International alliances give Taiwan a boost:
The Six-Year Plan is a major program of public investment. It is hoped that in spending such a huge sum of money something more than just hardware can be acquired.
"How to spend a given sum, permanently learn managerial techniques, and at the same time assist in the upgrading of relevant domestic industries are all things being attentively examined by the government," points out Lin Neng-jong, director-general of the International Cooperation Department in the Ministry of Economic Affairs. And in order to transfer technology, each ministry and each unit in charge of construction projects is definitely going all out to be a channel.
Take the burning issue of incinerators.
"Right now the total number of incinerators that environmental protection agencies at all levels want to build is up to twenty, with the overall cost nearly NT$100 billion," points out Dr. Larry L.G. Chen, deputy administrator of the Environmental Protection Administration. Of these, the international bidding for the several incinerators to be built in the initial period was "very regrettably" won by Japanese firms, so that, for instance, the incinerators in Hsintien and Shilin will be constructed by the Mitsubishi group.
Larry Chen points out that when the initial period of construction was up for tender, a small number of European firms were also interested in participating, but even just the costs of transporting the parts and facilities were so much higher than for neighboring Japan that they naturally were far inferior when it came down to the actual bids.
Going back to what was said earlier, though the Japanese firms can do the job both well and cheaply, the longstanding trade imbalance between Taiwan and Japan surpassed US$12 billion last year, so it is really not possible to just sit and watch Japanese firms monopolizing the engineering projects in Taiwan. Further, the Japanese have always been very reserved about technology transfer, so the EPA "searched high and low" and finally decided to make the 11 incinerators to be built in the second phase limited to tenders by domestic firms, with domestic companies fully responsible for their construction.
The domestic environmental protection industry still is quite a bit behind international standards, and the gap is unbridgeable in incinerator beds and in prevention of air pollution from emissions. Thus this set of domestic bidding restrictions includes a proviso: The domestic firm that wins the bid must cooperate with an original manufacturer from the United States or Europe to import the technology and undertake joint responsibility for the projects. Fortunately there are many local firms that are anxious to use this opportunity to launch themselves into the environmental protection field, like the Ta-ho Environmental and Technical Services Company which has been set up in joint venture between Taiwan Cement Corporation and the French company CGE. China Steel, Yuen Foong Yu Paper Manufacturing, and others are all looking for their own channels to import technology. With these companies buying and learning at the same time, there will be a lot more work involved. But when you think of the long-term behind-the-scenes value-added, it's still worth a try.
The joint venture method including domestic companies is employed by the EPA, while Minister of Economic Affairs Vincent Siew is strongly promoting transnational alliances. Having renowned international corporations come to Taiwan to share in contracting presents, it is hoped, an opportunity for local firms to get "drafted into the big leagues," giving domestic enterprises room to participate and learn.
This "alliance" concept has already gotten a positive response. For instance, German Vice-Chancellor Moellemann promised to use "German official influence" to promote this idea.
Taiwan could become a regional center:
Since it is an alliance, the principle of equal and mutual benefit is still the key. "This isn't a case where we pay for a vegetable but make the vendor throw in an extra scallion as well," is the metaphor employed by Mao Chi-kuo, director-general of the Office of High Speed Rail in the MOTC. It is a case of us having a field, with the hope that our partners will come help us plant it so that we can harvest it together.
What's more, Taiwan isn't the only place with a large "pie." It is expected that Korea's high-speed railway will enter the bidding stage soon. Right now only three countries have the ability to provide the core technology, so Taiwan has to be worried that Korea might steal them away!
If the core mechanical and electrical technology for the high-speed railway, including the cars, signals, and control system, is provided by European firms, just the shipping expenses for the "imported fully-built" huge rail cars would be an astronomical sum. In fact, Taiwan has some large enterprises with adequate technology, like the cogwheel factory of Formosa Plastics which can achieve the standards required for the aerospace industry, TECO Electric & Machinery Co., Ltd. which can make variable frequency high voltage motors, or the welding technology of China Shipbuilding or other large firms.
"If the bid-winning overseas firm can cooperate with these enterprises, some of the parts can be built in Taiwan and assembled here, so that the cost will naturally be much lower than doing it in the home country," notes Mao Chi-kuo. At the same time, Taiwan is flush with capital, and if the local firms can jointly invest, this will greatly reduce the financial pressure on the foreign tenderer.
Going a step further, whether you're talking about the high-speed railway, the mass rapid transit system, the nuclear power plants, the incinerators, or other large projects, the absorptive capacity of advanced nations is limited, so that the rising Asian market is naturally the new battle ground. If Taiwan can be raised up to be the parts manufacturing, assembly, repair, or operations center through alliances and joint investments, this will be a major advantage for any European or American firm in fighting for the Asian market in the future.
As early as three years ago, the Changchun Petrochemical Company went into a joint venture with the Hochst petroleum company of Germany to found the Taiwan Engineering Plastics Company. Lin Suhon, president of Chang Chun, based on his own experience of happily and smoothly cooperating with his German partner in an open and equitable way, suggests that alliances not only generate common benefits, they can truly build long-term friendship and understanding between the two sides. In this way, "there's no need to be afraid they'll just take the money and run." Affirms Lin: " When their economic interests are closely linked to our own, they will naturally stay here and set down roots."
Fair competition is the best method:
Some people wonder whether or not economic interests will become sacrificed to diplomatic ones under the label of "economic diplomacy." Will the burden of international relationships become a major consideration in deciding construction bids for the Six-Year Plan?
