untitled - taiwan business topics

4 taiwan business topics • september 2015

C O N T E N T S

SEpTEmbEr 2015 vOlumE 45, NumbEr 9一○四年九月號

Publisher 發行人

Andrea Wu 吳王小珍

Editor-in-Chief 總編輯

Don Shapiro 沙蕩

Associate Editor 副主編

Tim Ferry 法緹姆

Art Director/ 美術主任/Production Coordinator 後製統籌

Katia Chen 陳國梅

Manager, Publications Sales & Marketing 廣告行銷經理

Caroline Lee 李佳紋

Translation 翻譯

Jay Chen, Yichun Chen, Charlize Hung

陳正杰, 陳宜君, 洪兆怡

Chairman/ Thomas FannVice Chairmen/ Scott Meikle / Dan Silver Treasurer: Cosmas Lu Secretary: Fupei Wang

2014-2015 Governors: William E. Bryson Jr., Sean Chao, Rodney Van Dooren, Cosmas Lu, Scott Meikle, Dan Silver, Gordon Stewart, Ken Wu.

2015-2016 Governors:Margaret Driscoll, Thomas Fann, Ajit Nayak, Vincent Shih, Stephen Tan, Fupei Wang, Lee Wood.

2015 Supervisors: Arthur Cozad, Kai Speth, Neal Stovicek, Wern-Yuen Tan, Neil Waters.

COMMITTEES: Agro-Chemical/ Melody Wang; Asset Management/ Christine Jih, Derek Yung; Banking/ Victor Kuan; Capital Markets/ C.P. Liu, Shirley Tsai; Chemical Manufacturers/ Michael Wong; CSR/ Lume Liao, Fupei Wang; Customs & International Trade/ Stephen Tan; Education & Training/ Robert Lin, William Zyzo; Greater China Business/ Helen Chou, Cosmas Lu; Human Resources/ Richard Lin, Seraphim Mar, Vickie Chen; Infrastructure/ L.C. Chen, Paul Lee; Insurance/ Arthur Cozad, Joseph Day, Dan Ting; Intellectual Property & Licensing/ Jason Chen, Peter Dernbach, Jeffrey Harris, Vincent Shih; Marketing & Distribution/ Wei Hsiang, Gordon Stewart; Medical Devices/ Cyndi Chang, Tse-Mau Ng, Dan Silver; Pharmaceutical/ Margaret E. Driscoll, David Lin, Jun Hong Park; Private Equity/ William Bryson; Public Health/ Jeffrey Chen, Dennis Lin; Real Estate/ Tony Chao; Retail/ Prudence Jang, Ajit Nayak, Wern-Yuen Tan; Sustainable Development/ Kenny Jeng, Kernel Wang; Tax/ Stella Lai/ Cheli Liaw, Josephine Peng; Technology/ Revital Golan, Scott Meikle, Jeanne Wang; Telecommunications & Media/ Thomas Ee, Joanne Tsai, Ken Wu; Transportation/ Michael Chu; Travel & Tourism/ Anita Chen, Pauline Leung, Achim v. Hake.

American Chamber of Commerce in Taipei

129 MinSheng East Road, Section 3, 7F, Suite 706, Taipei 10596, TaiwanP.O. Box 17-277, Taipei, 10419 TaiwanTel: 2718-8226 Fax: 2718-8182 e-mail: [email protected]: http://www.amcham.com.tw

名稱：台北市美國商會工商雜誌發行所：台北市美國商會

臺北市10596民生東路三段129號七樓706室電話：2718-8226 傳真：2718-8182

Taiwan Business TOPICS is a publication of the American Chamber of

Commerce in Taipei, ROC. Contents are independent of and do not

necessarily reflect the views of the Officers, Board of Governors,

Supervisors or members.

© Copyright 2015 by the American Chamber of Commerce in Taipei,

ROC. All rights reserved. Permission to reprint original material must

be requested in writing from AmCham. Production done in-house,

Printing by Farn Mei Printing Co., Ltd.

登記字號：台誌第一零九六九號

印刷所：帆美印刷股份有限公司

經銷商：台灣英文雜誌社台北市108台北市萬華區長沙街二段66號

發行日期：中華民國一○四年九月

中華郵政北台字第5000號執照登記為雜誌交寄

ISSN 1818-1961

NEWS AND VIEWS

6 Editorial The TIFA Opportunity TIFA會談:機不可失

7 Taiwan Briefs By Timothy Ferry

11 ISSUESReviewing Regulatory Reasonableness; Helping Firms Win Taiwan Government Contracts

檢討法規合理性；協助美國企業獲得台灣政府採購案

By Don Shapiro

TAIWAN BUSINESS

25 “Hidden Champions” Tapping Niche Markets The government is recognizing and assisting smaller but high-performance companies to help them reach their potential.

By Philip Liu

TECHNOLOGY

28 In Search of IT BalanceGovernment procurement can play a key role in developing Tai-wan’s software market.

By Molly Reiner

COVER SECTION By Matthew Fulco 撰文/傅長壽

14 Taiwan’s 4G Blues 台灣的4G困局 Despite flat-rate data packages pinch-

ing the margins of telecom operators and creating network congestion, consumers are still signing up for 4G in droves.

20 Internet Piracy Undermines Entertainment Industry

Content owners urge the blocking of China-based websites that host a huge variety of unlicensed program-ming free of charge.

22 Cable TV Acquisition is a Complex Deal

In the first big consolidation in the Taiwanese telecom and media sector in five years, Morgan Stanley and Far EasTone are playing leading roles.

9 Contents.indd 4 2015/9/4 10:11:44 AM

taiwan business topics • september 2015 5

september 2015 • Volume 45 number 9

32 Carbon Abatement and Energy Supply

Anti-nuclear sentiment has been matched by enthusiasm for renewable energy and efforts to help combat global climate change.

35 Phasing Out Nuclear Power A “nuclear free homeland” has become

the goal of both major political parties.

38 Is Taiwan’s Energy Future in Renewables?

The goal has wide political support, but the challenges are immense, especially when abandoning nuclear energy is cou-pled with stringent targets for reduced greenhouse-gas emissions.

BEHIND THE NEWS

44 When Faith and Money CollideProposed legislation would require reli-gious foundations to establish internal financial auditing systems.

By Jens Kastner

AMCHAM EVENT

47 2015 CSR ForumHearing from the Younger Generation

By Ying Han Gan

INDuSTrYF CuS

Special Report on Energy

Growing Challenges

By Timothy Ferry

Driving investment, trade and the creation of wealth across Asia, Africa and the Middle East

Standard Chartered is a leading international banking group, with more than 86,000 employees and a 150-year history in some of the world’s most dynamic markets. We bank the people and companies driving investment, trade and the creation of wealth across Asia, Africa and the Middle East, where we earn around 90 percent of our income and profits. Our heritage and values are expressed in our brand promise: Here for good.

Standard Chartered PLC is listed on the London and Hong Kong Stock Exchanges as well as the Bombay and National Stock Exchanges in India.

In Taiwan, after three incorporations between 2006 and 2008, Standard Chartered Bank (Taiwan) Limited now has full coverage of service to individual and corporate clients in Taiwan via nearly 3,700 staff in Taiwan. Since its estab-lishment in 1985, the Bank has been leveraging its worldwide network to bridge clients to its 71 markets. With its solid experience in RMB business, Standard Chartered was the first to set up an RMB 2-way sweeping cash pool for Taiwan-ese corporates in the Shanghai Free Trade Zone, as well as among the first batch of banks offering RMB loans via the inbound loans programs in Xiamen, China. We are also the first bank to pen an MOU with the Bureau of Foreign Trade to promote trade between Taiwan and India.

The Bank has three key sustainability priorities: contributing to sustainable economic growth, being a responsible company and investing in communities. The Bank has been promoting its Seeing is Believing program for more than 10 years to help tackle avoidable blindness in developing countries. In Taiwan, the Taipei Standard Chartered Charity Marathon attracts more than 37,000 runners every year. As a charity race to promote diversified employment for the visually impaired (VI), it is also the race with the largest VI participation in Taiwan. The Bank also supports the Standard Chartered Financial Education Academy, which impacts over 10,000 elementary school students and teachers every year.

For further information please visit www.sc.com/tw/

Standard Chartered bank (Taiwan) limited

COvEr SpONSOr

9 Contents.indd 5 2015/9/4 10:11:47 AM


每年一度的台美貿易暨投資架構協定（TIFA）會談，

將為相關議題提供一個非常重要的高層對話平台，

有助於進一步提升雙邊經貿關係。台灣參加TIFA聯

席委員會議的代表團由經濟部次長領軍，美方則由美國副貿

易代表主談。

2015年TIFA會議預料將於下個月初在台北舉行，雖然因日

程安排上碰到困難，使得今年會談舉行的時間比平常晚，但

此次會談可能特別重要。台北市美國商會今年六月前往華府

進行年度「叩門之旅」時，討論的主要話題之一是台灣參與

跨太平洋夥伴協定（TPP）第二輪談判的重要性，以及台灣

需要清楚展現信守自由與公平貿易原則的決心，以確保美國

政府支持台灣成為TPP候選國家。

對華府的許多人來說，TIFA會談的成功與否會是檢視台灣

是否「準備好」加入TPP的重要指標。但如何衡量成功呢? 如

果是化解雙邊貿易全部的紛歧，包括最敏感的爭議點，都不

切實際。該注意的是若干關鍵議題要有實質進展，而且雙方

要能有良好具建設性的對話，找出解決剩餘問題的途徑。

台北市美國商會認為，這次TIFA會談發揮正面效益的可能

性非常高。對於在台美商關心的多項關鍵議題，台灣與會代表

都將可以列出具有建設性的初步發展，例如台灣食品藥物管

理署在經濟部智慧財產局支持下，正在建立藥品專利資料庫，

做為一個新系統的基礎，要確保創新藥品的智慧財產權在專利

到期為止前獲得保護。環境保護署與勞動部原本各自著手建立

新化學產品的登記制度，如今在國家發展委員會的協調撮合之

下，這兩個部門已經在努力調合彼此的規定及程序。

此外，經濟部投資審議委員會與金融監督管理委員會在設

法使外國投資審查過程中要求的標準更一致、更明確，讓審

查過程因此更加透明化。台灣當局也在設法透過修法與強化

執法機制，加強對商業機密的保護。

過去在這些方面，都已有好的進展。TIFA會談應該針對這

些努力更進一步的提昇，以訂出明確的時間表和具體措施，

使目標成為事實。

TIFA聯席委員會與會人士在討論時，也可能檢視因台灣監

管制度而衍生出的許多問題的根本原因。其中一項是經常不

顧國際標準做法，採行只有台灣才有的規定。此舉往往影響

到企業經營的成本，也使經營變得相對困難。另一個原因是

在訂定規則的過程不夠透明化，跟利益相關各方的諮商也不

夠。幸好台灣當局已經表示知道有這些問題，也願意改善。

因為有這些正面的跡象，台北市美國商會認為即將舉行的

TIFA會談是個非常好的機會，應該要充分利用。

The annual talks under the U.S.-Taiwan Trade and Invest-ment Framework Agreement (TIFA) provide an invaluable platform for high-level dialogue on relevant issues in the

interest of further strengthening the bilateral economic relation-ship. The Taiwan delegation to these TIFA Council meetings is headed by a Vice Minister of Economic Affairs and the American side by a Deputy U.S. Trade Representative.

The 2015 TIFA Council is expected to be held in Taipei early next month. Although that will be somewhat later in the year than customary due to some scheduling difficulties, this year’s meeting is likely to take on unusual significance. During AmCham Taipei’s Doorknock visit to Washington, D.C. this June, one of the main topics of discussion was the importance for Taiwan of gaining second-round entry into the forthcoming Trans-Pacific Partnership (TPP) trade grouping – and the need for Taiwan to clearly demonstrate its commitment to principles of free and fair trade in order to assure solid U.S. government support for its eventual TPP candidacy.

For many in Washington, the degree of success of the TIFA Council session will surely be taken as a critical gauge of Taiwan’s “readiness” for TPP. How should that success be measured? It would be unrealistic to expect quick resolution of all – or the most sensitive – of the outstanding bilateral trade issues. Instead, it will be vital to see material progress on a number of key issues, plus a productive dialogue between the two sides to identify paths forward for solving the remaining problems.

AmCham Taipei considers that the prospects for a posi-tive TIFA Council should be excellent. On several key issues of concern to the Taiwan-based U.S. business community, the Taiwan delegation will be able to report constructive initial devel-opments. With support from the Taiwan Intellectual Property

Office, for example, the Taiwan Food and Drug Administration is at work on creating a pharmaceutical patent database to serve as the basis for a system to ensure effective IPR protection for orig-inal drugs until their patents expire. With encouragement from the National Development Council, two government agencies that independently started to establish registration systems for new chemical products – the Environmental Protection Admin-istration and the Ministry of Labor – have made an effort to harmonize their regulations and procedures.

Further, the Investment Commission and the Financial Super-visory Commission have been seeking to make the foreign-investment approval process more transparent in terms of the consistency and specificity of the criteria being applied. And the Taiwan authorities have sought to improve trade-secret protec-tion through improved legislation and enforcement mechanisms.

In all of these areas, there has been good news. What will be needed at TIFA is to take these and similar initiatives to a new level by outlining a firm timeline and concrete measures to bring the objectives to reality.

The TIFA Council discussion is also likely to include an examination of the root causes for many of the difficulties that arise in Taiwan’s regulatory system. One is the frequent disre-garding of standard international practice to adopt unique-to-Taiwan rules that affect the cost and ease of doing business. Another is the lack of sufficient transparency and consultation with stakeholders in the rules-making process. Thankfully, the Taiwan authorities have shown an awareness of these issues and a willingness to address them.

As a result of these hopeful signs, AmCham looks forward to the upcoming TIFA talks as a prized opportunity that must be taken full advantage of.

The TIFA Opportunity

TIFA會談: 機不可失

E d i t o r i a l

9_Editorial.indd 6 2015/9/4 7:44:59 AM

t a i w a n b r i e f s


— by TIMOTHy ferry —

M A C R O E C O N O M I C

GDP GrOwtH PLUMMets On faLLinG eXPOrts

Economics i s sure ly an inexact

science, as indicated by the massive

recalculation currently going on for

Taiwan’s GDP growth forecasts for

2015. On August 14, the Director-

ate-General of Budget, Accounting

and Statistics (DGBAS) slashed growth

forecasts for the year from the 3.75%

announced a t year ’s s t a r t to ju s t

1.56%. Of the numerous factors cited

as responsible for the decrease, the

most immediate was the steep decline

in export figures for the trade-driven

economy. While Taiwan’s GDP primar-

ily consists of services, which generate

nearly 70% of economic activity, exports

are usually the main driver of growth.

Total trade fell by 11.3% through

July, according to the Bureau of Foreign

Trade under the Ministry of Economic

Affairs, coming to US$302.57 billion for

the seven-month period. July alone saw

a 14% drop. Exports outpaced imports

once again, but nevertheless declined

by 7.8%, to US$165.97 billion, for the

January-July period. Imports declined

at a steeper rate, by 15.3%, to reach

US$136.59 billion.

The pain was felt in most major

export sectors, particularly heavy indus-

tries such as steel and chemicals, which

saw decl ines of 12.6% and 15.9%

respectively. Electronics and machin-

ery, which together contribute 48.6%

of Taiwan’s exports, declined at a far

slower pace of 2.7%.

Exports to China, which account for

38.9% of Taiwan’s total exports, contin-

ued their slump, falling by 11.9% in July

for a 9.4% decline for the year’s first

seven months. The impact of China’s

sagging economy is likely partly to

blame, but as most exports to China are

components and materials for assem-

bly into finished products intended for

overseas destinations, the more likely

culprit is a surging US dollar that has

pushed up prices for electronics by 10%

in many markets, according to technol-

ogy research firm Gartner. The result

is that consumers are holding out for

better prices, leading to higher inven-

tory levels and lower shipments. Gartner

forecasts that sales of Taiwan’s IT prod-

ucts will decline by 5.5% for the year,

citing the rising greenback but also stag-

nant growth in key markets. The EU,

for example, is forecast to register 0.5%

growth for the year, only slightly better

than Japan’s 0.1%.

Local technology research f irm

Trendforce sees tablet shipments drop-

ping by 14.9% in 2015 on the global

downturn and a lack of interesting new

features, noting that tablets have failed

to rise beyond their utility as simple

entertainment devices, leading to declin-

ing interest from consumers. On the

other hand, Trendforce sees DRAM ship-

ments – of which Taiwan has a major

share – maintaining volume but with

revenues declining on falling prices.

Unemployment inched upwards, from

3.71% in June to 3.82% in July, affected

by the entry of new graduates into

the job market. Housing transactions,

meanwhile, plunged to 16-year lows in

Taipei, with the number of sales down

by 15.7% year-on-year in Taipei City

and 24% in New Taipei City. Despite

the various pieces of bad news, Taiwan’s

consumers seemed to be taking things

in stride. Consumer confidence fell only

slightly in August, from 89.58 in July to

86.15 in August, according to National

Central University’s Research Center

for Taiwan Economic Development,

which conducts a monthly consumer

confidence survey. The consumer confi-

dence survey is on a scale from one to

200, with a score below 100 considered

a negative outlook. The record high for

the survey occurred in April this year,

when the survey peaked at 92.93.

Economic indicators (YEar EarliEr)

Unit: US$ billion Year Earlier

Current Account Balance (H1 2015)p 38.57 31.15

Foreign Trade Balance (Jan.-July) 29.4 18.8

New Export Orders (July) 36.3 38.2

Foreign Exchange Reserves (end July) 421.96 421.65

Unemployment (June) 3.71% 3.92%

Discount Rate (Aug.) 1.875% 1.875%

Economic Growth Rate Q1 2015p 3.37% 3.41%

Annual Change in Industrial Output (June)p -1.35% 8.57%

Annual Change in Industrial Output (Jan.-June)p 2.13% 4.48%

Annual Change in Consumer Price Index (June) -0.56% 1.64%

Annual Change in Consumer Price Index (Jan.-June) -0.65% 1.21%

sources: moea, DGbas,cbc, boFtp=preliminary

July

THE RED LINE SHOWS CHANGES IN TRADE VALUE AND THE SHADED AREA CHANGES IN THE TAIEX INDEX.

