Taiwan Today

The merger and upgrade of the Taichung municipality has great promise, but challenges remain.

Taipei, the largest city in northern Taiwan, was upgraded to a special municipality in 1967. Kaohsiung, the largest city in southern Taiwan, became a special municipality 12 years later. Meanwhile, Taichung, the largest city in central Taiwan, waited and waited.

Various opinion polls over the years showed that more than two-thirds of the residents of Taichung City and Taichung County supported a merger of the two and then an upgrade to a special municipality. The city and county governments and councils lobbied for the same administrative changes. Finally in April 2009, the legislature responded to their will by passing an amendment to the Local Government Act, which allows cities and counties with a combined population of more than 1.25 million and significant political, economic and urban development to apply to integrate and upgrade their status to that of special municipalities. It is then up to the Executive Yuan to evaluate the applications and decide whether they should be approved.

The Executive Yuan approved Taichung City and Taichung County’s merger and upgrade application in June 2009. The name of the new municipality will be Taichung City. In fact, Taichung City and Taichung County were governed under one administrative unit from 1684 to 1945, and have remained closely connected in many ways. “Taichung City and Taichung County are inseparable as the yolk and white of an egg,” says Taichung Mayor Jason Hu, who is running for reelection. “We can’t grow without each other.” Hu believes that the merger will create a “one-and-one-is-larger-than-two” effect for the new municipality. “There is no point of a merger if it only brings one-and-one-equals-two results,” he says.

The Taichung special municipality will cover an area of approximately 2,215 square kilometers and have a population of 2.6 million. It will have 29 administrative districts including the city’s original eight and the county’s 21 townships, all of which will be re-classified as special municipality districts. In accordance with the Local Government Act, the municipality’s government can add more agencies and the number of public servants can be increased from Taichung City and Taichung County’s combined current total of 6,000 to 15,400. The number of council seats will be reduced from the original 103 of the city and county combined to 52, and elections for Taichung County’s township chiefs and representatives will cease after township offices become district offices, as district chiefs will be assigned by the mayor. The changes will affect 354 city and county seats that are currently elected positions.

Most local people think that, in the long run, a Taichung municipality will not only strike a balance in development between the north, center and south, but also sharpen central Taiwan’s regional competitive edge. Chi Kuo-tung, a legislator from Taichung County, notes that the development of Taichung City has been limited by its size. In fact, Taichung City has had to turn down some larger industrial investment projects because it had no available land for them. The merger will also allow the new Taichung City to claim a harbor, an international airport and a high speed rail terminal. These services are already up and running, but when a potential investor wants to know about the city’s harbor and international airport facilities, the answer “we’ve got them right in town” no doubt sounds better than “they’re in the neighboring county.”

The Taichung special municipality is also expected to play a more active role in cross-strait relations. According to Minister of Transportation and Communications Mao Chi-kuo, Taichung Airport is currently being expanded in order to serve flights to and from mainland China and tap the huge business and tourism potential of markets on both sides of the Taiwan Strait. Chi Kuo-tung notes that Taichung Harbor, which is Taiwan’s second largest harbor and has been designated as an offshore shipping center, is Taiwan’s nearest harbor to Xiamen Harbor in mainland China’s Fujian province. “There are numerous Taiwanese businesspeople in that area,” Chi says. “Given the business ties and convenient transportation, it’s quite possible that a cross-strait economic or ‘living circle’ can be formed by Taichung and Xiamen or even Guangdong province.” 

In many aspects, the merger is expected to allow for better overall planning of the Taichung special municipality. The several industrial zones and the science park that are spread throughout the city and county, for example, can be coordinated to form a chain or cluster effect to reduce production costs. Agricultural and natural resources in the county can also be integrated to better develop the tourism industry. Jason Hu thinks that with the harbor and airport facilities that are currently being improved, Taichung will be able to compete against Singapore and Hong Kong within five to 10 years.

Su Jia-chyuan, the Democratic Progressive Party’s candidate for the Taichung mayoral election, thinks that the merger will allow Taichung the opportunity to develop itself into a “waterfront city” of parks, museums and cultural heritage. The harbor, for example, can be developed concurrently as a commercial port and a tourist harbor. Industrial museums could be set up within industrial zones and commercial museums in commercial districts to form a museum chain. Su believes that Taichung’s future does not lie in industry or commerce, but in its environmental and cultural resources, citing the example of Rome, where tourism generates 70 percent of that city’s revenue.

Whatever the future plan, the special municipality is also expected to serve as the economic, cultural, social and medical core for the rest of central Taiwan. But although the merger seems to have positive potential in the long run, it is not without challenges.

Democratic Deficit

Some worry that the loss of elected council and township representatives will create a “democratic deficit” since there will be a much smaller number of seats representing the same amount of people. “Local government will focus more on the core areas with high population density and [more] council seats,” says Wang Hao-ping, an assistant researcher at the National Policy Foundation think tank. “Voices from remote areas or minority groups will be less heard and less responded to.” On the other hand, while democratic deficit may be an unfamiliar term to some Taichung residents, many are aware that fewer electoral districts will certainly make the remaining polls more competitive.

