Taiwan Today

While Taiwan’s newest special municipalities will have access to greater resources, they will also shoulder additional responsibilities for national development.

For both locals and newcomers in Taiwan, an up-to-the-minute map showing recently mandated city and county boundary changes will soon come in handy when the time comes to travel around the island. A current map of Taiwan’s administrative borders shows two special municipalities, 18 counties and five cities, which the government defines as urban areas that have more than 500,000 people, as well as political, economic and cultural importance. All of those borders have been in place for decades. Come December 25, however, the map will be redrawn to show five special municipalities, 14 counties and just three cities. For those familiar with older maps of Taiwan, the biggest puzzlement is likely to be the disappearance of Taipei, Taichung, Tainan and Kaohsiung counties.

The mystery of the missing counties can be easily explained, however. As the year draws to a close, Taipei County will be upgraded into a new special municipality now being referred to as Xinbei City, which means New Northern City in Mandarin. Xinbei City is widely being used for the sake of convenience, but the local government plans to poll residents about their choice of name, then submit its recommendation to the Ministry of the Interior (MOI) for approval. Taichung County and Taichung City, Tainan County and Tainan City, and Kaohsiung County and Kaohsiung City will merge and also be upgraded into special municipalities bearing the names of their respective current capital cities.

The principal goal of the upgrades and mergers is to spread central government resources and development policy more evenly across the island. “All of the reform projects aim to enhance the country’s overall competitiveness and pursue balanced regional development,” says Huang Li-hsin, director of the MOI’s Department of Civil Affairs. Thus, while those travelers with outmoded maps may find themselves initially baffled by the changes, they are also likely to find growing cultural and economic vitality in Taiwan’s new administrative districts in the years to come.

The current administrative borders were drawn in 1950, when Taiwan first implemented a system of local self-government. Since Taipei City and Kaohsiung City were elevated to special municipality status in 1967 and 1979 respectively, however, financial and human resources have been disproportionately concentrated in those two cities. As a result, the overall development of many other localities has lagged far behind in areas such as public services, welfare measures and the quality of public projects. This problem has been exacerbated by changes in demographics and regional growth, with enormous disparities cropping up between counties and cities in terms of population density, physical size and socioeconomic conditions. In 2006, for example, Taipei County had around 1.1 million more residents than Taipei City, but received only about half the city’s funding from the central government.

Chao Yung-mau is dean of National Taiwan University’s (NTU) College of Social Sciences and one of the 10 officials and 15 academics who served on the ad hoc panel the MOI established in 2009 to review proposed changes in administrative boundaries. “No citizen wants to live in a city or county where the economic performance and social conditions are poor,” he says, explaining the popular demand that led to the changes. “People know that when a local government’s coffers are empty, it can’t help but fail to carry out its duty to develop and maintain the local infrastructure at a level sufficient to satisfy residents’ needs. That’s why a rezoning program must take full account of political, demographic, socioeconomic and legal factors. It must reflect the interests of local citizens and the vision of local authorities.”

Responding to the mounting pressure to redraw Taiwan’s administrative map, in April 2009 the Legislative Yuan passed amendments to the Local Government Act, a move that cleared the way for counties and cities to apply for special municipality status through upgrades or mergers. The amended act stipulates that an area can seek a status upgrade if it has a population of more than 1.25 million, as well as significant political, economic, cultural and urban development. Under the act, local governments are required to draft applications for mergers or upgrades, which must be approved by their respective councils and then submitted to the MOI. Following a preliminary review by an MOI-appointed panel, the act empowers the Executive Yuan to make the final decision.

“This revision to the act marks a very important step toward a comprehensive reform of local government,” Minister of the Interior Jiang Yi-huah says. “It not only offers a new opportunity for counties and cities to acquire special municipality status, but also encourages them to play a more active role and assume more responsibility in the conduct of public affairs. Our ministry held a series of public hearings and invited experts in various fields and representatives from local governments to participate in this debate to seek the best possible solutions to remapping the country. In short, consensus building was the basis of every stage of the reform process.”

On June 23, 2009, 11 counties and cities applying for status changes were invited to present their proposals to the review panel. After a marathon 15-hour session, the MOI announced that the panel had unanimously recommended directly upgrading Taipei County to special municipality status, as well as merging Taichung County with Taichung City and Kaohsiung County with Kaohsiung City, with concurrent upgrades to special municipality status. The officials and academics on the panel, however, split evenly on the question of whether to merge and upgrade Tainan City and Tainan County, and thus referred the matter to the Executive Yuan.

