Taiwan Today

By any standard, NT$8.2 trillion (US$303 billion) is a tremen­dous amount of money. When the government launched its Six-Year National Development Plan (1991-1996), which calls for spending this amount of money on improving Tai­wan 's overburdened infrastructure, people were stunned by its expansiveness and extraordinary cost. Besides legitimate concerns about the challenge of financing the 775 projects that make up the plan, people worried about the government's ability to do so much so soon. Would success require the island to pull off another economic miracle, this one compressed into years instead of decades?

In fact, Premier Hau Pei-tsun, who initiated the plan, and the Council for Economic Planning and Development (CEPD), which pulled the 487-page, four-volume plan together in six months, both indicated from the outset that constant review and evaluation were essential. "During implementation," says the pref­ace to one widely distributed CEPD docu­ment, "the plan will be reviewed and revised each year in accordance with changes in the subjective and objective environments at home and overseas, the ability to carry out the plan, and the fi­nancial resources of the nation."

On August 3, 1992, during the com­pletion ceremony for moving the railroad tracks below ground in Taipei's Sungshan district, Premier Hau once again urged people to have a long-term perspective on the ambitious plan. "After the Six-Year National Development Plan was launched," the premier said, "it received both praise and criticism. People criticize the plan for being too vague, but this is because they don't understand the real content of the plan. It is a comprehensive plan that sums up all the economic and cultural projects planned by previous premiers. I just made the goal of the plan clearer. For instance, this project of moving the railroad tracks below ground in Sungshan was planned twenty years ago. And it was just completed today.

"Currently, many people question the quality of the plan," the premier added. "In fact, all the construction work should be implemented with thorough planning, good quality, and at reasonable prices. Moreover, the schedule is not the major concern. The plan does not need to be completed within six years. Many public works and transportation projects require coordination between various government agencies, which takes a lot of time."

Scope and schedule: these are the issues starting to make headlines. The very size of the plan, and the number of projects submitted for inclusion in it, made it necessary to set priorities, which was one reason for including evaluation and review in the plan's overall admin­istrative setup. Now that the plan has been under way for almost two years, the bottlenecks can be more accurately identified.

As expected, worrisome financial difficulties have already emerged for some big-ticket items, but even these pale in comparison with a variety of other im­plementation problems. According to CEPD, of ninety-one large projects, each with a budget exceeding NT$20 billion (US$800 million), only fifty-five have broken ground; the other thirty-six are still in various stages of planning. The plan's overall 1992 budget was NT$750 billion (US$30 billion), but only 80 per­cent was spent. Some major infrastructure projects are already behind schedule, including the northern section of the sec­ond freeway, the Taipei rapid transit sys­tem, and the third stage of the Taipei flood control project.

Missed deadlines are plaguing many of the plan's projects. The causes? Chief among them are land-acquisition prob­lems, shortage of human resources, inad­equate technical skills, and complicated coordination procedures among relevant government agencies.

Land acquisition ranks high, if not first, on the list of problems delaying construction. Land prices in many areas have tri­ pled in value since early 1986 because of real estate speculation. In addition, after martial law was lifted in July 1987, people were less hesitant to take to the streets to air their dissatisfaction with government decisions. "At that time, a 'protest culture' permeated society; oftentimes landowners went to the streets to protest against the low prices [offered by the government] to buy their land," says Cheng Wen-Ion (鄭文隆), deputy director general of the Taiwan Area National Expressway Engineering Bureau.

Matters were complicated by the government's willingness to negotiate with landowners over compensation for construction on their land. One example: "It happened that the compensation of­fered for tea-growing areas was different between the Taoyuan and Hsinchu county governments on the planned route of the northern section of the second freeway," Cheng says. "The differences triggered disputes." After twenty-two months, the expressway bureau is still trying to solve the land problems.