20

35

50

65

80

95

110

125

140

155

775080008250850087509000925095009750

10,000

taiwan stock ExchangE PErFormancE

unit: nt$ billionData source: twse

9_Briefs.indd 7 2015/9/4 9:33:34 AM



D O M E S T I C

tYPHOOn sOUDeLOr batters taiwan

Typhoon Soudelar slammed into

Taiwan’s northern coast on August 8,

making landfall at 5 a.m. with sustained

winds of 161 kilometers per hour and

gusts reportedly as high as 230 kph.

Schools, workplaces, and transporta-

tion networks were all shut down Friday

night as the typhoon neared. Six people

were killed and dozens injured by the

Category 3 (on the Saffir-Simpson Hurri-

cane Wind Scale) storm, which left a trail

of damage across the northern half of the

island, including flooding, downed trees,

and damaged structures. Up to four

million Taipower customers lost power,

and hundreds of thousands remained

without electricity for up to a week.

The typhoon was also instrumen-

tal in ending the standoff at the Ministry

of Education (MOE). Student protests

over “black box” high-school curricu-

lum changes that would view Taiwan’s

history more from the perspective of the

island’s relationship to China had rocked

the nation. But with the storm bearing

down on them, the student demon-

strators were forced to abandon their

encampments outside the MOE, effec-

tively ending their protest.

On the lighter side, the storm bent

two mailboxes on Longjiang Road, caus-

ing them to lean over at a funny angle

and creating an instant tourist attraction.

The mailboxes pulled in so many spec-

tators that Chunghwa Post considered

moving them to ease the instant traffic

congestion at the site. The postal service

reconsidered its decision in the face of

widespread criticism and the mailboxes

remain bent where they are.

taiwanese KiD riPs OLD art

A 12-year-old boy took an expen-

sive tumble at a Taipei art exhibition on

August 23, smashing a fist-sized hole

through a US$1.5 million, 350-year-old

Paolo Porpora painting entitled “Flow-

ers” while trying to break his fall. The

exhibition, “The Face of Leonardo,

Images of a Genius,” held at Huashan

1914 Creative Park, featured over 50

authentic works by prominent artists

from the Italian Renaissance to the 20th

century. Curator Andrea Rossi, though

shocked by the incident, asked that the

boy not be blamed or made to pay for

the cost of restoration. Despite interna-

tional headlines calling the incident one

of the most expensive art blunders in

recent history, Taiwanese art restoration

experts were able to repair “Flowers”

within two days of the accident.

eZ CarDs PrOVe seX seLLs anYtHinG

The EasyCard Corp. got into hot

water when it was revealed that the

some of the images it planned to use

on limited-edition stored-value cards

depicted a female Japanese pornographic

film star. The actress, 27-year-old Yui

Hatano, who is pictured clothed on the

cards, is apparently a fan of Taiwan,

releasing a statement saying she wanted

to participate in the program to help

raise money for charity. Despite the

kerfuffle, EasyCard stuck to its guns and

released the cards, though only via tele-

phone order after women’s groups and

politicians demanded that they not be

sold at retail outlets. The 15,000 cards

sold out within minutes, according to

media reports.

Lee tenG-HUi CaLLs JaPan eX-“MOtHerLanD”

Former pres ident Lee Teng-hui

placed himself once more at the center of

TYPHOON DAMAGE — Typhoon Soudelor blasted into northern Taiwan August 8, bringing devastating winds and wide-spread flooding.

photos:cna

9_Briefs.indd 8 2015/9/4 9:33:35 AM



controversy with remarks that referred to

Japan, former colonial master of Taiwan,

as his “motherland” when he was a

young man. In an article for a Japanese-

language publication, Lee noted that

both he and his brother volunteered for

the Japanese Imperial army during World

War II and that his brother died in the

war and his remains are interred in the

Yasukuni Shrine honoring Japan’s war

dead. Lee made the remarks as China

moves closer to marking the 70th anni-

versary of its victory in what is called the

War of Resistance against Japan, set for

September 3.

Unsurprisingly, Kuomintang (KMT)

loyalists took umbrage at these remarks,

with members of the party’s legislative

caucus calling him a traitor to the Han

Chinese people and arguing that one’s

motherland is where one’s ancestors

came from, which in Lee’s case would

be China’s Fujian Province. President

Ma Ying-jeou expressed dismay at Lee’s

remarks, calling them “shocking, hurt-

ful, and regrettable,” and accused him of

“selling out Taiwan.”

Tsai Ing-wen stepped into the contro-

versy by reminding citizens that “each

generation and ethnic group in Taiwan

has lived a different history,” and that

people should approach these differing

interpretations with an attitude of under-

standing that will allow for learning from

history, rather than allowing it to be used

a “tool for manipulating divisions.”

CHina stOCK MarKet PLUnGe Hits taiwan

C h i n a ’s b e n c h m a r k S h a n g h a i

Composite Index lost 40% of its value

from June, with shock waves felt around

the world, Taiwan included. The Taiwan

Stock Exchange (Taiex) dropped by

7.49% in 90 minutes on August 24, the

largest decline in a single session in the

history of the exchange. The market

closed down 376 points, or 4.84%, trig-

gering an August 25 decision to use the

National Financial Stabilization Fund

to invest in the market. That interven-

tion allowed the market to regain 10%

of its value over the following week. At

the beginning of September, the market

seemed poised to once again to enter

bear territory, however.

nDC UnVeiLs tOUrisM MeasUres tO bOOst GDP

In the face of declining exports and

diminished economic growth, the Execu-

tive Yuan announced on August 20 that

it was raising the number of Chinese

tourists granted Free Independent Travel

(FIT) visas by 1,000 per day for a new

daily total of 5,000. Raising the number

of Chinese allowed to travel under the

FIT program is just one of several policy

initiative revealed by National Develop-

ment Council Minister Woody Duh. Also

disclosed were initiatives waiving visa

entry fees for tour groups from several

South and Southeast Asian countries,

including India, Indonesia, Thailand,

Vietnam and the Philippines, and reduc-

ing the threshold for tourists to claim

sales-tax refunds on their purchases.

Duh also said that companies with over-

seas offices would be encouraged to bring

their employees to Taiwan for meetings

or visits under a new program that would

waive visa fees for such visitors. These

initiatives are expected to increase tour-

ism revenue by some NT$8.85 billion by

the end of 2015, the NDC said.

VOLUnteer arMY DeLaYeD aGain

For the second time, the Ma Ying-

jeou administrat ion’s plans for an

all-volunteer armed forces have been

delayed as the military has once more

failed to meet its recruitment needs.

Originally planned for 2014, the push

for an all-volunteer force was postponed

to January 1, 2016. Last month the

Ministry of National Defense (MND)

reported that the target date would be

pushed back one year to 2017, although

i t had already reached 70% of i ts

recruitment goals. The postponement

will impact 23,100 males who are set to

turn 18 shortly.

A n M N D s t a t e m e n t s a i d t h a t

conscription needs to remain in effect

due to “hostile threats from the enemy”

and “escalating tensions in the region.”

An all-volunteer army has been seen as

a solution to low morale of Taiwan’s

draftees and the need by a modern mili-

tary for more professionally trained

personnel. Ending conscription has been

considered one of President Ma’s more

MOTHER JAPAN — Former president Lee Teng-hui fields reporters' questions con-cerning statements he made about Taiwanese fighting for Japan in World War II.

photo: cna

9_Briefs.indd 9 2015/9/4 9:33:36 AM



significant policy initiatives, and critics

called the failure to implement the plan a

“bounced check.”

tainan MaYOr enDs CitY COUnCiL bOYCOtt

Tainan mayor William Lai ended

his 234-day boycott of the Tainan City

Council to give policy remarks as the

city addresses a dengue fever outbreak

that has sickened 2,500 people and

killed four. Lai, who belongs to the

opposition Democratic Progressive

Party (DPP), had boycotted the coun-

cil meetings to protest what he deemed

the mishandling of an investigation of

alleged vote-buying by council speaker

Lee Chuan-chiao of the KMT. Lai’s

boycott had been highly controversial,

and he was impeached by the Control

Yuan for “gross negligence” and faces

possible removal from office.

sOOnG enters raCe fOr PresiDenCY

People First Party (PFP) chairman

and veteran politician James Soong

threw his hat into the presidential race

as a third-party candidate, vowing to

end decades of bitter partisanship that

has divided the nation. “Collabora-

tion instead of endless confrontation is

our only way out of this mess,” he was

quoted as telling the media, adding that

his experience and resolve would allow

him to put Taiwan on the correct path.

Soong, a popular governor of Taiwan

Province in the 1990s, previously ran

for president as an independent in 2000

after being denied by KMT nomina-

tion. He garnered 36.8% of the vote in

a three-way contest that saw him lose to

the DPP’s Chen Shui-bian.

In 2004 he partnered with former

rival Lien Chan of the KMT, taking the

vice presidential slot on the ticket, but

Chen Shui-bian won reelection by a

margin of only 0.22% of the vote. In a

2006 run for Taipei city mayor, Soong

obtained only 4% of the vote, and he

ran once again for president in 2012 as

the PFP candidate and gained less than

3% support. The PFP, which Soong

founded in 2000, has been considered

– along with the KMT – as constituting

the “blue camp” in Taiwan politics, as

opposed to the “green camp” of the DPP

and Taiwan Solidarity Union. Soong’s

entrance into the race is therefore seen as

hurting the KMT more than the DPP.

HUnG faCes DOUbts OVer CaMPaiGn

KMT presidential nominee Hung

Hsiu-chu continued to face questions

over whether she will continue to run

in the race or step down in favor of a

stronger candidate. Reports continue

to circulate that the KMT is dissatisfied

with her candidacy, and some pundits

have speculated that she might be asked

to accept the party nomination for vice

president instead. So far, support for her

campaign has been tepid. Hung, who

is deputy legislative speaker, is trail-

ing DPP candidate Tsai Ing-wen badly

in recent polls, and the entrance of PFP

chairman and perennial candidate James

Soong only seems to be siphoning off

much needed support. A poll taken at

the end of August by the Taiwan Indica-

tors Survey Research organization found

support for Tsai at 37.1%, followed by

Soong at 21.6%, with Hung trailing at

only 13.9%.

20142015

20142015

20142015 20142015

2014201520142015

U.s.a

HK/china Japan totalasEan

Europe

Exports imports UNIT: US$ BillionSOURCE: BOFT/MOEA

28.3

71.2

26.3

64.5

11.2

24.5

20.2

15.4 19

.816

.2

14.8

16.6

16.9

18.2

22.8

11.3

33.9

19.8

17.2

29.9

166

136.

6

180.

116

1.3

taiwan's JanUarY - JUlY 2015 tradE FigUrEs (YEar-on-YEar comParison)

ONE MORE TIME — Perennial presidential candidate James Soong has once again entered the race for the presidency.

photo: cna

9_Briefs.indd 10 2015/9/4 9:33:37 AM


Issues

Should dishwashing detergent be governed by the food

safety law? Should marketing surveys for cosmetics

require approval by an independent review board?

Through the annual Taiwan White Paper and other chan-nels, AmCham Taipei has sought to call attention to laws and regulations that, while well-intended, have the inadvertent

consequence of impairing Taiwan’s economic competitiveness and even disadvantaging consumers. Some such cases arise from the creation of unique-to-Taiwan regulations that are out of step with standard inter-national practices, imposing a heavy compliance burden on businesses. Some others reflect a rules-making process that fails to allot sufficient time for industry and other relevant stakeholders to be consulted and provide feedback.

A new case cited by the Chamber’s Retail Committee exhibits both of those shortcomings. It involves a section of the Food Safety and Sanitation Act (FSSA) that came into effect with little notice in June 2013, at a time when considerable public attention was focused on the question of food safety following a series of food-related scandals. One article of the law deals with “food cleansers,” and seems intended to ensure that substances used to clean food items pose no risk to human health, a thoroughly reasonable goal. But the definition of “food cleansers” given in the law is so broad as to encompass not only substances used directly to disinfect or clean foods but also those used to clean “food utensils, food containers, and food packaging.”

Recently the Taiwan Food and Drug Administration (TFDA) has notified distributors of dishwashing detergent that their products are deemed to be “food cleansers” and thus subject to the provisions of the FSSA. In line with that determination, the regulators have insisted that only food-grade flavorings and colorants may be included among a detergent’s ingredients – even though the product obviously is not meant for human consumption. Further, the ruling was imposed abruptly, effective immediately, with no grace period allowed for companies to alter their product formulas or labeling.

Regulating dishwashing detergents under the FSSA also impacts the way they can be marketed. TFDA has interpreted the legislation as prohibiting “food cleansers” from making various advertising claims, such as being natural or organic, or having an anti-bacterial function. If detergents were instead treated as general consumer products, which is how they are classified in other markets, such claims would be allowed by the Fair Trade Commission as long as they can be substantiated.

Another new development is a determination by the TFDA that consumer surveys regarding cosmetics products need to be conducted under the provisions of the Human Subjects Research Act of 2011. That law previously was frequently applied to pharmaceuticals and medical devices, and was meant to protect consumer rights during clin-ical trials and other testing. Before such research can be carried out, the proposed protocol must be approved by an independent, third-party institutional review board (IRB). While performing their duty

Reviewing Regulatory Reasonableness

洗碗精應否劃歸食品安全法管轄？化妝品

市場調查是否須經人體試驗委員會批准？

台北市美國商會透過每年的《台灣白皮書》

和其它管道，希望喚起外界注意，台灣有

些法規雖立意良善，卻在無意間削弱台灣

的經濟競爭力，甚至無利於消費者。其中部分個案

肇因於台灣制定了獨樹一幟的法規，悖離國際標準

作法，導致企業為了遵守規定而背負沉重的負擔。

還有些個案反映法規制定過程的缺失，事前未給予

充分的時間諮詢和聽取業界與相關人士的意見。

本商會零售委員會茲舉一件可反映前述兩大缺

失的新事例：台灣食品安全衛生管理法中有一項

條文在幾乎未引起注意的情況下，於2013年6月生

效。當時台灣剛經歷一連串食安醜聞，輿論的注意

焦點大多放在食安問題上。該法中有一條針對「食

品用洗潔劑」的規定，其立意似乎是希望確保用於

清洗食品的物質不會對人體健康構成威脅。這是絕

對合理的目標。不過該法對「食品用洗潔劑」的定

義極為廣泛，不只涵蓋直接用於消毒或洗滌食品的

物質，還包括用於清潔「食品器具、食品容器或包

裝」的物質。

台灣食品藥物管理署最近通知洗碗精經銷商，表

示其產品屬於「食品用洗潔劑」，因此須遵守食品

安全衛生管理法的規定。主管機關根據前述裁量結

果，堅持洗碗精原料只能使用食品級的香料和著色

劑――即使該產品的用途明顯並非供人類食用。而

且這項規定是突然強制實施，且立即生效，並未給

予業者更改產品配方或標籤的緩衝期。

將洗碗精劃歸食品安全衛生管理法管轄，也衝

擊到產品的行銷策略。根據食藥署對該法的詮釋，

「食品用洗潔劑」的廣告不得標榜天然、有機或抗

菌等訴求。但若按照其它市場的分類規定，將洗碗

精改列為一般消費性產品，那麼根據台灣公平交易

委員會規定，只要能提出證明，廣告其實就可標榜

這些訴求。

另一項新發展則是食藥署決定，涉及美妝產品的

消費者調查須按照2011年頒布的人體研究法規定

進行。該法過去常適用於藥品和醫療器材，目的是

要保護消費者在參加產品臨床實驗和其它測試期間

的權益。該法規定，在進行人體實驗前，研究計畫

檢討法規合理性

9_Issues.indd 11 2015/9/4 7:46:11 AM


Issues

of reviewing cosmetic product advertising, TFDA staff noticed refer-ences to the results of consumer surveys and reminded cosmetics companies that they also need to abide by the IRB process since the surveys relate to products touching the human body.

For focus groups and other marketing surveys, the logic of requiring such a review is elusive, especially when the cosmetic prod-ucts are already for sale on the market, with the safety of the finished products and their ingredients having been evaluated and approved by the TFDA. Yet the burden on industry is considerable. The IRB procedure is expensive (thousands of U.S. dollars per case) and time-consuming, as the board members, moonlighting from academic or other positions, convene only periodically.

No other country in the world regulates detergents under food-safety provisions or subjects cosmetic consumer surveys to such stringent procedures. In both cases the regulator neither consulted with industry about the potential impact nor provided a suitable grace period to prepare for enforcement.

“The result is to raise the cost of doing business, lessen the attrac-tiveness of this market for multinational companies, and possibly even reduce consumer choice,” says AmCham Taipei president Andrea Wu. “Last year the government did a survey and identified regulations in Taiwan that are out of sync with international norms. Here are two more to add to the list.”

— By Don Shapiro

須經獨立的第三方人體試驗審查委員會批准。食藥

署人員在審查美妝產品廣告時，注意到廣告中提及

消費者調查的結果，因而提醒美妝產品業者，須事

前取得人體試驗委員會批准，因為這類產品調查涉

及人體。

對焦點團體之類的市場行銷調查而言，主管機關

要求審查的理由實在令人費解，尤其是已上市銷售

的美妝產品，其成品和成分的安全性早就經食藥署

審核、批准。新規定已對業者造成可觀的負擔。這

類審查不但費用昂貴（每件申請案需數千美元），

而且耗時，因為委員會成員是由學者或其他人士兼

任，偶爾才會召開會議。

全世界沒有其它國家將洗碗精納入食品安全法規

管轄，或要求美妝產品消費者調查須通過如此嚴格

的人體試驗審查程序。在前述兩個例子中，主管機

關既未針對可能引發的衝擊事先諮詢業界意見，也

未提供適當的緩衝期讓業者在新規定實施前有所準

備。

本商會執行長吳王小珍表示，「這會導致經商成

本增加，削弱台灣市場對跨國業者的吸引力，而且

甚至可能讓消費者的選擇變少」，「台灣政府去年

曾進行調查，試圖找出台灣法規不符合國際規範之

處；現在又多了兩個實例」。

— 撰文/沙蕩

From her base in Washington, D.C., Xiaobing Feng, regional manager for Asia of The Advocacy Center under the Depart-ment of Commerce’s International Trade Administration,

recently spent several weeks in Taiwan looking at opportunities for increased participation by American companies in Taiwan’s govern-ment procurement. In 2014, U.S. companies won 179 contracts worth US$276 million out of a total of 417 contracts (valued at US$1.1 billion) awarded to foreign firms.

