二」計畫的產業，在台灣各地中市政府共同負責。一個專門發展綠能技術的研究機已有產業聚落，例如眾所周知，工具機業者大都聚集構將在台南成立，由經濟部與科技部共同督導。台灣在台中，綠能科技設施則大都座落在南台灣。的生物醫學產業主要聚集在台北市，但市政府未被要但這樣的做法引發政治分贜的指控。台灣經濟研究求負責這項計畫。蘇孟宗說：「這跟政治可能有點關院的邱達生說：「如果你仔細看看被選中的產業，就係，因為台北市長不屬於執政黨。」會發現它們集中在民進黨執政的縣市，目的是要圖利批評人士也質疑「五加二」計畫中綠能科技與國在當地執政的政黨。」防產業的目標。台經院的邱達生說：「一旦開創國工業技術研究院產經中心主任蘇孟宗也認為，被選防產業，就會有很多固定成本，未來還有很多可變成中的產業確實有利於民進黨執政的地區，但他說明，本。」為了收回成本，「必須要有管道可以把產品賣地方政府深入參與，是「五加二」計畫與馬政府的計到海外市場，但那是不可能的事，因為中國會抗議，畫很重要的差別。他說：「雖然多數計畫的推動者是因此這方面的預算分配可能會有問題。」在中央，但每個產業在地方上都有個合作對象或主持多位批評人士說，綠能科技發展太過緩慢，而且無的人。地方主事者跟中央政府攜手合作，這點很不一法提供足夠可靠、平價的電力。樣。」但蘇孟宗認為，綠能科技與國防產業的目標，正好蘇孟宗說，縣市長或負責官員與中央政府合作，可反映出「五加二」計畫整體的優勢：清楚的說明與堅以在執行時更有效率，他認為這是很大的進步，因為定的決心。他說，政府把綠能科技和國防產業的目標前任政府往往只是在上面頒布政策。但另一方面，他說得很清楚，「他們要往哪裡走，已相當明確。如果指出，「不好的一點在於縣市長的目光必須要能夠超說得很清楚，到最後，政府、業界和工業技術研究院越自己的地盤，想到台灣整體」，因此中央政府的監等研究機構會找出方法來克服挑戰。問題在於他們能督是必要的。否在未來5到10年維持這個方向，不做重大改變，這才因此，亞洲‧矽谷計畫是由國發會主持，但有桃是重大挑戰。」

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include increasing Taiwan’s share of the 5+2/1 global IoT market from 3.8% in 2015 to 5% – out of the US$4 trillion to $11 tril- ASIA·SILICON VALLEY – lion projected by research firm Gartner Inc. – by 2025. DON’T FORGET THE DOT! The program also seeks to encourage the formation of 100 successful IoT- related enterprises, either local startups or R&D centers set up by large corporations. Further, it aims to develop three global systems integrators in Taiwan, successfully attract investments from two world-class companies, and create one online IoT-related learning platform. The government recognizes that talent is a necessary ingredient to achieve these objectives. Some 50% of startups in Sili- con Valley are created by immigrants, but Taiwan’s labor pool is heavily domestic. To expand talent resources, the Exec- utive Yuan has drafted a Foreign Talent Act that will dramatically liberalize Taiwan’s immigration rules for foreigners with desired talents. The country has also created the Taiwan Entrepreneur Visa, NEW OFFICE — Vice President Chen Chien-jen attended the Opening Ceremony of the modeled on a similar program in Singa- Asia·Silicon Valley Development Agency (ASVDA) in December last year. pore, and has established programs for

PHOTO COURTESY OF OFFICE OF THE PRESIDENT talent connections with Silicon Valley. Since access to capital for business expansion is also a perennial challenge nnovation is high on Taiwan’s “Taiwan is good at high tech, and for Taiwan’s startups, the Industrial Inno- agenda, and the Asia·Silicon Valley we already have a number of technol- vation and Transformation Fund will I segment of the 5+2 Innovative Indus- ogy science parks, so we should have a make NT$100 billion available through tries plan promises to launch Taiwan good chance of making Taiwan a plat- the National Development Fund, while into the innovation value ecosystem, says form for bringing Asian technology to the National Investment Co. will provide National Development Council (NDC) Silicon Valley,” says Chu-chia “Steve” a further NT$10 billion and the Angel Deputy Minister Kung Ming-hsin. Inno- Lin, economics professor at National Investor Program another NT$1 billion. vative technologies and business models Chengchi University and researcher A Fund for Startups, founded by the are transforming global business, Kung with the KMT-affiliated National Policy Taiwan Stock Exchange, will offer yet says, and “if Taiwan is not included in Foundation. another NT$270 million. that trend, it will be very difficult to The name for the program was orig- Deputy Minister Kung also stresses catch up.” inally “Asian Silicon Valley,” but later a the importance for the plan of signifi- The Asia·Silicon Valley program aims dot was inserted to make it “Asia·Silicon cant regulatory reform. “Even if we have to foster development of startups as well Valley. The dot is meant to signify that the right approach but the laws and regu- as Internet of Things (IoT) technologies Taiwan is not aiming to recreate Sili- lations are not reformed, there’s no way on the premise that startups stimulate con Valley in Taiwan, but instead to indi- that we can accomplish what we need to innovation, and that the IoT sector prom- cate that “Taiwan wants to be the dot do,” he says. ises tremendous growth opportunities. – the hub – between Silicon Valley and ASVDA was launched on Decem- “The major objective is to foster an Asia,” says Stephen Su, general director ber 25, 2016 to assist companies and innovation and entrepreneurship ecosys- of the Industrial Economics Knowledge integrate resources to promote IoT and tem particularly related to IoT,” says Center (IEK) at the Industrial Technology startups. Shortly afterward, the ASVDA Wang Ting-an, deputy CEO of the Research Institute (ITRI). Bay Area Office was opened in Califor- Asia·Silicon Valley Development Agency Through the Asia·Silicon Valley initia- nia to tap into networks of industries, (ASVDA) and counselor to the Ministry tive, the government is seeking to create universities, and research institutes inter- of Science and Technology. The program an ecosystem enabling startups to get nationally. is a key feature of the 5+2 plan, and is one funding, amend outdated laws and regu- The program has already fulfilled of the few elements that has gained politi- lations that have stymied growth, and one its main goals – attracting at least cal support from both sides of the aisle. increase the talent supply. Specific goals two international companies to open up

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IoT research centers in Taiwan. Micro- Despite the enthusiasm surrounding components? And will Taiwan embrace soft and Qualcomm have both launched the program, however, many questions innovation’s flipside, disruption? The such facilities. In addition, more than remain. Can Taiwan attract sufficient recent controversy in Taiwan surround- 140 companies and organizations have foreign talent to stimulate the generation ing Uber suggests that this process may joined an Asia·Silicon Valley IoT Alli- of startups? Will Taiwan’s relationship be painful. ance. Members include Acer, MediaTek, to IoT “value chains” simply be more Advantech, Cisco, Microsoft, and IBM. contract manufacturing of IoT-enabled — By Timothy Ferry

5+2/2 biomeica an taiwans AGING POPULATION

evelopment of the biotech, in the South is host to nearly 100 more. biopharmaceutical, and medi- Taiwan’s biomedical industry earned D cal device industries offers an revenues totaling nearly US$10 billion opportunity not only to advance Taiwan’s in 2015, according to data supplied by technology and grow its economy, but the Ministry of Science and Technol- Advanced equipment on display at the opening of the Biomedical Innovation Plan also provide solutions to many of the ogy (MOST). But most of the produc- Center.

problems faced by an aging society. tion involved the manufacture of generic PHOTO COURTESY OF OFFICE OF THE PRESIDENT “Taiwan is aging at a rapid rate and drugs or OEM medical devices, occupy- we need new ideas and new approaches ing lower links in the value chain. The products. Taiwanese biotech firm OBI by industry to tackle that issue,” says biomedical program will seek to raise the Pharma lost billions of NT dollars in Deputy Minister Kung Ming-Hsin of the value of Taiwan’s industry by establish- market cap last year after it revealed that National Development Council. “The ing and upgrading R&D centers, inte- Phase III clinical trials for its new breast biomedical, biopharmaceutical, and grating advances in precision machin- cancer vaccine OBI-822 were not statis- medical device sectors all have something ery to manufacture higher-value medical tically significant, causing a selloff of to contribute to take care of the diseases devices, and transforming generic drug company shares. that come with aging.” companies into makers of innovative Taiwan conducts highly regarded With 14% of its population already pharmaceuticals. fundamental research in molecular biol- considered elderly, Taiwan is aging Efforts to raise the level of Taiwan’s ogy at a number of prestigious research quickly and will become a super-aged biopharma industry began in the 2000s, institutes and universities, particularly society – with 20% of its population over but with long development cycles, the Academia Sinica. “But applying that 65 – by 2025, putting increased stress investments have yet to pay off. The research to commercial developments on the healthcare system. Strengthen- lengthy lead time is one of the reasons has been an issue and we haven’t done ing public health and promoting social that many oppose spending government very well on that,” says NDC’s Kung. He welfare are therefore two fundamen- money on this sector. says that the Basic Law for Technology, tal goals of the Asia-Pacific Biomedical “We’ve been doing biopharma for a which has strict limitations on academics’ Industry plan, the formal name for this long time, since the Chen Shui-bian pres- ability to work in private industry, has aspect of the 5+2 program. idency, with a lot of budget allocated stymied development of the sector, and Taiwan already has a thriving indus- towards it, but no return so far, so it’s that the government is looking to amend try sector under the broad biomedical a huge disappointment,” says Darson this law “to encourage cooperation heading, with over 40 companies listed Chiu, a Tunghai University professor and between research institutions or centers on the Taiwan Stock Exchange and many researcher with the Taiwan Institute of and commercial industry.” firms located in the Central and Southern Economic Research. “We should be very Kung acknowledges the risks involved Science Parks making biomedical equip- careful regarding biomedicine, as it will in biopharma research, and notes that the ment, biologic drugs, medical devices, take a lot of investment and squeeze our government is also placing heavy empha- generic drugs, implants, and more. limited budget.” sis on the medical device sector, which Nearly 200 more companies are located Drug development is a highly risky requires far shorter development time in the National Biotech Research Park in endeavor, with the odds extremely low and has much faster time to market. Taipei’s Nangang District, and the Ping- that even promising molecules in the tung Agriculture and Biotechnology Park lab will eventually lead to blockbuster — By Timothy Ferry

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5+2/3 GREEN ENERGY FOR A NUCLEAR-FREE, LOW-CARBON FUTURE

rogress on renewable energy devel- perception was created that Taiwan’s con will be buying local products for its opment is slow, but green energy current 700MW of onshore windpower is global supply chain.” P advocates are more optimistic than as much as the island can tolerate. Enercon’s plans for the local market ever before that Taiwan can live up to its Yet K.H. Chen, CEO of Taiwan’s dovetail exactly with the Tsai administra- potential as a green-energy hub. “There largest domestic solar power devel- tion’s goals of expanding the green energy is now a strong determination to make oper, Sinogreenergy, is taking the delays industry by developing home-grown proj- this work,” wrote Bart Linssen, managing in stride. “This is all just the learn- ects. Huge local demand would make director for German wind power turbine ing curve,” he says confidently, though Taiwan a desirable market for large inter- maker Enercon Taiwan, in an email. “We admitting that his investors, Swiss-based national renewable energy builders and are very confident about the Taiwan Partners Group, which is putting US$200 investment firms, prompting the develop- market.” million into Sinogreenergy to develop ment of local supply chain partners, tech- The government has ambitious goals 150MW of solar power in central and nology transfers for local manufacturers, for renewable energy. It seeks to have southern Taiwan, are surprised at the and employment for local technicians, 20GW of installed solar capacity and slow pace. “I don’t think land is actu- installers, and engineers. 3GW of installed offshore wind capac- ally the issue,” he says. “We need to find To spur the industry along, the admin- ity by 2025, together meeting 20% of the general SOP to get these projects istration has set aside NT$1 trillion for Taiwan’s power needs. Yet nearly a year approved.” Chen forecasts that Taiwan’s green energy development over the next into the Tsai Ing-wen presidency, Taiwan total solar power installed capacity will 10 years, and under the auspices of the has yet to see even 1GW of installed solar reach 3-4GW in the next three years. 5+2 Innovative Industries plan is estab- capacity. In addition, none of the Tier 1 Linssen is likewise sanguine about lishing an R&D center in Tainan to focus (over 500kW) ground-mounted systems the present delays. Despite the attention on green energy development. planned for select regions of rural south- that offshore wind has received in recent Recently passed amendments to the ern Taiwan have been approved by the years in Taiwan, “onshore wind is now Electricity Act now allow green energy government, leaving Taiwan a long way very much back on the agenda,” noted providers to sell their power directly to from the additional 1.4GW of installed Linssen. “That is the reason we chose to consumers (although most green energy capacity targeted for mid-2018, much less have our regional center for Asia here for suppliers had reservations about the effi- the eventual 20GW. sales and service. We will now also add cacy of that amendment), and NDC Regulatory holdups, complicated a procurement center in Taiwan. Ener- Deputy Minister Kung says that the applications requiring approvals from government will propose revisions to both central and local governments, and several more laws and regulations to ease complex land deals are all delaying solar- the development of renewable energy in power development, as is pushback from Taiwan. agricultural groups in direct competi- The key factor explaining the opti- tion for the limited available land. Envi- mism surrounding green energy in ronmentalists are also opposing the use Taiwan is not the rate of current prog- for solar power development of land ress, but rather belief that finally the contaminated by salt water, saying this government is solidly behind the industry. “wasteland” is actually salt marshes that “If the government is firm and clear in provide vital habitats for rare migratory its goals, industry will be very willing to birds, including the black-faced spoonbill. join us in the development,” says Kung, Offshore wind projects have finally noting that international investment firms started with the successful recent installa- are increasingly looking for opportuni- tion of two Formosa 1 pilot wind turbines ties in the Taiwan market for renewable in the waters off Changhua County, yet energy. “We need to create opportunities further projects are developing slowly. President Tsai inspects a model of the off- for those companies that are willing to Onshore wind has not seen significant shore wind farm planned for the waters transform. The time for Taiwan’s trans- off Changhua County. expansion since a series of violent protests formation is already overdue.” over wind farms located near homes in PHOTO COURTESY OF OFFICE OF THE PRESIDENT rural Miaoli tarnished its image. The — By Timothy Ferry