According to the preliminary design, the 12.2-kilometer beltway would pass through an agricultural district in Taoyuan. But 200 of 1,200 landowners along the route were dissatisfied with the govern­ment's compensation offer. "Whenever our construction workers entered the area, local people protested," Cheng says. Recognizing the logjam, Premier Hau announced earlier this year that the central government was not going to allocate additional funding for the project, and if the disputes could not be solved, the Taoyuan beltway project would be suspended.

The recalcitrant landowners then adopted a different tactic. They started lobbying the expressway bureau on de­sign, asking it to build an elevated expressway along much of the proposed route. The Taoyuan government asked the expressway bureau to study the land­ owners' proposal. "This is a feasible so­lution, because the local government has the ability and is willing to share the ad­ditional costs," Cheng says. "But once again, time has been wasted."

More than schedules are being influ­enced by the land-acquisition problems. Costs are also sky-rocketing. For exam­ple, the costs of construction on the sec­ond freeway averages NT$1.5 billion (US$60 million) per kilometer, compared with NT$100 million (US$4 million) for the Sun Yat-sen Freeway, the first free­way on the island completed in 1978. Land costs account for 32 percent of the total budget in the second freeway, while they amounted to only 8 percent for the first one. "When building the first freeway, some landowners considered it an honor to contribute their land to the government," Cheng says. "But in the second freeway, landowners use land as a bargaining tool to get as much money as possible."

Land acquisition is invariably a long and complicated process. It usually takes at least eighteen months, and involves altering land-use designations—primarily from agricultural to residential, commercial, or industrial land use—getting approval from local and central governments, announc­ing the change of land-use designation to the public, and executing the actual land expropriation.

Joint land development has provided one way to break up the logjam in many instances. The Department of Rapid Tran­sit Systems (DORTS) was the first to adopt this method, which emphasizes coopera­tion between the government and private sectors. Five stations in the Mucha line as well as another twenty stations in the Tamsui-Hsintien line are being built using the joint development approach. Land­owners can be developers or investors, and are responsible for the joint development plans which are submitted to the Taipei city government for approval. "The best benefit of this proposal is that the government gets the land without paying huge amounts of money for land expropriation, and land­ owners keep the land as well as make money on it," says Chou Lie-liung (周禮良), DORTS chief engineer. "Most important, the public gets an efficient tran­sit system as soon as possible."

"If the land problems are solved, I have confidence that most projects can be carried out smoothly," points out Arthur Y. Chen (陳豫), executive secretary of the Public Construction Supervisory Board, Executive Yuan, a government agency established in October 1990 to supervise the implementation of important public works. Through a computer­ized system, called the Project Inquiry Control System, the supervisory board will audit the schedules of construction projects and submit monthly reports to the premier. According to Chen, if a project does not involve land acquisition, it usu­ally proceeds smoothly. The project of moving the Sungshan railroad tracks be­ low ground is a good example. Since the construction involved existing tracks and no new land was expropriated, the project was completed one month ahead of schedule.

The shortage of human resources is another reason why projects are falling behind schedule. Construction companies simply cannot hire enough laborers. Pressure was relieved in April 1992 after the govern­ment lifted the ban on foreign labor. The expressway bureau, for instance, has im­ported 1,800 foreign workers, primarily from Thailand, the Philippines, and Indonesia.

The shortage of unskilled labor is only part of the problem. The need for experienced engineers gets more acute following the launching of each new project. As one high-level foreign engi­neering consultant says, "They need all categories of engineers here—civil, mechanical, electrical, whatever. You just can't put fresh college graduates in charge of large, complex projects. They don't have the experience."

Wang Wen-je (王文吉), a vice presi­dent in the Continental Engineering Corp., one of the contractors in the development plan, gives one reason for the shortfall. "After the Ten Major Construction Projects were finished in the early 1980s, the gov­ernment didn't undertake many large-scale public works," he says. "Experienced en­gineers either retired or changed jobs to something more profitable and less strenu­ous, like investing in the stock market."

