Taiwan Today

Modern China's leaders have recognized adequate housing as an essential of happy living. Dr. Sun Yat-sen, the Repub­lic's Founding Father, specified housing as one of the four basic people's requirements in his Principle of Livelihood. In his Program of Industrialization, he spelled out a national housing program.

President Chiang Kai-shek, a faithful disciple of Dr. Sun, has been equally housing-conscious. As early as 1955, he called upon government leaders to give increased atten­tion to housing. He ranked housing as especially important to social stability in his two supplementary chapters to Dr. Sun's San Min Chu I.

Unfortunately, the eight-year war with Japan and the subsequent Communist rebellion interfered with the development of a large-scale housing program on the Chinese mainland. The real beginnings have been in Taiwan, the model province of the Republic of China. The constantly rising per capita income of the island has enabled many thousands of people to build their own houses. Aware that the lowest income groups lack the capital and the credit to acquire their own housing, the government has moved into apartment-type construction with low down payments and long-term loans.

Taiwan has nearly 13 million people and a growth rate of about 3 per cent an­nually. Even to keep up with the popula­tion would require the construction of about 75,000 units annually. Another 50,000 units are required to replace those that have reached the end of their useful life or have been destroyed by typhoon, earthquake, fire and flood.

National housing construction on Taiwan can be divided into two phases. The first was the pioneering period under the National Housing Construction Committee of the Executive Yuan. The second and present phase is that of expanded construction under the Taiwan Provincial Government.

To get the long-delayed program started, the Central Government established in May of 1954 a technical group to plan urban hous­ing. This became the National Housing Construction Committee in July of 1955. Its functions were the construction and sale of housing and demonstration housing; the screening of applications for loans, guidance, and popularization of individually financed housing; research and improvement of housing design; and study of housing regulations and recommendations. Two subcommittees had charge of housing for farmers and factory workers.

Division of Labor

The National Housing Construction Committee found itself with inadequate funds for such an ambitious program. A small number of houses was built with American aid money. In 1958, the committee was disbanded and its functions were turned over to the Taiwan Provincial Government.

In view of the importance and the com­plications of housing, the Provincial Govern­ment decided on a division of labor ap­proach, as follows:

*To the Provincial Department of Social Affairs went responsibility for overall housing policy, and for the formulation and screening of plans and projects. A National Housing Administrative Office was established with sections for planning, loans, con­struction, and finance.

*To the Bureau of Public Works went the duties of engineering and design. It has a National Housing Engineering Department.

*To the Department of Finance went the difficult assignment of finding money.

*To the Bureau of Land Administration went the responsibility for procuring, surveying, registering, and allocating sites.

*To the Supply Bureau went the job of obtaining and supplying construction materials.

*To the Bureau of Forestry Admin­istration went the obligation to supply raw lumber.

*To the Land Bank of Taiwan's National Housing Department went the manage­ment of housing funds, the signing of loan contracts, and the collection and disbursement of construction monies.

Construction and loans are under the supervision of Housing Construction Committees set up under local governments to­gether with the Land Bank of Taiwan. Com­mittees are headed by a city mayor or county magistrate and are made up of from 9 to 12 members, including chiefs of local govern­ment departments, civic leaders, and leading architects. Committees have sections for administration, engineering, sites, and financ­ing. Land Bank branches handle the funds and administer the loans.

Source of Funds

Construction funds have come from five sources:

1. The Land Value Increment Tax. The Statute for the Enforcement of the Equalization of Urban Land Rights prom­ulgated in 1954 provides for (a) assessment and declaration of land value, (b) taxation of land according to the owner's declared value, (c) compulsory purchase of the land if the value declared by the owner is lower than the assessment, and (d) taxation of the unearned increment of land value. Funds from this source are to be used for such purposes as housing and road construction. From 1959 to 1966, all of the proceeds from the land increment tax went to the housing program. Beginning in 1967, not less than 25 per cent of the tax will be spent on housing.

2. Before 1963, some American aid funds were used to finance housing constructions. Money so appropriated and not used is still held in the National Housing Fund.

3. Rentals and installment payment of principal and interest on national housing units go into the National Housing Fund after bank loans are paid off.

4. Social Welfare Fund, which comes from taxes and supports a number of welfare activities besides housing.

5. Bank loans. Demand for housing exceeds the financing capability of the Pro­vincial Government. Since 1964, the govern­ment has been borrowing money from banks to undertake housing projects. The banks charge 0.75 per cent interest monthly and some housing loans are made at 0.5 per cent interest. The difference is subsidized by the government.

Through 1965, money from all these sources totaled NT$1,337,330,117 (more than US$33 million). The largest amount, NT$600 million, came from the land value increment tax. U.S. aid supplied more than $100 million and Flood Rehabilitation Bonds NT$43 million. The rest was from loans extended by the Land Bank of Taiwan, the Central Bank of China, and the Bank of Taiwan.

Types of Loans

Five types of loans are available: general, low-cost housing, dormitory, invest­ment, and site. Details of each type are as follows:

General loans—Made to citizens in the low-income bracket, including farmers, factory workers, fishermen, and some teachers and civil servants. Applicants must be 20 or older and living with spouse, parents or children. They must have had an established residence for more than six months and need housing. Loans are not to exceed 80 per cent of construction cost. Payments are made monthly over a period of 15 years at interest of 0.5 per cent monthly.

