Taiwan Today

Taoyuan County is taking the steps needed to become Taiwan’s sixth special municipality.

In August this year, a Taoyuan County Government (TCG) proposal to upgrade the county’s administrative status to that of a special municipality was submitted to the Ministry of the Interior (MOI) for review. “The purpose of administrative rezoning is to create larger, more efficient cities by integrating resources in order to increase a region’s competitiveness and promote regional development,” Taoyuan County Magistrate John Wu (吳志揚) says. “We’re confident that in all respects, Taoyuan is ready to play that role.”

The MOI, after receiving the TCG’s proposal, distributed it to relevant central government agencies for preliminary review, a process that is now under way. The ministry will compile the agencies’ opinions and send them to the Executive Yuan, which will then have six months for an ad hoc panel of academics and government officials to review the proposal and render a decision on the upgrade. If special municipality status is granted, Taoyuan will become Taiwan’s sixth such administrative area on December 25, 2014, with the intervening months used to prepare for the status change.

Located just south of New Taipei City in northern Taiwan, Taoyuan, which means “peach garden” in Chinese, got its name from the many peach trees early immigrants planted there. Today, most of the peach trees have given way to economic development, as much of Taoyuan County has transformed from a rural agricultural community into a modern metropolitan area. That growth has been driven by a variety of factors including the development of Taiwan Taoyuan International Airport (TTIA), which lies on the coastal plain and serves as Taiwan’s main gateway to the world. Taoyuan County is also a popular destination in northern Taiwan for visitors, thanks to its rich tourism resources and convenient transportation. Even more impressive, the county is Taiwan’s largest in terms of industrial output, with manufacturers in 24 industrial zones creating an annual production value of NT$2.32 trillion (US$77 billion). In 2011, Taoyuan generated tax revenues of NT$168 billion (US$5.6 billion), trailing only the amount generated by Taipei City among all of Taiwan’s cities, counties and special municipalities.

Wu notes that one of Taoyuan’s biggest advantages as a global competitor will be the Taoyuan Aerotropolis, a project that is currently under way and is scheduled for completion in 2021. That plan will see an expanded TTIA become the center of a growing ring of cities, businesses and recreational areas. Ultimately, the aerotropolis will connect local workers, suppliers, executives and merchandise to the global marketplace, as well as continue to serve as an international entry point into Taiwan.

Convenient and Complete

Taoyuan County already has one of Taiwan’s most convenient land transportation systems, with several freeways and railway lines connecting to other parts of the island. That system will soon become even more complete, as a new mass rapid transit (MRT) line from downtown Taipei to TTIA is expected to enter service in 2014. Taoyuan has also drawn up plans to construct its own MRT system with a scheduled operational date of 2021. The finished system will extend for 29.3 kilometers and have 20 stations at locations including the aerotropolis, Taoyuan High Speed Rail station and transfer station for the Taipei-TTIA MRT system.

Aside from constructing new facilities, Taoyuan County has also been actively working to boost its information and communication technology (ICT) infrastructure. The effort started in 2004 with an e-government project that provides citizens with online information and services. The county government then initiated the M-Taoyuan project in 2007, which focuses on establishing a county-wide wireless network to connect computers and mobile devices, as well as using ICT to deliver government services such as traffic or pollution monitoring.

Taoyuan County is now promoting its I-Taoyuan project, which aims to conserve energy through the use of green technologies, protect the natural environment and create a better living and business environment. That project has been so successful that Taoyuan County received double honors in 2009 from the Intelligent Community Forum, a New York-based think tank that studies global economic and social development. Among hundreds of competitors worldwide, the forum honored Taoyuan both as an Intelligent Community of Innovation and as a Smart21 community, or one of the world’s 21 most intelligent communities. The county made the Smart21 list again in 2010 and 2011.