At a meeting attended by both AmCham Taipei member compa-nies and local suppliers, Feng encouraged businesses to avail themselves of The Advocacy Center’s services by contacting the Amer-ican Institute in Taiwan’s Commercial Section when competing for government procurement. Although established in 1992, the Center has become more active in recent years as the Obama Administration has stepped up efforts to promote American business overseas.

The Center defines its role as “coordinating U.S. government resources and authority in order to level the playing field on behalf of U.S. business interests as they compete against foreign firms for specific international public contracts, both civilian and defense sales.” When more than one U.S. company is bidding, it will make a general case for the quality and reliability of American products and services, aside from seeking to ensure the fairness of the tender process. In addi-

Helping Firms Win Taiwan Government Contracts

來自華府，美國商務部國際貿易管理局「採

購商務推廣中心 – the Advocacy center」的

亞太區主任馮曉冰，最近拜訪台灣尋求提

高美國企業參與台灣政府採購案的機會。2014年

台灣政府採購案中，外國企業共得標417件（價值

11億美元）合約，其中美商得標179件，總得標金

額約2億7,600萬美元。

一場由台北美國商會會員企業與本地供應商共同

出席的會議上，馮曉冰鼓勵企業參與政府採購競標

協助美國企業獲得

台灣政府採購案

TOPICS can be found in the Eslite, Kingstone, Caves and Hess bookstores in Taipei, Taichung and Kaohsiung. But why wait until we’re on the stands? Make sure of getting a copy by filling in the subscription form below.

9_Issues.indd 12 2015/9/4 7:46:12 AM

Issues

tion, the Center stations a senior officer at four multilateral development banks around the world to support U.S. firms in competing for tenders for bank-related projects.

Involvement by the Center is not limited to cases of procurement by foreign government agencies or state-owned enterprises. It can also become engaged when a foreign government has a substantial connection with the tendering organization, such as a major minority shareholding or control over seats on the board.

Companies do not have to be American-owned to be eligible for the service. More important is the amount of economic benefit the United States will gain, for example through the export of U.S. products and services, licensing of technology, and the creation of American jobs. But all companies using the service, as well as their subcontractors, agents, and other part-ners, must pledge to abide by U.S. anti-bribery laws.

Since 2007 Taiwan has been a member of the World Trade Organization’s Government Procurement Agreement, of which the United States is a founding member. The purpose of the agreement is to assure companies from member countries of non-discriminatory access to government procurement in other member countries’ markets.

— By Don Shapiro

時，不妨透過美國在台協會商務組，援用採購商務推廣

中心的服務。該中心成立於1992年，配合歐巴馬政府積

極推廣美國企業在海外的業務，近年來變得大有作為。

採購商務推廣中心定義其角色為「在美國企業與其

它外國企業競標國際公開招標，包括民用和國防等合約

時，協調美國政府資源與權力，創造公平的競爭。」多

家美國企業競標時，採購商務推廣中心將除了尋求確保

招標過程的公平性之外，仍以產品服務的品質與可靠為

依歸。另外，採購商務推廣中心也在全世界四家多邊開

發銀行，安排資深專員支援美國企業競標時與銀行業務

相關項目。

採購商務推廣中心涉入業務並不侷限於外國政府機

構或國營企業採購案。如招標機構與當地政府有密切關

聯，比如持有主要少數股權或董事會席次控制權等，此

中心也可提供協助。

不一定只有美資企業才能獲得採購商務推廣中心的

服務，重點在於美國所將獲得的經濟利益總額。比如透

過美國產品出口和服務、技術授權與創造就業機會等方

式。然而，所有使用該中心服務的企業、承包商、代理

商與其他合作夥伴，都必須承諾遵守美國反賄賂法。

2007年起，台灣一直是世界貿易組織政府採購協定成

員，美國為創始成員之一。該協議的目的是為了確保各

成員國企業都能不受歧視地參與政府標案，進入其他成

員國的市場。

— 撰文/沙蕩

American Chamber of Commerce in Taipei Tel : 886-2-2718-8226 E-mail: [email protected]

Name: _________________________________________________________________ Membership ID#: (if applicable)_______________________

Company: ___________________________________________________________________________ Telephone: ____________________________

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• Acct. #: 018-1-093665-6 Standard Chartered Bank, Tunpei Branch (Please fax your transfer receipt to AmCham.)

Fill out this form and post or fax to 886-2-2718-8182 with your payment or receipt. AmCham will begin your subscription upon receipt of payment.

TOPICS can be found in the Eslite, Kingstone, Caves and Hess bookstores in Taipei, Taichung and Kaohsiung. But why wait until we’re on the stands? Make sure of getting a copy by filling in the subscription form below.

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9_Issues.indd 13 2015/9/4 7:46:12 AM

T e l e c o m & m e d i a

Cover story


台灣的4G 困局

Taiwan’s 4G Blues

Cover story

BY MATTHEW FULCO 撰文 / 傅長壽

9_CoverStory.indd 14 2015/9/4 7:47:03 AM



Dony Wang覺得，台灣的4G服務不

怎麼樣。他在台北一家清潔能源公

司擔任專案經理人，去年秋天給太

太買了一支iPhone 6之後，他太太

的手機數據傳輸速度和4G上網情況一直不穩

定，有時4G會轉為3G。

最後她打電話向電信公司抱怨。一位客服

人員答應公司會「瞭解這個問題」，但她的

4G服務品質並未改善。Dony Wang說：「就我

們來說，4G服務不如預期。」

他們的電信公司是政府持股比例很高的中

華電信。但Dony Wang說：「我不覺得這是中

華電信才有的問題。4G不像各家電信業者所

說的那麼好。」

這個問題在去年10月引起全國注意。民

主進步黨籍立法員員蔡其昌當時做了一個測

試，以突顯台灣4G涵蓋率的問題。他發現一

走進立法院，他的手機連接的網路就從4G轉

為3G。

網路分析公司OpenSigna l今年3月的一份

報告說，台灣的行動裝置使用者有69%的時

間可以連上4G網路，這個比率在全球排名

第11位。鄰近國家的情況好很多，例如香

港在全球排名第四（81%），日本排名第二

（86%），南韓排名世界第一（95%）。

但台灣使用4G的人數在急速增加。從4G服

務在2014年5月推出到2015年1月，使用戶數

成長到400萬人。據台灣政府表示，在短短8

個月當中，台灣4G普及率達到17，速度在全

球位居第一。

研究公司國際數據資訊（IDC）預測，到

2015年底，台灣的4G普及率將達到43%，也

就是全台灣2,300人口當中，有1,000萬人使

用4G。

如果台灣4G上網的情況不穩定，為何消費

者急著改用4G？中華電信總經理石木標說，

原因之一在於消費者想要利用高速網路 -- 每

秒1G，比3G無線網路快上7倍 -- 在行動裝置

上觀賞影片或者傳輸大型檔案。他並說，台

灣的網民每天平均有將近200分鐘在使用手

機，超過其他任何國家的網路使用者。

TOPICS請台灣大哥大和遠傳電信就本篇文

Do n y Wa n g i s u n d e r -whelmed by Taiwan’s 4G LTE serv ice . The pro j -ect manager for a Taipei-

based clean-energy company purchased an iPhone 6 for his wife last fall. Since then, his wife has experienced erratic data-transmiss ion speeds and 4G connectivity – it sometimes changes to 3G service.

Eventually, she called the carrier to complain. A customer service represen-tative promised the company would “look into the problem,” but the qual-ity of her 4G service has not improved. “As far as we’re concerned, 4G is a disappointment,” Wang says.

In this particular case, the telecom operator was heavily government-in-vested Chunghwa Telecom Co. (CHT). “I don’t think it’s a problem specific to Chunghwa Telecom, though,” says Wang. “4G LTE hasn’t lived up to the hype created by the telecom carriers.”

The issue came to national atten-tion in October 2014 when Democratic Progressive Party lawmaker Tsai Chi-chang carried out a test to demonstrate the shortcomings of Taiwan’s 4G cover-age. He found that his phone switched from a 4G to 3G network as he stepped inside the Legislative Yuan.

A March report by the network diagnostics company OpenSignal rated Taiwan’s LTE coverage No. 11 in the world, with its mobile users on 4G LTE networks 69% of the time. Neighbor-ing markets fared considerably better. Hong Kong placed fourth with 81%; Japan was second (86%), and South Korea had the world’s best 4G coverage at 95%.

And yet Taiwan’s 4G adoption is surging. From the time the service was deployed in May 2014 until January 2015, subscribers reached 4 million. The 17% penetration rate in just eight months was the fastest deployment in the world for that time span, according to the government.

Research firm IDC forecasts that the penetration rate will reach 43% by the end of 2015, with 10 million of Taiwan’s 23 million people using the service.

If Taiwan’s LTE coverage on the island remains inconsistent, why are its consumers anxious to switch over to 4G? For one thing, they want to tap its fast connection speeds – one giga-byte per second, which is seven times faster than third-generation wireless technology (3G) – to watch videos on their mobile devices or transfer large

Despite flat-rate data packages

pinching the margins of telecom

operators and creating network

congestion, consumers are still

signing up for 4G in droves.

固定費率吃到飽的方案擠壓電信業

者獲利空間，網路經常塞車，但消

費者對4G依然趨之若鶩

photo: matthew fulco




Cover story

章討論的議題發表評論，但未獲得回應。它們是台灣第

二和第三大電信業者。

由政府支持成立的產業情報研究所（MIC）資深產業

分析師徐子明說，電信業者強調4G的上網速度，說服

消費者從3G升級為4G。他並說，消費者也因此贈購價

格較昂貴的4G資費方案與可以和4G相容的行動裝置。

國際數據資訊電信通訊研究部的資深市場分析師葉

振男說，台灣電信業者利用固定費率無限上網的方案，

積極吸引消費者改用4G。他說：「固定費率是延用3G

時代的做法，業者為了保持市占率，就必須提供固定資

費的方案。這個做法有助於增加訂戶，但獲利程度不如

許多其他市場所採用的依數據使用量訂定不同費率的做

法。」

業者惡性競爭

台灣三家主要電信業者原本計畫從去年11月起，停止

提供固定費率無限上網的方案，以彌補龐大的網路建構

成本，包括總額達到1,186.5億新台幣（38.9億美元）

的執照費，但規模較小的競爭者台灣之星在10月30日宣

布將無限期提供4G吃到飽的服務，三大業者在競爭壓力

下低頭，決定維持原本的固定費率方案。

產業情報研究所的分析師徐子明說：「在4G的時代，

電信業者再次投入大筆經費取得頻段，但市場環境未

有改善，因為每用戶平均收入（ARPU）的成長依然有

限。他指出，業者也未開發付費使用的行動裝置應用程

式，為服務加值。結果是台灣的電信業者「落入一個圈

套中，各家只提供『你有我也有』的服務，例如以低廉

的上網費用和便宜的手機做為主要的促銷策略」。

惡性競爭的態勢就此形成。去年12月，亞太電信為了

使它的市占率從7%擴大的10%以上，推出每月560元的

上網吃到飽方案，成為台灣當時最低的費率。這家公司

是電子代工巨擘鴻海所有，它除了提供無限上網，並宣

布4G客戶打電話和傳送簡訊到網外也享有一定的優惠。

提供免費服務會壓縮亞太電信的獲利空間，但董事長

呂芳銘去年12月在記者會上表示，該公司認為，類似做

法「將成為趨勢」。

今年4月，亞太電信的對手做出反擊。規模最大的中

華電信針對6月底前簽約的新用戶祭出優惠，4G無限上

網的最低費率從1,136 元降為988元。台哥大和遠傳也

推出998的費率，同樣到6月底前有效，台灣之星則再次

推出每月只要599元的無限上網方案。

files, says CHT president Shih Mu-piao. Taiwanese netizens spend close to 200 minutes per day on their smartphones, the most of any Internet users in the world, he adds.

Taiwan Mobile and Far EasTone (FET), the No. 2 and No. 3 mobile tele-com carriers in Taiwan, respectively, did not respond to TOPICS’ requests for comment on the subject.

Carriers tout 4G’s fast connectivity to persuade consumers to upgrade from 3G, says Remus Hsu, a senior analyst at the government-backed Market Research &

Consulting Institute (MIC). That in turn increases the purchase of more expensive 4G subscription plans and 4G-enabled mobile devices, he adds.

Andy Ye, a telecom analyst at IDC in Taipei, observes that Taiwan’s carriers have promoted 4G subscriptions aggres-sively with unlimited data packages at fixed monthly charges. “The flat rates are a carryover from the 3G era that the telecom operators have to offer if they want to maintain their market share,” he says. “It has helped them sign up more subscribers, but it is less profitable than

the tiered-price services offered in many other markets.”

Race to the bottom

Initially, Taiwan’s top three telecom operators had planned to suspend the flat rates from November 2014 to offset high network deployment costs – including licensing fees totaling NT$118.65 billion (US$3.89 billion). But after smaller rival Taiwan Star Cellular announced on October 30 it would offer unlimited 4G services indefinitely, they bowed to competitive pressure and kept their flat-rate packages available.

“ I n t h e 4 G e r a , c a r r i e r s h a v e again spent a fortune to acquire spec-trum bands,” says Hsu of MIC. “But the market environment has yet to see improvements because average revenue per user (ARPU) growth remains limited.” Nor have carriers developed paid applica-tions to bring additional value to consum-ers, he notes. As a result, Taiwan’s tele-com operators “are falling into the trap of using me-too services like low-cost Inter-net connections and cheap phone prices as major promotional strategies.”

A race to the bottom has ensued. In December, Asia Pacific Telecom launched a NT$560 flat-rate package, then the

Chunghwa Telecom President Shih Mu-piao, left, and Johan Asplund, chief technology officer of Alcatel-Lucent Taiwan, right.

photos: matthew fulco




越打越激烈的價格戰開始讓投資人感到憂心。4月15

日，台灣三大主要電信公司的市值在一天之內總共減

少358億元以上。遠傳股票收盤時跌了2.7元，成為72.5

元，跌幅2.7%，市值等於少了87.98億元。中華電信股

價收盤跌1.5元，成為97.5元，相當於市值減少116.36

億元。台哥大股價跌幅最大，每股跌4.5元，收盤價為

104.5元，市值減少153.9億元。

針對股價下滑一事，中華電信發言人表示，988元無

限上網費率是短期促銷優惠，對公司整體財務表現不會

有重大影響。

中華電信總經理石木標說，台灣電信業者的價格戰無

法持續下去。他說：「台灣電信業的營收已停止成長，

數據使用量卻急速增加。遲早有一天，不會再有無限上

網的方案。」

電信業整合的機會

就短期而言，整合行動有可能改善台灣行動通訊市場

的環境。例如根據BMI Research今年2月的一份報告，頂

新集團可能出售在台灣之星52%的持股。報告說，頂新

有意「出脫非核心業務」，而台灣之星被認為是「可以

處置的資產」。

BMI說，台灣之星若由任何一家主要競爭對手併購，

將可能改善台灣行動通訊市場競爭的態勢，因為台灣市

場不夠大，無法支撐4家以上的大型業者。

國際數據資訊的分析師葉振男對此表示同意。他說，

在3G時代，只有中華電信、台哥大和遠傳在行動通訊業

務方面有獲利，規模較小的業者如亞太電信和威寶則是

連年虧損。他說：「如果不整合，亞太電信和威寶會跟

在3G時代的情況一樣虧錢。我不知道這兩家小公司能撐

多久，因此進一步整合應該在未來一兩年內發生。」

葉振男說，台灣之星如果不跟中華電信或遠傳整合，

它就必須在下一回合4G執照競標時取得2.6Ghz的頻段。

國家通訊傳播委員會（NCC）在9月4日之前，將受理

中華電信、台哥大、遠傳、亞太電信和台灣之星新的頻

段申請。這個第二回合的競標可能相當激烈，因為各家

電信業者的頻段已經不敷使用。各家出價也可能很高，

估計可達500億元，而分析師說，台灣之星存在現有資

本不足的問題。

葉振男說：「我認為即使台灣之星能在一年之內解決

頻段和資本的問題，要在未來改變台灣的4G市場生態，

還是會非常困難。」

cheapest available in Taiwan, in a bid to increase its market share from 7% to double digits. The company, which is owned by contract electronics manufac-turing giant Hon Hai Precision Indus-try, also announced that its 4G custom-ers would be entitled to free calls and text messages to users of other carriers.

Offering the free services will squeeze Asia Pacific Telecom’s margins, but the company believes such practices “will become a trend,” chairman Lu Fang-ming told reporters at a news conference in December.

In Apri l , Asia Paci f ic Telecom’s competitors hit back. Market leader CHT lowered the threshold of its monthly 4G flat-rate prices from NT$1,136 to NT$988 for new subscriptions before June 30 . Ta iwan Mobi l e and FET responded by launching NT$998 pack-ages valid during the same period, while Taiwan Star revived a flat-rate subscrip-tion plan of just NT$599 per month.

The escalating price war has begun to spook investors. On April 15, Taiwan’s three telecom giants reported a combined total loss of more than NT$35.8 billion in the value of their stocks in a single day. FET shares fell by NT$2.7 to close at NT$72.5, equivalent to a loss of NT$8.798 billion. CHT shares fell by

NT$1.5 to close at NT$97.5, amount-ing to a loss of NT$11.636 bill ion. Taiwan Mobile shares were hit the hard-est. They plunged by NT$4.5 to close at NT$104.5, shedding NT$15.39 billion in market valuation.

In re sponse to the fa l l in share prices, a spokesperson for CHT said its NT$988 flat-rate package was a short-term promotion and would not seriously impact the company’s overall financial performance.

Shih of CHT says the ongoing price war among Taiwan’s mobile telecom operators is not tenable. “Revenue for Taiwan’s telecoms is plateauing while data use is skyrocketing,” he says. “One day, sooner or later, there will be no more unlimited data packages.”

Opportunities to consolidate

In the short term, consolidation may improve conditions in Taiwan’s mobile market. For instance, Ting Hsin Inter-national Group may sell its 52% major-ity stake in Taiwan Star, according to a February report from BMI Research. The group intends to “exit non-core businesses,” and Taiwan Star is consid-ered “an asset ripe for disposal,” the report says.

The absorpt ion o f Ta iwan S tar by any of its main competitors could improve the competitive dynamics of Taiwan’s mobile market, which is too small to optimally sustain more than four big players, BMI says.