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hile much of the 5+2 Innova- controller components but increasingly tive Industrial plan remains software, into its already strong machine- W controversial, two sectors making industry clustered in Taichung have gained support from both major is seen as an effective way to expand political parties: smart machinery and markets while generating employment. Asia·Silicon Valley. Smart machines mean The Taiwan machinery industry’s annual Government officials tour the Smart manufacturing equipment that is intelli- output is valued at about NT$1 trillion Machinery Promotion Office in Taichung. gent, self-learning, and can communicate (around US$33 billion) by the Taiwan PHOTO COURTESY OF OFFICE OF THE PRESIDENT with other machines and human opera- Association of Machine Industry, and tors, transmitting data in real time. These according to Taiwan’s Topology Research advanced technologies are finding appli- Institute, in 2015 Taiwan was the world’s cations in almost every industry. seventh largest producer and fifth largest smart machines. Dana Burch, director The smart machines program aims exporter of machine tools. of OEM business for Rockwell Automa- to leverage Taiwan’s strengths in IT A smart machine is loaded with tion, a U.S. leader in automation solu- and machine-making to gain a larger sensors and other components enabling it tions, concurs with general observations share of the burgeoning Industry 4.0 to gather large amounts of data – on the that while Taiwan has “a lot of people sector. Also called “the Fourth Indus- operations of the machine, productivity, on the leading edge who are commit- trial Revolution,” Industry 4.0 refers to maintenance, inventory, etc. – and then ted to doing things faster, better, and the rapidly advancing radical automa- communicate that data to other machines cheaper,” they are often small compa- tion that is seeing smart machines swiftly or a human operator. nies that jealously guard their knowhow. replace human workers across a swathe The Fourth Industrial Revolution is “They don’t like to talk about what they of industries. The global market for already underway, with smart machines do, but that inhibits learning and growth smart machinery stood at US$7.4 billion replacing humans in a wide range of in the industry,” he observes. in 2016, and is expected to grow 15% jobs ranging from accounting to manu- The Smart Machinery initiative plans annually to reach US$15 billion by 2021. facturing to transportation. This trend to build an innovation center in Tai- After that, it will grow even faster, reach- is expected to have huge implications chung in which systems and technology ing US$40 billion by 2026, according to for productivity and employment in the will be installed, and where automation a study by analytics firm BCC Research. coming decades. solutions providers such as Rockwell and Smart machinery is a good bet Chuang Chia-yu, president of Crown others will host seminars to teach local for Taiwan because “it plays off our Machinery Co. in Taoyuan, says that manufacturers how to make greater use strengths. We are good at computer tech- “traditional machinery has no value of automation. “Getting those kinds of nology and related production so we can added. It’s just hardware and just price people together doesn’t happen easily,” bring this knowledge into the machines,” competitive. Software is the value added says Burch. “Through these government- says Chu-chia “Steve” Lin, an economics that makes a machine globally compet- sponsored seminars, you’ll have a whole professor at National Chengchi Univer- itive.” A smart machine can earn a lot of people” exposed to what Industry sity and researcher at the KMT-affiliated 40-50% premium over a conventional 4.0 can accomplish. National Policy Foundation. Integrating machine, according to industry insiders. Taiwan’s developing Internet of Things However, most Taiwanese machine — By Timothy Ferry (IoT) technology, including sensor and makers lack the knowhow to produce

5+2/5 n the face of China’s rapid military build-up and Beijing’s pressure on DEFENSE INDUSTRY FOCUS I other countries not to sell weaponry to Taiwan, “what can Taiwan do except ON FIGHTER-TRAINERS AND develop its own defense industry?” asks National Chengchi University professor Arthur Ding, a defense specialist. “It’s submaines the inevitable outcome of China’s interference.”

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The Democratic Progressive Party fighter-trainer aircraft, budgeted at but in some cases are said to exceed the (DPP) has long made national defense NT$68.6 billion (US$2.22 billion). The performance of the U.S. versions. a key plank in the party’s platform, and aircraft will be designed in conjunction But Taiwan stopped building fighter during her election campaign President with the Aerospace Industrial Develop- jets after the IDF program ended and Tsai Ing-wen promised to raise defense ment Corp. (AIDC). In addition, around instead opted to purchase advanced spending to at least 3% of GDP. Taiwan’s NT$3 billion (US$99 million) has been weapons from the United States. To defense budget for 2016 comes in at budgeted for the design phase of the successfully complete the new mission NT$356 billion (US$11.6 billion), just submarine program which will involve of building fighter-trainers, Taiwan will over 2% of GDP, but Defense Minister collaboration between NCSIST and the largely have to rebuild its engineering Feng Shih-kuan recently announced that recently established Submarine Devel- team and know-how. the defense budget would rise by 50% to opment Center at the CSBC Corp., the Submarines are even more challenging reach 3% of GDP in 2018. state-owned shipbuilding firm privatized to design and build. Taiwan has a long A good chunk of that budget will be in 2008. history of shipbuilding, but no experience earmarked towards developing Taiwan’s The administration says that invest- making submersible vessels, and the proj- own indigenous defense systems. The ments in defense industries will not only ect will undoubtedly require substantial Defense Industry portion of the 5+2 Inno- benefit national defense but will contrib- support by foreign defense contractors. vative Industries program will involve ute to overall economic development, Because of the high cost and techni- the development of submarine and fight- generating some NT$250 billion to $400 cal difficulties, many question whether er-trainer aircraft, as well as advanced billion (US$7.6 billion to $12.1 billion) it is wise or even feasible for Taiwan to cyberwarfare capabilities, Unmanned in earnings and creating thousands of develop its own defense sector. Taiwan Aerial Vehicles (UAVs), and other proj- new jobs. will probably have a hard time finding ects and systems. Taiwan’s previous experience in weap- partners and the necessary technology. Several of these programs are already ons development includes the Indigenous On the other hand, political obstacles also underway and will involve both state- Defense Fighter (IDF), developed in the make new or even second-hand weapons owned and private industrial firms and 1980s in conjunction with Honeywell systems difficult to acquire from abroad. research institutes. For example, the Air and General Dynamics, a fleet of frigates Arthur Ding says that a local defense Force signed a memorandum with the based on the U.S. Navy’s Perry-class, and industry will benefit Taiwan in a vari- National Chungshan Institute of Science missile and missile-defense systems that ety of ways. First, it will generate numer- and Technology (NCSIST) to build 66 were based largely on U.S. technology ous well-paying high-tech jobs at a time when many recent graduates are frus- trated at the lack of good employment opportunities in technology on the island. Developing the defense industry will also enable Taiwan to upgrade its technical capacity in a number of related sectors, notes Ding. Although Australia struggled to build its Collins-class submarines, the experience allowed it to significantly increase its capabilities on various technological fronts. Taiwan’s capabilities in software and IT hardware will also likely stand it in good stead when it comes to developing

AIR AND SEA — Besides submarines and fighter-trainers, Taiwan’s defense industry devel- Taiwan’s cyberwarfare capabilities. opment program includes Unmanned Aerial Vehicles such as the one above.

PHOTO COURTESY OF OFFICE OF THE PRESIDENT — By Timothy Ferry

5+2/6 he “new agriculture innovation program” adopted by the Executive Yuan on December 8 last year forms the DEVELOPING HIGH- T basis of this “plus” initiative added onto the original Five Pillar Industries. The goal is to develop a viable agricul- VALUE, INNOVATIVE tural sector suitable for a modern economy – one with sufficient competitiveness without over-reliance on government subsidies. The program aims to increase the output value of local agri- AGRICULTURE culture by NT$43.4 billion (US$1.4 billion) by the end of 2020, and over the same period to increase the average farming-house-

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hold annual income to NT$1.8 million from the 2015 level of NT$1.2 million. To achieve the goal, the government plans to invest a total of NT$110 billion – NT$20 billion in the first year and NT$30 billion in each of the remaining three years. A centerpiece of the four-year program is the introduction of modern technology into agricultural operations, so as to boost the added-value. The government will enlist industry, academia, and research bodies to jointly engage in the R&D of agricultural technologies. The program calls for the setup of 20 “agricultural processing zones” and comprehensive agricultural cooperation with Thailand, Vietnam, Burma, and Indonesia. It will also encourage the establishment of agro-biotech firms. Besides developing high-added-value agricultural products, advanced technologies will also be employed in helping the AGRICULTURAL INNOVATION — Vice President Chen and Hsinchu farming sector cope with the problems of labor shortages and Mayor Lin Chih-chien at an event to promote Taiwan’s mullet roe. climate change. By developing manpower-saving techniques, PHOTO COURTESY OF OFFICE OF THE PRESIDENT such as the use of drones for pesticide spraying, the government expects to achieve a 60% reduction during the four-year period ers against loss from natural calamities. Over the past 20 years, in the level of manpower needed on Taiwan’s farms. such losses have amounted to an average of NT$11.7 billion To inject fresh blood into farming, the Council of Agriculture annually. hopes to enroll 3,000 senior-high graduates a year in university Other major policies under the program include enhanc- agriculture departments. In return for free tuition, the students ing the competitiveness of the livestock and poultry-raising will be asked to pledge to engage in agricultural activity for at industries, promoting the sustainable utilization of agricultural least three years after graduation. resources, assuring the safety of domestic agricultural prod- To stabilize farmers’ incomes, the government also plans ucts, and expanding domestic and overseas sales channels for to enact an agricultural insurance law, offering tax incentives Taiwan’s agricultural goods. to encourage insurance companies to offer insurance to farm- — By Philip Liu

China Steel, and Taipower are spearhead- 5+2/7 ing the circular-economy plan. Along with natural gas and oil refining, the SAVING RESOURCES WITH A circular economy will be one of the three major targets for CPC’s NT$200 billion cicua economy investment plan for the next six years. One project to be included is the utilization of fuel gas, a by-product of oil refin- ikipedia defines a circu- currently still entails a similar rate of ing, for the production of styrene. China

lar economy as a “regenera- expansion in CO2 emissions. Steel for its part will expand the use of W tive system in which resource While the government is still drafting furnace slag as materials for pavements, input and waste, emission, and energy the detailed circular-economy program, cement, armor blocks, artificial reefs, and leakage are minimized by slowing, clos- some major elements have been deter- other purposes. ing, and narrowing material and energy mined, notably in the fields of petro- Another project is to use methane, loops. This can be achieved through chemicals and biotech. The Ministry produced from pig manure, for power long-lasting design, maintenance, repair, of Economic Affairs, for instance, has generation as part of the “Plan for the reuse, remanufacturing, refurbishing, and decided to establish a “special circular- Revitalization and Development of the recycling.” economic zone” in Kaohsiung, aimed at Pig-raising Industry” initiated by the In line with global trends, the Taiwan recycling and reusing waste and by-prod- Council of Agriculture and passed by government is actively promoting this ucts generated by local heavy industry, the National Development Council on concept, with emphasis on the recycling such as generating electricity from the February 20 this year. The project aims and reuse of resources so as to assure waste heat and steam of the petrochemi- to generate 100 million kilowatt-hours sustainable development of the econ- cal production process. This project was of power this year from the waste of one omy and the integrity of the environ- conceived in the wake of the petrochem- million pigs, with the number of animals ment. A major goal is to cut the reliance ical pipeline explosion in Kaohsiung in to be expanded to 2.5 million by 2020. of Taiwan’s economy on fossil fuels, as mid-2014. every percentage point of GDP growth The state-run enterprises CPC Corp., — By Philip Liu

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TAIWAN LOOKS SOUTHWARD

The government is seeking to strengthen trade, investment, tourism, education, and cultural relations with South and Southeast Asia.

