(Illustration by Lin Hsin-chieh)
Taiwan’s economic, social and sustainable development needs are to be met through a comprehensive and farsighted infrastructure plan.
On Aug. 31, the Legislature approved the first-term special budget of NT$107.07 billion (US$3.57 billion) for the Forward-looking Infrastructure Development Program (FIDP). Running from September 2017 to August 2021, the NT$420 billion (US$14 billion) initiative is aimed at meeting Taiwan’s development needs for the next 30 years and ensuring future generations enjoy greater prosperity.
The timing of the FIDP is opportune. In recent years, overall investment spending in Taiwan has been sluggish, with investment by government agencies and state-run enterprises showing negative growth. Funding for public infrastructure has also decreased yearly after hitting a peak in 2008.
These trends were highlighted in the 2016-2017 Global Competitiveness Report published by Geneva-based World Economic Forum (WEF), where Taiwan ranked 13th in infrastructure among the 138 economies surveyed. In comparison, the country placed 12th and 11th, respectively, in the 2015-2016 and 2014-2015 editions of the WEF report.
|
|
Full Effort
National Development Council Minister Chen Mei-ling (陳美伶) believes no effort can be spared in implementing the FIDP. “Taiwan needs to start building the infrastructure of tomorrow so as to support its development needs and respond to the latest industrial, technological and lifestyle trends at home and abroad,” she said. “By increasing infrastructure investment, the government will lead the way in stimulating the economy and accelerating its transformation and upgrade.”
The FIDP comprises eight categories: aquatic environments to build resilience against climate change, child care facilities to address declining birthrates, digitalization to create a connected nation, food safety to protect consumers’ health, green energy to ensure environmental sustainability, human resources to boost employment, railway development to provide convenient and safe transportation and urban-rural projects to balance regional development. It is projected to add NT$470.5 billion (US$15.7 billion) to Taiwan’s real gross domestic product (GDP) growth, contributing an average 0.1 of a percentage point to real GDP in each of its four years.
Public infrastructure spending, Chen said, serves to spur job creation, attract private investment and improve citizens’ well-being and quality of life. “We’ve selected the most important and meaningful projects for inclusion in the program,” she said. “They can help tackle many economic, environmental and social challenges, as well as build strong foundations upon which the nation can grow and prosper.”
Wu Chung-shu (吳中書), president of Taipei City-based Chung-Hua Institution for Economic Research (CIER), said Taiwan’s economic growth has been less than stellar in recent years, citing the low figures of 1.5 percent in 2016 and 0.7 percent 12 months before. At the same time, government spending on infrastructure declined.
|
|
“The launch of the FIDP could well turn the tide and give the economy badly needed momentum,” Wu said. “If rolled out efficiently and in a sustainable manner, the program will generate private investment and lead to more dynamic growth.”
Real Challenge
But the issue of the day for the government, Wu said, is making sure there is an equal emphasis on hard and soft infrastructure. In the past, priority was given to physical facilities or installations such as airports, bridges and roads over human capital, legal and regulatory frameworks, and public services.
“Both kinds of infrastructure are crucial for the economic, social and cultural advancement of a nation,” Wu said. “The government must focus on drafting detailed FIDP action plans so as not to overlook the soft infrastructure compo-nents of the program.” Tackling unemployment and raising wages and living standards are essential in giving the FIDP a fighting chance, he added.
Wu is on the same page when it comes to the unsung hero of infrastructure development. Including talent development and public services improvement through digital channels in the FIDP is a good idea, he said, as is harmonizing local laws with international standards. “High-quality soft infrastructure is key to unlocking the potential of an economy and facilitating business development, investment, innovation and trade.”
|
|
Full Access
A nation’s competitiveness hinges on all members of society having access to a broad range of economic activities and social services. This is a fundamental right of citizens as it gives them a greater say in the development and improvement of their own lives, according to Wu.
At the same time, effective implementation of the FIDP plays a critical role in its success. “Central and local governments must closely coordinate in responsibly allocating resources,” he said, stressing the importance of a transparent evaluation and monitoring mechanism for assessing outlays versus results. This view is shared by the Legislature, which required funding for the program to be divided into three terms with each subject to review before the next is approved.
Tsai Ming-fang (蔡明芳), an associate professor in the Department of Economics at Tamkang University in New Taipei City, said the FIDP may well turn out to be a powerful weapon in the government’s arsenal for combating the effects of climate change. “We’re living in a world where the pace of change is accelerated by powerful forces like global warming and technological innovation. Consequently, new and better ways of doing what is needed for the future of Taiwan must be found.”
According to Tsai, significant investment in renewable energy under the FIDP is a viable way for the country to wean itself off nuclear power and eliminate related environmental, health and safety concerns. Similar spending on aquatic environments will safeguard drinking water quality and source reliability while mitigating the impact of flooding.
The other categories are no less important, Tsai said, singling out railway development and its role in establishing an integrated transportation network featuring high-speed and traditional rail systems, as well as metros and light rail. “Interconnected public transport systems are vital in reducing travel times and driving the tourism industry.”
|
|
Sound Policy
Upgrading Taiwan’s energy, information and communication technology, transport and water supply represents sound policymaking and provides the services one expects in a fully industrialized nation, Tsai said. “It also produces a more livable society in which all members can share in the benefits of modern living.”
Such a philosophy extends to bridging the urban-rural divide via equitable distribution of resources and economic activity. This is particularly important when it comes to rural areas increasingly populated predominantly by seniors as a result of the younger generations moving to the cities for education and employment. Greater spending on infrastructure in these parts of Taiwan is expected to help create healthier business climates conducive to entrepreneurship and innovation. This will entice young people to return home and, as a result, strengthen the financial and social fabric of the local community, according to Tsai.
FIDP projects relating to child care facilities, food safety and human resources can also have a positive effect on tough social issues like consumer protection, fertility rates and employment. But Tsai cautions that real progress will be difficult to achieve without central and local governments getting on the same page when it comes to coordinating existing and proposed projects. “There’s a need to understand how to use the FIDP as a platform for supporting parallel undertakings such as the five-plus-two innovative industries initiative,” he said.
The initiative is at the vanguard of government efforts to revitalize Taiwan’s economy. It targets the five emerging and high-growth sectors of biotech and pharmaceuticals, green energy, national defense, smart machinery and Internet of Things, as well as focuses on promotion of two core concepts: circular economy and a new paradigm for agricultural development.
|
|
Another possible pitfall Tsai sees in carrying out the FIDP is an unwillingness to look abroad for solutions to local problems. “Japan, for example, has advanced railway technologies, while Singapore boasts rich water management experience,” he said. “Through cooperation with foreign counterparts, we can try to acquire core technologies and cultivate homegrown tech talent.”
There is no question that world-class infrastructure and well-established services are essential in achieving higher living standards, greater economic growth and lasting prosperity, Tsai said. “The FIDP has every chance to be a winning formula for Taiwan.”