Ye of IDC agrees. In the 3G era, only CHT, Taiwan Mobile, and FET earned profits from their mobile service, while smaller competitors Asia Pacific Tele-com and Vibo have been loss-making for several years in a row, he notes. “With-out consolidation, Asia Pacific Tele-com and Vibo will face the same condi-tion they did in 3G – losing money,” he says. “I don’t know how long both of these small firms can hang on, so further consolidation should happen in one or two years.”

As for Taiwan Star, if it does not seek a tie-up with CHT or FET, it must acquire 2.6Ghz of spectrum in the next round of 4G bidding, Ye says.

The Nat iona l Communica t ions Commission (NCC) will accept applica-tions for four spectrum bids from CHT, Taiwan Mobile, FET, Asia Pacific Tele-com, and Taiwan Star until September 4. This second round of 4G bidding is likely to be heated since telecom oper-ators are already running out of spec-trum. Spectrum bids will also run high –




Cover story

up to an estimated NT$50 billion – and analysts say Taiwan Star’s existing capi-tal is insufficient.

“I think even if Taiwan Star can solve spectrum and capital issues in one year, it will still be very hard for them to change Taiwan’s 4G market landscape in the future,” Ye says.

Network congestion

Financial travails aside, the preva-lence of flat-rate data packages is strain-

ing Taiwan’s 4G networks. “Data usage growth is phenomenal with 4G,” says Johan Asplund, chief technology offi-cer of Alcatel-Lucent Taiwan. According to the company’s analysis of global LTE networks, data use on 4G quadruples that on 3G. As a result, he says, “flat-rate packages may not be the ideal solution for Taiwan as data consumption amongst its mobile users varies considerably.”

“The NCC needs to continue look-ing at how to support operators to boost capacity through easing introduction of

high-capacity small cells and further plan-ning for coming radio spectrum alloca-tions,” he adds.

Jay Lin, a Taipei-based freelance soft-ware engineer, says the speed of his 4G service has become gradually less consis-tent since he purchased a subscription from Taiwan Mobile in September 2014. “At the beginning, it was very fast all the time,” he says. “But not anymore.”

To illustrate that point, Lin uses the Ookla Speedtest app to check his iPhone 6’s download speed, which is shown to be 68.3 megabytes per second (Mbps) at 3:30 in the afternoon. “This is reason-ably quick, but at night it often falls to 40 Mbps,” he says. “When I first got the 4G service, download speeds wouldn’t fall that low.”

Bandwidth throttling – the deliber-ate slowing of Internet service to limit upload and download rates – could help to alleviate Taiwan’s network congestion, experts say. In the United States, throt-tling is practiced by several major tele-com operators when customers hit certain usage thresholds. AT&T throttles LTE subscribers when they hit 5GB of data in a month. T-Mobile throttles custom-ers on its unlimited high-speed data plans when they use more than 21GB a month. Both companies only throttle customers

網路壅塞

除了財務問題之外，市場充斥上網吃到飽的方案，使

得台灣的4G網路負荷十分沉重。台灣國際標準電子有限

公司科技長李思柏說：「有了4G之後，數據使用量的

成長非常可觀。」根據該公司對全球4G LTE網路的分

析，消費者採用4G之後，數據使用量是之前在3G時代

的4倍。因此，李思柏說，「固定費率方案在台灣這個

市場可能不是理想的做法，因為行動通訊用戶的數據使

用量差異很大。」

他補充說：「NCC需要繼續研究如何支持業者擴充容

量，例如簡化引進高容量小型基地台的程序，以及進一

步規畫未來的無線頻段分配事宜。」

台北的自由業軟體工程師林家錚說，他在去年9月向

台哥大申辦4G服務之後，手機上網速度越來越不穩定。

他說：「起初每次都非常快，但現在已經不一樣。」

為了證明，林家錚使用Ookla Speedtest應用程式測試

他的iPhone 6的下載速率，結果顯示每秒68.3Mbps，當

時是下午3點半。他說：「這樣算快的，但到了晚上，

時常降到40Mbps。我剛開始有4G的時候，下載速率不

會降到那麼低。」

專家說，頻寬節制 -- 刻意降低網路服務效率，以限

制上傳和下載速度 -- 可能可以幫助台灣減緩網路壅塞

的問題。在美國，有好幾家主要的電信業者會在用戶達

到一定的使用量門檻時，會啟動頻寬節制措施。AT&T

在用戶一個月內數據使用量達到5G時，可針對該用戶啟

動這項措施。T-Mobile吃到飽高速數據方案的用戶如果

一個月內數據使用量達到21G，也會面臨同樣情況。這

兩家公司只有在網路呈現壅塞狀況時，在會採用頻寬節

制的做法。

美國另一家公司Verizon Wireless在6月開始用另一種

方法來減緩網路壅塞的情況。該公司表示，它是藉影

音優化技術提高數據傳輸的效率，以減輕網路容量的負

荷。

世界各國的電信業者，大都採用分級付費制度，對行

動通訊的頻寬做較好的運用。台灣主要電信業者過去曾

推動改革上網方案的定價結構，但沒有結果。2012年

4月，台哥大當時的總經理賴弦五（現任台灣之星總經

理）呼籲行動電話用戶，在4G推出之前要節制數據的使

用量。他在一場媒體會議上說，台哥大將與NCC合作開

發分級付費方案，以減輕網路的負荷，而不致於「影響

正常行動電信用戶使用者的權益」。

What better way to pass the time on the MRT than to engage in mobile communication?





at times of network congestion.U.S.-based Verizon Wireless has

employed a different technique to ease network congestion since June. The company says it now deploys video optimization technology to transmit data more efficiently and ease capacity burdens on the network.

Global telecom operators also rely largely on tiered mobile data plans to better utilize bandwidth. Taiwan’s tele-com heavyweights have pushed for a change in the pricing structure of the island’s data plans in the past, but to no avail. In April 2012, then Taiwan Mobile President Cliff Lai, who now heads Taiwan Star, called for the nation’s mobile users to curb their data usage ahead of the rollout of 4G LTE. Speak-ing at a media conference, he said Taiwan Mobile would work with the NCC to develop tiered pricing plans to alleviate heavy traffic on networks without “affecting the rights of normal mobile users.”

Maximizing efficiency

The implementation of time division duplex (TDD) technology would be one way to maximize utilization efficiency on Taiwan’s 4G LTE networks, according

to AmCham Taipei’s Telecom & Media Committee, as set out in the 2015 Taiwan White Paper. TDD works by dividing the data stream into frames. Within each frame, it assigns different time slots to the forward and reverse transmissions, allowing them to share the same trans-mission medium while only using the bandwidth required by each type of traf-fic. Introducing TDD could increase spec-trum efficiency and allow higher down-load volumes for video, which is expected to comprise 70% of Taiwan’s total band-width by 2017.

Demand for Taiwan’s 4G spectrum will reach 1,050 MHz by 2020, accord-ing to the Ministry of Transportation and Communications (MOTC). The government intends to release around 410 MHz from 2015 to 2017 to meet the needs of 4G operators and prepare for the transition to 5G.

5G will be used in a wider range of applications aand will process real-time information better than its predecessor. Market observers expect the next-genera-tion cellular system to play an important role in the development of the Internet of Things (IoT) in sectors such as industrial infrastructure, medical instruments, and transportation.

With i t s s trengths as a technol -

ogy hub, Taiwan could become a major 5G player as the technology emerges. For instance, market observers say the island would excel in the production of 5G chipsets. System-on-chip solutions made by Taiwan Semiconductor Manu-facturing Co. (TSMC) and certified by CHT would be a potential product for the global market. The Taiwan govern-ment plans to oversee such endeavors to increase their chances of success.

In August, the semi-governmental Institute for Information Industry (III) signed a pact with the Telecom Technol-

台北市美國商會電信暨媒體委員會在2015年《台灣

白皮書》中指出，採用分時雙工（TDD）技術可以提高

台灣4G LTE網路的使用效率。分時雙工技術是把數據

流分割為一格一格，每一格指定不同的時段進行上傳和

下載，如此便可共享同一個傳輸媒介，但使用的頻寬不

需增大。採用TDD技術可以提升頻段的效率，增加影音

的下載量。到了2017年，預計台灣整體頻寬使用量有

70%將用於影音的下載。

邁向5G時代

據交通部表示，到了2020年，台灣對4G頻段的需求

將達到1,050 MHz。NCC有意在今年到2017年之間釋出

大約410 MHz，以因應4G業者的需求，並且為5G預做準

備。

5G用途將比4G更為廣泛，處理即時資訊的能力也較

強。市場觀察家預期，新一代的行動通訊系統在工業基

礎設施、醫療器材和交通等行業的物聯網（IoT）發展

方面將扮演重要角色。

台灣利用做為科技重鎮的優勢，在5G發展階段可以發

揮重要作用。例如，市場觀察家表示，台灣在開發5G晶

片組方面將大有可為。由台積電開發並且由中華電信認

證的系統單晶片解決方案，將具有行銷全球的潛力。台

灣政府計劃督導這項發展，以提高成功率。

今年8月，半官方性質的資訊工業策進會與電信技術

中心簽署備忘錄，要研究5G行動通訊網路可能使用的

頻段。行政院副院長張善政在簽約儀式中說，如果政

府很快分配5G頻段，並建立「測試場」供各公司就開

發中的5G應用程式進行實驗，則這項協議將有助於台

灣行動通訊產業的發展。他說：「簽署這項備忘錄，將

幫助我們找出至少未來10年研發與政策規畫的明確方

向。」

目前還沒有任何公認的標準機構界定5G技術。台灣國

際標準電子有限公司的科技長李思柏說，一般每10年會

出現一套新的無線通訊標準。他說：「4G在2010年出

現，因此5G時代應該大約會在2020年開始。」

在4G時代正式展開之前，台灣政府選擇支持英特爾

領軍開發的WiMAX技術，結果這項技術未能獲得廣泛採

用，中華電信總經理石木標說，台灣在5G標準訂定的階

段應該審慎。他說：「5G將帶來龐大的商機，因為5G

和物聯網連在一起，將是行動通訊的未來。我們不能再

選錯邊了。」





Cover story

internet piracY unDermines entertainment inDustrY

Content owners urge the blocking of China-based websites that host a huge variety of unlicensed programming free of charge.

Online piracy of tele-v i s i o n p r o g r a m s r ema in s r ampan t

in Taiwan in the absence of a mechanism to block offend-ing websites, which are largely based in mainland China.

A Chinese-language search on Google for “free Taiwanese TV programs” turns up dozens of results for unlicensed TV content. Provided a user can put up with the embedded advertising on these sites, it is possible to view almost any TV program offered by local pay-TV channels online and free of charge.

The abundance of readily available pirated content hobbles the competitiveness of Taiwan’s entertainment industry and deprives it of revenue, experts say. “Piracy is destroying the ecosystem of Taiwan’s television sector,” says Kevin Lin, chief legal officer of Taiwan Broadband Communications (TBC), noting the cable industry’s falling subscriber numbers and the declining production value of Taiwanese programming. Taiwan’s telecoms are also hurt by Internet piracy, Lin observes, as ironi-cally they pay traffic costs to the mainland operators hosting the

unlicensed content.Without an intellectual

property rights mechanism to prevent consumers from accessing illegal over-the-top (OTT) content, the industry’s development and consumers’ interests will be harmed in the long run, Lin says.

In response to concerns about Internet piracy, the Taiwan government introduced a bill to amend the Copyright Act in May 2013. The draft amend-ment would have authorized the Taiwan Intellectual Property Office (TIPO) under the Ministry of Economic Affairs to act on complaints from content owners regarding material that had been posted online without their permission. TIPO would then require Internet services providers (ISPs) to block websites with infringing content. Judicial review of content owners’ requests was to be excluded.

TIPO said it sought to target serious offenders that “special-ize in copyright infringement activities,” like MegaUpload, a popular file-sharing service in the late 2000s that provided thou-sands of links to pirated television programs, movies, music

ogy Center (TTC) to explore a poten-tial spectrum for 5G mobile networks. The agreement could give a boost to Taiwan’s mobile-communications indus-try if the government can allocate a frequency spectrum for 5G soon and set up a “testing field” for companies to try out their pilot 5G applications, Vice Premier Simon Chang said at the sign-ing ceremony. “This signing of the MOU

will help us find a clear path of research and development as well as policy plan-ning for at least the next 10 years,” Chang said.

Meanwhile, 5G wireless technology has yet to be defined by any recognized standards body. Asplund of Alcatel-Lu-cent notes that a new wireless standard is typically deployed once a decade. “We saw 4G emerge in 2010, so 5G should

arrive in about 2020,” he says. Given that the Taiwanese government

supported Intel’s ill-fated WiMAX tech-nology in the lead-up to the 4G era, Shih of CHT says Taiwan should be prudent as 5G standards are decided. “There will be huge opportunity with 5G, as 5G and IoT together are the future of mobile communications,” he says. “Let’s not back the wrong horse again.”




albums, and software. U.S. authorities shut it down in 2012. But Taiwan’s netizens worried that the amendment would

lead to curbs on freedom of speech and pushed back hard. A Facebook page organized to advocate an open Internet attracted almost 50,000 followers, and the group behind the effort planned to stage an Internet blackout in protest on June 4, 2013. Websites including Wikipedia Taiwan and Mozilla Taiwan promised to go dark to boost awareness.

Protest emails came flooding into the TIPO office. “Suddenly, a lot of people started to send mails to the office, asking us why we wanted to censor the Internet,” says Chang Yuh-Ying, direc-tor of TIPO’s copyright division. “They asked us: ‘How can you decide which sites should be blocked? What if legal content is blocked as well? Does the U.S. do this – and if the U.S. doesn’t, then why should Taiwan?’ ”

“Taiwan’s netizens told us it was silly to restrict our own Internet access rather than taking down the websites hosting pirated content,” Chang explains. “Since it was not possible to have a reasonable discussion with Taiwanese Internet users, the government withdrew its plans to amend the Copyright Law.”

Taiwan’s netizens believe their Internet culture is closer to that of the United States than to South Korea, which is often cited as an example of a democratic country that practices some form of online censorship, Chang observes.

In fact, the United States tried and failed to implement its own anti-piracy bill in 2012. The proposed legislation, which was called the Stop Online Piracy Act (SOPA), initially received strong bipartisan support in the House of Representatives and Senate. Had it passed, the bill would have made it possible to seek court orders against websites outside U.S. jurisdiction suspected of enabling or facilitating copyright infringement. The court orders could have been used to prevent online advertisers and payment providers from doing business with the offending websites, bar search engines from linking to the sites. Moreover, it could have required ISPs to cut off access to such sites.

Google and Microsoft weighed in to defeat the bill, says Lin of TBC. “It’s a battle between the content and Internet indus-tries,” he says. “The Internet companies say nothing should restrict the use of the Internet. The truth is that there is a lot of traffic they don’t want to lose that is generated by searches for pirated content.”

By contrast, the Taiwan government is loath to be seen as interfering in the media market, says Michael Kwan, an asso-ciate professor in the Department of Radio, Television & Film at Taipei’s Shih Hsin University. “It’s a legacy of the martial law era,” he says, referring to period from 1949-1987 when the island had strict controls on freedom of speech and assem-bly. “Now the government says ‘we aren’t going to control anything.’”

An industry in decline?

The need to combat Internet piracy in Taiwan is pressing because its rise coincides with a weakening of the nation’s enter-tainment industry, market observers say. Kwan attributes some of that decline to a brain drain. Taiwanese actors, directors, and screenwriters have been relocating to China to tap a vast market offering them better opportunities than they can find in Taiwan, he says.

Noting China’s elaborate costume dramas as an example, Kwan says: “Although China has strict censors, the Chinese are willing to invest in content, which is the most important thing. In Taiwan, there is too much of a focus on the technology and infrastructure of television – at the expense of producing high-quality content.”

Lin of TBC agrees that China is luring away Taiwan’s enter-tainment talent. He notes that a former classmate of his is a screenwriter who relocated to China and received NT$10 million to write 20 episodes for a Chinese television show. Lin says it would be impossible to earn that kind of money in Taiwan.

由於沒有封鎖相關網站（多數設在中國）的機

制，電視節目在網路上遭到侵權的現象在台灣

依然十分普遍。專家說，如果大量盜用的節目

內容可以輕易取得，不利於台灣娛樂事業的競爭力，並

使娛樂事業的收入減少。

在外界對網路侵權行為表達關切之後，台灣政府在

2013年5月提出一項修正案，要授權經濟部智慧財產局

在內容所有人舉報時，要求網路業者封鎖提供侵權內容

的網站。智財局表示，它將針對「專門從事侵犯著作權

活動」的屢犯採取行動。

但台灣的網民擔心這項修法將導致言論自由受限，因

此強力反撲。一個主張保持網路開放性的臉書頁吸引近

50,000 人追蹤，而且有許多抗議信件寄到智財局辦公

室。Google與微軟也表態反對這項修法，使得此事成為

內容提供者與網路業的對抗。

一位智財局官員說明：「由於無法跟台灣的網路使用

者進行理性討論，政府撤回了修法的計畫。」

在台灣需要對抗網路侵權行為的同時，台灣的娛樂

事業的實力正在全面轉弱，部分原因是在中國的拉攏之

下，台灣演員、導演與編劇人才逐漸流失。

美國想要建立網站封鎖機制的努力並未成功，但歐

洲聯盟和新加坡、馬來西亞、南韓與印尼已採取這類措

施。例如在南韓，版權所有人可請電信監管機關命令網

路業者封鎖發表盜用內容的網站。

網路侵權行為不利娛樂事業 (概要)




Cover story

Chang of TIPO urges Taiwan’s entertainment sector to respond by boosting its creativity. “We cannot say all the prob-lems the television industry is facing are due to piracy,” she says. “The talent shortage needs to be addressed. If we want to ensure that we can attract top talent to the local television sector, we need to come up with new ideas, and not just repeat the same things we did 10 years ago.”

While Chinese websites continue to host pirated television content from Taiwan, Chang says the situation has improved in recent years. “China has started to pay more attention to copy-right law,” she says. “Since the Cross-Strait Agreement on Intel-lectual Property Rights Protection and Cooperation was reached in 2010, the two sides have been able to deal with IP disputes through an administrative approach, and most of the time it is very effective in resolving the problem of websites that are host-ing unauthorized content.”

But Lin of TBC says it is arduous for Taiwanese content owners to pursue legal action against offending Chinese websites. “It’s very time consuming, especially as Taiwanese are usually unfamiliar with the Chinese legal system,” he says.