souteast asian esients o wate spasin estia in new taipei city PHOTO: CNA

BY JANE RICKARDS

outheast Asia may be close to ness linkages with Southeast Asia and “It is a multipurpose policy to Taiwan geographically, but Tai- the Indian subcontinent that embody broaden and deepen our engagement S wanese traditionally tended to see new principles of equality and reci- with these partner countries – with their its people as little more than a source procity. governments, their businesses, and their of cheap labor. Even in academia, says The scope of the linkages is broad, people,” says Minister Without Port- Edwin Yang, an instructor in the Col- ranging from tourism, the most notable folio John Deng, who heads the Office lege of International Studies at National success story so far, to easing hardships of Trade Negotiations which is over- Taiwan Normal University, Southeast experienced by local migrant workers, seeing the program. “Taiwan has strong Asia until recently was not considered a to supporting Taiwanese manufacturers soft power and we’re willing to share serious field of study. “The majority of in the region by pushing for bilateral our experiences in building up soft scholars still have the mentality of the investment agreements. The aim is to power with our partner countries.” Middle Kingdom – that Southeast Asia present Taiwan as a friendly and equal The Tsai administration is looking is home to Nanyang, the southern bar- partner willing to assist with these to this strategy to help Taiwan over- barians.” nations’ development. come a number of economic challenges. The New Southbound Policy devel- The policy, which went into effect Because of pressure from China on oped by the government of President last November, covers 18 nations other nations, for example, Taiwan has Tsai Ing-wen aims to radically change including 10 in Southeast Asia and had difficulty entering into free trade this mindset. With a motto of yiren- six in South Asia, plus Australia and agreements and other pacts with its weiben or “people orientation” and a New Zealand. The priority nations for trading partners. The New Southbound 2017 budget of NT$4.1 billion (about the early stages are Indonesia, India, Policy allows diplomatically iso- US$134 million), the government is Vietnam, Malaysia, the Philippines, and lated Taiwan to increase its economic encouraging multiple social and busi- Thailand. engagement through informal, lower-

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profile networks. figure the Tsai administration is anx- while investment in China over the Another prospective benefit is that ious to lower. same period shrank 12%. Taiwanese attracting Southeast and South Asians investment is also starting to pour into to work and study in Taiwan could Diversifying trade India, Standard Chartered reports. help resolve talent and university-stu- Accumulated investment there from dent shortages created by Taiwan’s In fact, the trend toward diver- 2000 to 2016 stood at US$177 million, aging society. Further, diversifying trade sification has already begun. While ranking Taiwan as India’s 40th largest eases Taiwan’s over-reliance on China, Taiwanese generally prefer doing busi- investor, but nearly half of this amount and projects being discussed – such as ness in China, where Mandarin is flooded in after March 2015. exporting electronic toll collection sys- spoken and the cultures are similar, This trend is likely to intensify if the tems and hospitals to the region – help China’s growth is slowing and labor current uneasiness continues in cross- to shift Taiwan’s exports of goods and costs are rising as the economy shifts Strait relations. “Southeast Asia has the services away from an overconcentra- from an export-driven to a consump- potential in the next five years to catch tion on electronic products. tion-driven orientation. up to China,” says Standard Chartered Overall, the more cosmopolitan Many China-based Taiwanese man- economist Tony Phoo. “They can’t approach to business enables Taiwan to ufacturers, especially makers of low-end match the size of China, but they can be improve as a global business location. products such as shoes and furniture, as competitive.” As Alan Hau Yang, executive director are expanding operations in Southeast Roy Chun Lee, deputy executive for Southeast Asia Studies at National Asia, attracted by the cheap labor. A director of the Taiwan WTO and RTA Chengchi University puts it, the New prominent example is Taichung-based Center at the Chung-hua Institution for Southbound Policy is not merely an Pou Chen, one of the world’s largest Economic Research (CIER), notes that economic policy, it is a “grand national manufacturers of shoes for brands such the New Southbound Policy is facili- strategy.” as Nike and Adidas. It built up a pro- tating what is a natural economic trend. Even without the China factor, duction base in southern China starting Overseas Taiwanese businesspeople engaging with the region makes eco- in the 1980s, but is now increasing (台商 Taishang) have been present nomic sense. The 10 Association of output from factories in Indonesia and in Southeast Asian countries such as Southeast Asian (ASEAN) nations, Vietnam. Vietnam for decades, forming extensive which are home to 630 million people According to the Taiwan Institute networks with local overseas Chinese. and a diversity of languages and cul- of Economic Research (TIER), citing And former President Lee Teng-hui tures, are generally experiencing much Investment Commission statistics, had his own “Go South” policy in the faster growth than the rest of the world. China remains the nation’s number-one 1990s, as did President Chen Shui-bian Their rising middle classes are hungry destination for exports and investment, in the 2000s (which is why the current for education, technology, and ever- with at least US$165 billion in accu- program is called the New Southbound better living conditions. While the mulated investment. (The actual figure Policy). But those earlier efforts had International Monetary Fund forecasts could well be higher, since companies only limited success because the China global growth for this year at 3.5%, often invest through subsidiaries in market was such a strong draw. the Asian Development Bank projects Hong Kong or tax-free havens such as One difference in the new plan is that Vietnam will experience growth of the Virgin Islands.) that South Asian nations are included 6.5%, the Philippines 6.4%, and Indo- The ASEAN nations collectively form for the first time. But the biggest nesia 5.1%. Taiwan’s second largest export market change, experts said, is that pre- And in contrast to aging Taiwan and and investment destination, with accu- vious policies had the narrow focus of China, Southeast Asian nations tend mulated investment of US$91 billion. looking southward simply for cheap to have relatively young populations, Next to China, Vietnam has received land and labor, which made it less wel- making their future economic prospects the most Taiwanese investment, some come in the target countries. even rosier. A similar trend can be seen US$31 billion. Taiwan was once ranked This time Taiwan is seeking to build in India. The ADB puts its economic number one among global investors relationships on a more equal and growth for this year at 7.4%, which in Vietnam; in 2016 it was the sixth- reciprocal basis. Kristy Hsu, director would make it the world’s fastest- biggest investing country. Taiwanese of the Taiwan ASEAN Studies Center growing economy. Half of its estimated investment comes to US$17 billion in at CIER, says that as the New South- 1.3 billion people are aged under 25, Indonesia, US$15 billion in Thailand, bound Policy was being set up, a according to a Standard Chartered and US$12 billion in Malaysia. number of ASEAN countries expressed Bank report. Around 2011, Taiwan began to interest in seeing more people-to-people Officials and economists alike are invest more in ASEAN nations than in exchanges, particularly in education concerned about the economic depen- China, reversing a trend of over two and training for their youth. And for dency on China that grew under the decades. TIER notes that the seven the first time, Taiwanese businessmen previous Ma Ying-jeou administration. largest ASEAN economies saw Tai- are showing an interest in certain Almost 40% of the island’s exports wanese investment increase by 43% Southeast and South Asian countries as go to the mainland or Hong Kong, a from January through September 2016, important consumer markets in their

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own right, notes Tan Ching-yu, director nificant slump in mainland tourists. Southeast Asian students are eager to of TIER’s Emerging Markets Develop- Cambodian tourists, at 85%, showed learn from Taiwan’s development expe- ment Study Center. the biggest increase, albeit from a rience in such fields as management, Although political factors are likely low baseline. The number of tour- entrepreneurship, high-tech industries, to keep Taiwan out of the China-backed ists from Thailand increased by 52%, and agriculture. Regional Comprehensive Partner- from Brunei by 51%, and India 38%. Scholarships will also be established ship (RCEP) trade pact, which includes NCCU’s Alan Hau Yang says the gov- for Taiwanese to study in Southeast ASEAN as well as India, Australia, ernment hopes to attract more than 2.2 Asia. In addition, the government is and New Zealand, Taiwan is report- million tourists a year from Southeast encouraging Taiwan universities to edly close to signing bilateral investment Asia by 2019. set up academic programs in the tar- agreements (BIAs) with some of these Eased visa requirements are facili- geted countries, and Southeast Asian nations, including Vietnam and Thai- tating this growth. Brunei and Thailand languages will start to be taught in Tai- land. Other countries that have been gained visa-waiver status last year, wan’s elementary schools from the next named as potential partners for BIAs joining Malaysia and Singapore. In mid- school year. include Myanmar and Brunei. April the Ministry of Foreign Affairs However, some observers worry Minister Without Portfolio Deng announced that the Philippines would that universities now rushing to obtain says such investment agreements will receive visa-free treatment on a trial grants to set up Southeast Asian study help ensure that Taiwanese companies basis for a year, and that visa applica- centers may simply be looking for ways are treated fairly by Asian govern- tion procedures would be streamlined to overcome their current shortage of ments, with their property and personal for Cambodia, India, Indonesia, Laos, resources, without having a deep-seated safety adequately protected. Concerns Myanmar, and Vietnam, including the commitment to the projects. And Alan in that regard stem from anti-Chi- opening of online applications. The elec- Hau Yang points with concern to cram nese riots across Vietnam in 2014 in tronic processing eliminates the need schools that are even advertising courses response to China deploying an oil rig for applicants to travel to their nation’s in Southeast Asian languages with slo- in a disputed part of the South China capital to apply at a Taiwanese de facto gans such as “Learn to speak Bahasa Sea.” Rioters also attacked Taiwanese embassy. In addition, citizens of Sri Indonesian and earn NT$1 million a companies by mistake. Lanka and Bhutan have been allowed to year.” He fears that later disillusionment However, CIERs Hsu is more pes- apply for tourist visas for the first time. will erode support for the New South- simistic about Taiwan’s prospects for In other moves to promote tourism, bound Policy. BIAs, saying that little progress has the Executive Yuan is encouraging local As the government hopes the New been made so far, for technical rather governments to host travel fairs in the Southbound Policy will promotes a than political reasons. Negotiations region, while the Tourism Bureau is two-way flow of professionals, it is need time and manpower, and Asian encouraging local restaurants to comply seeking to streamline regulations with trade officials are currently preoccupied with Islamic dietary laws and obtain regard to visas, residency, health insur- with other agreements such as RCEP, Halal certification. Recently the Central ance and tax incentives for qualified she notes. News Agency reported that the number personnel from the target countries. It One of the elements of the New of Halal-certified restaurants had is also establishing a database to help Southbound Policy is to set up “Taiwan broken the 100-mark, and tourism offi- match professionals from the 18 coun- Desks” in the targeted countries, sepa- cials are pushing to increase the number tries with prospective employers among rate from the “trade offices” that serve further to 200. Phoo says these develop- local companies, and last year the Cab- as de facto Taiwanese embassies. They ments could make Taiwan an attractive inet-level Overseas Community Affairs will serve as centers for research on tourist destination for the affluent Council held two job fairs on behalf of local business conditions, assist Tai- global Muslim market. Taiwanese enterprises with operations shang in forming business clusters, For the promotion of Taiwan as in Southeast Asia. and identify and promote trade oppor- an educational hub for the region, the The policy also involves helping tunities. Taiwan Desks are already government has allocated a budget of first-generation immigrants from operational in Vietnam, Indonesia, NT$1 billion. In 2015 around 40% of Southeast Asia to use their linguistic Thailand, and the Philippines. Taiwan’s foreign students came from and cultural backgrounds to make a ASEAN nations, and Deng says plans larger economic contribution, such as Tourism and education call for doubling the number of students obtaining foreign-language teaching from Southeast Asia within a few years certification or working in tourism. In terms of people-to-people by offering more scholarships. Deng Another aspect of the policy is to exchanges, the biggest gains have been says the government is also encour- improve the welfare of the over 600,000 in tourism. From January to November aging Taishang to establish scholarships migrant workers in Taiwan as part of last year, 195,419 visitors from the in the local communities where their the effort to build better relations with 18 countries came to Taiwan, a 23% businesses are operating, partially their home countries. Last October, the increase over the same period the year to improve their corporate image. Legislative Yuan amended the Employ- before, and helping to offset a sig- According to Hsu of CIER, many ment Services Act to lift the requirement

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that migrant workers must leave the country after working in Taiwan for three years before being rehired. The change had the effect of eliminating stiff brokerage fees. Most recently, the Min- istry of Labor ruled that Taiwanese employers must grant paid vacations and other forms of leave to migrant workers after one year of service.

