“Taiwan is exceptionally blessed in terms of its geographic location,” said the president at the opening ceremony of the 2009 International Conference on Aerotropolis at the Taipei International Convention Center April 28. The plan calls for NT$67 billion in government funds by 2020 to upgrade the Taoyuan International Airport into the country’s first aviation city.
As the flagship program of the “i-Taiwan 12 Projects,” the air park is critical to the country’s future development, and together with the Port of Taipei, will “create an important transportation network providing integrated aviation and maritime links with the rest of the world,” according to a statement by the Office of the President.
Much had been said about how Taiwan missed its chance to develop an Asia-Pacific Regional Operations Center—a policy first proposed in the early 1990s by then premier Vincent Siew but never implemented. This opportunity, however, appears to be well on its way to being quickly realized.
The Legislative Yuan passed the International Air Park Development Act Jan. 12, laying the groundwork for the aerotropolis. According to the legislation, the government will establish a state-owned company to operate the airport. The business will be developed and managed under the supervision of the Ministry of Transportation and Communications.
To fast track the implementation of the program, the Executive Yuan passed a draft act for the establishment of a state-run international airport park company April 8 that stipulates the firm’s establishment by 2010.
“The enactment of this bill will help transform the airport into a driving force to propel Taiwan’s economic development and enhance the country’s overall competitiveness,” said Lee Long-wen, director-general of the Civil Aeronautics Administration, the agency currently responsible for the airport.
Given the scale of investment and the potential for business opportunities, the proposal has been hailed by many as an engine that will drive the next phase of exponential growth for Taiwan, following the creation of export processing zones in the 1960s and the establishment of the Hsinchu Science Park in the 1980s.
As a gateway to the nation, the airport is privileged with the shortest average airway distance to major cities in the Asia-Pacific region. It commenced operations in 1979 and was one of the most advanced international airports in Asia at the time.
Other than the opening of Terminal Two in 2000, however, no major investment has ever been made. The lack of a clear development plan has hampered its expansion. As a result, the president specifically included converting the airport into an aviation city as one of his campaign promises.
“In the 21st century, airports will no longer function just as transit points for people and products, but will also serve as influential centers of national economic development,” said Taoyuan County Magistrate Eric Liluan Chu, who first came up with the initiative three years ago.
“Ultimately, we aim to create an international aerotropolis that combines the flow of people, logistics, capital, information and technology,” he explained, adding that the aviation city will put Taiwan firmly on the world stage.
The development scheme is built on a “fried-egg model” proposed by the MOTC. The airport and an adjacent free trade zone at the center of the aviation city, like an egg yolk, will be developed by the central government. The county government will be responsible for planning other surrounding areas, like the egg white, based on its land utility policy and urban planning. In all, the Taoyuan aerotropolis will consist of eight zones covering a total of 6,150 hectares.
Building on the existing 1,223-hectare airport, the airport zone will be further expanded to 1,665 hectares. The central government will spend NT$1.9 billion renovating Terminal One to increase its capacity by 25 percent. When it is completed in 2011, the facility will be able to receive 15 million passengers per year.
A third terminal will be added, doubling the number of passengers served by the airport from 22 million in 2008 to 47.5 million in 2035, while the volume of cargo handled will increase from 1.49 million to 4.02 million metric tons over the same period of time.
“These numbers point to the enormous potential of Taoyuan aerotropolis to become a major transhipment center in the Asian region,” the president said.
With total investment of over NT$25 billion, the 290-hectare free trade zone is one of the most important aspects of the development scheme. Currently covering 45 hectares, the FTZ began operations in 2006 under a build-operate-transfer scheme involving the island’s Farglory Group.
Of the over 600 FTZs in the world, the Farglory version is the first to integrate the services of an air cargo terminal, a forwarder’s building, a value-added industrial park, a logistic center and a business center.
“The aim of the FTZ is to build a global operation center connected to the world,” said Yeh Chun-yao, chairman of Farglory FTZ Investment Holding Co. Ltd. For example, with direct flights across the strait now in regular service, semifinished goods from the mainland can be airlifted to the FTZ for final processing and assembly, and then be delivered to any corner of the world.
“With the around-the-clock dedicated services of the FTZ, this process can be completed in just a couple of days,” he explained. “Products processed this way will be labeled as being made or assembled in Taiwan. As a result, they will enjoy a higher perceived value.”
To leverage this advantage and capitalize on tax incentives provided by the government, more than 50 firms have set up processing facilities at the value-added park, including 20 foreign companies. Farglory hopes to see more than 1,000 businesses open their regional headquarters in the FTZ in the future.
On April 24, DHL International, a global express and logistics company, inaugurated its new Taipei Gateway at the FTZ. To reaffirm its commitment to the country, the company spent NT$210 million tripling the facility’s daily shipment capacity. Only three years ago, however, DHL had intended to move the operations to Singapore.
Now that the economic landscape has improved, “our plan for Taiwan is long-term,” stressed Jerry Hsu, DHL’s president for the greater China area. “With the best available location in the market, the growth potential in Taiwan is tremendous, and our expanded Taipei Gateway will enable DHL to ride on the growth momentum,” said Stephen Fenwick, the international company’s senior vice president of operations.
Chu praised the company’s decision as “wise and insightful.” According to the county government, the Asia-Pacific region will handle over half the global volume of air cargo by 2015.
At a time when Taiwan is striving to become a regional operations and logistics hub, “the timing of the investment could not have been more opportune,” said Vice Premier Chiu Cheng-hsiung at the inauguration ceremony. Both the vice premier and the magistrate hope that the company will increase its investment in the country.
The 750-hectare aviation industry zone, to the south of the airport, will be dedicated to industries such as aviation technology, aircraft repair, maintenance services and manufacturing.
The county is already home to around 10 companies in related industries, including Evergreen Aviation Technologies Corp., a joint venture between Taiwan’s Evergreen Group and GE Aviation from the United States. The industry zone will further promote clustering of such businesses in this highly technology-intensive segment.
The 490-hectare trade exhibition zone will be situated southwest of the airport to bring in international finance and business, as well as facilitate trade opportunities. The airport-compatible industry zone will span 1,385 hectares, housing aviation research and development centers and various industries.
The refined agriculture development zone, occupying two lots totaling 525 hectares to the west of the airport, will serve as the domestic distribution center and overseas transport platform for the country’s fresh produce. It will also function as a biotech agriculture display and sales park to promote R&D in organic and floral farming, recreation and agriculture-related tourism.
With the added employment opportunities, a 685-hectare quality living zone will be established to accommodate the influx of workforce to the area. A coastal recreation zone will be built around the Jhuwei port with an estimated area of 360 hectares, where a tourist terminal, water activity facilities and a fisheries promotion center will be set up.
Write to Meg Chang at meg.chang@mail.gio.gov.tw