He concurs that it will be a challenge to reverse the Taiwan government’s decision on amending the Copyright Law. But South Korea’s experience combating piracy is relevant for Taiwan, he says, noting that a copyright owner there can apply to the telecom regulatory body to issue an order to an ISP to block a website hosting pirated content.

The government of South Korea is indeed fighting piracy vigorously. It spends £12.7 million a year on enforcement, the most of any government in the world, according to the United

Kingdom’s Intellectual Property Office. To help the government stamp out piracy, South Korean citizens are asked to report ille-gal websites through a web portal, the Office notes. Those who report regularly can receive rewards of coupons and gift cards valued at up to £1,700 per year.

In its 2015 White Paper, AmCham Taipei’s Telecom & Media Committee urged the Taiwanese government to amend its Copy-right Law or Telecom Law to allow copyright owners to apply to the appropriate government agency to cut off access to OTT websites outside Taiwan that host unlicensed content. The 28 countries of the European Union as well as Singapore, Malaysia, South Korea, and Indonesia have adopted similar measures.

The Committee also recommended that the government impose criminal penalties on sellers of devices that enable consumers to access illegal OTT services or who knowingly help illegal OTT operators do business in Taiwan.

Joanne Tsai, executive vice president and managing direc-tor of Fox International Channels in Taiwan and China and co-chair of AmCham Taipei’s Telecom and Media Committee, says a comprehensive approach to the piracy problem would be most effective. Site blocking would be one element, as it has been used successfully across Europe and Asia. But she stresses that it is also important to raise awareness of the piracy problem among advertisers, “so that marketing money is not spent on illegal sites.”

“Content is king,” she concludes. “It needs to be protected.”

— By Matthew Fulco

cable tV acQuisition is a compleX Deal

An investment consortium headed by Morgan Stanley Private Equity Asia (MSPE Asia) with participation by Far EasTone Telecommunications Co. (FET) announced

plans on July 30 to acquire China Network Systems (CNS), Taiwan’s largest cable TV operator, in a transaction estimated to be worth US$2.45 billion.

Should the deal go through, it would be the first major consolidation in Taiwan’s telecommunications and media sector since 2010 and represent a profitable exit for MBK Partners, a private-equity firm focused on North Asia that has held a US$1.5 billion majority stake in CNS since 2006.

Completion of the deal would enable FET to package its

mobile phone services with CNS’s cable and broadband busi-nesses. That integration would allow the two companies to share costs and sell a larger range of services. “Through the strate-gic alliance with MSPE Asia and collaboration with CNS, our customers will get to enjoy a smart lifestyle in the future, where they can access goods and services online anytime anywhere through TVs and mobile devices,” said FET President Yvonne Li in a statement.

The move signals FET’s intention to boost its digital content capacity and expand into connected devices, analysts say. Taiwan’s second largest telecom operator has more than 2.2 million 4G customers, and expects that figure will grow to more

In the first big consolidation in the Taiwanese telecom and media sector in five years, Morgan Stanley and Far EasTone are playing leading roles.




than three million this year. “In addition to the core telecom-munications business (access), FET will also be actively promot-ing other new businesses such as an Internet of Things platform, smart home, medical care, and in-car Internet,” said company chairman Douglas Hsu in a statement.

Two legal restrictions have shaped the structure of the deal. The first is a ceiling of 60% on foreign shareholdings in domes-tic telecom and media enterprises, and the second is a provision of the Telecommunications Act that prohibits political parties, government agencies, and the military from investing in domes-tic media enterprises, including cable operations. Because of the first requirement, 40% of the equity will be held by private domestic investors and the rest by MSPE Asia.

FET is currently ineligible to buy into CNS since govern-ment institutions – mainly pension funds – hold a 2.89% stake in the company, according to a July filing with the Taiwan Stock Exchange. FET’s contribution will therefore take the form of NT$17.12 billion (US$524.5 million) in non-convertible bonds. The deal reportedly will be funded through bond issues and equity totaling US$950 million, plus US$1.5 billion in loans from eight local banks, and is expected to close in the first quar-ter of 2016.

“It’s a big, complex project that has generated some nega-tive press comment,” says a source close to the deal, who requested anonymity because the transaction is pending regula-tory approval. “But it scrupulously adheres to the law and also brings a number of advantages for the cable market, capital market and viewing public.”

Benefits of the deal

For FET, “acquiring CNS is a game-changer,” says Kevin Lin, chief legal officer at Taiwan Broadband Corp., another cable operator. “It gives them the last mile [the technologies providing connection services to and from the user’s office or home] to 1.3 million households.” CNS’s 1.3 million subscribers comprise nearly one-fourth of Taiwan’s cable television market. The company is the market leader in Taipei and Kaohsiung and also has more than 250,000 broadband customers.

Lin says the acquisition will allow FET to better compete with Taiwan’s top telecom operator, Chunghwa Telecom (CHT), which he notes has access to nearly all of Taiwan’s 8 million households, and with No. 2 carrier Taiwan Mobile. Taiwan Mobile chairman Richard Tsai and his brother Daniel, chairman of Fubon Financial Holding Co., purchased an 80% stake in the cable operator kbro Co. Ltd. from the Carlyle Group in 2010 for NT$36.1 billion (US$1.19 billion), giving Taiwan’s second largest telecom firm access to kbro’s 1.2 million subscribers.

Meanwhile, Morgan Stanley is committed to upgrading CNS with the regulator’s digitization goals in mind, say sources close to the deal. That includes bringing in outside expertise, such as hiring former Comcast senior executives as advisers, developing better products and services (like a household security function), and cultivating talent. “There is an opportunity here to upgrade the infrastructure [of Taiwan’s cable TV] and make it one of the best in the world,” says one of the sources.

CNS will also benefit from improved corporate governance and controls if the deal is approved, and become a more tightly controlled company, the sources say, noting that Morgan Stanley and its subsidiaries have been subject to strict regulation by the U.S. Federal Reserve since the global financial crisis.

MBK Partners has profited handsomely from its investment in CNS, according to The Wall Street Journal. Dividends paid out by CNS have surpassed the private-equity fund’s purchase price, allowing MBK to make sizeable payouts to its own inves-tors, The Journal reported in July.

Exiting has proven difficult, though. MBK first tried to sell its CNS stake in 2010 for US$2.4 billion to the Want Want Group, a Taiwanese conglomerate that owns a large food busi-ness heavily invested in China, as well as hotels, hospitals, real estate, and media interests. Its media portfolio includes the daily Chinese-language newspapers China Times and Want Daily, the magazine China Times Weekly, CtiTV, and China Television.

As Taiwan’s National Communications Commission (NCC) reviewed the deal, Want Want’s pro-Beijing chairman Tsai Eng-meng sparked opposition with blunt language advocating Taiwan’s annexation by China. In a January 2012 interview with The Washington Post, he said, “Whether you like it or not, unifi-cation [with China] is going to happen sooner or later. I really hope that I can see that.”

Still, the NCC granted conditional approval for the acquisi-tion in July 2012. Those conditions stipulated that Tsai and his family relinquish management of CTiTV’s news channel, and that China Television change the programming on its digital news channel and establish an “independent news-editing mech-anism.” When Want Want refused, the NCC rejected the deal.

“Want Want’s China ties definitely raised concerns with regulators,” says a businessperson familiar with the matter. But that wasn’t the only – or necessarily even the primary – reason why the deal was rejected, the businessperson says. Since the conglomerate already has a large media portfolio, “the govern-ment was more worried that Want Want would become too powerful if it took over CNS.”

Taiwanese snack and beverage maker Ting Hsin Interna-tional Group was the next to bid for CNS, offering MBK more than US$2 billion for its majority stake in August 2014. Ting Hsin sought to acquire CNS to boost the prospects of its subsid-iary, Taiwan Star Cellular, in the digital convergence market, analysts say.

The Wei family, which owns Ting Hsin, has no other media interests, which was expected to help them get the green light from regulators. But in October last year, Taiwan’s Ministry of Health and Welfare revealed that Ting Hsin’s two edible-oil making companies had added lard intended for animal feed to their cooking-oil products to lower costs. The ensuing scandal forced chairman Wei Ying-chuan to resign and Tsing Hin’s bid for CNS cratered.

The road to approval

Regulatory approval for the sale of CNS to the consortium led by MSPE Asia and FET will be needed by the NCC, Invest-




Cover story

一個以Morgan Stanley Private Equity Asia (MSPE

Asia)為首並有遠傳電信參與的投資集團已經

宣布計劃併購台灣最大的有線電視業者中嘉網

路，金額估計達24.5億美元。

這將是2010年以來台灣第一件大規模的電信與媒體

業整合行動，也代表私募基金安博凱將在獲利後退出。

安博凱從2006年起，一直是中嘉的大股東，握有價值

15億美元的股分。

這項交易完成後，遠傳將可以把手機服務跟中嘉的有

線電視與寬頻業務綁在一起。這項整合可使兩家公司分

攤成本，並提供更廣泛的服務。

這項交易的結構受到兩項法律限制的影響。第一是

外國人在台灣電信與媒體業持股不得超過60%，第二是

電信法規定，政黨、政府機構和軍方不得在包括有線電

視在內的媒體事業投資。因為有上述第一項規定，中嘉

40%的股分將由台灣的民間投資者持有，其餘由MSPE

Asia取得。

遠傳目前不能取得中嘉股分，因為政府機構（主要是

退休基金）在遠傳持有2.89%股分。遠傳因此是以171.2

億新台幣取得不可轉換的債券。據稱這項交易所需資

金，將透過發行債券與現有證券取得9.5億美元，另外

向8家本地銀行貸款15億美元，預料將在明年第一季正

式成交。

據接近這項交易的人士說，有鑑於國家通訊傳播委員

會數位化的目標，摩根士丹利決心使中嘉更為精進，包

括引進專業技術人才，例如聘任Comcast前高層主管為

顧問，開發更好的產品與服務（例如居家安全功能）以

及培養人才。如果交易成功，中嘉也將因為公司管理與

管制改善而獲益。

先前曾有兩個集團想要併購中嘉，但沒有成功，如果

這次的交易計畫實現，對台灣的私募基金市場乃至於整

個資本市場都會是正面的消息。私募基金公司近幾年都

避開台灣市場，據稱主因之一在於投資者能否退出存在

著不確定性。

有線電視併購交易條件複雜 (概要)

ment Commission of the Ministry of Economic Affairs, and the Fair Trade Commission. One consideration in such cases is whether any of the funding is coming from Chinese sources; according to the prospective investors’ announcement, the only money from outside Taiwan will be from Morgan Stanley Asia’s private equity fund.

Under the deal, FET would hold the bonds for seven years, but the company has indicated its intention to switch to holding shares if the law restricting government investment is changed. The NCC has proposed easing the restrictions to allow firms with up to 5% of their shares held by political parties, govern-ment agencies, or the military to invest in local media compa-nies. The proposal is part of a package of amendments to the Cable Radio and Television Act that is still undergoing legisla-tive review.

“The law against government investment is widely regarded as nonsensical as applied to the cable industry,” say sources familiar with the deal. The ban may be reasonable for media companies that control content, they agree. “But a cable TV company is just a pipe, a distributor. It doesn’t pick content. And under the proposed structure, Far EasTone will have no board members and no management control.”

After the collapse of two previous bids for CNS, it will be considered a positive sign for Taiwan’s private-equity market, and capital market in general, if the current deal goes through. Uncertainty about investors’ ability to exit has been cited as a major reason why PE firms have shied away from the Taiwan market in recent years.

In fact, since the global financial crisis Taiwan has been among Asia’s worst performers in attracting private-equity investment. “The PE [private equity] market has been icy for

a while,” notes an industry source. “There is a perception in Taiwan that PE funds just buy and sell companies. But they actually improve the companies’ operations in many ways, and for the funds, cable is a very stable business with a steady cash flow. It would be a good thing for PE in Taiwan if this deal is approved.”

— By Matthew Fulco



As part of its effort to revitalize the economy, the Taiwan gov-ernment has been seeking to

identify – and then encourage and assist – small or midsized companies that have unique, internationally competi-tive products or services. The aim is to help these companies further develop to reach their full potential, while also holding them out as a model to inspire other domestic enterprises.

Dubbed the Mittelstand (meaning “Middle Status”) Award after a similar initiative in Germany, the program – run by the Ministry of Economic Affairs (MOEA) through its Industrial Devel-opment Bureau – was launched in 2012 for an initial three-year term (2012-2014) and featured the annual selection of 10 exemplary companies. It has since been extended to 2023, with 10 to 12 enterprises to be chosen every other year from among applicant companies.

The German program was designed to recognize the importance of “hidden champions” – the relatively small and inconspicuous but highly successful enterprises that form the backbone of the German economy. As defined by Hermann Simon, the German man-agement guru who coined the term, a company must meet three criteria to be

considered a hidden champion: ranking among the top three in global market share (or number one within the com-pany’s home continent), annual revenue of less than US$4 billion, and being rel-atively unknown to the general public.

MOEA regards the program as a means of spurring the growth of com-panies that have the business scale, technological base, and international competitiveness to stand out among Ta iwan’s 1 .25 mi l l ion smal l and medium enterprises (SMEs), whether in the fields of manufacturing, services, or even agriculture. The ministry is offering assistance in four major areas: cultivation of talent, development or acquisition of technology, acquisi-tion of patents and other intellectual property, and marketing and brand development. For example, MOEA is providing advice and financial sub-sidies to help award winners set up training programs and recruit talent from overseas. Hidden champions can also qualify to offer R&D positions to young men as a substitute for their compulsory military service, and their R&D programs may also be eligible for subsidies and tax credits.

Marketing assistance includes subsi-dies for branded marketing and brand

promotion, attendance at major inter-national industry fairs, and integrated marketing in emerging markets.

To date, 32 Mittelstand Award win-ners have been chosen: 10 in 2013, 10 in 2014, and 12 in 2015. Also identified were 186 “potential hidden cham-pions,” including 64 selected this year from among 162 contestants.

Most of these companies are leaders in their niche sectors. One of the 10 winners picked in 2013, for instance, was Hiwin Technologies, whose ball s c rews and l inear gu ideways are supplied to leading international semi-conductor equipment firms, such as ASML, Applied Materials, and Tokyo Electron Limited (TEL).

Another was Giant Manufacturing, the world’s largest bicycle maker, which focuses on the production of high-end bikes. Giant ranks among the top three bicycle brands in the United States and Europe, and is the leading import brand in Japan, Australia, Canada, and Holland.

Also selected in the first batch of winners was TXC Corp., a leading sup-plier of quartz crystal components for smartphones and other ICT products. It is one of the few manufacturers in the field to possess complete process

“HiDDen cHampions” TAPPING NICHE

marKets

BY PHILIP LIU

T A I W A N b u s I N e s s

The government is recognizing and assisting smaller but high-performance companies to help them reach

their potential.

Johnson elliptical trainer

PHoTo: JoHNsoN HEAlTH TECH

9 champions.indd 25 2015/9/4 7:48:20 AM



Representatives of this year's winning companies pose with Premier Mao Chi-kuo at the awards ceremony.

pHoto:ministrY oF economic aFFairs

technology, including slicing, grinding, polishing, and packaging/testing. TXC’s customers include Apple, Samsung, Sony, Nokia, and HTC, as well as Intel, Toshiba, and Cisco.

Through dedicated websites, publi-cation of promotional pamphlets, and the encouragement of media coverage, MOEA has sought to actively publi-cize the award winners, holding them up as models for emulation by local SMEs. The ministry has also set up a dedicated service window for the award winners and established a service corps consisting of experts in various fields to help the “potential hidden champions” overcome development bottlenecks and improve their operations.

IDB Director-general Wu Ming-ji reports that since the launch of the program, the ministry has invested NT$516 mi l l ion (about US$17.2 million) to carry out 42 assistance mea-sures in the areas of talent cultivation, technological development, IP acquisi-tion, and brand promotion/marketing for both current and potential hidden champions. According to the IDB, that effort induced the participating com-panies to invest a total of NT$137.6 billion (US$4.6 billion), leading to the creation of 12,775 jobs.

Subsidies from MOEA, for instance, helped Chroma ATE, a leading supplier of precision testing and measurement instruments (and part of the first batch of Mittelstand winners in 2013), in developing technologies for an auto-mated testing system for SoC chips, power system for electric cars, and effi-ciency testing equipment for solar cells. Partly as a result of the assistances, the

company’s sales grew to NT$10.3 bil-lion in 2014, with after-tax net profit reaching NT$1.52 billion, for earnings per share (EPS) of NT$3.51. In compar-ison, those figures in 2012 were NT$4.2 billion in sales, net profit of NT$875 million, and EPS of NT$2.52.

The 12 award winners for 2015, announced in March, include 10 manu-facturers:

Aten International , a maker of branded KVM (keyboard, video, and mouse) switches used for control-ling multiple computers, achieved an extraordinary gross margin of 59% in 2014 on sales of NT$4.9 billion. It was the second-largest brand worldwide in that product segment, accounting for a 13% share, and number one in Asia. The high added-value results from its heavy emphasis on R&D, which is conducted in three R&D centers – in Taiwan, China, and Canada. Expen-diture on R&D equals 10% of annual sales. As of mid-2014, the company owned 427 global patents.

Intai Technology takes advantage of its expertise in precision metal pro-cessing to produce components and parts for endoscopic-surgery and mini-invasive devices for the medical device industry, industrial precision fasteners, and components and parts for wireless communications systems. The com-pany devotes 10% of the sales value to R&D in order to develop cutting-edge technologies in its field. It holds 26 medical-device patents, and is one of the top five suppliers in the world of metal processing products to leading medical -device f i rms. In 2014, i t recorded sales of NT$1.8 billion, with

an EPS of NT$7.87. Johnson Health Tech, one of the

few well-established Taiwanese brands on the global market, supplies fitness equipment based on patented technol-ogies covering such aspects as motors, controllers, meters, and human-machine interface. It markets worldwide under three separate brands: Matrix for fitness centers, Vision for home workouts, and Horizon (sold through hypermarkets and other mass market outlets). John-son’s global sales channels include 241 dedicated stores. With sales of NT$16.6 billion in 2014, the company is now the world’s third-largest fitness-equipment maker, as well as the leader in Asia.