SUPPORTING THE SOUTHBOUND POLICY — A group of young Taiwanese businesspeople during Business cooperation a trip to several Southeast Asian countries. PHOTO: CNA The New Southbound Policy may also help support the government’s pro- training of public-health workers. Deng with the 18 countries, Deng says. Key grams to cultivate the “Five Plus Two” adds that Taiwan is in talks with sev- areas of cooperation may be environ- innovative industries and to undertake eral of these countries to establish joint mental protection, mutual recognition investment in “forward-looking infra- research programs to combat conta- of educational diplomas, joint scientific structure.” One of the five industries is gious diseases such as dengue fever. research projects, agreements between green energy. Taiwan is a key producer According to Lee, one obstacle the hospitals to train doctors, and sister-city of solar panels and also aspires to build New Southbound Policy faces is that arrangements between local govern- up expertise in offshore wind farms mid-level government officials do not ments. Personnel may change, he notes, that could one day be made available to always fully understand or appreciate but such institutional agreements can other markets around the region. the policy’s objectives. In the case of provide long-run continuity. One area where noticeable progress the Myanmar vaccination program, China is naturally watching the has already been made is agriculture. for instance, he says, MOHW per- New Southbound Policy closely to see Last December, the Council of Agricul- sonnel find it hard to combine the idea if it crosses any lines in terms of pro- ture launched the Taiwan International of offering humanitarian assistance with moting an independent Taiwan. “That’s Agriculture Development Co. to pro- the pursuit of business opportunities. As why the government has positioned the mote farming products and technology. another example, Kristy Hsu cites the New Southbound Policy so carefully, John Deng says that productivity-en- need by small and medium enterprises defining it as a development policy or hancing techniques and equipment for more information about the host industrial policy, instead of a polit- developed in Taiwan for small-scale country’s policies and regulations before ical or diplomatic policy,” says Hsu. farms have been well-received in South- they can take advantage of opportu- So far, she says, some individual Chi- east Asia, where there is great market nities in such important markets as nese academics and low-level officials potential. But as small businesses face ASEAN and India. have criticized the policy, but Chi- financial challenges in entering the But Taiwanese officials are fre- nese leaders have not made any official regional market, the government is pro- quently unable to provide enough statements about it. viding bank guarantees totaling NT$50 detailed information or analysis. This Experts say China is most worried billion. Indonesia has been particularly problem was encountered last year by about Vietnam, where Taiwan’s eco- interested in agricultural coopera- smaller medical equipment companies nomic relations are the warmest. As tion with Taiwan, including projects that were interested in setting up shop a sign of Beijing’s concern, China and involving aquaculture and organic in Indonesia following its “big bang” Vietnam in January signed a joint com- farming. liberalization that allowed majority for- muniqué in which Vietnam promised to As the promotion of healthcare and eign ownership in that industry for the resolutely oppose Taiwan independence sharing of disaster-prevention tech- first time. However, the medical instru- and refrain from developing any official niques are also key parts of the New ment companies found entering the ties with Taiwan. China is also wary Southbound Policy, says CIER’s Lee, market to be complicated and govern- about Taiwan’s relations with India and the Ministry of Health and Welfare ment help insufficient, says Hsu. Indonesia due to their large sizes and (MOHW) has been heavily involved in Experts say it is hard to quantify resulting clout. If Indonesia leads in the program. The Ministry just com- the likely economic benefits of the New Taiwan cooperation, its ASEAN coun- pleted a pilot immunization program in Southbound Policy using traditional terparts might follow. The Indonesian Myanmar, which had the aim of both economic measures, such as forecasting Council on World Affairs and its pri- engaging in a humanitarian effort and the prospective boost to GDP growth, vate Habibie Center were Taiwan’s two promoting business opportunities for since the overarching aim of the pro- main collaborators in the first “track Taiwanese vaccination producers. The gram is to improve Taiwan’s relations in two dialogue” forums between ASEAN government hopes to cooperate with the region over the long-term. and Taiwan last November. How China all 18 targeted countries on bilateral A primary long-term goal is to will react to these emerging informal pharmaceutical certification and the create more institutional cooperation networks remains to be seen.

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Airline and Airport Ups and Downs

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IS SHUTTING SONGSHAN AIRPORT A FLIGHT OF FANCY?

Given the downtown airport’s ownership structure and importance in serving Taiwan’s outlying islands, closing it would be problematic.

BY MATTHEW FULCO

IN THIS REPORT riginally from Xindian, between Taiwan and China in 2008 Alex Tsai is the manager provided impetus for Songshan’s O of a bed and breakfast in expansion. Along with the thaw in the offshore island-county of Penghu cross-Strait relations, the Ma Ying- and travels to Taipei up to five times jeou administration (2008-2016) a year to visit family and friends, promoted the idea of using Songshan shop, and take a break from Peng- as a hub in a “Northeast Asia Golden • Is Shutting Songshan Airport a Flight of hu’s splendid isolation. When he read Flight Circuit” of city airports. Fancy? p32 media reports that the Taipei City During Ma’s first term, routes were government was considering shut- opened from Songshan to Shang- ting Songshan down, Tsai was not hai’s Hongqiao, Tokyo’s Haneda and pleased. “For travelers like me, there’s Seoul’s Gimpo airports. • Hengchun Airport Longs to Get Flights Off no comparison between the conve- Between 2008 and 2012, pas- the Ground p35 nience of the Songshan and Taoyuan senger volume at Songshan surged airports,” he says. from 3.1 million to 5.7 million, and Even with the opening of the then grew more modestly to 6.1 mil- Taoyuan Airport MRT, which makes lion in 2016 as restrictions were • Will Taichung’s Airport be Expanded? it possible to reach the airport from placed on adding new capacity. p36 central Taipei within 45 minutes, Business travelers, who account Tsai prefers Songshan. “It takes 50 for a large swath of Songshan’s pas- minutes to fly from Penghu to down- senger volume, have lauded the town Taipei [Songshan],” he notes. airport’s re-introduction of inter- • The Collapse of TransAsia Airways p38 “It’s about the same time to fly to national flights. “Being able to fly Taoyuan, but then it’s another hour from Songshan to Hongqiao really to get to Taipei by the time you dis- reduces my travel time between Taipei embark and take the train.” and Shanghai,” says Jerry Wei, a • Uber’s on the Road Again p40 Songshan is both a civilian airport senior director at the market intelli- and military airbase. It was the sole gence firm Migo, which has offices international airport serving Taipei in Taipei, Shanghai, and San Jose, until 1979, when Chiang Kai-Shek California. Wei flies the Songshan- International Airport (now Taoyuan Hongqiao route almost monthly. Airport) opened in Taoyuan. From Since he lives in the eastern Taipei then until the late 2000s, Songshan district of Nangang, Wei has little served only domestic routes. reason to take the Taoyuan Airport The resumption of direct air links MRT, which terminates at Taipei

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Main Station in the west of the city. down, the Taipei City government and “It’s now possible to get from downtown “Going that route is not a good use of my other opponents of the airport point to its Taipei to Taoyuan Airport in just 35 min- time,” he says. impact on the local community. Besides utes; it’s very convenient,” he says. “So Also relying on the Songshan- the noise from planes, height restrictions why do we still need Songshan, which has Hongqiao route is Carl Wegner, director mean developers cannot build structures a negative effect on the city?” of Greater China business development as high as they would like. Lai suggests the Songshan site be for R3, a New York-based financial tech- At the same time, proximity to the converted into a central business dis- nology consortium. “Customs clearance airport lowers property values in the trict with premium residential, office, is quicker, and there’s no need to travel to neighborhood, in what would otherwise and retail space. “It should be like Man- Taoyuan,” says Wegner, who divides his be a prime downtown Taipei location, hattan,” he says. time between Shanghai and Taipei. “You observes Paul Lee, head of AmCham Some opponents of Songshan Airport just need to accept smaller planes and no Taipei’s Infrastructure Committee and say that its location in downtown Taipei late flight options.” chairman and CEO of Global Construc- makes it inherently unsafe. Those voices tion International. grew especially loud in the wake of the Clipping Songshan’s wings Lai Chen-I, Chairman of the General February 2015 crash in the Keelung River Chamber of Commerce of the Republic of TransAsia Airways Flight 235, which Despite Songshan’s revival over the of China and a veteran of the construc- resulted in 43 deaths and 14 injuries. The past decade, the Taipei City govern- tion industry, urges the government to Kinmen-bound flight had just taken off ment under Mayor Ko Wen-je has called act to shut down Songshan now that the from Songshan Airport. for its business to be transferred to the Taoyuan Airport MRT is in operation. Following the crash, Kuomintang Taoyuan airport by 2020. At the ceremony launching the Taoyuan Airport MRT in March, Ko urged the central government to begin discussing the relo- cation of Songshan’s routes with local governments. “The integration of Songshan and Taoyuan airports can be discussed in a more serious manner with the launch of the Wugu-Yangmei Overpass along the National Sun Yat-Sen Freeway [Freeway No.1] in 2013 and the airport MRT line,” Ko was quoted as saying in the English-language Taipei Times. “It is time that the government made a decision.” In place of the airport, the Taipei City government proposes building a PHOTO: WIKIPEDIA 330-hectare “Central Park.” The plan would join the former airport site on the southern bank of the Keelung River with riverside sections of Taipei’s Dazhi and Dawan areas, forming a wetland park. Together with the nearby Taipei Expo Park, it would form a Central Park that could be used among other things as a venue for outdoor movie screenings, con- certs, and live broadcasts of sports events. The idea isn’t new. During the 2002 Taipei City mayoral election campaign, opposition Democratic Progressive Party (DPP) candidate Lee Ying-yuan, now Minister of the Environmental Protection Administration, suggested turning Song- shan into a large green space like New York City’s Central Park. But Lee lost the poto mattew uco election to Ma Ying-jeou, and the proposal was shelved. Above, an Air China Boeing 737 on the tarmac at Songshan Airport; below, a Uni Air flight to Penghu preparing to depart from Songshan. As reasons for shutting Songshan

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legislator Luo Shu-lei told the Chinese-language United Daily News that Songshan was the “most dangerous airport” in the world and should be shut down. A March 2015 editorial in the Eng- lish-language Taiwan News said that Songshan poses a threat to the safety not just of nearby residents, but to all the parts of Taipei City and New Taipei City that are below flight paths. “Do you keep an airport running which might cause the loss of hundreds or even thousands of lives the next time things go wrong, or do you close it down in an orderly process and transfer its operations to another airport ready to take are currently working together on the over?” the editorial said. study, which is expected to be completed Hwang Tay-lin, an associate professor by year-end. of aviation and maritime management Lee of AmCham Taipei’s Infrastruc- at Chang Jung Christian University, says ture Committee questions whether the that media reports about Songshan Air- study will be perceived as being objec- port being unsafe are exaggerated. The tive. “With the government carrying out airport is in full compliance with inter- the study, people are going to think it’s national aviation requirements, he says. biased,” he says. “What we need is for “It’s not reasonable to say that Songshan the government to hire an independent is unsafe simply because it is located in party who can stay above local politics an urban area,” Huang maintains. “The and offer objective analysis and recom- TransAsia crash occurred because of pilot mendations.” error, not because of an issue related to In an interview with Taiwan Busi- and highly value the convenience of Song- the airport itself.” ness TOPICS, CAA Director-General Lin shan, he notes. Kuo-shian highlighted three issues that Underscoring that point, DPP Legis- Easier said than done will weigh heavily in any decision about lator Yang Yao, who represents Penghu, Songshan’s future. First, travelers to and said during a meeting of the Legislative In January, the Ministry of Transpor- from Taiwan’s offshore islands account Yuan in March that residents of Taiwan’s tation and Communications (MOTC) for 84.3% of Songshan’s annual domestic offshore islands strongly oppose closing announced it had commissioned a feasi- passenger volume of 2.8 million people. Songshan since it would compromise bility study to evaluate whether Songshan “If Songshan Airport’s flight capacity their access to the high-quality medical Airport should be closed and its air traffic is relocated to Taoyuan Airport, it will facilities in Taipei. moved to Taoyuan. The Ministry’s Civil greatly impact their needs and rights,” he Secondly, the CAA owns only 41.5% Aeronautics Administration (CAA) and says. Many of those passengers come to of Songshan’s land, with the remainder the Taoyuan International Airport Corp. Taipei for just a limited amount of time belonging to the Ministry of National Defense. “For Songshan to be shut down, the Ministry of National Defense would have to agree, and they have their own considerations, different from the CAA or the Taipei City government,” Lin explains. Thirdly, Lin points out that Taoyuan Airport’s passenger volume has spiked in recent years. Its runways, terminals, and aprons are on the brink of overload, and have no extra capacity to accommodate Songshan’s passengers and facilities. “It would be better to evaluate the feasibility of relocating Songshan Airport in 2030, after capacity improvements of Taoyuan Three scenes at Songshan Airport, clockwise from the top of the page: Terminal 1, the airport's MRT station, and Terminal 2. have been completed,” he says. PHOTOS: WIKIPEDIA In March, speaking to legislators,

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Premier Lin Chuan said that the govern- may find new support. That US$1 bil- would attract between NT$20 billion and ment does not currently have any plans lion project was to be overseen by the NT$40 billion private investment (about to relocate Songshan Airport. “Some CAA and MOTC for implementation US$656 million to US$1.3 billion) and have proposed relocating the airport for in two stages over a 20-year period. It create 10,000 new jobs. a while now. But the crux of our consid- would involve relocating the CAA head- In the meantime, business travelers erations is not just the outer islands, but quarters and airline company offices are thankful Songshan faces no imminent also matters of national security,” he was on the east side of the airport to free closure. “In my four years of commuting quoted as saying in the English-language up five hectares of land for a conven- between Shanghai and Taipei, if there China Post. tion center, hotels, office buildings, and was ever a flight from Hongqiao to Song- With efforts to relocate Songshan at shopping malls. shan, I would jump on that first,” says an impasse, a plan approved in 2012 by Then-Deputy MOTC Minister Yeh R3’s Wegner. Compared to the Pudong the Cabinet to transform the city airport Kuang-shih estimated that the redevel- Airport-Taoyuan Airport route, “It feels into an Asia-Pacific business travel hub opment of the Songshan Airport area twice as easy.”