Low-cost loans—These are for those who are registered with the government as underprivileged. Other rules are similar to those for general loans, but the down payment is only 1 per cent of the construction cost. Payments are made over a period of 20 years without interest.

Dormitory loans—These are extended to government agencies and schools to construct housing for their employees. The ap­plicants must provide the sites and loans may not exceed 20 per cent of the construction cost. Payment is in 10 years at interest of 0.75 per cent monthly.

Investment loans—These are extended to companies, civic bodies or individuals building housing for sale or rent. Loans may not exceed half of the construction cost, and if all or part of the housing is to be used for commercial purposes, the loans may not exceed 20 per cent of the construction cost. The interest rate is 0.99 per cent monthly. Two-story unit loans must be paid in three years, three-story unit loans in four years, and four-story (or higher) loans in five years. If built for rental, two-story units may be paid off in four years and three-story (or higher) units in six years. For housing involving commercial use, the maximum loan period is two years.

Site loans—These are extended on land in an approved area. Loans may not exceed 80 per cent of the assessed or owner-declared value, or 30 per cent of the construction cost. Maximum size of a site is 198 square meters (60 ping). The interest rate is 0.75 per cent and the period is five years.

Space Variation

Because of limited funds, strictly governmental housing projects have been few. Most of the housing built so far has been by private citizens with loan support from the government. However, the government has laid down regulations and sought to protect the public interest. The prescribed space for units varies from 26.4 square meters and the construction cost from NT$16,000 to NT$80,000. Types of buildings are classified as storied houses, flats, and apartments. Investment-type housing may be larger and more expensive (up to 100 square meters costing NT$120,000, or even larger and more expensive). Details of the government criteria are set forth in the accompanying table.

From 1955 to April of 1966, nearly 66,000 housing units were constructed with government loan assistance. Loans totaled NT$1,332,429,426. The peak years were 1960, when more than 18,000 units were built, and 1965, when more than 15,000 were constructed. Assuming an average of five persons per family, better housing has been provided for 330,000 individuals.

Housing also has made an important contribution to Taiwan's booming economy. General construction has been the province's fastest growing industry in recent years. An average housing unit requires 207 man-days of work. This has meant a substantial increase in employment, especially in urban areas, where it is most needed. Industries serving construction have grown and pros­pered. These include cement, steel, brick-yards, lumber suppliers, glass plants, paint makers, and so on. The demand for cement—together with exports to Vietnam—have compelled Taiwan to renew imports from Japan.

For 1966, the housing program calls for construction of 10,000 units for the citizenry in general with loans totaling NT$440 million. These other units are scheduled:

4,095 for squatters, 2,069 under the flood relocation plan, 1,100 under the typhoon damage plan, and 2,400 under the dormitory loan plan to government agencies and schools.

American Confidence

Among Taiwan housing investors are American companies. They have examined Taiwan investment conditions carefully and concluded that it is a good place to spend their money. Such investors have raised the quality of building with their insistence on good construction and that the new commu­nities serve the interests of renters and buyers. Some of the apartment projects now under construction or contemplated will have schools, markets, parking and play areas, parks, and other facilities.

Most apartment-type housing follows a set pattern of three or four-story units made of reinforced concrete. The buyer pays a set price for a given space—With the ground floor units bringing the most and the fourth floor the least. Buyers then choose their own floor plans—within the limits set by the basic construction—as well as interior finishings and decorations. Interestingly, most parti­tions are made of brick and plaster. Taiwan has a wealth of timber but most of it is in the rugged Central Mountain Range and still inaccessible. Lumber is too expensive for use in partitions.

Basic contractors maintain their own interior crews and usually do the work for the buyer. However, the latter may do part of the work himself, or employ subcontrac­tors. One reason for the reasonableness of Taiwan housing is the low cost of labor. Skilled carpenters, masons, plasterers, and other construction workers have a daily wage of around US$2 a day, which is above the semi-skilled factory level. The economic stability policies and actions of the government have kept prices down and thus dis­couraged rapid wage inflation.

Even lower middle-class housing offers the luxury of a maid's room (although it may be more of a large cupboard than a room) and bath. Maidservants in middle-class homes usually receive between US$15 and $20 a month. Foreigners may pay from $25 to $40 and be glad of the opportunity.

With all the building, the demand is far from satiated. Units now under construction for government workers and armed forces members could have been sold out a dozen times over. Lotteries are held to decide the lucky buyer of an apartment. Private contractors building for the middle class may sell out a 40-unit building before they pour the first batch of concrete. A continuing high birth rate, the accelerating move­ment from farm to city, and the increasingly high level of prosperity assure that Taiwan's housing boom will continue for a long time to come.

As everywhere else in the world, the greatest need is at the lowest income levels. With heavy military and educational ex­penses, the government lacks the funds to do all that it wishes for the less privileged. But it is trying. That is in keeping with the counsel of Sun Yat-sen, the wishes of Chiang Kai-shek, and the realization that the best defense against political and social extremes is a better life for all the people.