KMC Chain Industrial is the world’s leading bicycle-chain manufacturer, holding an astounding 73% market share for high-end products. The total length of its chains produced in a year could circle the earth 4.8 times. The company’s chains are 5-10% lighter than counterparts made in Japan and Europe, and last more than twice as long as most other products on the market. The chains’ unique designs, which facilitate changing gears, have won KMC numerous international design awards. Their use by many of the world’s top professional cyclists testifies to their quality. “Uniqueness is a prerequisite for market leader-ship,” says KMC vice president Wu Hsin-chuan. The company’s 2014 sales reached NT$2.3 billion, with a gross profit margin of over 35%.

Lucidity Enterprise, dedicated to promoting green industry, produces LED auto lights that feature low power factor and long life. Through the addi-




tion of 60 new products every year, the company boasts a complete product lineup. The products are exported to Europe, Africa, Oceania, Asia, and Latin America under the two brands of Lucidity and Optronics. Sales in 2013 (the most recent data available) came to NT$2.03 billion, and the EPS was an extraordinary NT$10.96.

Machvision Inc . , a specialist in machine vision, is a leading supplier of AOI (automated optical inspec-tion) devices for printed circuit boards (PCBs). Seventy percent of the world’s top 100 PCB manufacturers, including all of the top 10, utilize the company’s AOI devices. Machvision is the leading brand in all three of its major markets: Korea, China, and Taiwan. In 2014, it registered sales of NT$650 million and had an EPS of NT$4.03.

Nanliu Enterprise produces health-care and medical textiles, including wet towels, facial masks, and surgical gowns, with the help of its advanced nonwoven manufacturing and pro-cess technologies. The company is the world’s second-largest supplier of spun-lace nonwoven medical fabric, with a 20% global market share that puts it behind only DuPont. Nanliu holds certi-fication based on EU, U.S., and Japanese national standards, and its sales have been growing at an average annual rate of 44% over the past three years. Rev-enue topped NT$5.3 billion in 2014, with the EPS reaching NT$5.39 in 2013 (the most recent number available).

Pixart Imaging Inc., which special-izes in the design of imaging integrated-circuits (ICs), has established a foothold

in the emerging Internet-of-Things market by rolling out sensor, radio fre-quency (RF), and MCU (microcontroller unit) ICs for use in wearables. It aims to become a leader for chips used in the human-machine interface for the Internet of Things, helping customers to develop IoT applications for smart homes, autos, and intelligent automation. A major supplier of CMOS image sensors, the company had sales of NT$4.75 billion in 2014, when profits rose 30% and EPS came to NT$2.95. Thanks to an emphasis on R&D, the company as of last year had obtained 850 patents, both domestically and abroad, or more than eight per employee.

Singtex Industrial, a fabric manufac-turer, was deemed a hidden champion thanks to its development of pro-prietary functional textiles made by blending fabric with coffee grounds. The products feature odor control, UV protection, and fast drying. Its patented S.Cafe brand fabric has been hon-ored with various invention awards, including INPEX in the United States, iENA in Germany, the Geneva Interna-tional Exhibition of Inventions award, and the National Invention and Cre-ation Award from Taiwan. Singtex, which also sells other functional fab-rics and garments, saw sales rise 8% in 2014 to hit NT$1.39 billion, with the EPS reaching NT$2.4.

Yoke Industrial Corp. manufactures hooks for industrial lifting under the “Yoke” brand. Technological break-throughs in recent years enabled the company to leap from grade 80 for lifting chains and fittings, to grade 100, with products featuring much higher pulling endurance at low temperature. Moreover, it is extending its reach from manufacturing to other specialties, such as offshore engineering. The company’s sales jumped 26% to NT$2.34 billion in 2014, with gross margin reaching 30%.

Two service providers were also among the latest group of Mittelstand winners:

Bright Ideas Design, a pioneer in innovative digital cultural services in Taiwan, utilizes animation and inter-active technologies for the digital presentations of museum collections,

exhibitions, and historical landmarks, among others. It has played a key role in digitalizing the archives of Taipei’s National Palace Museum, as well as arranging digital exhibitions such as one of Xian’s terracotta warriors and horses and another of Beijing’s Yuan-mingyuan (Old Summer Palace) Park. The company’s sales soared 77% to NT$200 mil l ion in 2014, 16% of which came from overseas markets, with EPS reaching NT$2.

Galaxy Software Services Corp. (GSS) is a leading provider of solu-tions for human-resource, document, and knowledge management, among o the r func t ions . I t i s backed by domestic and foreign patented technol-ogies, and its knowledge-management system was recognized by receiving the Taiwan Excellence Award and the 2012 Cloud-End Innovation Award. The company’s HR management and credit-investigation systems hold the largest market share in the domestic banking industry, its knowledge-man-agement system is the first choice of medical centers in Taiwan, and its doc-ument-management system is the most widely used by municipal governments on the island.

GSS has established cooperative links with a number of leading foreign information-service firms, including Japan’s Vintage and Orio Global, for joint development of solutions. The company’s sales amounted to NT$740 million in 2013 (last year’s figures were not available), compared with NT$530 million in 2011, representing an 18% compound average growth rate during the 2011-2013 period.

One of the high-performance products of KMC Chain..

pHoto: Kmc cHain

Samples of fabric from Singtex Industrial.

PHoTo: s INGTEx



Taiwan has exce l l ed a t the development of information-technology (IT) hardware, in

part due to the financial and other assis-tance provided by the government over the past two decades.

But support on the same scale has not been extended to companies on the software side of the business, and many in the software sector have strug-gled to get off the ground in the highly competitive East Asian and world mar-kets. Even software multinationals have found Taiwan to be a less welcoming market than might be expected. They

note the low proportion of government IT expenditure allotted to software and computer services compared with most other countries.

“Ta iwan i s ba s i ca l l y the on ly developed nation that still has propor-tionally more of its IT investment in hardware,” says Roan Kang, general manager of marketing and operations for Microsoft Taiwan. That procure-ment imbalance has contributed to a business environment that is chal-lenging for up-and-coming software developers and large software multi-nationals alike. Some 70% of public

IT investment is allotted to hardware, while only 30% goes to software and computer services. The opposite ratio is the norm in the United States and most other developed economies.

Countries tend to emphasize hard-ware manufacturing when first building up their information systems infrastruc-ture, but as the infrastructure matures, most gradually shift focus to soft-ware development. A major reason is that a well-developed software and ser-vices sector generates greater economic growth and more white-collar jobs than IT manufacturing. It also brings higher margins. Another factor is that software investment enables hardware invest-ment to be exploited to the greatest extent possible, as was confirmed by a joint Korean-U.S. study published in the International Journal of Information Management.

“Investment in software and ser-vices will generate much higher GDP impact than buying hardware,” says Vincent Shih, general manager of legal and corporate affairs at Microsoft Taiwan, particularly since the hard-ware increasingly is not built in Taiwan. “But if you buy software and services, you need people to do the services, and the money will stay here. If you want to help your unemployment rate, you should put more investment into soft-ware and services.”

in searcH oF it BALANCE

BY MOLLY REINER

T E C H N O L O G Y

Government procurement can play a key role in developing Taiwan’s software market.

The Nankang Software Park in Taipei houses numerous leading software firms, but critics contend that Taiwan could do more to develop its software sector.

pHoto: cna

9 technology.indd 28 2015/9/4 9:43:13 AM


T E C H N O L O G Y

Adding to the problem has been Tai-wan’s declining overall spending on IT procurement in recent years. While the U.S. government’s annual expendi-ture on IT increased 2.1% from 2012 to 2014, from US$80.28 billion to US$81.99 billion – and is set to increase further – the Taiwan government’s annual spending on IT fell 28.5% between 2011 and 2015, according to National Development Council (NDC) statistics. In addition, while IT spending comprised 2.17% of the U.S. Federal budget in 2014, NDC data shows that IT spending as a proportion of Taiwan’s national budget fell from 0.84% in 2011 to 0.60% in 2015.

Government procurement is con-sidered vital to the development of IT markets, as government – including the military, public schools, and other public institutions – tends to be the largest single consumer of IT products. Cre-ating a large market for both domestic and international suppliers makes it pos-sible for the market to serve as a testbed for new IT products. Moreover, govern-ment procurement can provide an index enabling other buyers to evaluate price and quality, a function that is particu-larly important for intangibles such as software. Plus, better software allows the government to more efficiently administer services to its citizens.

The massive success of Taiwan’s hardware industry over the years is

partially responsible for the low gov-ernment expenditure on software. Taiwan’s IT hardware and machinery makers have been primary drivers of Taiwan’s economic growth for 30 years, contributing over 50% of Tai-wan’s exports – US$84.32 bi l l ion out of a total US$165.97 billion in the first seven months of this year. IT firms such as Taiwan Semiconductor Manufacturing Co. (TSMC), United Microelectronics Corp. (UMC) and the world’s largest electronics manufac-turer, Hon Hai (Foxconn), are bedrocks of Taiwan’s economy.

This successful experience with hard-

ware, coupled with the risk-averse nature of the business environment in Taiwan, has made for a slow transition to investment in software. Conceptually, says Microsoft’s Kang, many business-people in Taiwan find it to be a “big and difficult shift to think that some-thing you can’t see or touch is actually worth more than this beautiful piece of designed hardware that you know has substantial value.” In addition, those intangible software products tend to be much riskier investments, even if they potentially can deliver greater profit at much lower marginal cost. “The high-tech industry here tends to take a very

Chairman Morris Chang of Taiwan Semiconductor. Hardware companies like his also have signifi-cant numbers of personnel with software expertise.

pHoto: cna


T E C H N O L O G Y


hardware-centric view, and as a result the government has adopted a rather hardware approach to technology,” Kang explains.

Perpetuat ion of that historical imbalance can partially be attributed to bureaucratic practices that have had the effect of discouraging software procurement. For many years, respon-sibility for overseeing government procurement, including IT software, was in the hands of a Joint Procure-ment Platform run by the state-owned Bank of Taiwan, but the staff at the bank lacked the technical expertise to analyze the merits of different soft-ware products. Tenders were frequently delayed due to internal difficulties.

An article entitled “A Government Software Procurement Crisis” pub-lished in the April 2014 issue of Taiwan Business TOPICS noted that the gov-ernment software procurement had practically ground to a halt, and the amount of purchases in that fiscal year was but a fraction of the normal level of US$130 million, which already was low by international standards.

The August 2014 establishment of the Software Procurement Office (SPO) under the Ministry of Economic Affairs was designed to remedy the sit-uation. Industry sources regard the change as a move in the right direction, but are still uncertain about the new system’s efficacy.

Many complain that government-contracted software projects tend to be too small and too few. In discussing the problem, one veteran of the Taiwan tech sector uses the metaphor of a cake that is large enough for everyone to have a bite, but too small to pro-vide any significant nourishment. The solution, the expert says, is for gov-ernment procurement to play a role in making the cake bigger. Procurement on a larger scale would enable compa-nies to sustain project teams for longer periods. For startups, it would mean having sufficient manpower to engage in the R&D needed to be competitive, not just in Taiwan but in the global software market.

To achieve this goal, say know-ledgeable sources, certain provisions of

the procurement law would have to be amended. Under the current law, speci-fications for ICT procurement must be written in terms of hardware require-ments. Altering the system to include language that more specifically refer-ences software and services would lead to a much greater volume of contracts for such products and services, the sources say.

Future trends

Many in industry and government see the future of Taiwan’s IT sector in the close integration of software and hardware. For instance, the bur-geoning Internet of Things (IoT) – the network of everyday devices connected both to the Internet and to each other – demands close linkages between soft-ware, cloud services, and advanced hardware devices.

“What we’re advocating for Taiwan industry is a transformation from hardware-only business to hardware-software integration,” says Stephen Su, general director of the Industrial Economics and Knowledge Center at the Industrial Technology Research Institute (ITRI). “Taiwan cannot do software only.”

Such an emphasis on combining hardware and software opens up the possibility that Taiwan’s well-estab-lished hardware giants can best evolve

for the IoT era by devoting resources to software R&D. That shift may be easier to accomplish than might be imagined. “About one-third of the soft-ware talent and software resources in Taiwan can be found within the so-called hardware companies,” says Sam Shen, senior director of the Market Intelligence & Consulting Institute (MIC) under the government-backed Institute for Information Industry. “If you count them in the total, the number of personnel doing software-re-lated activities is actually much, much bigger than what is seen in just the soft-ware industry alone.”

The challenge in propelling Taiwan into the era of integrated systems will be to spark the necessary cre-ativity and alter the prevailing risk-averse mindset. Those issues are just beginning to receive attention. In fact, the procurement imbalance problem remains outside the mainstream of eco-nomic research in Taiwan. “This is the first time someone has approached me to ask about software procurement,” Darson Chiu, a research fellow at the Taiwan Institute of Economic Research (TIER), told this reporter.

“Taiwan still has a very good rep-utation in terms of technology,” says MIC’s Shen. “The problem is whether we can leverage the resources needed for the new type of business model to succeed.”

Advantech, a leader in industrial automation solutions, is working together with Microsoft Taiwan on cloud platforms for the Internet of Things.

pHoto: cna



A Special Report on Energy

Growing Challenges

INDUSTRYF CUS


BY TIMOTHY FERRY

9 IF.indd 31 2015/9/4 10:05:47 AM


INDUSTRYF CUS

IN THIS SURVEY

• CarbonAbatementandEnergySupply p32

• PhasingOutNuclearPower p35

• IsTaiwan’sEnergyFutureinRenewables? p38

CaRboN abaTemeNT aND eNeRgY SUpplY

On June 15, the Legislative Yuan passed the landmark Greenhouse Gas Reduction

and Management Act (GGRMA), clearly confirming Taiwan’s com-mitment to the fight against global climate change. The bill, which had been pending in the legislature since 2006, calls for Taiwan to halve its 2005 levels of greenhouse gas emis-sions – mostly carbon dioxide (CO2) – by 2050.

Environmental Protection Admin-istration (EPA) Minister Wei Kuo-yen called the legislation a “milestone” that “brings the country more in line with international policymaking.” He said he expects the law to “enhance national competitiveness and spur development of the green sector,” while preventing the nation’s exports from being the target of potential tar-iffs or boycotts aimed at high emitters.

The international community was quick to laud the move. At a climate change forum on August 21, Robert Forden, deputy director of the Amer-ican Institute in Taiwan (AIT), called the legislation “a significant step for-ward in Taiwan’s climate efforts.” The European Chamber of Commerce in Taiwan (ECCT) congratulated Taiwan for marking “a legal com-mitment to take action to cut carbon emissions” and sending “an impor-tant s ignal to the internat ional community” that Taiwan is willing to shoulder its share of the burden of mitigating climate change.

Seve ra l weeks l a t e r, Ta iwan

marked another milestone, but this one less laudable. On July 2, demand for electricity peaked at within 2% of Taiwan’s total reserve capacity for power generation, putting both industry and households at risk of power shortages. Nominally, the state-owned Taiwan Power Co. (Tai-power) maintains a 15% reserve, but drought conditions this spring impacted output from Taipower’s hydroelectric plants, while one of the reactors at the Jinshan Nuclear Power Plant (NPP1) has been offline since late last year. A number of fossil power plants were also offline for repairs or upgrades.

More importantly, though, Tai-wan’s energy demand has continued to rise alongside economic growth, but almost no new power-generating capacity has been added in recent years, bringing Taiwan’s effective reserve margin to dangerously low levels. Demand for primary energy has increased over the past decade by an average of 1.9% annually, while power demand increased 1.8% year-on-year in 2013 after a slight dip in 2012, and the release of 2014 sta-tistics will l ikely show a further increase. With Taiwan’s aging fleet of nuclear reactors nearing retirement starting in 2017, and with little push for license extensions that would enable them to continue generating power for another 20 years, Taiwan stands to lose some 18% of its power generation. Only part of that shortfall can be made up by coal-fired units

Anti-nuclear sentiment has been matched by enthusiasm for renewable energy and efforts to help combat global climate change.

photo: cna

photo: cna

9 IF.indd 32 2015/9/4 5:39:50 PM



currently under construction or planning, and these projects are also likely to meet opposition from environmentalists.

These developments will make it harder for Taiwan to meet its commit-ments under its greenhouse gas (GHG) emissions-reduction strategy.

The desire to honor its role as a devel-oped economy in the fight against global warming – while still maintaining a suf-ficient and affordable energy supply – is the core of Taiwan’s energy challenge. The issues involved are always highly political, and can be expected to become even more so as Taiwan nears the pres-idential and legislative elections next January. Both the ruling Kuomintang (KMT) and opposition Democratic Pro-gressive Party (DPP) agree that Taiwan needs to reduce its energy demand and carbon footprint, and the stated goals of both parties with regard to promoting renewable energy are also quite similar.

DPP candidate Tsai Ing-wen has com-mitted to allowing the existing nuclear power plants to continue operating only until their 40-year licenses expire. The two units of NPP1 are scheduled to reach retirement in 2017 and 2018, NPP2 (Guosheng) in 2019-2020, and NPP3 (Maanshan) in 2024-2015. If Tsai is elected and stands by her com-mitment, Taiwan will need to sharply reduce demand or find an equal volume of energy – some 18% of Taiwan’s cur-rent total electricity consumption – as a replacement. To meet the objectives committed to in the GGRMA, this replacement power would need to be emission-free or at least carbon-neutral renewable energy.

Less clear is what the position of the KMT may be toward the role of nuclear power going forward. The party’s pres-idential candidate, Hung Hsiu-chu, has called for more public discussion of the issue to try to forge broader consensus.

looking at the background

Providing sufficient energy has long been a challenge for Taiwan. Save for severely limited natural gas and coal deposits, the island is almost completely devoid of energy resources and imports 98.4% of its primary energy supply,

mostly in the form of fossil fuels such as crude oil and liquefied natural gas (LNG) sourced primarily from the Middle East, and coal from China and other countries. The near-total dependence on imports is a problem for Taiwan’s energy security.

Adding to the challenge, energy-in-tensive industries such as petrochemicals, steel, and most significantly semiconduc-tors and other Information Technology (IT) products, form the pillar of Taiwan’s economy. Directly or indirectly, their energy consumption is 50% of the total. Consequently, energy imports are equiva-lent in value to 12% of GDP (though that figure is down from a high of 13.87% in 2012, reflecting falling oil prices).

