Transportation minister Yeh Chu-lan stated in early July that privatization was necessary because the government has had to appropriate NT$5 billion yearly to prop up TMTC.

Privatization of state-owned enterprises has been an international trend for some time now. The ROC government adopted a policy of privatization in 1989, set out a schedule, passed the necessary legislation, and since then has been gradually selling off the stock of state-owned enterprises to the public. The pace of privatization, however, has lagged behind schedule.

Just a question of time

After the decision was made last September to privatize TMTC, the company began working actively to re-launch as a private company using investments from employees. Minister Yeh stated that the company was turned over to employee investors in order to avoid the loss of jobs.

In June, TMTC relinquished 38 bus routes, on both provincial and national highways, to a number of private bus companies. Only 1000 of TMTC's original 3000 employees have made the jump to the newly privatized Kuokuang Company, while the rest have retired, been laid off, accepted outplacement assistance, or found jobs with other private bus companies.

1,090 employees of Kuokuang Company have invested NT$300,000 each in the new company, which will operate 96 of TMTC's routes (43 running on provincial highways and 53 on national highways). Kuokuang's bus fleet includes over 400 vehicles from TMTC and more than 300 newly purchased ones. The company is also renting 23 bus stations and 15 maintenance and repair facilities, and has hired more than 300 drivers from TMTC who did not invest in Kuokuang.

Although the privatization has gone smoothly so far, it has come as a big blow to employees nearing the age of 50, for they would have been eligible for generous pension benefits upon reaching their 50th birthday. That dream is now gone, replaced by the harsh reality of possible unemployment in middle age and a Hobson's choice between leaving the company or continuing on with Kuokuang, where they would lose much in terms of salaries, seniority, and benefits, and would have to face performance evaluations.

A job fair for TMTC employees attracted scant interest, and 450-plus jobs available at the private bus companies have attracted few comers; more than 300 remain unfilled today.

New start amid protests

Kuokuang Company officially went into business at 00:00 a.m. on July 1st, but the opening was accompanied by continuous protests.

When Kuokuang dispatched its very first bus from the company's main terminal in Taipei on July 1, former TMTC employees were on hand to protest, and violence ensued. More than 100 former TMTC drivers now employed at Kuokuang went on strike that same morning at the terminal in Keelung to protest against low base pay. The Keelung dispatcher sent out an emergency call for drivers and buses from Taipei, Chungli, and Hsinchu, but customers were angry.

Another 100 or so TMTC employees unfurled protest banners at a groundbreaking ceremony for a freeway construction project attended by minister Yeh Chu-lan.

Controversy has also erupted over the handling of nearly NT$150 million (US$4.3 million) in assets still owned by the Taiwan Motor labor union and the employee benefits committee.

The union and the benefits committee plan to use some of this money to bankroll their protest activities. The transportation ministry, for its part, is planning to demand liquidation of the committee's assets. The union countered that at a general session attended by over half of its members on June 7, the membership had approved, by a majority vote, the use of over NT$36 million in union funds to support the protest activities. The union has demanded government jobs for nearly 110 of its members, and until this demand is met the union will continue operating, and will refuse to liquidate its assets.

The TMTC employee benefits committee, which owns assets worth at least NT$120 million, intends to distribute them evenly among company employees, but has pointed out that regulations do not currently allow this distribution. The committee will have to wait until the central government's Council of Labor Affairs amends the relevant regulations before the plan can go ahead.

Although the repercussions of privatization have not yet fully played themselves out, Kuokuang nevertheless managed to open its doors by the end of June 2001, which was the deadline set forth at the National Development Conference. In this sense, TMTC has done better than other state-owned enterprises, where privatization lags behind schedule due to the economic downturn and/or the lack of a proper legal environment.

Ho Mei-yueh, vice chairwoman of the Council for Economic Planning and Development, reports that the revised schedule calls for the government to complete privatization of Chunghwa Telecom, Central Reinsurance, Taiwan Machinery Manufacturing, and Aerospace Industrial Development by the end of this year. In the meantime, privatization of Taipower and China Petroleum cannot proceed until the enactment of relevant legislation. Privatization of China Petroleum and Taipower is now scheduled for late 2003 and late 2005, respectively.

It remains to be seen whether the process at TMTC will serve as a model for the privatization of other state-owned enterprises. The investment hopes of a thousand employees are riding on the success of Kuokuang Company, but in fact there is more at stake than that, for Kuokuang's fortunes will have a bearing upon the government's success in privatizing other state-run corporations.

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Privatization of Taiwan Motor Transport Company has sparked a raging confrontation with the company's former employees, who have staged several protests outside the headquarters of the Council of Labor Affairs to demand that the government ensure their "right to life" and "right to a livelihood." (photo by Hsueh Chi-kuang)