Taiwan Today

Glyn T.H. Ing (殷之浩) is chairman of Continental Engineering Corp. (CEC), which he founded in 1945 while still in mainland China. CEC is one of Taiwan's largest construction firms, and Ing is one of the construction industry's most vocal spokesmen both locally and abroad.

Ing wears many hats, including chairman of the American Bridge Co. and the Taiwan Synthetic Rubber Corp. and honorary chairman of ACER Inc. He is also president of the Real Estate Association of the ROC. Internationally, he is president of the Confederation of International Contractors' Associations and past president of the Asia-Pacific Real Estate Fed­eration, the International Federation of Asian and Western Pacific Contractors' Associations, and the past world presi­dent of the International Real Estate Federation.

In March, Ing met with the Free China Review to discuss the current status of the construction industry in Taiwan and suggest areas in which it could be improved. Excerpts follow.

FCR: What has been the impact of the Six-Year National Development Plan on the construction industry?

Glyn T.H.Ing: Everybody is talking about the plan because it involves a huge amount of money, about US$310 billion, which is to be spent on projects that will be started within this six-year period. About 50 percent of the budget will go directly or indirectly into the construction industry.

Part of the projects involved are actu­ally the continuation of old ones already under way. But the progress on both old and new projects has often been stalled by such difficulties as land procurement, slow planning, and the arrangements for financing.

There are many other problems as well, such as the shortage of engineers, laborers, and construction materials and equipment. These would normally be extremely serious problems, but the slow progress being made on the plan mitigates these shortages for the time being.

We in the industry believe that the plan will actually take longer than six years. In fact, we believe that instead of a six-year plan, there should be a long­ term national development plan of twenty years or more--one that includes all the development required. If this is done, it would be easier to set priorities. Long-term financing could be more care­fully arranged and planning could be done on an overall basis to avoid duplications and ensure balanced development. Moreover, land could be acquired before the start of any project, which would eliminate costly delays.

The construction industry would also benefit because we could make the best use of our limited supply of human and material resources. Besides avoiding unnecessary increases in costs, construc­tion companies would be able to plan their own expansion and upgrading based upon Taiwan's long-term develop­ment needs.

FCR: What other areas besides longer-range planning should be given high priority?

Ing: The shortage of engineers and laborers is another big problem. Theoretically, at least, this should be solved by training. But that will be a long process, and we need a solution now.

The government has approved the importation of laborers from Southeast Asian countries, but no details have come out yet concerning the importation of labor from mainland China, although it has been approved in principle. Of course, many considerations need to be reviewed, but this should be considered an urgent issue. It is all right for laborers from dif­ferent countries, who speak different languages, to work here. But if the job is going to be done smoothly, we need engineers who speak Chinese and understand our cul­tural background.

As more of the six-year plan projects actually get under way, the shortage of engineers will become even more serious. When this happens, government agencies will be the ones to suffer first, because the private sector will be able to attract engi­neers away by offering higher salaries. Actually, this is already happening, and it is driving up the pay scale.

Finally, government agencies should make every effort to improve their super­ vision of construction projects. More attention must be paid to quality. But if their best engineers are hired away by the pri­vate sector, improvements in supervision will be especially difficult to achieve.

FCR: What category of engineers is in the greatest demand?

Ing: The shortage of design engi­neers is not that serious because it is easy to get outside help, including Chinese en­gineers from the United States. Much more serious is the shortage of construc­tion engineers-those who work right on the construction site-because over the past few years we haven't had too much construction work going on here. As a re­sult, not many people went into the field. Also, not many Chinese engineers here or in the United States are interested in on­ site construction work, maybe because they prefer working in an office.

When you want to get field engineers, you can't get them from the United States or Southeast Asia because of language problems and the differences in cultural background. But there are plenty of construction engineers in mainland China, and they would be able to work here with much less difficulty. I have mentioned this to people in government many times, but they still hesitate, maybe because they are worried about Communist infiltrators. But I really don't think this is a problem.

FCR: A large number of local engineers may be well trained, but they are also young and don't have much field experience. Is this a problem?

Ing: This is one of our most serious problems. Many of these engineers are very inexperienced. Nowadays, to do a job right, we need someone who has, maybe, five years of experience. But we can only find people with one or two years of experience. That affects the progress and quality of the work.

FCR: What is the general quality of construction here?

Ing: The quality of public construc­tion work is rather low, although it is improving. Actually, this is a responsibility of government agencies. If you award the projects. you have the responsibility to su­pervise. But if you are not capable of su­pervising properly, then there are problems. In order to get the proper supervision, the owner may arrange for interna­tional companies or local consulting engineering companies to handle the project construction management.