In 2014, Taiwan had 41.18 giga-watts (GW) of installed power-generation capacity – meaning that if all facilities were running at full capacity, they would generate 41 gigawatts of power per hour

(GWh). That number represents “name-plate” capacity, however, and no power plants can run at 100% for an extended period. In Taiwan, the utilization rate for nuclear power is the highest, at over 90% annually.

Of the total capacity, 77.6% (31.96 GW) belongs to Taipower, while 22.4% (9.21 GW) is owned and operated by independent power producers (IPPs). Taipower is the sole operator of the nation’s power transmission and distri-bution grid, though a small amount of power is utilized off-grid by Taiwan’s largest manufacturers. Power plants run-ning on fossil fuels make up 72.4% of the combined installed capacity (Tai-power plus IPP), consisting 37% of liquefied natural gas (LNG), 27.4% coal, and 8.1% oil . Nuclear power occupies 12.5% of the total installed capacity, while conventional hydro-

This summer, high temperatures brought increased electricity usage, and drought condi-tions reduced hydroelectric output. As a result, peak demand on the Taipower grid rose to within 2% of reserve margins, leading to warnings of power shortages.

photo: cna

9 IF.indd 33 2015/9/4 10:05:49 AM

INDUSTRYF CUS


electric take up 4.4% and “pumped storage” hydro 6.3%. Wind and solar photovoltaic (PV) provide 2.5% of capacity, and another 1.5% is in cogene-ration plants using waste and methane.

The proportion of capacity does not necessarily translate into an equivalent proportion of actual power generation, however. Several factors may account for the difference, including the price and availability of the relevant energy resource. In 2013 (the latest year for which data is available), relatively cheap and efficient nuclear power generated 18.8% of Taiwan’s total power gener-ation of 213,429 GWh, far higher than its 12.5% of installed capacity. Coal-fired plants produced 38.4% of power in 2013, while efficient but expensive LNG plants generated some 31%. Expen-sive and unreliable renewables, which include conventional hydro but not pumped storage, generated only 3.4% of the power supply, while pumped storage hydro also underperformed at 1.5%.

In 2014, Taiwan’s overall power demand increased by 2.7% over the pre-vious year to reach 219,200 GWh, and since 2001, power demand has increased by more than 38%. The Bureau of Energy (BOE) of the Ministry of Eco-nomic Affairs reports that last year, the per capita electricity consumption came to 10,791 kilowatt hours (kWh), a 2.21% increase compared with 10,557

kWh in 2013.In the face of both increasing power

demand and the commitment to reducing carbon emissions, the question is how Taiwan can continue to supply sufficient energy to industry and households at a reasonable cost. According to the DPP, the answer is increased efficiencies. The party’s secretary general, Joseph Wu, in a letter to The Wall Street Journal in response to an editorial criticizing the DPP’s plans to phase out nuclear power, wrote that “current power demand levels could already be reduced by 10% by implementing existing conservation methods” and that “additional energy savings facilitated by new technologies such as smart grids and smart meters will also feature prominently in our long-term plans.”

Driving efficiency

That direction is a worthy objective, and in fact Taiwan’s BOE has been pro-moting greater efficiencies in the power generating and industrial sectors for years. As early as June 2008, the gov-ernment inaugurated the Framework for Sustainable Energy Policy, aimed at reducing the energy intensity of Taiwan’s industries and power sector. The policy included a number of programs aimed at promoting energy efficiencies, including subsidies for industrial upgrades, energy

audits, public education, and mandatory regulations and standards. The BOE notes that energy intensity – the measure of how much energy is required to generate a certain amount of GDP – had conse-quently declined by 20.8% as of 2014, an annual reduction of about 2.46%. Without reductions in energy intensity, energy demand grows in parallel with GDP growth, as happened for most of Taiwan’s recent development history.

Energy savings are also reflected in reductions in Taiwan’s GHG emissions. According to the BOE and EPA, Taiwan generated some 250 million tons of greenhouse gases in 2013, including not only carbon dioxide but also methane and nitrous oxide. That equaled about 10.9 tons per capita, down from a his-torical high of 256 million tons in 2007. CO2 intensity has declined alongside energy intensity, from 0.0197 kilograms of CO2 per US dollar of GDP in 2007 to 0.0163kg per dollar in 2013, according to the EPA. These sav ings r e f l e c t advances in manufacturing and power generation technologies that allow for greater productivity.

Siemens, recognized as a world leader in producing energy savings in manufac-turing, notes for example that electrical drives account for two-thirds of indus-trial power consumption and that the introduction of variable speed drives can reduce energy use by 70%. The company also offers software called Powerrate that incorporates Big Data to “help in making energy flows visible in production plants and derive the matching, important energy savings potential.”

Siemens says the energy-savings solu-tions it offers to Taiwan’s manufacturers have been well-received, and that demand for “energy saving and productivity solu-tions in Taiwan’s industrial production are increasing, as industries are striving to stay competitive and environmentally friendly.”

More can be done as well on the con-sumer side. Opower, a U.S.-based energy software firm, employs “data manage-ment, insightful analytics and behavioral science” to produce substantial reduc-t ions in power demand. According to Opower, its methods of engaging consumers directly in their energy con-

LNG Coal Oil NuclearHydroelectric Pumped storage Wind and solar Cogeneration

SOURCES: Taipower, Bureau of Engery

TAIWAN POWER SUPPLY 2013

Installed Capacity Power Generation

5.5

9 IF.indd 34 2015/9/4 10:05:49 AM


Few would deny tha t nuc l ea r power has been vital to Taiwan’s development into an industrial

powerhouse. Always highly dependent on imported energy, primarily crude oil, Taiwan responded to the oil crises of the 1970s by embracing nuclear power as a way to at least partially insulate itself from the vagaries of the global oil market.

Nuclear power was always contro-versial, though. Especially following the Three Mile Island near-meltdown in 1979 and Chernobyl’s actual meltdown in 1986, nuclear power was increasingly viewed as a hazard by large segments of the public. The government’s staunch defense of nuclear energy turned the power source into a symbol of the top-down decision-making characteristic of an authoritarian regime that seemed to favor industrialization over social welfare.

Opposition to nuclear power became

intertwined with dissatisfaction with the prevailing political system, and from its very beginnings the opposition Demo-cratic Progressive Party (DPP) “vowed to challenge the KMT’s pro-nuclear stance,” according to a study by Ho Ming-sho, a sociologist on the faculty of Nanhua Uni-versity, that was published in the journal Modern Asia Studies under the title “The Politics of Anti-Nuclear Protest in Taiwan: A Case of Party-Dependent Movement.” One of the first major moves made by Chen Shui-bian after being inaugurated as president was to stop construction of the fourth nuclear power plant (NPP4) in Longmen, New Taipei City. Later the project was reinstated – in the face of overwhelming opposition in the legisla-ture and despite a ruling by the Council of Grand Justices that the decision to halt construction, though not unconstitutional, was procedurally flawed.

What followed for the Longmen plant was a decade of monumental cost over-runs, with the total cost of the project now put at NT$283 billion (US$9.3 billion). Lawsuits among the various contractors and subcontractors, alle-gations of shoddy construction, and a host of other widely publicized ills trans-formed the plant into a lightning rod for antinuclear sentiment. The controversy continued into the Ma administration, which assured the public that the plant would go into operation only if the safety could be unequivocally assured.

Antinuclear sentiment rose as Presi-dent Ma Ying-jeou’s popularity waned and the horrors of the Fukushima disaster in neighboring Japan seized media attention. Massive protests against the Longmen plant occurred in 2012, 2013, and 2014, with opponents of nuclear energy stressing the numerous risk fac-


pHASING OUT NUClEAR pOwER

A “nuclear free homeland” may be the goal of both major political par-ties. The difference is how – and how fast – to achieve it.

sumption through transparent, real-time analytics has saved some 8,000 GWh of power to date around the world.

But could such efforts be enough to drive down Taiwan’s total power con-sumption by 10% over the next eight years? President Ma has spoken fre-quently of decoupling energy demand from GDP growth, which seems to be happening, as Taiwan’s GDP growth rates have generally outpaced energy demand growth in recent years. Energy intensity has declined, partially due to the previously mentioned greater effi-ciencies in manufacturing but also to the ongoing decline of manufacturing in Taiwan and the rise of a far less energy-intensive service-based economy. Services account for some 70% of Taiwan’s GDP but consume only 10% of its primary energy supply.

Nevertheless, although the rate of growth in power demand has slowed, the demand for both primary energy and electrical power still continues to rise.

Among the main obstacles retarding further improvements in energy effi-ciencies is the low price per kWh that Taipower is allowed to charge. The cost of energy in Taiwan, particularly elec-tricity, is among the lowest in the world for developed nations. According to Tai-power, the average selling price for power in Taiwan is NT$2.89 (9 US cents) per kWh. Power prices in the energy-rich United States, by contrast, range from 19.71 US cents in New England to 11.03 cents in coal-rich southern states. In Japan, the average cost is the equivalent of 22 US cents. One of the few mar-kets where the price of electricity is even lower than in Taiwan is South Korea,

at the equivalent of 6 US cents, in large part because of the continuing commit-ment to nuclear energy. In China and South Korea, new nuclear facilities are being built, and Japan is restarting plants that suspended operations after the Fuku-shima disaster.

Taiwan’s pricing policy has been explained as the need to support industry with cheaper energy to increase the island’s competitiveness. It is also a legacy of the Republic of China’s founding principle of stressing social welfare. According to economists, cheap energy over the years has come to be seen as an element of public welfare.

But the relatively low price of energy has undoubtedly also constituted a key obstacle hampering the development of alternative energies such as solar and wind power.

9 IF.indd 35 2015/9/4 10:05:49 AM

INDUSTRYF CUS


tors Taiwan shares with Japan. They predicted that a similar disaster at one of the nuclear plants in northern Taiwan could force an evacuation from Taipei, the political and business capital. The government responded in 2014 by indef-initely suspending construction of the NPP4, though it was more than 90% completed, and ruling that the ultimate fate of the plant would be decided by popular referendum. No such referendum has yet been held due to interparty dis-putes over how it should be organized.

Opposition to nuclear power has now become a mainstream position, with the KMT joining the DPP in adopting the concept of a “Nuclear Free Homeland” as the eventual goal. The New Energy Policy of the Bureau of Energy under the Min-istry of Economic Affairs (MOEA), for example, declares the government’s inten-tion to “steadily reduce nuclear energy dependence, create a friendly low-carbon green energy environment, and gradually move towards a nuclear-free homeland.”

With the NPP4 plant seemingly perma-nently on hold, the timeline for achieving such a nuclear-free homeland is now a lot shorter. All of Taiwan’s three operating NPPs are nearing the end of their licensed 40-year lifecycles, and the DPP’s Tsai – as well as President Ma – has committed to not extending them. (KMT presiden-

tial candidate Hung Hsiu-chu has taken a somewhat different stance, however, sup-porting continued reliance on nuclear power, at least at this stage).

The three plants now in operation – each with two units of reactors – are Jinshan (NPP1) and Guosheng (NPP2) located in New Taipei City, and Maan-shan (NPP3) in southern Pingtung County. Their total installed capacity amounts to 5.14 gigawatts (GW), or 12.5% of Taiwan’s entire installed power-generating capacity.

Over the past decade, the state-owned Taiwan Power Co. (Taipower) has received international recognition for its nuclear power management. The plants operate at an average of 90% of their capacities, allowing nuclear power to generate 18% of Taiwan’s elec-tricity despite the smaller proportion of installed capacity.

NPP1 faces the end of its licensure in December, 2018, but this date may be pushed back as one of its reactors has been offline since December 10 last year – originally for a scheduled refueling outage, but the situation was complicated by a broken connecting bolt on one of the fuel assembly rods supplied by global nuclear-power firm Areva, according to a source close to Taipower. After it was replaced, a Safety Evaluation Report con-

ducted by Taipower and Areva for the Atomic Energy Council (AEC) – the cab-inet-level nuclear regulator – cleared the reactor for restart. But members of the Legislative Yuan demanded that the reactor stay offline until the lawmakers could hear a report on the matter from the AEC. As of press time, the presen-tation had still not been placed on the Legislative Yuan’s agenda.

The AEC is not directly under the authority of the legislature but still accepts its oversight, and consequently the reactor remains idle. At this point, it is unclear whether the conclusion of its license would be according to the original date or instead be extended for a period equivalent to the time it has not been operational. NPP1’s second reactor is scheduled to be decommissioned in mid-July 2019, according to the AEC.

The two reactors at Jinshan are the smallest of the units, each with installed capacity of 636 MW and together gen-erating about 1.8% of Taiwan’s total e lectr icity production. The pain of losing nuclear energy would not be felt until later, when the Guosheng plant’s twin 985-MW reactors are retired, in late December 2021 and early March 2023 respectively, according to the AEC website. Guosheng supplies 7.3% of Taiwan’s total energy supply – some 16,000 gigawatt hours (GWh) – but more significantly, it supplies this power to the economic centers of Taipei City and New Taipei City. Taiwan currently lacks sufficient transmission lines to easily redistribute power from the south to the north.

The Maanshan twin 951-MW reac-tors are scheduled to be retired in July 2024 and May 2025. Without license extensions for some or all of the existing plants, at that point Taiwan would be nuclear free. To date, Taipower has sub-mitted an application to the AEC for license extension for NPP1.

Nuclear power plants are normally granted 40-year licenses not out of tech-nological or safety concerns but for antitrust considerations. They are gen-erally considered capable of running for another 20 or even 40 years, although the plants might need to undergo extensive refurbishment, with certain components

A woman in a Pink Panther costume joins an anti-nuclear rally on March 14 in Taipei. photo: cna

9 IF.indd 36 2015/9/4 10:05:50 AM



replaced. Many nuclear plants have been granted license extensions in the United States, where building a new nuclear facility has been politically problematic since the Three Mile Island disaster.

Nuclear waste issue

The day of reckoning for Taiwan’s nuclear power sector might actually come a good deal earlier, if issues sur-rounding the storage of spent fuel rods cannot be cleared up.

Nuclear waste, particularly the highly radioactive spent uranium fuel rods, is another thorny issue. Though no longer usable as fuel for the reactor, the spent fuel rods are still highly dangerous. According to the U.S. Nuclear Regu-latory Commission (NRC), the rate at which radioactive elements in the fuel rods decay into harmless substances varies greatly. “Some isotopes decay in hours or even minutes, but others decay very slowly,” the NRC reports on its website. “Strontium-90 and cesium-137 have ha l f - l i v e s o f about 30 year s [meaning that half the radioactivity will decay in 30 years]. Plutonium-239 has a half-life of 24,000 years.”

Managing this spent fuel is clearly a long-term endeavor. AEC Minister Tsai Chuen-horng says that national policy on spent fuel rods dictates that they undergo short-term storage in cooling pools in the power plant until they are cool enough to be transported to medium-term storage in dry casks. Long-term storage would be in a “geological repository” buried up to 5,000 meters underground, depending on geological and other factors.

Taiwan has never been able to put medium-term storage into effect, and long-term storage remains a dream. The AEC has given approval for dry-cask storage for the Jinshan and Guosheng plants’ spent fuel rods, but Mayor Eric Chu of New Taipei City (who is concur-rently chairman of the KMT) has so far refused to grant a building permit for the construction.

AEC policy also permits spent fuel rods to be t ransported to another country for reprocessing, an operation in which four-fifths of the radioactive mate-rials is recovered for recycling into new

fuel rods, while the remainder is vitri-fied and shipped back to Taiwan as glass. Taipower last November attempted to open bids on an NT$11.25 billion plan to send 1,200 spent fuel rod bundles to a foreign country for reprocessing. Several countries are technically capable of such reprocessing, including France, Japan, Russia, and Britain, but the project was suspended by the legislature before any bids were placed.

Unless space in the cooling pools is cleared before the next refueling cycle, “Jinshan and Guosheng are going to face a situation in the future where they may not have enough space to store the fuel, in which case they would be unable to continue in operation,” explains Minister Tsai. “The number of spent fuel elements to be reprocessed overseas is designed to allow the plants to operate up to the expiration of the licenses.”

Due to lack of spent-fuel storage capacity, the first unit of the Jinshan plant might be forced to cease operations as early as next year.

The potential impact

A report commissioned by the MOEA determined that by 2025, if there is no longer a nuclear component to the energy mix, the impact on the Taiwan economy would be significant, and electricity con-

sumers could be faced with substantial price hikes and possibly power shortages. The study reportedly forecast that under those conditions total GDP would decline by 0.5%, with economic growth rates down by 0.18%. It also projected that electricity bills would rise by 10%.

An increase in carbon emissions would also be likely, as the phasing out of nuclear power would presum-ably necessitate greater reliance on fossil fuels. Currently Taipower is in the midst of rebuilding a number of conventional coal and gas-fired power plants to aug-ment its installed capacity. These will include seven new “ultra-supercritical” 800-MW coal-fired units that burn far more efficiently than older coal-fired plants and generate 40% fewer emis-sions, as well as seven combined-cycle units whose gas/steam turbines are also highly efficient.

Still, reduced emissions are not zero emissions. Without nuclear energy in the mix, MOEA sees total emissions rising by 15% by 2025, despite Taiwan’s commit-ments to reduce emissions to half of 2005 levels by 2050.

Power shortages are another risk. Most estimates see demand for power in Taiwan continuing to rise, and without nuclear power the island may lack suf-ficient energy. Taipower expects to have installed capacity of 51 GW in 2024

The low-level nuclear storage site on Lanyu (Orchid Island) has been highly controver-sial, with accusations that the site is insecure and violates the local Aboriginals' rights.

photo: cna

9 IF.indd 37 2015/9/4 10:05:51 AM


INDUSTRYF CUS

With the two major political parties seemingly in agree-ment to allow nuclear energy

facilities to wind down and be replaced with renewable energy, the near term is likely see a big uptick in investment in alternative power sources regardless of the outcome of next January’s presiden-tial election.

The Ma Ying-jeou government has

co-opted the “Nuclear Free Homeland” policy of the opposition Democratic Progressive Party (DPP) by suspending construction of the Longmen Nuclear Power Plant (NPP4) and declaring its intention not to seek extension of the lifecycle of the three operating NPPs. Meanwhile, the normally starkly divided Legislative Yuan has come together in passing the Greenhouse Gas Reduc-

tion and Management Act to provide the framework for a marked reduction in the emission of carbon dioxide (CO2) and other greenhouse gases.