HENGCHUN AIRPORT LONGS TO GET FLIGHTS OFF THE GROUND

The central government has given Kenting’s only airport one final chance to prove its

poto mattew uco viability.

he best beaches on the island of Taiwan are in Kenting 2006 and just 2,448 by 2011, according to the Civil Aeronautics National Park, an isolated nook of the Hengchun Penin- Administration (CAA). No flight arrivals have been recorded at T sula near the country’s southernmost point. To get there Hengchun Airport since September 2014. from Taipei requires a two-hour journey on the high-speed rail Industry observers had expected the central government to to Kaohsiung, followed by a 2 to 2.5-hour taxi ride or a three- turn Hengchun Airport over to the military, yet in December hour bus trip. the Ministry of Transportation and Communications (MOTC) The length of the trip to Kenting has long been a deterrent to announced a CAA plan to bring international charter flights to its tourism business, with domestic tourists often opting instead the airport for a two-year trial period. Under the scheme, Kao- for the bucolic Penghu islands, a mere 50-60 minute flight from hsiung International Airport would deploy workers to Hengchun anywhere in Taiwan. Venturing farther afield, one can reach Airport to handle work related to international flights, such as Japan’s Okinawa islands in about 100 minutes by air. customs, immigration, quarantine, and security matters. With an eye to raising Kenting’s profile, in the early 2000s The CAA plan is based on a proposal by the Pingtung the Pingtung County government persuaded the central govern- County government. “The Hengchun Airport exists because the ment to allow it to build an airport that would cut travel time local government wanted an airport, so they are clearly going to from Taipei to Kenting to about an hour. In theory, the idea was oppose efforts to close it,” says Hwang Tay-lin, associate pro- sterling. If the journey was a breeze, who would be able to resist fessor of aviation and maritime management at Chang Jung Kenting’s rustic tropical charms? Christian University. There was just one problem overlooked by planners: Powerful At the same time, he explains, the airport is hemorrhaging downslope winds lash the Hengchun Peninsula from October to cash. Although no flights have arrived at or departed from the April, making it next to impossible for seven months of the year airport in two-and-a-half years, “people are still going to work to land the light aircraft that Kenting’s Hengchun Airport can every day,” Huang says. Annual losses from the airport’s oper- accommodate. Hengchun’s location – near the ocean and sur- ations come to some NT$60 million (US$1.9 million, according rounded by mountains – means the airport cannot be expanded to the CAA. to accommodate larger jets able to navigate the heavy winds. According to recent posts on Hengchun Airport’s Facebook As a result, arrival numbers at the Hengchun Airport fell page, the airport is hosting educational activities. An April 11 from 23,000 in 2004 (its first year of operation) to 11,000 in post shows photos of students from the Affiliated Hospitality

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Senior High School of National Kaohsiung University of Hospi- tality and Tourism visiting the airport. A March 30 post shows pictures from a visit by a local kindergarten. When contacted for comment, officials at Hengchun Airport referred Taiwan Busi- ness TOPICS to the CAA. To improve usage of the airport, the CAA has adopted a number of measures, says CAA Director-general Lin Kuo-shian. These include allowing cyclists to use parts of the terminal space to rest, encouraging visits such as those shown on the airport’s Facebook page, leasing airport space or facilities for filming, and permitting ultra-light aircraft and unmanned aerial vehicles (UAV) to use the airport. With regards to Hengchun’s future, “the opinions of the local government play an important role,” Lin says. “We respect the The salvation for Hengchun Airport may be opening it to planning strategy organized by the Pingtung County govern- international charter flights. ment. Developing international charter flights will be the short- PHOTO: WIKIPEDIA term strategy in 2017 and 2018.” That strategy just might work, given Taiwan’s ascendance last visited Kenting in February with his wife and daughter. as a top tourist destination in Asia. A record 10.7 million tour- “They love the food on Kenting’s main street and with conve- ists visited last year, up 2.4% year-on-year, according to data nient travel options we would go more often.” compiled by the Directorate General of Budget, Accounting and He cited reckless driving by a local taxi on the return to Statistics. Kaohsiung from Kenting as further reason to open direct Ken- In an interview with Taiwan Business TOPICS, Daniel ting-Hong Kong flights. “There were seven passengers crammed Schroeter, a Hong Kong resident who has visited Kenting twice into this absolute jalopy, and the guy was driving like his house previously, indicated strong interest in potential charter flights. was on fire,” Schroeter says. “We didn’t feel very safe.” “Of course I would take a charter flight,” says Schroeter, who — By Matthew Fulco

WILL TAICHUNG’S AIRPORT BE EXPANDED?

Local authorities are pressing for Ching Chuan Kang to be upgraded to

international airport status. The Taichung government would like the city's airport to be upgraded to become a full-fledged international airport.

PHOTO: WIKIPEDIA

aoyuan Airport provides the majority of Taiwan’s inter- Taoyuan Airport, where airport traffic reached 40 million pas- national flight service. Taipei City’s Songshan Airport, sengers last year. T Kaohsiung Airport, and Taichung Airport offer limited In a July 2016 report by Taiwan’s Central News Agency, international service to Asian destinations. Lin described his proposal as a “well-thought-out strategy that But since a flash flood disrupted service at Taoyuan Airport would allow the northern, central, and southern regions to com- in June 2016, Taichung officials have been urging that the city’s plement one another other and help achieve balanced regional Ching Chuan Kang Airport, which also serves as an air force development.” base, be upgraded to a full-scale international airport. Taichung Taichung Airport has been steadily boosting its interna- Mayor Lin Chia-lung has maintained that an international air- tional flight capacity in recent years. International and cross- port is needed to serve the city’s population of 2.75 million strait passenger traffic volume rose from 91.4 million in 2012 to and its multiple industries, as well as to reduce congestion at 147 million in 2016, according to the Civil Aeronautics Admin-

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istration (CAA). The airport currently serves 17 international destinations. Eight of those are cross-Strait routes; there is also service to Hong Kong, Macau, Japan, Korea, Vietnam, and Cambodia. “Based on the passenger traffic volume forecast and long- term development trends, the Taichung metropolitan area has international route needs,” the CAA said by email, adding that Taichung Airport serves as a “good regional international airport” for Northeast and Southeast Asia. Yet some observers say Taichung Airport’s development could be hampered by its narrow taxiways, insufficient airport apron space, and a restriction on flights between 11 p.m. and 7 a.m. (to avoid noise complaints). “Not only do we need to consider demand at Taichung Air- port, but we also need to look at the actual situation on the ground, and determine if it’s feasible to make major upgrades,” says Chen Ming-ming, chief executive officer of the KKday e-commerce travel platform and a veteran of the tourism industry. A view of the Taichung Airport from the air. PHOTO: WIKIPEDIA “It’s not uncommon for local officials in Taiwan to press the central government to support their big infrastructure projects for political reasons,” Chen observes. In this case, Taichung’s prestige would be raised if it could have an international airport of its own, as Taipei and Kaohsiung do, he adds. airport’s proximity to the city,” he says. Also vying for more international flights is Kaohsiung Air- Diverting flights from Taoyuan to Kaoshsiung seems unlikely. port. Last June, Kaohsiung Secretary-General Yang Ming asked Like Taichung, Kaohsiung has a longstanding ban on late-night the Ministry of Transportation and Communications (MOTC) flights (in Kaohsiung’s case the ban is from midnight to 6:30 to consider shifting some international flights from Taoyuan to a.m.). Further, airlines would lose money if flights are diverted Kaohsiung. “Southern Taiwan needs more flights to help bring from Taoyuan to Kaohsiung, as planes would need to fly at off- in more tourists and create business opportunities,” he was peak hours. “The airlines wouldn’t accept that, nor would they quoted as saying by the English-language Taipei Times. accept being diverted to Taichung,” says Chen. The local government has tried and failed to get approval to Meanwhile, Taoyuan Airport is undergoing substantial expand Kaohsiung Airport in the past, observes Paul Lee, head upgrades of its own, which will help it to ease congestion prob- of AmCham Taipei’s Infrastructure Committee and chairman lems. Expansion of Terminal 2 is scheduled to be completed in and CEO of Global Construction International. “The city 2018, and construction of Terminal 3 by the end of 2020. The wanted to lengthen the runway to bring in more logistics invest- Taoyuan International Airport Corp. has moved up the comment, but they faced restrictions on building because of the pletion date of a third runway from 2030 to 2025 to meet rising demand. Taichung Airport officials are proceeding with plans to expand their airport, whether or not it is ultimately upgraded to international level. The Central News Agency’s July 2016 report noted that construction of a second runway has begun and that seven overnight parking bays will be completed by 2018. “There is sufficient land for the development and use of the airport in the vicinity of Taichung Airport,” the CAA said, adding that future development will be contingent on growth of airport passenger traffic and the surrounding metropolitan area. The local government has also put together a NT$64 billion (over US$2 billion) plan to build a 36-kilometer MRT system that would connect Taichung’s airport and seaport to the city’s downtown. The MOTC will review the plan this year. Based on current cargo flights, facilities, capacity, and future growth projections, “Taichung Airport can serve as a solid alter- native airport to the Taoyuan and Kaohsiung airports,” Paul Lee concludes. A Hong Kong Airlines Airbus A320 at Taichung Airport. — By Matthew Fulco PHOTO: WIKIPEDIA

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THE COLLAPSE OF TRANSASIA AIRWAYS

Behind the two crashes that sank the company were some critical business mistakes.

BY MATTHEW FULCO

or Taiwan’s erstwhile No. 3 carrier, TransAsia Airways, the end F came mercifully. For nearly two years before it declared bankruptcy last November, TransAsia had struggled to fill flights, its load capacity falling to 60%. Even slashing prices to as little as NT$1,500 (about US$50) for certain domestic flights, such as the Taipei- Hualien route, failed to attract business. Chairman Vincent Lin blamed falling Chinese visitor numbers, high fuel prices, and a resurgent U.S. dollar for the com- An ATR aircraft that was part of the TransAsia Airways fleet. PHOTO: WIKIPEDIA pany’s losses, which totaled NT$2.2 billion (US$72 million) in the first three quarters of 2016. Speaking at a news conference at the Taiwan Stock Exchange, recorded by a passing car’s dashboard economy decelerated, and many facto- chief executive officer Liu Tung-ming camera and showing the plane careening ries in the South moved their operations said, “Despite our best efforts to devise a over an elevated highway in Taipei to China, decreasing domestic business new business model, the company could and into the Keelung River. In Taiwan, travel. Then the high-speed rail arrived not produce an effective turnaround plan “TransAsia Airways” became synony- in 2007, dealing a crushing blow to the to repair its deteriorating finances.” mous with the risks of flying. domestic aviation industry. That year, It was an unfortunate turn of events “The crashes frightened people,” says Taipei-Taichung and Taipei-Chiayi ser- for TransAsia, Taiwan’s first private civil Hwang Tay-lin, an associate professor vice were canceled. The following year carrier. The firm had previously thrived of aviation and maritime management at brought an end to the Taipei-Tainan on a somewhat innocuous reputation. It Chang Jung Christian University. “They route. Finally in 2012, the once-lucrative lacked the resources and scale of its com- felt TransAsia couldn’t guarantee their Taipei-Kaohsiung route was terminated. petitors EVA Airways and China Airlines, safety on flights.” The high-speed rail affected all of but was less expensive – and until its last From its inception in 1951 under the Taiwan’s carriers adversely, but it hit two years of operation, nearly as safe. name Foshing Airlines through 2007, TransAsia especially hard. Compared That changed when two fatal crashes TransAsia chiefly flew domestic routes. to China Airlines and EVA, “TransAsia claiming 91 lives occurred within seven One of the most important of those was was much smaller, so it was harder for months of each other (July 2014 and Taipei-Kaohsiung. At the zenith of Tai- the company to absorb the losses,” February 2015), sapping consumer con- wan’s domestic aviation market in the says Chang Jung Christian University’s fidence in TransAsia. Investigators ruled mid-1990s, that route was served by Hwang. that pilot error caused both crashes, 3,000 flights a year. Competition was Had things continued that way, rather than engine failure or inclement fierce. Some carriers offered a package TransAsia might not have lasted much weather conditions. of 10 pre-paid tickets for frequent trav- longer. Indeed, its counterpart Far Eastern Aggravating matters, local TV sta- elers, with a one-way ticket costing about Air Transport (FAT) collapsed in early tions and social media users constantly NT$800. 2008. What saved TransAsia was the replayed footage of the second crash, But over the next decade, the Taiwan launch of direct cross-Strait flights and

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the opening of Taiwan to Chinese tourists in the first year of former President Ma Ying-jeou’s administration. Between 2009 and 2013, TransAsia’s revenue doubled on the back of cross-Strait flights. The company went public in 2011. “The cross-Strait routes were very profitable,” says Chen Ming-ming, chief executive officer of the KKday e-commerce travel platform and a veteran of the tourism industry. “In terms of distance, Taipei-Shanghai isn’t much farther than Taipei-Kaohsiung, but TransAsia could charge three or four times as much (NT$12,000-NT$16,000 compared to NT$4,000).