Green Light

On June 29, the Executive Yuan officially endorsed the review panel’s recommendations for Taipei County, as well as the Taichung and Kaohsiung areas. More surprisingly, it also gave the green light to the Tainan application, thanks mainly to the region’s special historical and cultural significance. The city is generally regarded as one of the oldest in Taiwan. Zheng Cheng-gong (1624−1662), a Ming dynasty loyalist better known in the West as Koxinga, established Tainan as his capital after driving out the Dutch East India Co. in 1662. Tainan remained the capital of Taiwan prefecture under the Qing dynasty until 1887, when the capital was moved to Taipei.

Residents of the forthcoming Xinbei City, Taichung City, Tainan City and Kaohsiung City special municipalities are looking forward to the change because a special municipality is a top-level local administrative entity that falls under the direct jurisdiction of the central government, which leads to greater funding and improved services. “The status change will enable a local government to enjoy a much bigger budget allocation, set up additional vital agencies within its structure and employ more civil servants,” the MOI’s Huang Li-hsin says. “It will thus be more capable of fulfilling executive functions in the interests of local citizens and businesses.”

From the central government’s point of view, the creation of new special municipalities makes sense because it will enable local governments to manage their own affairs more efficiently. According to NTU’s Chao, the upgrades reflect the principle of devolution, or the transfer of power from the central to local governments. “Citizens are demanding better services at the local level like highly functional public transport systems, proper maintenance of roads and other infrastructure in communities, better equipped schools and more reliable health services,” he says. “Therefore, public duties are generally better exercised by those authorities that are closest to their constituencies, rather than by a higher tier of government.”

Although many residents of the new special municipalities are excited about the prospect of improved services and amenities, the distribution of financial resources among Taiwan’s local governments has long been a bone of contention. Despite an annual review of the financial condition of each government level by the Executive Yuan, the current Act Governing the Allocation of Government Revenues and Expenditures stipulates that 43 percent of the central government’s tax revenue must go to the two current special municipalities, 12 percent must be distributed to rural and urban townships, while 6 percent must be held by the central government as an emergency reserve. The residual 39 percent must be divided among the remaining 23 counties and cities based on each locality’s population and area. Those percentages have remained unchanged since 2001.

Obviously, special municipalities have been eligible to receive an outsized share of funding from the central government, and the striking inequality in tax revenue distribution goes a long way toward explaining why so many counties and cities have been interested in upgrading their status. For those living outside the new or existing special municipalities, however, the picture is a bit more uncertain, with some local governments denouncing the upgrades as unfair and calling for administrative reform to be applied across the board. “Without proper complementary measures taken, these five special municipalities will still capture the lion’s share of funds and resources from the central government,” says Chen Chao-chien, an assistant professor in the Department of Public Affairs at Ming Chung University headquartered in Taipei City. “In contrast, governments in rural areas are likely to suffer broken budgets and diminishing resources, and their residents might end up as poor, second-class citizens.”

To address such criticisms, the government has been concentrating on improving the finances of local governments and examining legislation designed to prevent rural areas becoming marginalized. “Two pieces of legislation are being drawn up to enhance the development of Taiwan’s eastern region and raise the aboriginal population’s living standards,” Minister Jiang says. “The current act covering development on the outlying islands will also be fully implemented to guarantee a prosperous future for their residents.”

Moreover, amendments to the Act Governing the Allocation of Government Revenues and Expenditures have been proposed to ensure that the dollar amount of funds to each special municipality, county or city will not drop below this year’s level. Under the proposed amendments, a set of formulas that account for indicators such as population, land area and performance in policy implementation, rather than the current distribution formulas, would also be introduced to evaluate disbursements to each local government. To control labor costs, the MOI has also coordinated with the Central Personnel Administration to set practical upper limits on the number of new civil servants to be employed at each newly upgraded special municipality.

Lee Yun-jie, dean of National Open University’s Department of Public Administration, suggests that the central government emphasize the importance of fiscal autonomy and sound financial management at lower government levels. “Local authorities should be encouraged to develop their own sources of income within the bounds of the law, rather than being highly dependent on financial assistance from the central government,” Lee says. “In addition, when it comes to central government subsidies, local governments that perform well and take concrete measures to boost their own revenues should enjoy first priority.”

Financial Challenges

If that is the case, the emphasis on fiscal autonomy and developing local sources of revenue, while praiseworthy, may mean that securing adequate funding for the three new special municipalities could be a challenge. In fact, some opine that the upgrades will increase the financial burden on the central government. “The move will result in a vast expansion of government payrolls because a municipality is entitled to employ thousands more people in the local government,” says Ming Chung University’s Chen Chao-chien. “But I wonder where the money will come from?” Thus far, there has been little discussion of tax increases, increased government debt or reductions in funding to areas outside the special municipalities, leaving the issue to be resolved as the upgrade process continues.