According to the ROC Construction Industry Foundation for Research & Development, the net value of construction industry will jump to NT$680 billion (US$27 billion) from the current NT$180 billion (US$7.2 billion) in six years. As a result, private sector engineering companies are offering top dollars to attract engineers, including those already working on six-year plan projects with other firms. Turnover is extraordinarily high in the market. "Generally speaking, an engineer with seven years of experience is considered mature in this market," Wang says. "The construction sites are full of recent college graduates. But they can't take immediate action when problems arise. They always have to ask for instructions, which really wastes time."

Making matters worse, government engineering agencies have to compete with the private sector not only in attracting experienced people, but in keeping those already on the payroll. Y. Y. Tseng (曾元一), president of the Retired Serv­icemen Engineering Agency (Ret-Ser), a public firm and the island's largest con­struction company, explains the com­petitive environment. "Before 1986, only a limited number of engineers left Ret­ Ser," he says. But after DORTS, the Na­tional Expressway Engineering Bureau, and the Public Construction Supervisory Board were set up, they had to build competent engineering staffs. Since the heads of the three agencies had worked for Ret-Ser before they took their new positions, they each took some engineers with them to their new offices. "I don't consider our engineers moving to other government agencies a brain drain," Tseng says. "But in the past two years, more than seventy engineers have left us to seek higher pay in private companies."

Engineering is, of course, a key ele­ment in the ultimate quality of the public works under construction. Chou Lie-liung of DORTS is especially worried about this problem, because the rapid transit system involves technology which has never been used before in Taiwan, such as the huge tunnel-boring machines. "The gov­ernment is always the loser in this game," he says. "If our engineers are not experi­enced enough, how can they supervise complicated construction? This situation is like giving an army sergeant a general's responsibilities." Chou is worried that private companies with a shortage of professional engineers may end up jerry­ building public works.

In the face of these concerns, experts in government and the private sector are suggesting that new projects be released for bid at a slower pace, one that takes into account how much the market can bear. "We have been starving for more than ten years," Wang Wen-je says, "and now, suddenly, whole fish and big chunks of meat are offered at the same time. We can't eat them all." Ret-Ser's Y. Y. Tseng also suggests that major construction projects should be launched at a more con­sistent and predictable pace. "We hope the government will establish a detailed time­table for the whole six-year plan, and set priorities for all 775 projects," he says. "Because of our limited human resources, we should maximize efficiency through good planning."

Many of the plan's projects, such as Taipei's MRT and the high-speed rail line between Taipei and Kaohsiung, re­quire cutting-edge high technology. "It is hoped that through the construction of these projects, new technology can be transferred to help develop related indus­tries in Taiwan," says Kuo Nan-hung (郭南宏), minister without portfolio in the Executive Yuan. "Building these projects is very expensive, and their maintenance is even more costly." One goal for local businesses is to develop the expertise necessary to handle long-term mainte­nance of these systems. There is substan­tial money to be made. In the case of the high-speed rail, the costs for five years of maintenance are expected to be roughly equivalent to one year of construction costs. "If we can produce some of the component parts ourselves, lots of money can be saved," Kuo says. "In addition, we can eventually export this technology to mainland China and Southeast Asia."

In the past, the task of developing means for technology transfer has received relatively low priority. For example, three nuclear plants were built on the island by the mid-1980s, but the construction of the fourth nuclear plant, a major project in the six-year plan, will still primarily count on foreign technology. "It's because the three plants were all turn-key projects," Kuo says. (An overseas contractor designed and constructed the projects, then turned the keys over to the Taiwan Power Company when they were ready for operation.) Some observers complain that government offi­cials are still reluctant to address tech­nology transfer issues because of their great complexity. But this attitude is be­ing challenged in both the public and private sectors.

Moh Za-chieh (莫若楫), president of Moh and Associates Group, a private en­gineering consultant company in Taipei, points out: "If government officials are not willing to introduce technology, and existing rules don't regulate its acquisi­tion, how can we complete the task of technology transfer?" At present, the Technology Cooperation Regulation governs technology transfers. But since the regulation was promulgated in 1962 and most recently revised in 1964, it suf­fers from being outdated and too vague for today' s high-tech environment.