Some 2.2 million people live in Taoyuan County, spread across 13 townships, cities and towns, all of which are self-governing entities falling under the county government. In recent years, many young residents of Taipei City and New Taipei City, both of which are special municipalities and have seen skyrocketing housing prices, have moved to Taoyuan County due to its lower cost of living. Real estate prices in Taoyuan County, for example, are about a quarter of those in Taipei City. With convenient highway and railway transportation making for easy commutes, it is not surprising that Taoyuan County has become one of Taiwan’s fastest growing areas in terms of population.

Like Taiwan’s other cities and counties, Taoyuan County’s revenue comes from its own collected taxes, central government subsidies and the national tax redistribution fund. Local governments rely heavily on income from the tax redistribution fund, and one reason for pursuing an upgrade to special municipality status is the larger share of the fund they receive. “The problem is a tax redistribution policy that greatly favors special municipalities,” says Hoping Wang (王皓平), a senior assistant research fellow in the Interior Affairs Division under the National Policy Foundation, a think tank based in Taipei City. “A handful of special municipalities take a large piece of the pie and many counties and cities have to share the rest.”

The uneven distribution of national financial resources has understandably given rise to frequent disputes. Local governments complain that because the tax redistribution fund favors special municipalities, the country has been divided into two worlds, with one being the rich special municipalities and the other the poor counties and cities. “Residents of special municipalities enjoy a dominant share of resources, but people in other places become poorer and increasingly feel that they are second-class citizens,” Wang says. “Eyeing the greater amount of money, everybody wants to gain special municipality status if there’s an opportunity.”

Aside from distributing revenues more evenly, there are other good reasons for creating special municipalities. From a national development point of view, more special municipalities can help the country better meet the challenges of globalization, as larger cities with greater resources are more capable of taking on international competitors. From a local self-governance point of view, a special municipality is able to manage an area more efficiently than a collection of smaller local governments. The greater power and resources of a special municipality government, for example, make for more effective planning and implementation of development projects than do individual efforts launched by townships, cities and towns.

Despite the advantages associated with creating more special municipalities, after Kaohsiung City gained that status in 1979, no new ones were designated over the next 30 years. That situation finally changed after the Local Government Act was amended in 2009 to allow cities and counties that meet certain development criteria to apply for special municipality status through mergers or upgrades. After the amendment was promulgated, Taoyuan was one of 11 cities and counties to submit applications that would have led to the formation of a total of seven new special municipalities if all had been approved. After reviewing the applications, the Executive Yuan approved special municipality upgrades for Taipei County, which was renamed New Taipei City, a merged Taichung City and Taichung County, and a merged Tainan City and Tainan County. The expansion of the existing Kaohsiung City special municipality to include Kaohsiung County was approved at the same time.

Taoyuan County’s special municipality application was denied in 2009, with the Executive Yuan’s review panel finding that although the county had significant cultural and tourism resources as well as a thriving economy and sound infrastructure, it lacked a role in regional politics and in promoting regional development. The panel also opined that Taoyuan County was slightly less populous than other applicants. The panel’s population finding was controversial, however, as the merger of Tainan City and Tainan County was approved, despite the fact that the new administrative area had a smaller population than Taoyuan’s.

The reaction to Taoyuan’s failed bid for special municipality status has been mixed. Chen Chao-chien (陳朝建) is an assistant professor in the Department of Public Affairs at Ming Chuan University in Taipei City and a Taoyuan resident. Chen notes that except for its relatively small population of 1.96 million, Taoyuan County was equally or more qualified than the successful applicants in terms of meeting “special requirements in their political, economic, cultural and metropolitan development,” as stipulated by the Local Government Act.

On the other hand, Chen thinks that the denial of its upgrade application was not necessarily a bad thing for Taoyuan. It is important for local governments considering special municipality upgrades to take a close look at the effect on revenue sources, Chen says, because while special municipalities may receive more funding from the tax redistribution fund and have more methods of generating income than lower-level governments, they are also faced with higher expenditures and reductions in other central government funding sources. For example, premium payments for Taiwan’s National Health Insurance system are shared by insurees, employers and local governments. County governments are required to make a contribution for farmers, fishermen and low-income families only, while special municipality governments have to cover the entire workforce in their administrative area.