Vicious cycle

As TransAsia’s fortunes improved, the company embarked on an aggressive expansion effort. Its fleet of aircraft grew Union members protest outside a TransAsia shareholders' meeting following the company's bankruptcy announcement. to 27, flying to 27 destinations, 13 of PHOTO: CNA which were in China. TransAsia also flew to six cities in Japan, and launched flights to Singapore, Thailand, and Vietnam. at the last minute, and they need an air- passengers before bowing out in Sep- In the throes of that expansion, the line to have a number of options.” tember 2016. In a research note at the company made a critical mistake in pur- Yet chairman Vincent Lin reportedly time, the Australian-based Centre of Avi- chasing four costly Airbus A330 aircraft, believed TransAsia’s future lay in further ation (CAPA) said: “V Air’s collapse is says Hwang Tay-lin. The planes, which international expansion. Following the not self-inflicted but rather, a failure of were part of a total plan worth US$480 company’s announcement in December TransAsia.” Given TransAsia’s “small million and required a down payment of 2014 that it would purchase four more size and undefined market position, roughly US$38 million, put significant new Airbus planes, it set its sights on instead of the sum of the two airlines fiscal pressure on the company at a time U.S. territories in the Pacific. TransAsia being greater than the individual parts, when revenue was already suffering fol- said it expected to launch a chartered having two sub-scale airlines fragmented lowing the July 2014 Penghu crash. flight service to the Northern Mariana both,” CAPA said. With the new equipment, TransAsia Islands in 2015. Meanwhile, the situation wors- began flying to Singapore, Seoul, and The company also launched V Air, ened. A steady personnel exodus robbed Tokyo – cities that attract lots of business Taiwan’s first low-budget carrier, in TransAsia of its top talent, as Chinese travelers, KKday’s Chen notes. “Business December 2014. Lin estimated the cost of carriers lured away pilots with higher pay travelers drive revenue for airlines, but that venture to be NT$2 billion NT$3 bil- and the chance to fly a larger variety of TransAsia didn’t have enough flights,” he lion (US$65.6 million to US$98.4 million). routes. Morale among employees lagged says. “Business travelers often buy tickets V Air flopped, carrying just 500,000 as the company struggled to restore its reputation. In July 2016, Taiwan’s Aviation Safety Council (ASC) published a devastating report that found negligence on the part of TransAsia Airways played a role in the fatal February 2015 crash. Investigators found that the captain of Flight GE235 had been unable to smoothly handle emergency situations such as engine failure during training sessions, but TransAsia failed to address the problem. The captain failed a flight simulator test in May 2014 as he could not manage an V Air, TransAsia's budget carrier, shut down after less than two years in business. engine flameout occurring during takeoff. PHOTO: WIKIPEDIA The 16.2% drop in Chinese visitors

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to Taiwan last year hastened TransAsia’s opment & Construction Co.), says travel agencies, observes Lin Kuo-shian, demise. The most profitable routes for KKday’s Chen. director-general of the CAA. “We have the company started to lose money from From December 1, the Civil Aero- done our best to ensure that travelers and mid-2016 when the inauguration of Pres- nautics Administration (CAA) suspended employees’ rights are protected,” he says. ident Tsai Ing-wen caused Beijing to put a all TransAsia flights, temporarily desig- Ultimately, the bankruptcy proceeded damper on cross-Strait relations. nating China Airlines to take over the smoothly, says Hwang Tay-lin, adding There was still a chance to save flights through January 20. The CAA fur- that TransAsia’s employees were able to TransAsia from bankruptcy. But the Lin ther supervised the use of an NT$600 find jobs with other Taiwanese airlines. family feared that continued poor per- million trust fund for severance pay- Given the extent of the compa- formance by the airline would hurt ments to TransAsia’s employees, while ny’s fiscal distress, “bankruptcy was the other companies in the group to which an additional NT$600 million was ear- most reasonable option for TransAsia,” TransAsia belonged (The Goldsun Devel- marked for refunds to customers and Hwang concludes.

UBER’S ON THE ROAD AGAIN

The ride-hailing app is now partnering with licensed car-rental companies in Taiwan.

ide-hailing app Uber returned to Taiwan in April after a two- R month suspension of its services, this time in partnership with licensed car-rental companies. In a break with Uber’s standard business model, drivers’ companies set the fares – and non-professional drivers are barred from taking Uber assignments. The revised business model solves Uber’s insurance and registration travails in Taiwan. Previously, Uber was unable to insure its drivers or passengers as the drivers were unlicensed. Secondly, since it is registered as a technology company, vice operations,” observes Nephy Hu, delivery app was an illegal business. But Uber is forbidden by law from hiring an industry analyst at the state-backed by utilizing “legal loopholes to evade its own drivers in Taiwan. Now, drivers Market Intelligence & Consulting Insti- government inspections,” UberEats had working with the ride-hailing giant are tute (MIC). But to ensure that its business prevented the government from collecting hired by their respective car-rental firms. runs smoothly in Taiwan, Uber must pay sufficient evidence to “confirm their busi- At an April press conference in Taipei, its fines in full, he says. ness operations.” Uber Asia-Pacific regional general man- Uber has appealed the fines and is in At present, it is unclear how the con- ager Mike Brown said that the company discussion with the government about its tinued operation of UberEats will affect is “happy to bring Uber back in Taiwan,” tax bill, company executives say. Uber’s new venture here with car rental adding that it is important for Uber to Given Taiwan’s strict ride-hailing firms. adhere to local regulations. operation rules, Hu cautions that Uber Still, “if Uber is able to survive and Uber’s newfound interest in compli- may still face headwinds in Taiwan. “The flourish in compliance with the rules set ance comes after a protracted battle with chance for Uber to be shut down [again] by the Taiwanese government, the diver- regulators that saw it get slapped with cannot yet be completely ruled out, as sification brought by Uber will be a NT$830 million (about US$27 million) in there is potential for it to violate public positive thing for the Taiwanese licensed fines. Regulators say the company must transportation regulations,” he says. rental-car market and may force taxi also pay NT$50 million (US$1.64 mil- Meanwhile, Uber’s UberEats food- operators or individual taxi drivers to lion) in taxes for 2015. delivery service remains a point of upgrade their services,” says MIC’s Hu. “As far as the regulations are con- contention with local authorities. In a cerned, the Taiwanese government seems February statement, the Director-Gen- — By Matthew Fulco to be okay with Uber’s change in ser- eral of Highways (DGH) said the meal-

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wat competence o taiwan taents nee o oo obs

BY WILLIAM ZYZO

hen I arrived in a vibrant labor. There was nothing unusual about labor-intensive jobs in Taiwan, and for Taipei at the end of 1990, that decision. To stay competitive, busi- social and economic reasons, the few W the young professionals I nesses always look for ways to lower labor-intensive jobs that are available met were upwardly mobile and full of costs, and as Taiwan’s labor cost went are deemed unattractive and unaccept- hope. Learning English was all the rage, up, companies here inevitably sought able by most of the local population. and they diligently studied English in cheaper labor elsewhere. For domestic job-seekers that leaves their spare time. For labor-intensive jobs that could office work as the main option for Since arriving in Taiwan, I have been not be offshored – jobs such as taking employment. Nearly all these jobs, a teacher, trainer, coach, and consultant. care of the elderly, doing housework, however, require specialized knowledge, These jobs have given me a front-row and waiting on tables – Taiwan began training, or certification – jobs such as view on employment and employability, importing labor, mainly from the Phil- accounting, law, medicine, and soft- especially in multinational corpora- ippines, Indonesia, and Vietnam. That ware programming. Depending on the tions. All in all, I have spent more than these jobs are largely performed by nature of the job they aspire to, people 30,000 hours training professionals in people from less prosperous countries may spend between four and ten years entry-level jobs and coaching CEOs in is also a reflection of how the global acquiring the necessary knowledge, charge of thousands of people. I have economy works. Those who grew up in experience, and certification. I have watched these professionals move up or prosperous times in Taiwan find such grouped these specializations in Figure be squeezed out – some unable to ﬁnd a labor-intensive work unappealing. 1 under three broad categories: eco- job again. As a result, there are now fewer nomic, scientiﬁc, and humanities. The optimism and prosperity that I initially found so attractive about Taipei now seems to be under threat – Fig.1 Examples of specializations universities provide a threat coming from the nature of the jobs available in Taiwan and the competence needed to do those jobs. In this ECONOMY- PEOPLE- article, I will point out the source of the Business administration Philosophy Accounting RELATED RELATED Psychology problem with employability and then Finance Literature offer modest suggestions for what can Human resources Art and design Marketing be done about it. Sociology Sales Anthropology Let’s begin by looking at the nature Logistics Religion SCIENCE- of available jobs. As Taiwan’s prosperity Information technology ... Law RELATED rose during the 70s, 80s, and 90s, so did ... the wages of its workers. When wages reached a tipping point, businesses in Programming Taiwan found it more cost-effective Medicine Mechanical engineering to gradually move the work to China, Chemical engineering Vietnam, Indonesia, Thailand, Cam- Mathematics ... bodia, and other places with cheaper

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Given how the nature of office jobs Fig.2 Worker Tasks in the U.S. Economy, 1960 − 2009 has changed in recent decades, changes All Education Groups are also needed in the way we educate

and otherwise prepare people for those 70 jobs. Think about how most subjects are taught in school. If you are from Taiwan, for example, reflect on how 60 you learned English in class. Most likely you were asked to memorize vocabulary and grammar rules, listen to recorded conversations (if you were lucky), and 50 then take standardized tests based on what you read, heard, and memorized – instead of demonstrating that you could 40 use English to solve real problems in real situations, which is what English is needed for at work. 30 That’s the first problem with how Input in Percentiles of 1960 Distribution Mean Task 1960 1970 1980 1990 2000 2010 students are being prepared to perform Non−Routine Analytical Non−Routine Interpersonal office jobs. Instead of being prepared Non−Routine Manual Routine Cognitive Routine Manual to perform the tasks they will face at work, they are being prepared to pass standardized tests. Secondly, Taiwan students are using The third problem, which is still and buying products. the same books, same learning methods, nascent, is the automation of well- Consequently, the majority of the and same tests as their counterparts in defined, routine cognitive tasks. As office jobs available in Taiwan will be other countries. When these students machine-learning algorithms mature, undefined and non-routine in nature. graduate, they find that office jobs tend many well-defined, routine cognitive What has been happening in the United to go to qualified workers in places jobs that people perform today will be States will most likely transpire in where the labor cost is the cheapest. For taken over by software at a fraction of Taiwan as well. A study conducted by example, many multinational compa- the cost. In fact, it is happening already. the Massachusetts Institute of Tech- nies in Taiwan offshore their call-center Most Taiwan citizens prefer using nology (MIT) in 2013 found that (as jobs to China. The same is true with eGate instead of dealing with human shown in Figure 2) among the five types accounting, customer support, coding, immigration officers, and consumers of tasks performed by workers – rou- and other jobs that do not need to be increasingly prefer going online for tine manual, routine cognitive, non- performed locally. booking flights, reserving hotel rooms, routine manual, non-routine analytical,

