Following local opposition to the fourth nuclear power station, the sixth naphtha cracker and other major projects, Bayer of Germany has, almost on the eve of the start of construction work, called a halt to its plan to build a chemical plant in the Taichung Harbor zone. This followed the newly elected county magistrate's insistence that a referendum would be called to decide whether the plan should be allowed to go ahead. Although the central government is attempting to mediate, the future of the Bayer plan is now uncertain.

This stand-off once again highlights the conflict between economic development and environmental protection and also attracts attention to the referendum issue. It also poses these questions: When the policies of central and local government go in different directions, what is the solution? Does Taiwan's industrial policy have a complete and well-defined decision-making process?

At the end of last year the Democratic Progressive Party's Liao Yung-lai, who has led local people over a long period in opposition to the Bayer investment plan, won the Taichung County seat in the elections for city and county magistrates. Overnight, this put a big question mark against the Bayer plan to invest in the Taichung Harbor zone. Liao has continued to insist on his campaign promise to decide whether to allow the Bayer plan to proceed by holding a local referendum. This has caused Bayer to suspend plans to invest in Taiwan and also sparked off a political debate about referendums and industrial policy.

A spokesman from Bayer's head office said that for its Taiwan investment plan the company had carried out over two years of preparatory work and 18 months of negotiations, and couldn't just continue to wait. They had already moved their sights to Baytown, Texas. This decision has shocked the government and the business sector in Taiwan. The Minister of Economic Affairs, Wang Chih-kang, says that the government will do its best to rescue the plan, for otherwise the loss for Taiwan will be huge and there will be a chain of negative effects. Jeffrey Koo, director of the Chinese Federation of Industry and Commerce, says that the Bayer episode is not just a vote of no confidence in the government's plan to make Taiwan an Asia-Pacific Regional Operations Center, it is also setting a negative example to domestic industry.

Looking back to the early days of the Bayer plan, the main focus of controversy was on pollution and industrial safety. The anti-Bayer camp still believes that the proposed plant, which would make TDI, a liquid used in plastics manufacture, would cause pollution and are especially worried that the phosgene used in the production process could, if it leaked, cause major death and injury.

In response to these fears, Horst Mueck, chairman and president of Bayer Taiwan, has explained patiently on a number of occasions that the Bayer plan is a high-tech industrial investment plan. The products they want to make are TDI and MDI. Only five companies in the whole world have such technology. The products are used in over 2000 items in the aerospace, automotive, electronics and communications industries-everything from everyday goods to high-tech products, for example, sofas, sponges, car bumpers and seat frames.

As to Bayer's safety record, as a testimony to the safety of Bayer plants he notes that in 400 operating years, its 19 plastics feedstock plants in Germany, the US, Japan, Brazil, Mexico and Spain have not recorded a single death due to an industrial accident. Bayer has tried hard through public meetings, door-to-door visits and environmental impact reports to win the confidence of local residents, but has still been unable to win over the opposition.

The residents of the Taichung Harbor area are still extremely concerned about the environmental and safety risks from the Bayer plant. One member of the Anti-Bayer Alliance, Shih Chi, who is secretary to the newly elected Taichung County magistrate, says that in the seven-member team which made the first environmental impact assessment there wasn't one chemicals or industrial safety expert, and the people who carried out the second assessment were not the ones who made the decisions. He says that this makes it very difficult to have confidence in the assessment results. Also, in the dealings with Bayer he says that Bayer have always been arrogant and he has never felt they were sincere. He feels that the government has been looking to smooth the way for Bayer all along.

The Bayer plan has now entered its fourth year. After the government put forward its Asia-Pacific Regional Operations Center plan, Bayer was the first foreign company to volunteer an interest in making a major investment in Taiwan. Over more than three years Bayer has passed environmental assessments by both the Investment Commission of the Ministry of Economic Affairs and the Taiwan Province Department of Environmental Protection. They were also assisted by the Council for Economic Planning and Development in acquiring 58 hectares of land in the Taichung Harbor industrial zone. In order to smooth the way for Bayer to invest in Taichung County, the MOEA announced that after the plant begins operations, each year it will pay NT$1.5 billion in business tax and NT$150 million in building tax, and that 300 jobs will be created in total. The volume of imported materials and exported finished products will total 1.3 million tonnes per year, which will help Taichung Harbor develop into a major international commercial port.

A belief that the environmental impact assessments were conducted too casually is one of the reasons local people have continuously been unwilling to accept the plan. They think that the MOEA is more interested in economic considerations than in the environment. Liao Yung-lai has advocated a referendum since he was a DPP legislator. Then, on 10 December, the Legislative Yuan passed amendments to the local self-government law, giving local government the power to decide local affairs through referendums. This gave rise to the prospect that the Bayer plan would really become the first major investment plan to be vetoed by the people.

The plan for a referendum has been put on hold with the suspension of the Bayer investment plan. However, questions have been raised regarding referendums. Wang Ming-sheng, director of the Department of Public Administration at Sun Yat-sen University, says that a prerequisite for holding referendums is a mature civic society and to be effective they need the participation of a populace with civil consciousness, authoritative experts, and decision-making bodies that have the confidence of the people. However, it seems that Taiwan falls short in all of these three areas.

Also, questions such as the scope of the referendum, whether or not it would be binding and who would have the right to vote were still waiting to be resolved. Chiang Pin-kun, director of the CEPD, says that the keys to the Bayer case are pollution prevention and industrial safety, which are industrial technology issues. As such, the case should not be decided just by a referendum.

Is the Bayer case a national development issue or a local matter? Whether the Bayer case is suited for resolution through a referendum has also been a focus of disagreement in the DPP.

DPP Secretary-General Chiu Yi-jen says that the right to a referendum is clearly present in the DPP party program, which means it is a method that the DPP already advocates. Therefore, the party should respect the decisions of local leaders. However, Party Chairman Hsu Hsin-liang and Department of Information Director Sisy Chen both believe that the Bayer case is closely identified with the DPP's industrial policy. It could be an example of the transformation of the party's economic policy and an opportunity to remove any suspicions that the party is "anti-business." Therefore, it is no longer just a local affair and the party center has to intervene. The public disagreement between leading figures in the party was followed by a succession of statements of position by party members. This highlights the fact that the DPP needs to face up to the problems of lack of internal unity on policy and the disparity between ideals and reality.

Chiu Yi-jen says that local opposition to Bayer is not just motivated by a desire to protect local interests. According to the CEPD's national land-development plan this type of industry should not be located in Ilan or Taichung County. The Bayer case has thus helped highlight the questions: How is the national land-development plan to be implemented and where is the flexibility?

After brewing for a long period of time the Bayer case has changed from an industrial issue to a political one. However, Horst Mueck of Bayer says that Bayer is not interested in becoming involved in Taiwan's politics. The problems that have now occurred were certainly not perceived by Bayer as factors in the equation when they were carrying out pre-investment assessment. The issues that Taiwan now faces are how to avoid losing the confidence of international business and how to win more overseas investment.

In the light of the problems that the case has caused for Bayer, for the DPP and for central and local governments, Taiwan's political parties have a responsibility to face up to the problems of overcoming political disagreements and formulating a set of realistic and complete methods, which have the confidence of the public, for policymaking, investment approval and environmental impact assessment in respect of major industrial projects. Otherwise, the future may bring more debacles like the Bayer case.

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Concerned that the Bayer plant will cause pollution and be dangerous, residents in the Taichung Harbor area have often petitioned and protested; they do not want Bayer to become their neighbor. (photo by Pu Hua-chih)