Reductions in central government funding sources outside the tax redistribution fund also affect special municipalities. While a county township can receive as much as 90 percent of the funds for a development project directly from the central government, central government funding for projects launched by a special municipality district is capped at 50 percent. It is important for local governments to weigh such financial intricacies carefully when considering special municipality status. “There’s a lot of math to do,” Wang says.

The good news is that amendments to the Act Governing the Allocation of Government Revenues and Expenditures are already under deliberation in the legislature. The changes are expected to provide a more equitable formula for the distribution of government funds. The bad news, however, is that the amendments’ journey through the legislature has been anything but smooth. With a dozen different amendments proposed by the Executive Yuan, opposition parties and individual legislators, when and which changes will pass is anybody’s guess.

Although Taoyuan was unsuccessful in its 2009 bid for special municipality status, the county was able to become what the government terms a quasi-special municipality in 2011. Taoyuan was able to do so under a 2007 amendment to the Local Government Act, which stipulates that a county gains quasi-special municipality status when its population reaches the 2 million mark, as Taoyuan’s did in June 2010. There are currently no other quasi-special municipalities in Taiwan, although Taipei County held that distinction from 2007 until its upgrade in 2009.

Many of the regulations relevant to special municipalities also apply to quasi-special municipalities. For the TCG, that has meant maintaining the established system of county and township government administrative offices while also gaining most of the responsibilities for personnel management, administration and fiscal affairs held by special municipalities. Unfortunately for Taoyuan, the quasi status means less funding than is received by full special municipalities. Taoyuan’s share of the tax redistribution fund as a quasi-special municipality, for example, is only 70 percent of what it would receive as a special municipality, according to Wu. Taoyuan County’s total revenue for this year is projected at NT$62 billion (US$2.1 billion), for example, while that of Tainan City, a special municipality with a population smaller than Taoyuan’s, is NT$83 billion (US$2.8 billion).

Quasi-special municipality status is not the end of the line, however, but something more like an intermediate stop along the way to becoming a full special municipality. After earning quasi status in 2011, Taoyuan immediately started to prepare itself for the rest of the journey. The next major milestones were reached in April this year, when the county government completed its upgrade proposal and submitted it to the county council for approval, and in August, when the proposal was forwarded to the MOI.

Mixed Reception

While the county government, council and most citizens eagerly envision the benefits the upgrade is expected to bring, support for the bid is not unanimous. Wu notes that if Taoyuan becomes a special municipality, the biggest change will be that the former county’s townships, cities and towns will all be redesignated as districts, with district leaders appointed by the mayor. “There won’t be any district-level elections and the present township, city and town heads and citizen representatives will lose their role in local politics,” Wu says. “Many of them have been involved in local politics for a long time or even for generations, so it’s hard for them to just give it all up and change careers.”

To promote the upgrade’s benefits for Taoyuan, Wu has visited all of the county’s 13 townships, cities and towns to discuss the issue with local politicians and residents. Most local politicians now understand the necessity of the upgrade, Wu says, adding that he will continue communicating with the naysayers.

Wu is confident that Taoyuan is ready for special municipality status and that the upgrade will soon take place. Academics also believe Taoyuan’s upgrade prospects are good. The National Policy Foundation’s Wang says that although there are sound economic, social and regional development reasons to make Taoyuan a special municipality, the deciding factor is the county’s population growth from the 1.96 million listed in its 2009 proposal to 2.02 million in the current proposal. Wang concedes that in absolute terms, an additional 60,000 people is probably not that big of an increase, but in terms of political power, 2 million is a magic number. “When creating a special municipality, there are always a lot of political considerations involved rather than just an administrative rezoning,” he says. “A population of more than 2 million has political significance that can’t be ignored.”     

Write to Jim Hwang at cyhuang03@mofa.gov.tw