Fig.3 Net Perceptions of Human Resources in Taiwan - 2017

Hard-working Very trustworthy Extremely well-educated Easy to develop/train Very loyal Highly productive High degree of Emotional Intelligence (EQ) Well-rounded Easy to retain Easy to recruit Good English-language skills (if required) Shows great deal of initiative Innovative Of ‘world-class’ standard Creative

souce amcam taipei 2017 business cimate suey -40 -20 0.0 20 40 60 80 100 120

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and non-routine interpersonal – growth Fig.4 Innovating through collaboration between 1960 and 2009 occurred in only two categories: non-routine analytical and non-routine interpersonal. Business model redesign Business process redesign A separate study by McKinsey & Leadership competency redefinition Company, published in January 2017, ... concludes that jobs that are least likely to be automated are 1) Managing and Business administration Philosophy developing people, 2) Applying exper- Accounting innovation Psychology Finance BUSINESS PEOPLE Literature tise in planning, decision-making, and Human resources NON- Art creative tasks, and 3) Interfacing with Marketing ROUTINE Sociology COGNITIVE Sales Anthropology stakeholders. WORK Logistics ... In other words, the McKinsey & Information technology innovation innovation Company report reaches the same con- Law ... clusion as the MIT study. Managing TECHNOLOGY and developing people and interfacing with stakeholders means the same as Manufacturing technology Visual communication “non-routine interpersonal tasks,” and Manufacturing process Programming User interface design applying expertise in planning, decision- Rapid prototyping Electronics Aesthetic form design ... Engineering ... making, and creative tasks, in essence, Mechanical engineering means the same as “non-routine analyt- Chemical engineering ical tasks.” ... That gives us a fairly reasonable idea of the kinds of employment available to sonal in nature, we need to prepare our people have related to Taiwan human people residing in Taiwan. Labor-inten- children early for these jobs. Schools resources: lack of initiative, innovation, sive jobs are fewer and fewer, and those will need to shift their focus from indi- and creativity. Design thinking fosters that are available will be unappealing vidual learning to peer-based learning, collaboration – as shown in Figure 4. in nature. Among office work, jobs that and the way we evaluate students will You can find more information about can be offshored will move to cheaper need to be changed. Instead of giving design thinking at https://dschool.stan- labor markets, and in time other well- each individual student a score, eval- ford.edu. defined, routine jobs will be automated. uations will become team-based, and Finally, learning should be seen as Among the remaining office jobs, the knowledge-based evaluations will a life-long process, the way breathing majority will be non-routine in nature. become learning-based. is a process. We are not done with They will require creativity and inno- As an example, the teacher could breathing in the morning and then head vation as well as emotional and social divide the students randomly into off to work. Just as we keep breathing intelligence – areas in which the Taiwan groups, asking each group to research throughout the day, we need to create workforce tends to be the weakest, a particular subject as a team and then systems and processes at work where as shown in the annual Business Cli- present the findings to the class. Each we are continuously learning. The very mate Survey conducted by AmCham team should be evaluated based not nature of non-routine jobs demands Taipei. Over many years, the survey only on what they accomplished but continuous learning. The best way to has consistently shown that managers also what they learned from others and accomplish it is to gradually change the find Taiwan’s human resources lacking their feedback. Peer-based learning will organizational management framework in the competencies most needed for foster the development of non-routine, from the current command-and-control performing non-routine analytical interpersonal learning – something that to a coach-and-collaborate framework and non-routine interpersonal tasks, is missing in the way learning is cur- that relies on continuous feedback, including creativity and innovation, rently structured in the schools. learning, and adjustment. showing initiative, and being able to For university students, in addition compete at an international level. to each person acquiring specialized As seen in the survey results shown knowledge, a “design-thinking”-based in Figure 3, despite being highly edu- framework can be used to encourage cated, trustworthy, and hard-working, collaboration between different dis- — William Zyzo is an executive Taiwanese people lack the very compe- ciplines. Stanford University already coach with multinational clients in tencies the available jobs require. has a successful program that has been Taiwan, Hong Kong, Singapore, South tried and tested. What universities in Korea, and China. He is also Advisor So what can be done? Taiwan need is to find a way to imple- to AmCham Taipei’s Advance Learning ment it locally. Design-thinking-based Lab and Managing Director of Z&A First of all, as most work will be learning will allow us to address the Knowledge Solutions. He can be con- non-routine, analytical, and interper- three major concerns that business- tacted at [email protected].

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5 training.indd 43 2017/5/4 1:14:59 PM ADVERTORIAL

Steady Promotion of Taoyuan Aerotropolis Project

mid a flurry of announced abuse of power, illegal land speculation, major infrastructure proj- and insider trading. A ects, the Taoyuan Aerotropolis Because of the project’s vast scale, stands out for its scale and boldness. it will have broad impact on numer- Touted as the largest national infra- ous stakeholders. Mayor Cheng has structure project since the Ten Major therefore stressed that the principle of Infrastructure Projects of the 1970s Democratic Participation is an integral Chairman Huang that catapulted Taiwan into the ranks part of the decision-making process for of major industrial economies, the the Aerotropolis. The door has been island’s geographic advantages and Aerotropolis is a planned transporta- open for both technical experts and industrial and technological capabili- tion, logistics, industrial, and residential average citizens to participate in what ties to create a logistics, commercial, city that will take up 4,687 hectares, the Aerotropolis project organizers call residential, and technological hub for surrounding and encompassing the “whole community public hearings” the Asia Pacific region. Upon comple- existing 1,223-hectare Taiwan Taoyuan designed to allow opinions on all sides tion, the Aerotropolis is expected to International Airport. to be fully expressed and discussed. create 200,000 to 300,000 new jobs, The Aerotropolis project was orig- The Aerotropolis will also employ generate annual revenues of NT$2.3 inally conceived nearly three decades the most technologically advanced trillion (US$75.4 billion), accommodate ago, and was formally announced in green energy and smart city solutions 60 million passengers and 4.5 million 2012 with the launch of the Aerotropo- to ensure that the project meets the TEUs of container cargo a year, and lis Action Plan by the Executive Yuan. principle of Eco-Development under register total investment of NT$500 The plan was formally accepted by the the guidelines of “three lows and one billion (US$16.4 billion) in aviation and Construction and Planning Administra- high” – low energy consumption, low non-aviation related industries. tion under the Ministry of the Interior pollution, and low water usage, along The Aerotropolis will consist of in 2014, and currently is undergoing a with high added value. “Low carbon five dedicated zones: an Administra- review of its urban-planning arrange- and the use of fewer resources will tion and Business Service Zone, which ments and land acquisition by sections. be the foundation for an eco-friendly will include the provision of interna- Huang Shih-cho, the project’s Aerotropolis,” says Huang. tional financial services; a Passenger new chairman, says that during the In addition, the Aerotropolis will Transportation and Retail Zone that administration of the previous county play a key role in the Asia·Silicon Valley will include areas for MICE facilities, government the Aerotropolis suffered Development plan, one of the 5+2 Inno- Integrated Recreation, and Inter- from adverse publicity regarding forced vative Industries being promoted in national Medical Services; a Green relocations, the prospect of added cooperation between by the Taoyuan Innovation Zone featuring areas for pollution, and allegations of corruption authorities and Taiwan’s central govern- Aircraft and Aviation, Biotechnol- in land acquisition. To overcome these ment. The program aims to foster ogy, Cloud Computing, Green Energy, criticisms, incumbent Taoyuan City an innovation and entrepreneurship and Cultural and Creative Industries; Mayor Cheng Wen-tsan has vowed ecosystem particularly related to the a LOHAS Residential Zone with areas that the Aerotropolis will be developed Internet of Things (IoT), and Taoyuan for Research, Exhibition and Living according to the following 5 Principles: Aerotropolis, in coordination with Facilities; and a Logistics and Trading “Public Transparency,” “Democratic Taoyuan, is planning to build the “Asia Zone that includes areas for Interna- Participation,” “Eco Development,” Innovation R & D Talent Exchange tional Logistics. “Public Interest,” and “Introduction of Center.” This center will provide The Aerotropolis project is not Industries.” research and test beds for budding only ambitious in concept, but enjoys Transparency is vital to safeguard- entrepreneurs from Taiwan and around a strategic location that brings some ing the Public Interest. Noting that Asia, in close contact and coordination clear advantages. Taiwan is on aver- transparency and open communica- with Silicon Valley, enabling technology age less than three hours away by air tion are the keys to gaining public trust, testing, fundraising, and eventually, the from nearly all major East and South- Chairman Huang adds that transpar- “Asian Youth Innovation IPO Center” east Asian cities, making it a natural ency regarding all aspects of the project, as the goal. choice for international shipping and including land deals and investment In accordance with the princi- logistics as well as international confer- approvals, will reduce unnecessary ple of Introduction of Industries, the ences and events across the Asia Pacific disputes and eliminate allegations of Aerotropolis will seek to leverage the region. The airport’s Third Terminal

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and Third Runway projects, which have as easy access to the Port of Taipei, will dential areas will be eco-friendly and been approved and absorbed into the make the Aerotropolis well-suited to comfortable, and the entire complex Aerotropolis project, will tremendously be a major logistics and transshipment will be saturated in Smart City technol- expand the capacity of the airport from hub, including Free Trade areas where ogy to ensure that the Aerotropolis runs today’s 40-plus million passengers annu- light manufacturing can be performed, smoothly and conveniently. ally to well over 60 million by 2025. enabling the Aerotropolis to become a Taiwan is making huge strides to In addition, the Aerotropolis in the high-added-value industrial zone. upgrade and advance its position in future will include multiple tourist facil- The Aerotropolis will also include the Asia Pacific region and the world. ities, such as hotels, conference centers, huge investments in ground transpor- Together with the government’s 5+2 shopping malls, and even a theme tation, such as an extension of green Industrial Innovation program and park, to attract both casual visitors line to the existing Airport MRT and the Forward Looking Infrastructure and MICE-related (meetings, incentive, roadways that will one day cater to Development program, the Aerotropo- conferences, and exhibitions) travelers. automated electric vehicles. In keeping lis will serve as a launching pad into The cargo and logistics zones, as well with the ideals of LOHAS, the resi- Taiwan’s future.

的規動動的的機的機會動的的會；會的的會；機意；；的不的的核到的減不的不到的會動的機規會的的不；機的的的的會的意的會會的會動會動的的的的的碳減的的動的的機動的的規會的的的動的的

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TAIPEI PREPARING FOR ITS uniesiae moment

te basetba staium et an tennis cente potos coutesy o TAIPEI UNIVERSIADE.

The 12-day competition in August will be largest sporting event ever hosted in Taiwan.

BY CHRIS HORTON

arely does Taiwan have a Universiade, a name coined by com- tors in Taiwan to view a high level of moment to bask in the inter- bining the words “university” and athletic competition. Roughly half of R national spotlight, but a major “Olympiad,” has been organized by the Olympic medalists have previously par- such opportunity is coming this summer. Swiss-based International University ticipated in a Universiade, notes You From August 19 to 30, Taipei and Sports Federation (FISU) every other Shih-Ming, deputy finance commis- neighboring cities will host the 29th year since 1959. The Summer Univer- sioner of the Taipei city government, Summer Universiade. Given that siade, which ranks as the second-largest who is serving as deputy CEO of Tai- Taiwan inhabits a diplomatic no- multisport event in the world, exceeded pei’s Universiade organizing committee. man’s-land, this will be the biggest only by only the Summer Olympics, will Speaking at an Amcham Taipei lun- international event it has ever hosted, be the ﬁrst large-scale international ath- cheon on March 30, You described the offering a chance to raise Taipei’s proﬁle letic competition that Taiwan has ever extensive efforts the organizing com- as a global city and enhance Taiwan’s hosted. mittee has made to ensure the success of reputation as a tourist destination. When Taipei Mayor Ko Wen-je the games, as well as to provide a legacy To appreciate how rarely Taiwan gets opens the games in August, over that will last beyond this year’s event. to host such occasions, consider that 12,000 athletes, coaches, and staff from In November 2011, FISU announced previous contenders for the biggest inter- 145 countries are expected to be on that its decision to award the 2017 national events held here include the hand for competition in 22 sports cat- Universiade to Taipei, which was com- 2010 Taipei International Flora Expo, egories, according to the organizers. peting against Brasilia, Brazil for the 1948 Taiwan Province Expo, and – That’s even more than the total partic- hosting rights. Given that another going back to the Japanese colonial era ipants in last year’s Summer Olympics Brazilian city, Rio de Janeiro, was when Taipei was known as Taihoku – in Rio de Janeiro. preparing to host the 2016 Summer the Taiwan Exhibition of 1935. The Universiade will enable specta- Olympics, Taipei’s successful candidacy