Although adequate funding may remain a sticking point, the trend toward the consolidation of Taiwan’s administrative districts appears unstoppable. According to a policy explanation released by the Executive Yuan in June 2009, the new special municipalities represent only the initial step of the central government’s plan. In the long term, the government envisions the formation of three large urban communities in Taiwan, with each having at least one special municipality as the locomotive for regional development. In other words, the administration envisions Taipei City and Xinbei City working together to promote the development of northern Taiwan, Taichung City driving growth in central Taiwan, and Kaohsiung City and Tainan City spurring development in the south.

In fact, further administrative consolidation could take place in northern Taiwan in the not-too-distant future, according to the MOI ad-hoc review panel. “In order to create a metropolitan area with a population and socioeconomic conditions comparable to other big cities in the world, the panel also suggested that, conditional on public support, Taipei City, Taipei County and Keelung City should consider a merger into a ‘Greater Taipei’ when the time is ripe,” MOI Director Huang says.

Huang also believes the expansion will go even further, in practice if not in name. “In the era of globalization, in order to keep Taiwan competitive on the world stage, we have to emulate the success of metropolises like London, Paris and Tokyo by extending the administrative zones of major cities, devolving more power and responsibility to these special municipalities and encouraging close partnership at the local level,” she says. “Consequently, a single metropolitan belt linking all of the major cities along Taiwan’s western corridor will take shape and bring the advantages of each of its regions into full play.”

In the long term, the Executive Yuan’s development goals also extend beyond Taiwan’s large urban areas, envisioning the remapping of the country into seven regions based on geographical proximity and economic structure. “With their dense population and a higher degree of urbanization and modernization than the other areas, the three major groupings—Taipei City, the future Xinbei City, Keelung City and Yilan County in the north; a merged Taichung City, Changhua County and Nantou County in the center; as well as a merged Kaohsiung City and Pingtung County in the south—will serve as Taiwan’s windows on the world,” Minister of the Interior Jiang says. “Meanwhile, Taoyuan County, Hsinchu County, Hsinchu City and Miaoli County should work hand in hand to preserve their traditional Hakka culture and maintain the region’s momentum as Taiwan’s high-tech powerhouse. Yunlin County, Chiayi City, Chiayi County and a merged Tainan City should combine their efforts to develop quality agriculture. As for Hualien County and Taitung County in eastern Taiwan, as well as for the outlying islands of Penghu, Kinmen and Matsu, while their remote geographical location and low population density hamper industrial development, their amazing natural scenery affords them an excellent opportunity to develop local tourism industries.”

The executive branch’s vision of developing strong regional centers will require extensive cooperation between the central and local governments, as well as among the local governments themselves. “The government will employ policy tools and provide financial incentives to encourage special municipalities, counties and cities within the same region to cooperate for overall development,” Jiang says. “When it comes to funding from the central government, projects based on partnerships within the same region will be given higher priority than others.”

NTU’s Chao Yung-mau also highlights the importance of cooperation. “The success of this reform requires the central and local governments to work together closely,” he says. “In other words, the central government should show a willingness to drive the process forward, as well as provide enough incentives for local governments to work together and coordinate their efforts. That’s the best way to ensure that effective authorities are established at the local level in order to improve the living conditions of residents across the country.”

To achieve greater efficiency, more cooperation will also be needed at the regional level, which will likely require the establishment of administrative bodies within each region to coordinate the efforts of local governments. “We encourage local authorities within the same grouping to set up a regional development committee as a platform to address matters of mutual concern and enhance cooperation,” the MOI’s Huang says. “Special municipalities will be charged with playing an active role as coordinators and will need to have a positive impact on the development of their surrounding areas.”

Such efforts are already underway in the island’s north and south. The Northern Taiwan Development Commission was established in November 2005 and is administered by authorities from eight city and county governments, while a regular meeting of Kaohsiung and Pingtung government heads has been held several times a year since 1999.

By the end of this year, there will be five special municipalities that contain about 60 percent of the nation’s population. While the new administrative areas will receive greater funding and amenities, those who govern them will also shoulder the additional responsibility of turning them into modern, world-class metropolises. The governments of all five special municipalities will also need to make a more concerted effort to advance regional integration. The success of the reforms set in motion in June 2009, then, will depend on how well the local governments respond to such challenges in the future.

Write to dennis0602@mail.gio.gov.tw