Taiwan Today

The Taoyuan Aerotropolis, one of the i-Taiwan 12 Projects, is set to bolster Taiwan’s economic development and international competitiveness.

Airports in the 21st century no longer merely fulfill the functional role of providing transportation, but in many countries are also expected to play a role in driving national economic growth. The foremost example is the rise of the aerotropolis, a new urban model that places airports at a central location with a city growing around them to facilitate the flow of people, goods, capital, information and technology to the global marketplace. The model has further elevated the importance of airports and is reshaping the way people live and do business.

Taiwan is among the many countries to have prioritized an aerotropolis plan as one of its schemes for economic development. In fact, the Taoyuan Aerotropolis project is one of the i-Taiwan 12 Projects—12 major public construction schemes designed to regenerate Taiwan’s economy—promoted since 2008 by the administration of President Ma Ying-jeou. The total budget for the i-Taiwan 12 Projects will amount to nearly NT$4 trillion (US$133 billion) through 2016, while the planned investment for the airport city project is NT$1.2 trillion (US$40 billion). The project is expected to solicit a further NT$1.2 trillion in private investment, generate an annual production value of NT$600 billion (US$20 billion) and create some 80,000 job opportunities once it is completed in 2021.

Wu Chih-yang, magistrate of Taoyuan County, northern Taiwan, says the rapid pace of globalization is ushering in an entirely new phase for airport development. Given its central location for aviation transportation throughout North and Southeast Asia, Taiwan Taoyuan International Airport has substantial potential as a transshipment hub for the Asia-Pacific region, Wu says.

Asian Hub

In terms of average flying time, a measure used to indicate the centrality of an airport, the distance between Taiwan and seven major cities in the western Pacific—Hong Kong, Shanghai, Manila, Seoul, Tokyo, Singapore and Sydney—compares favorably. The airport at Taoyuan averages 2.55 hours, considerably less than its counterparts in Hong Kong, Singapore and Shanghai at 3.05 hours, 3.25 hours and 4.55 hours respectively, according to the Cabinet-level Council of Economic Planning and Development (CEPD).

The Taoyuan County Government, Wu says, has mapped out the Taoyuan Aerotropolis Regional Plan with the aim of integrating land resources, population, businesses, industries and transportation around the airport. “The aerotropolis plan will be an effective approach for our nation to confront the challenges of globalization,” Wu says. “Our ultimate goal is to create a prosperous, well-rounded and ecologically friendly aerotropolis that connects Taiwan to the world.”

Lee Yung-jaan, director-general of Taoyuan County Government’s Urban and Rural Development Bureau, says the planning for Taoyuan Aerotropolis is based on a “fried egg” analogy developed by the Ministry of Transportation and Communications (MOTC). The “egg yolk” represents the central cluster of the airport, a special zone and a free trade zone, all administered by the MOTC, while the “egg white” signifies the surrounding areas and related businesses that will largely be developed by the Taoyuan County Government, Lee explains.

“Currently, the Taoyuan Aerotropolis is the most important development plan for Taoyuan County. It’ll bring abundant business opportunities to the county and the island as a whole,” Lee says. “Besides being situated in a prime location in the science and technology industrial corridors of northern Taiwan, the Taoyuan Aerotropolis plan has gained a competitive advantage since the establishment of direct flights across the Taiwan Strait.”

The overall planning for the aerotropolis integrates some 6,150 hectares including land surrounding Taoyuan International Airport in Zhongli City and Guishan, Fuxing, Dayuan and Luzhu townships. It will allocate space for airport and aviation-related businesses, trade exhibitions and the production and marketing of local farm produce, as well as residential and recreational areas.

Lee says that his agency completed its regional plan for the Taoyuan Aerotropolis in April 2010, which included a comprehensive outline of the project’s objectives, layout and development guidelines, as well as target industries, businesses and services. The master plan for the project passed a screening by the CEPD in December 2010 and is awaiting approval by the Executive Yuan. Once ratified by the Cabinet, the rezoning of farmland for industrial use is expected to proceed in line with urban planning guidelines.

Still, Lee notes that land acquisition is likely to pose the biggest challenge for the implementation of the project, citing the complex legal issues involved in rezoning. He suggests that the central government take charge of the whole project to ensure the overall development of the area.

In the meantime, as the core of the aerotropolis project, Taiwan Taoyuan International Airport is undergoing reform related to its management, infrastructure and services. An important move was the establishment of the Taoyuan International Airport Corp. by the MOTC in November 2010 as a dedicated body for the management and operation of the airport. Previously, the airport was run by the MOTC’s Civil Aeronautics Administration.

Samuel Lin, president of the Taoyuan International Airport Corp., says the change of the organizational structure from an administrative authority into a business enterprise is an important one. Adopting modern business management strategies will help to upgrade the airport’s operational and service efficiency, which has become his top mission since he was appointed to head the corporation, Lin says.

Although the state-run company is still subject to the deliberations of the Legislative Yuan, it has greater flexibility in financial planning, talent recruitment and soliciting the participation of businesses, and can also cooperate with outside organizations more easily. All of these factors will make it easier for the national airport to improve both its facilities and services in its bid to beef up competitiveness.

In addition to having installed new luggage carousels and information boards, a number of infrastructure refurbishment projects for the airport’s Terminal One and its runway are underway. These include improvements to airport roadways, signs and navigation facilities, as well as widening several expressways servicing the airport from four to eight lanes. Also, the extension of the Taipei Mass Rapid Transit (MRT) system from Sanchong District, New Taipei City to the airport is slated for completion in 2013.