One of Legislator Chi Kuo-tung’s concerns is the large gap in infrastructure development between the city and county. In fact in the 1970s and 1980s, Taiwan pursued a policy of relying on cities to spur development in their surrounding areas, but the policy ended up widening the gap between urban and rural areas. “Taichung County has been too poor for the construction of infrastructure,” he says. “The new municipality’s development could be crippled if infrastructure in nine-tenths of its area is way behind the remaining one-tenth.”

The county’s lack of efficient public transportation systems, for example, is one challenge that Chi thinks could negatively impact the municipality’s development. Actually, the greater Taichung area has one of Taiwan’s most convenient transportation systems linking it to outside areas. It has several freeways, two Taiwan Railway Administration (TRA) lines—the mountain line and the coastal line—the high speed rail, a harbor and an international airport. The problem is that each of the respective terminals functions as more of an isolated point rather than part of a network due to the lack of sufficient local public transportation.

Makeshift Mass Rapid Transit

Taichung County’s Deputy Magistrate Chang Chuang-hsi admits that public transportation within the county leaves much to be desired, but thinks that part of the problem can be solved by “metro-izing” the two TRA railways. “Through a tighter schedule and shorter stops at each of the stations, the railway could function like a mass rapid transit system among cities,” he says. “And then, with an organized bus system to help people get to and from the train stations, a workable public transportation system could be built with moderate investment.”

Chang says such a system could also help create a more balanced population distribution. He explains that the continual drain of Taichung County’s population to urban areas, coupled with changes resulting from Taiwan’s industrial restructuring, has meant the decline of rural areas, as development projects and enterprises have become increasingly concentrated in large cities. Currently, Taichung City has a population density of 6,500 people per square kilometer, while the figure is 760 for Taichung County. “The living environment is much better in the county than the city and the land is much cheaper,” Chang says. “Adequate public transportation systems could attract more people to live in the county, which would narrow the gap between the city core and its rural areas.”

In reality, however, Taichung County does not have the money for many of the infrastructure improvement projects, even though the ideas are there. Such financial difficulty is in fact not uncommon among Taiwan’s local governments, but Taichung County is one of the worst affected with a debt of NT$60 billion (US$1.87 billion)—second only to Taipei County’s NT$100 billion (US$3.12 billion). Taichung City currently has a debt of about NT$5 billion (US$156 million), but it will inherit the county’s debt upon the merger.

Currently, local government revenues come from their own taxes, as well as the central government’s redistribution of tax revenue and subsidies. The central government tax revenue is collected by local governments, which forward a fixed percentage of certain categories to the central administration. In turn, those funds are redistributed among local governments according to various criteria.

More Money

The upgrade is expected to bring more revenue to the new municipality due to the higher percentage of tax redistribution funds allocated to special municipalities. According to the Ministry of Finance, the new Taichung City will receive NT$29.4 billion (US$919 million) from the tax redistribution fund, which is about NT$3.6 billion (US$112 million) more than what the city and county combined receive currently.

But since the actual amount from the tax redistribution fund and central government subsidies are limited, local governments have to shoulder most of the expenditures for constructing and maintaining infrastructure, social services, education and cultural activities, among others. This is usually easier for larger cities since their incomes from taxes are high. Taipei City and Kaohsiung City, for example, can both generate more than 70 percent of their revenues, and Taichung City can generate more than 60 percent. But it is more difficult for remote places like Taichung County, which generates about 50 percent of its revenue from taxes.

Decker Lu, a professor in the Graduate Institution of Financial and Economic Law at Ling Tung University in Taichung City, worries that when it comes to revenue generation, what has worked for Taichung City will not work for the county. He points out that the revenue from local taxes is not as high as that in Taipei or Kaohsiung, but the city has kept debt under control by generating funds from readjusting and rezoning city land for development. “Readjusting and rezoning work for urban areas because they increase land usage and value, and thus the government’s tax income.” Lu says. “I don’t see how such an approach can increase the revenue of a rural township in Taichung County.”

Whether the increased revenue can cover increased expenditures and how the new municipality will solve the debt issue is yet to be seen, but Lu is not too optimistic about the new municipality’s keeping a financial structure as sound as the original Taichung City. In fact, some city residents already have complaints, as they are aware of the lower per capita allocation of central government funding that will occur after the merger. The distribution of revenues will also be a problem. The new city government will need to decide if funds are to be spent on, say, the preservation of Atayal culture in remote Heping Township (Heping District after the upgrade), or on building more parking lots in heavily populated areas.

Since April 2009 when the Local Government Act was amended, a great many visions as well as challenges for the new Taichung special municipality have come to light. While the visions might vary, there is a consensus that it is the challenges that will have to be resolved first. For Taichung, one and one is likely to be less than two in the first several years, but eventually the whole looks like it will become much greater than the sum of its parts.

Write to Jim Hwang at jim@mail.gio.gov.tw