There are many examples of the ill after-affects of this kind of "political purchasing." There are certainly lessons close at hand. Spain just completed its high-speed railway last year. Under similar political pressures there was really no choice but to let France provide the cars and Germany the electrification system. In the end, the Germans and French ended up fighting and struggling with each other throughout the construction period until it became virtually an international joke. How can Taiwan avoid a similar fate?
"We don't need to be overly concerned about this problem at present," argues P.K. Chiang, political vice minister of Economic Affairs. Since the Six-Year Plan is public infrastructure, the primary consideration must be getting the job done right to benefit all the citizens. Other factors, like raising the level of economic and trade diplomacy, helping upgrade local firms, and so on are all subsidiary goals. At the same time, changes in the subjective and objective domestic and international environments mean that the oft-repeated objective of the Six-Year Plan to insure "open bidding and fair competition" must be thoroughly implemented, and cannot remain but a slogan.
First, this year will be critical in the efforts of Taiwan to enter GATT. And open, fair, nondiscriminatory treatment is the watchword of GATT. For example, in the past, in order to rectify the trade imbalance with the United States, Taiwan permitted imports of alcohol and tobacco products from there, and today the European countries are demanding similar treatment, creating extreme pressure on Taiwan. If there is "a fix on" just to win someone's friendship so that a certain country wins a certain project, other countries, after getting wind of what's going on, will ask to be likewise permitted to get in on it, or will lodge protests. Wouldn't that be even more of a mess? Further, many countries have been heavily lobbying Taiwan, and there would be no way to "even things up" with some back-room maneuvering.
"All the countries that will bid on the high-tech items are advanced nations, and will be able to lose gracefully. Their only demand is that they get a fair chance to compete," says one economic official. And fair competition depends entirely on the managing agencies using specialized requirements. That is precisely the way for Taiwan to maintain strict neutrality and avoid "offending" any nation.
Equal mutual treatment without pressure:
From a more substantive angle, the number of competitors who will come is large. Naturally, for the buyer, this means more advantageous conditions will be offered, so this is absolutely a good thing. Thus, taking advantage of opportunities and periodically "fanning the flames" will give all competitors confidence and enthusiasm about remaining here to stay in this competitive market; this is an indispensable technique.
Further, Taiwan's political environment is radically changing, which is another reason why "open tenders, fair awarding" is essential.
"In the past, under the authoritarian structure, if the word was out that the American bid should win, then the American bid won," points out C.P. Chang. But now there is oversight from an aggressive Legislative Yuan and opposition party, and if things aren't done precisely according to the letter of the auditing and tender laws, there will immediately be accusations of "collaborating to promote the interests of others," and who wants to have to carry that label around?
Besides a strong legislature, with the development of democratic politics, various interest groups are both "numerous and vocal" with their opinions. For example, there were endless disputes over land acquisition and the proposed routes of transportation projects, which all affected the pace of the projects. This caused the foreign firms who were anxious to get their orders settled to have to wait off to the side chomping at the bit.
Fortunately, under these circumstances, not only do foreigners understand, it's possible they are even ahead of the game. "In democratic countries, there are many affairs which require multilateral discussion between governments but which get stuck in parliaments, or, because the ruling party changes in an election, have agreements previously reached get scrapped," says Lillian Lin, deputy director of the Foreign Language Department of the Central News Agency, who has served long stints in Germany and Australia.
Thus, since Taiwan is now entering the ranks of the democratic countries, this naturally means that international society cannot just pressure all of it through a single point, and outsiders must hold their horses and give Taiwan more autonomy and more patient understanding.
Don't forget what it took to get here:
Coming back to where we were, the Six-Year Plan has captured international attention. It has created an excellent opportunity for Taiwan to get together with other countries in international society under principles of equal and reciprocal benefit. But J.C. Jang, deputy director of the Department of Operations of the Euro-Asia Trade Organization, who has followed the ups and downs of economic diplomacy for over a decade, cautiously reminds people: "When you look at how good things are today, don't forget how painful things were before."
Since the ROC on Taiwan suffered ruptures in official relations with ally after ally, citizens carrying their ROC passports have been discriminated against all over the world. It was just five years ago that ministerial level trade and economic officials from Taiwan, after being abandoned by international society for so long, finally got the courage up to go abroad, but even then they were turned away at the doors of the host country ministers. Then two years ago, when the Six-Year Plan was first being bruited, government and civic economic and diplomatic figures rushed overseas to explain it to foreigners and invite them to participate at every possible occasion, until finally it was the European and American ministers knocking on doors here instead .... J.C. Jang says that this outcome was the result of painstaking work, achieved bit by bit.
The Six-Year Plan is but an opportunity, and a beginning. If it can be handled carefully, and there is meticulous learning, its value won't just stop at the US$300 billion.
[Picture Caption]
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The visit to Taiwan of Carla Hills, the special representative of the United States Trade Office, is replete with significance. (Photo by Yen You)
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The Six-Year National Development Plan has not only gotten international attention; many local firms hope to take the opportunity to upgrade technology and expand their operations.
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German Deputy Chancellor and Economics Minister Juergen Moellemann came to Taiwan in his official capacity. (photo by Lu Chen-sheng)
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Taiwan is mountainous terrain, and tunnel building treacherous. Often it is necessary to bring in foreign technology and machinery. (photoby Diago Chiu)
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Expensive foreign engineering consultants play a key role in the Six-Year Plan. (photo by Vincent Chang)
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High-Ranking Officials Visiting ROC in the Last Two Years
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The Mucha line of the Taipei City Mass Rapid Transit System is nearing completion, and the French manufacured cars are already in the testing stage.
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