In the face of this situation, Kuo Nan­-hung advocates pushing the government and private sector to reach a consensus on procedures, then work together to make technology transfer happen. Until the regulations are updated, Kuo suggests a quick fix: "We can specify procedures for technology transfer in the contracts," he says. "But first, we have to understand the extent of our abilities, and know what we need to learn. And foreign companies, on the supply side, will have to consider what they can teach us. They may hesitate be­ cause they don't want to see us become their competitors. But building a partner­ ship between local companies and foreign consultants is a feasible solution."

Kuo points out that many local sub­contractors are also hesitant about adopting new technology. They prefer to handle simple, contract-labor work. Moh Za-chieh agrees, explaining that technology transfer takes time and money. If private companies do not see the future market potential of using new know-how, they are reluctant to invest. "Actually, we want to get involved more in big projects," Moh says. "But we hope the government has a long-term plan for launching public works projects. We are not satisfied with eating the crumbs left over by foreign consultants."

Based on his experience, DORTS chief engineer Chou Lie-liung is optimistic that technology transfer can be done effec­tively. Two years ago, foreign consult­ants from American Transit Consultants, the general consultant for DORTS, and Chou's staff started working in the same office. "I set a clear timetable for them in executing technology transfer," Chou says. He is confident that his staff has already learned important new civil-en­gineering skills. "But the electrical and mechanical technology is more compli­cated," Chou says. "I have to wait till the first line has been completed, but I be­lieve in our engineers' abilities. As long as they have the opportunity to learn, they can make it."

Most six-year plan projects require the cooperation of various government agen­cies. Breakdowns in com­munication between various levels of government and between different agen­cies can complicate matters. Contractors are sometimes overwhelmed by the number of offices they must deal with in the course of their work. "Being a con­struction company, we don't have the ability to deal with so many government agencies," says Y.Y. Tseng of Ret-Ser. "We hope our clients—the government agencies—can solve all related problems and just let us do the construction work.

Waste soil disposal is one example. I think our client should coordinate with the Environmental Protection Administration first, then tell us where we can dump the waste soil."

The complaint hits a sore spot. The contractors working on the huge tunneling projects that are part of the Taipei MRT have had a rough time finding places to dump the tons and tons of soil exca­vated each day. Usually the government requires construction companies to solve their own dumping problems. Because there is no large dumping area in Taipei, construction companies have to send truckloads of soil to distant districts. It is estimated that from 1993 to 1995, between 3 million to 3.5 million cubic meters of waste soil will be dumped annually.

Originally, DORTS received permis­sion from the Department of Public Works, Taipei county government, to dump 3.6 million cubic meters of dirt at the coast near Linkou, reclaiming 60 hectares of land. But when application was made to change the land-use designation, an entertainment company complained that the county's Department of Education had already given it permission to open up a recreational beach in the same area. They protested against the dumping. The case is not yet resolved, and will involve decisions made by the Ministry of the Interior. Although several dump sites have been found, waste soil disposal is a continuing problem.

The Public Construction Supervisory Board, set up in October 1990 with the premier as chairman, will help solve the coordination problems. The board will soon be upgraded to the Council of Public Construction, and will supervise the qual­ity, techniques, and schedules of all major public works. Moh Za-chieh is pleased with the move: "Now, all the departments are doing their own projects, and there is no organ to arrange and coordinate various departments and to set timetables to release the projects," he says. "After the board be­comes the council, it will do the overall planning." A powerful mechanism for re­ view and evaluation is now in place. As the Six- Year National Development Plan is fine-tuned in the months and years ahead, the setting of clear priorities should help ensure that Taiwan will enter the twenty-first century with an infrastructure that meets the economic, social, and cultural needs of its people. ▪