Working Smart

Lin says his company holds meetings every two weeks with law-enforcement authorities to enhance cooperation on issues such as customs, immigration, quarantine and security in a bid to raise operational efficiency and meet passenger needs.

In 2010, Taoyuan International Airport handled more than 25 million passengers, a growth rate of 16 percent compared with 2009, while the total volume of cargo amounted to 1.77 million tons, up 30 percent year-on-year. Both were historic highs for the airport.

Lin says that currently, the number of transit passengers at the Taoyuan airport is only 8 percent of total passenger numbers, compared with more than 30 percent recorded at the international airports in Hong Kong and Singapore. The figures indicate there is still much room for growth for Taiwan’s airport transit business, the airport president says. The airport intends to create more comfortable, well-equipped areas for transit passengers to serve this customer group better and lure more passengers to transit in Taiwan. Lin says new facilities will include areas to rest, enjoy fine dining and shop. He adds that the money passengers spend while they are waiting for flights is one of the main non-aviation revenues emphasized by international airports around the world.

Meanwhile, aviation industry manufacturers estimate worldwide passenger traffic will register average annual growth of 5.5 percent, according to Lin. Given that demand growth in the Asia-Pacific region is generally higher than the global average, the total passenger numbers at the Taoyuan airport could rise from the current 25 million to 58 million in the next 20 years, Lin says. Accordingly, the existing facilities—Terminal One and Terminal Two, which commenced operations in 1979 and 2000 respectively, will not be able to meet the projected future demand, Lin notes.

The construction of a third terminal is proposed in the MOTC’s master plan for Taoyuan Aerotropolis. Lin hopes the project can be approved quickly so that planning and infrastructure development can begin as soon as possible. He expects the launch of the new terminal to be a big boost to the airport’s operational and service efficiency.

In addition to the Taoyuan airport, the core of the aerotropolis project includes the free trade zone that has been operated by Farglory FTZ Investment Holding Co. since 2006. Farglory FTZ was one of the first of the world’s some 700 free trade zones to offer cargo, logistics and freight forwarding services, together with facilities for business operations, manufacturing, assembling and processing.

Farglory FTZ was also the island’s first free trade zone to operate “inside the border, outside customs,” a model under which cargo processed at the Taiwan facility is spared customs inspection. The free trade zone can store, load and unload cargo 24 hours a day at the clients’ convenience, while the fully automated tracking and information management systems can handle 1.2 million tons of air cargo a year, the greatest capacity in Asia, according to the operator.

Meanwhile, Chen Sung-tsao, assistant vice president of the Business Management Planning Department at Farglory FTZ, says the free trade zone offers a multitude of incentives including exemptions from business tax, customs duties, commodity tax, business income tax, port duties and trade promotion service fees, in addition to allowing the employment of foreign laborers. Neither is the zone the exclusive province of corporations as any type of business can operate a department or office there regardless of its capitalization. All of these factors enable companies to cut production costs and operate more flexibly, Chen says.

Year ’Round, Door to Door

Farglory FTZ’s operations cover import, export, transit, planeside release and express delivery businesses, with customized, door-to-door and year-’round services. In 2010, the dollar value of cargo that it dealt with accounted for 64 percent of the total amount handled at the island’s five FTZs, including four harbors in Keelung, Taipei, Taichung and Kaohsiung in northern, central and southern Taiwan, respectively. Currently, some 100 companies including 30-odd multinationals have set up bases at the free trade zone in Taoyuan.

In the aftermath of the 2008 global financial crisis, Chen says an increasing number of enterprises have asked for ocean cargo services to save on expenses. In view of this trend, Chen says his company has been working closely with the Port of Taipei in Danshui District, New Taipei City, which is within a 30-minute drive of the airport, to render integrated air and ocean cargo services.

Chen says his business group also looks favorably upon the growth potential of the greater Taoyuan County area, given the government’s active promotion of the aerotropolis project. He cites the improvements in transportation networks such as the extension of the MRT system and widening of expressways, upgrades in airport facilities, and peripheral land and infrastructure development.

Hence, besides being able to expand its free trade zone from the current 45 hectares to 290 hectares, the Farglory Group is looking to facilitate a variety of industrial clusters, as well as complete supply chains in the zone. The group is also studying other investment opportunities related to the aerotropolis project, especially housing and recreational developments.

Moreover, Chen believes that recent developments in cross-strait relations, including the Economic Cooperation Framework Agreement signed with mainland China and the launch of direct cross-strait flights, will encourage closer cooperation between enterprises on both sides. This will lead to a better division of labor and thus boost competitiveness, the Farglory official believes, as well as encourage multinationals to use Taiwan as a springboard to the mainland market.

In a 2010 annual survey conducted by Airports Council International on airport service quality, Taiwan Taoyuan International Airport was listed as the world’s fourth best airport in the category of 15–25 million passengers per annum. The ranking demonstrates the high standard of customer service achieved by the airport.

“Now that we operate as a service-oriented enterprise, we’ll make every effort to address customer needs and deliver faster, safer and more convenient transportation services,” says Taoyuan International Airport Corp. president Samuel Lin. “We believe that as long as we focus on our core business and do a good job, the various industries in the surrounding areas will thrive as well. Consequently, that will contribute to regional, as well as national, prosperity and achieve the original vision of the Taoyuan Aerotropolis project.”

Write to Kelly Her at kelly@mail.gio.gov.tw