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was far from guaranteed, You says. duck, and glutinous rice balls in soup, organizing committee officials, gov- “Brasilia was a very strong candidate,” athletes will have a wide selection of ernment leaders, and the American he notes. “We were lucky to win the international, halal, vegetarian, and Institute in Taiwan. After inspecting the rights to host this event.” vegan eating options from which to different venues, he says he was highly Taipei then put together a staff of choose. impressed with the level of organization more than 600 personnel to work on and preparedness. the project, most of them full-time. Everything on schedule “It’s amazing to me that Taiwan Their objective is to ensure that this has not hosted any major interna- summer’s Universiade goes off without This past March, Summer Univer- tional event before, as it has great a hitch, in hope that a successful event siade director Marc Vandenplas led an infrastructure in place to pull this off will lead to similar opportunities in the 11-member delegation to Taiwan to successfully,” Hawkinson says. “This future. “We want to demonstrate to the tour the Athletes’ Village and competi- will be their greatest challenge ever, and world that Taipei has the capability to tion venues to ensure that all facilities I know they will be prepared and it will host large events like this,” You says. would be ready for opening day. Also be a huge success.” It is no small task. All told, the 2017 discussed were budgetary matters, Hawkinson predicts that Taiwan will Universiade will require 79 venues for plans for the opening and closing cer- also be among the top medal winners competition and training. The majority emonies, and logistical details such this year, along with Team USA and of these facilities are in Taipei and New as the catering and interpretation ser- competitors from Russia, China, Japan, Taipei City, but some are as far away as vices. Vandenplas publicly praised the and South Korea. He considers Taiwan Taoyuan, Hsinchu City, and Hsinchu organizing committee for both its prep- as likely to excel in baseball, women’s County. Fourteen universities across aration and its candor, which he said basketball, and martial arts, while Team northern Taiwan are involved in this exceeded that of previous hosts. USA is strongest in swimming and collective effort, both as venues and Many other visitors have been in basketball. You adds that he expects sources of volunteers. and out of Taiwan in recent months Taiwan to be particularly competitive in More than US$100 million has been to work on preparations for August’s badminton and weightlifting. spent on refurbishing and upgrades events. Among them has been Nels The foreign athletes coming to for the 38 competition venues and 41 Hawkinson, deputy head of delega- Taiwan – and their friends, family, and training facilities, including work on 10 tion for Team USA. This year will be supporters accompanying them – are soccer fields and a revamped Tianmu Hawkinson’s fourth Universiade – he likely to have many questions regarding Baseball Stadium, which received an previously was in charge of all logis- food, language, local culture, and places NT$120 million facelift. tics for the 2011 games in Shenzhen, to go and things to see, Hawkinson says. There has also been construction of China, as well as the 2013 games in This is where Taiwan’s extensive support new facilities that will be available for Kazan, Russia and the 2015 games in preparations will hopefully be helpful. use after the Universiade. One example Gwangju, South Korea. Taipei Universiade’s main opera- is the new Taipei City Tennis Center Taiwan’s organizing committee tion center will be located at Taipei on Minquan East Road, which was has had several opportunities to see Arena, but for athletes the main inter- built on the grounds of a closed pri- first-hand what is involved in hosting face with the organizing committee mary school. The center has a seating a Universiade. It sent delegations to will be the 18,000 volunteers who have capacity of 15,000, and it is hoped that observe the Universiades held two years been enlisted to help ensure everything after the curtain falls on this year’s Uni- ago in South Korea and four years ago goes smoothly. Among these volunteers versiade it will be able to host both ATP in Russia. are 11,600 Taiwanese students, 6,000 and WTA tennis tournaments. Hawkinson has made four trips to other members of the local community, The more than 11,000 athletes will Taiwan in the past year to meet with and nearly 300 international volunteers be housed at the Athletes’ Village at Linkou. The location is critical, as FISU rules mandate that the Athletes’ Village be located no more than 60 minutes from all competition venues. You notes that special consideration went into planning the village, including easy- to-overlook details such as the need to provide longer beds for the tall basketball and volleyball players. Various dietary requirements were also given attention when deciding the village’s dining hall menu. In addition to high- lighting traditional Taiwanese dishes such as xiaolongbao dumplings, roast TRAINING EXERCISE — Police, firefighters, and military units will be mobilized for any emergencies. poto taipei city oenment

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residing in Taiwan. including the provision of increased Health and safety are also important green space and walking/cycling paths. issues for international events such as “All of these things, in addition to these, and the organizing committee has a successful Universiade event, will worked to make sure that crucial infra- certainly propel the attitude of living structure and measures are in place for healthy further along,” says the head of any potential problems that arise, from operations for Anytime Fitness Taiwan, a sprained ankle to a terrorist attack. who goes by the name of Mr. DK. “I A total of 39 designated hospitals love exercise and playing outside, and across northern Taiwan will serve the for those reasons Taiwan is a great games, offering medical services, sports place to live.” physiotherapy, and even Traditional An additional benefit for Taiwan Chinese Medicine treatments such as from the Universiade will be an increase cupping, which received global atten- Taipei Mayor Ko Wen-je during his temple in the quantity of public housing, which tour asking for good weather in August. tion at the Olympics in Rio courtesy of is in short supply here. Public housing swimmer Michael Phelps. poto taipei city oenment currently accounts for only 0.08% Besides being a hot month, August percent of Taiwan’s housing supply, also has the potential to bring destruc- immediate of these benefits will be the compared with 5% in the United States tive and disruptive typhoons. While opportunity to see world-class athletes and 29% in Hong Kong. After the Uni- medical staff will be available for ath- – including future Olympic champions – versiade has ended, the Athletes’ Village letes exhibiting signs of heat-related compete in Taiwan. will be converted into public housing. problems – and Taipower is working to Universiade tickets will go on sale The event will leave northern make sure that there will be sufficient in June, with competition tickets priced Taiwan more wired than before, as electricity for all the air-conditioning at NT$200 to NT$300 for four days more than 4,900 new Wifi hotspots are units in the Athletes’ Village – there is of events, You said. Opening cere- being installed in preparation for the little any government can do about the mony tickets will be priced higher games. International tourism to Taiwan weather. Nevertheless, Mayor Ko vis- at NT$1,000 for regular seats and – which set a new record with more ited temples around Taipei in January, NT$10,000 for VIP seating. All told, than 10.7 million visitors last year – making offerings and asking the gods there will be 750,000 tickets available, is also expected to receive a welcome for good weather during the games. he said, expressing his hope that local boost, according to Cheng Ing-hui, Security planning has been a top pri- and foreign businesses operating in deputy director of the Taiwan Tourism ority for the government. On April 15, Taiwan will purchase tickets in bulk for Bureau’s international section. Besides the Office of Homeland Security under their employees and encourage atten- the athletes themselves, many of their the Executive Yuan said that in the dance to promote the success of the relatives and classmates will come to event of a major security breach or ter- games. Taiwan for the competition. rorist attack during the Universiade, an As noted in the international media, “We hope these participants and vis- emergency response mechanism will be Olympic host cities in recent years have itors from all over the world will use activated. A first-tier response center lost quite a bit of money in putting on their time in Taiwan after their compe- will be headed by the Vice Premier, the event, and the expensive stadiums tition to explore both northern Taiwan while a second-tier response center will and other facilities that were built often and further afield,” Cheng said. “I’m be led by the Minister of the Interior. saw little use once the games were over. confident that if they do, they’ll be Numerous rehearsals coordinating Universiade’s smaller size and more moved by the friendliness and helpful military, police, and medical units have distributed approach to competition attitude of the Taiwanese people, and been held in recent months, including a venues are expected not only to avoid return home with a good impression simulated hostage negotiation situation those problems but in fact to create new that makes them want to return again involving the buses that will be used to or improved facilities that will benefit in the future. It should have an all- transport athletes. Drills have featured universities, schools, and communities around positive impact on our country’s the use of hardware ranging in size for years to come. international tourism market.” from flash grenades to Black Hawk heli- An example is Taipei’s Heping Ele- For Taiwan, which has learned to copters. mentary School, which will gain a new live with being almost invisible inter- gymnasium and basketball court with nationally, Universiade appears to be a “For You, For Youth” seating for 7,000. Developed with sus- one-of-a-kind opportunity to raise its tainability in mind, the facility has been profile. Noting the unifying power of The motto for the Taipei Universiade equipped with smart green features sport, Hawkinson expresses confidence 2017 is “For You, For Youth,” implying including a rain-collecting roof. that Taiwan will rise to the occasion. that the benefits of the event will be One of the goals of the organizing “Taiwan needs to – and will – take enjoyed not only by the athletes, but committee is transforming Taipei into advantage of this special opportunity,” by residents of the host cities. The most a greener and more sustainable city, he says.

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nese, and Chinese. Those who sign up for a tour need not worry about mistak- Taiwan Tour Bus: The enly buying a ticket for the wrong destination or missing their stop. The Taiwan Tour Bus system (www. Best Way to Explore taiwantourbus.com.tw) offers over 100 options, most of which last a full day. In every case, the price includes all admis- Taiwan’s Northeast sion charges and insurance. Very often, it also covers a delicious lunch featuring local delicacies. Gratuities are entirely n their haste to get from the zone, Taiwan’s Tourism Bureau has for optional. skyscrapers of Taipei to the bucolic several years overseen a selection of Yilan’s most famous geographical Ibackwaters of Hualien and Taitung, foreigner-friendly bus expeditions called feature is the Lanyang Plain. Named many visitors rush through Yilan by Taiwan Tour Bus. after the Lanyang River, the plain is a train or bus. Yet this county in Taiwan’s These tours enhance the visitor fertile flatland where rice, watermelons, northeast offers an intriguing mix of experience by providing not only trans- and spring onions grow particularly natural and cultural attractions. portation (including pick-up from well. But that is not to say the county Since the completion of Freeway major hotels, railway stations, and lacks interesting topography. Well over 5 and the world’s fifth-longest road other points), but also guides who half of Yilan is mountainous, and in the tunnel in 2006, driving time from introduce local sights in English, Japa- heart of these wooded uplands lies the central Taipei to the county’s princi- 12,631-hectare Taipingshan National pal city – also called Yilan – is seldom Forest Recreation Area. more than an hour. Every weekend, For decades a key part of Taiwan’s thousands of Taipei residents, as well once-mighty lumber industry, Tai- as a good number of international visi- pingshan is situated between 500 and tors, board buses to Yilan, and head to 2,000 meters above sea level. The plant the hot springs at Jiaoxi, the Lanyang and tree species here are typical of Museum, or the National Center for subtropical, warm-temperate and cool- Traditional Arts. temperate ecosystems. This rich foliage Some foreign visitors, however, are nurtures a stunning array of birds, reluctant to venture beyond Taipei by beetles, and butterflies. themselves. It is true, after all, that Much of the logging equipment outside the capital fewer people speak brought here has been preserved, to English and public transportation is not the delight of industrial-heritage fanat- quite so convenient. To help tourists ics. Most visitors take a ride on what who venture outside the Taipei comfort is called the “Bong Bong Train,” a

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Sailing around the island requires wood was submerged to prevent it from a lot less paperwork, and is a high- warping or cracking in Taiwan’s hot light of another one-day Taiwan Tour summers. More than a dozen office and Bus outing, the Guishan Island Dolphin dormitory buildings date from Japan’s Watching and Seafood Tour. 1895-1945 colonial occupation of Priced at NT$1,900 per adult (chil- Taiwan, and exhibits inside these highly dren aged 2 to 12 pay NT$1,200), photogenic structures depict the tough the tour begins with a look around conditions in which loggers lived. Lanyang Museum, a striking piece of Luodong Forestry Culture Park is architecture filled with historical and within walking distance of the town’s geographical information about the railway station. A bit further from region. After lunch at Wushi Harbor, the heart of Luodong, the sprawling excursionists board a boat and head out National Center for Traditional Arts into the Pacific. Almost everyone gets introduces a range of local art forms, to see dolphins, and whales sometimes including Taiwanese opera (which first put in an appearance. Back on land emerged in Yilan County) and budaixi. about three hours later, the tour makes The latter literally means “cloth-bag quick stops for taro ice and cake before drama” but “hand puppetry” is a better returning to the capital. translation. narrow-gauge railroad originally built Those who feel Yilan should not Elsewhere in the county, but not to transport timber, enabling them to be rushed can join the Yilan Cultural on any Taiwan Tour Bus itinerary, is enjoy close-up views of pristine glades Two-Day Tour (NT$5,300 per person Taiwan’s foremost whisky producer, as well as mountain panoramas. on weekdays, NT$5,800 on weekends, King Car Kavalan Distillery. Even for tourists willing to drive, including a night’s stay in the three-star Since hitting the market in 2008, getting to Taipingshan can be tiring. It Kavalan Hotel in Luodong). The itiner- Kavalan has astonished whisky aficio- is best, therefore, to let a professional ary satisfies gourmands and outdoors nados across the globe and scooped handle the driving by joining the one- types as well as culture vultures. numerous accolades. The malt is day Taiwan Tour Bus Yilan Taipingshan Of special interest are the Luodong imported from Scotland and Finland, Nature Tour (NT$1,400 per person on Forestry Culture Park and the National but every other stage of the produc- weekends and holidays, NT$1,200 per Center for Traditional Arts. tion process is done here. The distillery person on weekdays; starts and ends in The forestry park is where many of is open to the public, and admission is Taipei). This includes lunch and admis- the trees logged at Taipingshan were free. If you are driving, do bear in mind sion to the forest recreation area (which processed. Bilingual information boards that Taiwan has one of the world’s for adults is between NT$150 and around the site go well beyond the strictest drunk-driving laws. NT$200) but not the Bong Bong Train. history of logging in Taiwan, covering For all kinds of travel informa- People more interested in the oceans topics such as aquatic plants and the tion about Taiwan, visit the Tourism that surround Taiwan than the moun- local dragonfly and amphibian popula- Bureau’s website (www.taiwan.net.tw), tains dominating the interior will also tions. or call the 24-hour tourist information find Yilan much to their liking. Frogs and insects thrive in the park’s hotline 0800-011-765 (toll free within Guishan Island is just 12 kilometers 5.6-hectare log pond, which is where Taiwan). offshore but uninhabited; the Chinese name means “turtle mountain,” and the islet does indeed resemble a turtle. Between 1977 – when the small civilian population was relocated – and 2000, the only humans who set foot on the island were soldiers. To protect its delicate ecology, only those who obtain permits in advance are allowed on the island. Applying for these is best done with the help of a local tour company. For more information about the island and the nearby coastline, see the website of the North- east and Yilan Coast National Scenic Area (www.necoast-nsa.gov.tw).

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