I think more attention should be given to this issue. If a government agency or private company doesn't have adequate supervisory capabilities for a construction project, then they should seek outside help. There may be some extra costs, but it will also help upgrade our construction quality.

FCR: What about subcontractors? Are their standards improving?

Ing: Government agencies should pay more attention to encouraging specialized contractors, like those in steel work, foundation work, and other areas. When contractors specialize, they really pay more attention to improving their work, and in this way their costs will also be reduced. When I talk about subcontractors, by the way, they are not necessaily that small; some of them can be quite big, as in many foreign countries.

FCR: Why has the quality and modernization of Taiwan's construction industry lagged behind places like South Korea and Japan?

Ing: For thirty years I have been complaining to the government about its policy of giving special considerations and privileges to Ret-Ser Engineering Agency [RSEA, one of the subsidiaries of the Vocational Commission for Retired Servicemen, a government-owned enter­ prise] and other government agencies. When Ret-Ser was first set up [in 1956], the government wanted to give training and employment to retired servicemen­ sort of a welfare program.

Although the government had good intentions, this interfered with the proper development of the private construction industry. Since government agencies negotiate directly with Ret-Ser and others instead of going through an open-bidding process, the firm receives all the plum projects. This procedure wastes huge amounts of taxpayers' money, because privately negotiated prices can be 30 percent higher than open-bid prices. And if private companies don't get big and im­portant projects, they can't make large capital investments in equipment and manpower, nor can they gain important construction experience.

Three decades ago, the capabilities of the private construction firms in Taiwan were second only to Japan in Asia. But now the picture is entirely different. To­ day, local construction firms are incapa­ble of handling many of the jobs that are part of the six-year plan. We now have to depend on outside help, which is unfortunate. This is a direct result of a mistaken government policy toward public construction.

FCR: Do you think the policy will change in the near future?

Ing: Because of rising public dissat­isfaction, and because of increased attention to the issue from the opposition parties in the Legislative Yuan, Ret-Ser will have to give up its special privileges. The Executive Yuan has already been asked to make Ret-Ser participate in open-bidding processes.

The private sector welcomes this change, but it also expects that all parties should compete on exactly the same basis in open-bidding procedures. If a company does not have to pay the full range of taxes, which is the case with Ret-Ser, or if the contract requirements are written in such a way that only Ret-Ser's record of major project work can qualify, then the competition will be unfair.

I don't expect that this situation will be corrected without a considerable amount of argument and negotiation. But the health of our industry depends upon correcting this policy. When you talk about free competition, it's supposed to be genuinely free. If it draws in only one or two bidders, then there is a problem.

The private sector should be allowed to hire assistance from outside. For exam­ple, if a contract is for NT$5 billion and a company can't do it alone, it should have the chance to hire help for the parts it can't handle. At least give the company an opportunity to cooperate with other local contractors or even outsiders. Then it will be able to participate in the competition, perhaps win the bid, and thereby gain more experience.

Another possibility is to call for inter­ national bids, with the stipulation that if they bid on a job, they should cooperate with local partners. Technical transfer should also be required. Otherwise, if inter­ national contractors just use local firms as helpers, then the transfer of technical and management skills won't take place, and that is what we need here. But if a local firm is a regular joint-venture member, then it will be able to understand all the steps of the construction project, and it will be able to learn. That is very important.

FCR: What would help improve the quality of the construction industry and ensure the best public infrastructure development?

Ing: Several things should be con­ sidered. One is to establish a high-level government organization-either a Min­istry of Construction or a Ministry of Pub­lic Works-to centralize all public construction. Most countries have some­ thing like this, but here it is all divided up. For example, contractors working on the Taipei mass transit system are under the supervision of the city government, the provincial government, and also partly under the central government. There isn't a single higher office with supervisory responsibility.

The government has been talking about forming a Ministry of Public Works, but I think they should enlarge that to a Ministry of Construction that would include both government and pri­vate construction. This would also in­clude housing and factories. These should all be under a powerful administration.

Also, an R&D organization should be set up to target the issues that must be addressed to improve the industry. More at­tention should be given to preparing construction contracts with reasonable conditions that are fair to both the contracting agencies and the construction firms. Other topics worth considering include setting up an arbitration system, finding ways to introduce alternative design systems to raise quality and save on construction costs, and adopting more au­tomation to save on labor.