The government plan calls for gener-ating some 15% of domestic power from renewable sources by 2030. The target is to have in place 5,200 megawatts (MW) of installed wind power and 8,700 MW of installed solar photovoltaic (PV), as well as biomass-fueled power plants and even geothermal, for a total of 17.25 gigawatts (GW) of renewable energy installed capacity. For its part, the DPP’s 2025 Nuclear Free Homeland Initiative, the blueprint for the party’s energy policy, calls for generating 20% of Taiwan’s total power from renewable energies by a decade from now.

But can renewable technologies such as wind power and solar PV pro-vide enough electricity to offset the loss of nuclear power, while also allowing Taiwan to meet its emissions reductions commitments? Nuclear plants currently generate more than 38,000 GWh of elec-tricity annually, making up 18% of Taiwan’s total power supply,

The scale of the challenge is enor-mous. Researchers at the Industrial

IS TAIwAN’S ENERGY FUTURE IN RENEwABlES?

The goal has wide political support, but the challenges are immense, espe-cially when abandoning nuclear energy is coupled with stringent targets for

reduced greenhouse-gas emissions.

(including the final Maanshan reactor), but still sees demand as outpacing supply.

One reason is that Taipower’s orig-inal plans were based on the Longmen NPP being operational. With its twin 1,350-MW reactors, the plant was expected to supply 19,300 GWh of elec-tricity annually. Without it, Taipower

forecasts that reserve capacity will fall to 4.3%, deep in the danger zone for power shortages. In 2025, if the final Maanshan reactor ceases operation, the situation would be even more acute.

For industry, an uncertain power supply would be distressing. As AmCham Taipei has repeatedly emphasized in its

annual Taiwan White Paper, Taiwan’s high-tech industries – which constitute the backbone of the economy – are heavy consumers of electrical power. Those companies, whether domestic or for-eign-invested, cannot operate without assurance of a stable supply of energy at competitive prices.

President Ma and Economic Affairs Minister John Deng visit AU Optronics' solar installa-tion atop its Taichung display-panel fab.

photo: cna

9 IF.indd 38 2015/9/4 10:05:51 AM



Economics and Knowledge Center (IEK) under the Industrial Technology Research Institute (ITRI) estimate that to generate enough power to replace nuclear energy, Taiwan would need to install 180 GW of solar PV, requiring some 100 square kilo-meters of land.

“It’s quite difficult to replace nuclear power in the really short run, because we aren’t ready in terms of the whole infrastructure, and also the capacity of renewable energy is quite low right now,” says Wen Lih-chyi, director and research fellow at the Center for Green Economy at the Chung-Hua Institution for Eco-nomic Research. She adds that new energy technologies such as hydrogen fuel cells are “not really commercialized yet.”

DPP Secretary General Joseph Wu, in a letter to The Wall Street Journal responding to an editorial criticizing the DPP’s plans to let nuclear power die on the island, said it is “disingenuous” to suggest that the DPP is seeking the one-to-one replacement of nuclear power with renewable energy. According to Wu’s letter, Taiwan could reduce power demand levels by 10% from their current levels by 2025 using existing conserva-tion means, and that technologies such as smart grids and smart meters could add to these power conservation methods. The DPP’s 2025 Nuclear Free Homeland Initiative also calls for industrial trans-formation away from energy-intensive heavy industries.

Whether or not such major reduc-tions in Taiwan’s total energy demand can actually be achieved, Taiwan will still need to find a way to make up for the loss of nuclear power. And if it wants to cut emissions at the same time, the answer will necessarily be renewable energy.

“Every developed nation needs to go for renewable energy because of the envi-ronmental concerns, but also because of the continuous improvement in renew-able energy that has lowered the costs,” says IEK Deputy General Director Jack C.C. Chang. “But the question is, how much? What percentage? There are energy security and energy stability issues. And cost. You need to balance all these issues, and in different countries you may have different weightings, dif-ferent pressing factors.”

The Ma administration has encour-aged renewable energy research and development with the aim of enabling renewables to fill a larger portion of Taiwan’s energy needs in the future. Pas-sage in 2009 of the Renewable Energy Development Act, for example, funneled research funding into developing renew-able energies. Other initiatives include the Million Rooftop PVs and Thou-sand Wind Turbines programs initiated in 2012, and the Rising Green Energy Industry Program of 2014. The result has been a boost to the development of Taiwan’s renewable energy industries, primarily solar and wind.

According to data from the Bureau of Energy (BOE) under the Ministry of Economic Affairs, Taiwan’s renewable energy sector has grown in value by 195% between 2008 and 2014, increasing to NT$488.4 billion (over US$15 billion) in annual revenue and creating nearly 70,000 job opportunities. The BOE forecasts strong continued growth for these indus-tries, reaching NT$1 trillion by 2020.

Worldwide, Taiwan solar-cell man-ufacturing industry is second only to China’s, with 2014 revenue of NT$184 billion, and the nation holds a substantial share of the solar wafer and module man-ufacturing industries as well. Taiwan is also a leader in LED lighting, also consid-ered “green tech” due to its low energy consumption. The BOE reports that the production value of LED manufacturing reached NT$237.9 billion in 2014.

Scant domestic adoption

These i ndus t r i e s a r e p r imar i l y export-oriented, however. Green-en-ergy advocates for years have noted the

glaring disparity between the amount of production of renewable energy and green technology products and the paltry renewable energy installations on the island. Currently, 323 onshore wind turbines are operating in Taiwan, the equivalent of 644.4 MW of installed capacity, according to the BOE, while IEK says that accumulated solar PV installa-tions total around 300 MW. Conventional hydroelectric accounts for another 1,800 MW in installed capacity. Collectively, these renewable energy sources generated 3.4% of Taiwan’s total power generation of 213,429 GWh in 2013.

I n i t s 2 0 1 5 P o s i t i o n P a p e r o n Energy and Environment, the European Chamber of Commerce Taiwan (ECCT) says that despite declining costs for renewable energy and a general uptick in installations around the world, “there has been little action so far to further develop renewable energy” in Taiwan.

Critics contend that despite lip ser-vice paid to the idea of renewable energy, Taipower has intentionally or unin-tentionally erected obstacles that slow down the process and reduce the amount of amount of green energy available. Bart Linssen, service manager for Sol-Vent, a Taiwanese wind power firm invested by Enercon, a German wind-turbine manufacturer, says: “On paper, everything works. But grid connection at this point is very complicated and time-consuming.” He also cites difficul-ties obtaining the necessary permits and approvals in timely fashion.

For example, he notes that in Taiwan every windmill needs its own separate Environmental Impact Assessment (EIA), whereas in Europe large-scale EIAs are conducted for land areas earmarked for

DPP presidential candidate Tsai Ing-wen at the DPP's New Energy Workshop, held at National Cheng Kung University in Tainan April 18. photo: cna

9 IF.indd 39 2015/9/4 10:05:52 AM


INDUSTRYF CUS

wind-power development. ECCT also calls attention to the

failure to provide a stable financial environment for investment. “The Renewable Energy Act, with its ever changing feed-in tariff, isn’t providing the necessary confidence to attract signif-icant investment,” the chamber notes in its position paper.

The i s sue o f foot dragg ing and unstable feed-in tariffs (FiT) may be related to the sorry state of Taipower’s finances. As a state-owned enterprise, the company has to follow the government’s directives, leaving it with little control over its price structure or the policies governing how it generates power. The Ma administration’s emissions-reduction policies have led to liquefied natural gas (LNG) becoming the fuel source for over 30% of Taipower’s total generation, even though at NT$3.91 per kWh, the cost of power generation at LNG-fired plants is more than the utility can charge its cus-tomers.

After price hikes in 2012, the average price of electricity is allowed to range somewhat according to fuel costs and cur-rently stands at NT$3.07 per kilowatt hour, according to Taipower. Such poli-cies have put Taipower’s operations in the red for years. In its 2014 Sustainability Report, the company notes proudly that it lost only NT$17.5 billion in 2013, down

from NT$61.6 billion in losses in 2012. Nuclear power costs Taipower only

about NT$1.9 per kWh, while solar power is far more expensive. The utility pays FiTs of NT$8.18 per kWh for small rooftop installations and NT$5.62 per kWh for ground-based systems. As Tai-power focuses on regaining financial health, it is not surprising that it has been reluctant to accept major quantities of costly solar power.

Wind power is far cheaper, with an onshore FiT of NT$2.62 per kWh. But wind power suffers from a poor public image. It was the target of fierce protests in Miaoli County’s Yuanli Township in 2013 that pitted local residents against Infravest, a German wind-power firm that has built 170 of Taiwan’s windmills. The protestors claimed that the turbines were built too close to area homes, pre-senting not merely a noise disturbance but also a threat to their life and prop-erty if they were to collapse during a typhoon. In fact, this summer six of Tai-power’s own windmills were destroyed by powerful Typhoon Soudelor.

ECCT and other renewable-energy advocates urge Taiwan to adopt “com-munity-invested energy generation as a viable option.” In such projects, local communities invest in the project in return for a portion of the proceeds. As these generators usually operate under

20-year Purchasing Power Agreements (PPAs), the returns can bring in steady income – usually around 8% annually – for years. In Germany, up to 50% of wind-power installations are communi-ty-invested, and giving the local residents a financial stake in the installations tends to “turn complainers into supporters,” observes Peko Ku, a representative for wind-energy consultancies Wind Minds and Forte.

The use of community- inves ted projects could potentially foster more involvement by Taipower in renewable energy installations. This option is no panacea, though. A substantial number of publicly invested windfarms in Ger-many failed to generate either the kWh or the earnings that had been predicted, according to German newsmagazine Der Spiegel.

Renewable-energy systems suffer from other shortcomings as well – some more difficult to overcome. The first is the often-cited “intermittency” issue with wind and solar power, since those sources cannot generate power 24 hours a day under all weather conditions. That conflicts with society’s need for base-load power – the always-on, minimum power requirement needed for a grid to operate properly. Baseload power is gen-erally provided by relatively inexpensive and efficient fuels such as nuclear or coal. Most renewable energy, however, is sub-ject to the vagaries of nature and cannot be relied upon to provide baseload in the absence of large-scale, cost-effective means of energy storage.

The Nordic experience

Renewable energy advocates dispute the idea that renewable energy cannot serve as baseload. A number of studies, as well as real-world experience in the Nordic countries, show that renewable energies – if strategically placed for max-imum output during different times and seasons – can go a long way towards enabling wind and solar to provide base-load requirements. The addition of natural gas “peaking plants” would make it possible to meet a country’s power needs. Denmark, for example, gener-ates 39% of its total electricity needs

High winds make Penghu Island an ideal location for both onshore and offshore wind power generation, with more windmills planned in the coming years.

photo: cna

9 IF.indd 40 2015/9/4 10:05:52 AM



from wind power alone, and much of the remainder from hydropower.

Hydroelectric, which generates power from a steady and reliable source of water stored in a reservoir, is often used as baseload. Most nations with a high proportion of renewable-energy power generation, including Portugal, New Zealand, and the Nordic countries, gen-erally obtain this energy primarily from hydropower. Offshore wind resources in the Baltic region are also fairly strong and reliable, but not constantly avail-able. Denmark relies on a Nordic-wide grid that allows it to sell electricity to Sweden and Norway when it has a sur-plus of wind power, while purchasing power generated from those countries’ ample hydropower resources when it has a shortfall.

Taipower has already maxed out its hydroelectric resources, and with the res-ervoirs constantly filling with silt and given the specter of frequent periods of drought, conditions are not promising for any increased reliance on hydropower. As an island, Taiwan is also unconnected to a regional grid, eliminating the possi-bility of power sharing that makes use of renewables more feasible.

Another factor that could severely constrain Taiwan’s ability to transition to heavy dependence on renewables is the low “power density” of wind and power energy sources. Power density – measured in watts per square meter – is derived by calculating the land area a given energy

source requires and then dividing that number by the total power-generation output. It factors in the entire footprint of an energy source, including not just the power-generating facility itself but also the coal mines, natural gas and oil wells, and pipelines, as well as environ-mental mitigation requirements.

According to energy experts, the power density of coal can range from 100 to 1,000 watts per square meter depending on such variables as whether the coal is anthracite or the lower-quality bitu-minous, how it was mined, and what environmental mitigation requirements are in effect. More-efficient natural gas ranges from 200 to 2,000 watts per square meter, but renewable energies rate far more poorly. Solar PV was rated at only 9 watts per square meter in a 2010 study. Although technological advances likely have improved the efficiency somewhat since then, the power density would still be extremely far below that of fossil fuels.

Wind power generates fairly large amounts of power per turbine, but the space needed between turbines – not to mention between turbines and residences and other protected environments – is so large that its density comes to only 0.5-1.5 watts per square meter. Biomass also scores poorly, as photosynthesis con-verts only 1% of sunlight into energy, requiring vast amounts of space to grow plants for energy production.

With Taiwan’s extremely limited land-mass, the power densities of various

renewable energies ultimately are likely to pose a severe limitation on how much they can actually be utilized for power generation.

Do these circumstances mean that Tai-wan’s goal of moving to high rates of renewable energy usage is likely to fail? Germany offers both an inspirational and a cautionary example.

G e r m a n y b e g a n i t s t r a n s i t i o n towards green renewable energies in the 1990s, but adding to the challenge is that it also resolved to do away with carbon-free nuclear energy in 2011 after the Fukushima disaster. The stress of trying to meet the twin goals of reducing both carbon emissions and dependence on nuclear energy has spurred Germany to spend billions of euros on renewable energy installations – but also simulta-neously increasing its dependence on coal, particularly low-quality, highly polluting lignite.

Since 2010, Germany’s instal led capacity of renewable energies, including wind, solar PV, biomass and hydro-electric, has expanded to over 87 GW, almost half of Germany’s entire power capacity, while the installed capacity of power plants burning either hard or soft coal has declined. The utilization rate of coal plants for electricity generation has expanded, however. Lignite was used to generate 25.4% of Germany’s electric power in 2014, up from 23% in 2010, while anthracite declined very slightly, from 18% in 2010 to 17.8% in 2014. Germany’s ability to control emissions has suffered substantially as a result. Emissions have exceeded 2009’s 910 mil-lion tons of greenhouse gas every year since then, and reached a high of 953 million tons in 2013 before falling once again to 912 million tons in 2014.

In fairness, Germany is still in the process of transition and no final judg-ments can be made about the success of its energy program. Nevertheless, the dilemma faced by Germany does indicate what might be expected in Taiwan, par-ticularly in the short term.

Will Taiwan be capable of reducing carbon emissions, eliminating nuclear energy, and maintaining sufficient energy supply – all at prices that the economy can tolerate?

Many private residences in Western Europe, such as this home in Belgium, install rooftop solar panels to generate power for their own consumption and to sell to the local utility.

photo: cna

9 IF.indd 41 2015/9/4 10:05:53 AM


Siemens has published a detailed ecological review of its wind turbines. The key question is how long it takes a wind farm to generate the volume of

energy that it consumes during its lifetime, for example for manufacture, installation and disposal. As expected the calculations show that land-based wind farms pay off faster than their more powerful counterparts on the open sea. But both showed outstanding results – regardless if onshore or offshore. The study looked at two offshore wind farms, each comprising 80 turbines, and two onshore wind proj-ects with 20 turbines each.

Offshore wind farms are particularly good at saving CO2

A wind farm with 80 turbines produces 53 million mega-watt hours of electricity during its intended 25-year service life. It emits seven grams of CO2 per kilowatt hour (g/kWh). In comparison, energy from fossil sources burdens the climate with an average of 865 g/kWh, meaning that the wind farm saves a total of 45 million tonnes of CO2 during its entire service life. Absorbing the same amount of greenhouse gases would require 1,286 square kilometers of forest in Central Europe, or about half the area of the German state of Saarland.

During its expected service life, an offshore wind farm will save 45,000,000 tonnes of CO2 emissions. To absorb that much in 25 years would otherwise require 1,286 km² of forest.

Land-based wind farms are ahead when it comes to amor-tization, or in other words how long it takes a wind farm to produce the volume of energy that it consumes over its entire lifecycle. For an onshore facility, assuming an average wind speed of 8.5 meters per second, the amortization period is only 4.5 to 5.5 months. This figure also takes materials, production, construction, operation, maintenance, disman-tling and recycling into account. Offshore wind farms, on the other hand, take a little longer – between 9.5 and 10.5 months – to offset their energy requirements. The study therefore shows that even though wind farms are suppos-edly energy-intensive to set up, they make up for their energy consumption within just a few months – out of a total expected service life of up to 25 years.

— Andreas Binner

a d v e r t o r i a l

JUST HOW GREEN IS WIND POWER?

西門子發佈了一份關於其風電機組的詳盡生態考察報

告。關鍵問題是風電場要用多長時間，才能生產出

其在壽命週期內耗用的電量，譬如，建造、安裝和

處置等環節的耗電量。果不其然，計算表明，相比于發電容

量更大的海上風電場，岸上風電場的回報更快。但不論是

岸上風電場，還是海上風電場，計算結果都很理想。研究

考察了兩座分別配備了80台風電機組的海上風電場，和兩座

分別配備了20台風電機組的岸上風電場。

在二氧化碳減排方面，海上風電場的表現尤為突出

一座配有80台風電機組的海上風電場，在其25年的設計

使用壽命期間，可以生產530億度電能。它每生產一度電，

要排放7克二氧化碳。相比之下，礦物燃料發電的平均排放

量為865克/度，這意味著，海上風電場在其整個使用壽命期

間，總共可以減排4,500萬噸二氧化碳。在中歐，需要1,286

平方公里的森林，才能吸收這麼多的溫室氣體，這相當於德

國薩爾州面積的一半左右。

在其設計使用壽命期間，海上風電場可減排4,500萬噸二

氧化碳。要在25年內吸收這麼多二氧化碳，需要1,286平方

公里的森林。

從攤銷的角度，或者，從風電場需要用多長時間，才能生

產出其在整個壽命週期內耗用的電量來說，岸上風電場的表

現更好。對於岸上風電場，假設平均風速為8.5米/秒，攤提

期間僅為4.5到5.5個月。這個數位的計算，也考慮了物料、

生產、建造、運行、維護、拆卸和回收等因素。另一方面，

海上風電場的發電量抵消其耗電量所需的時間略長一些，在

9.5到10.5個月之間。因此，這項研究表明，儘管按理說，

風電場的建造，要耗用大量能源，但它們卻能在短短幾個月

內生產出所耗用的電量，而它們的設計使用壽命卻長達25

年。

— Andreas Binner

風力發電有多環保？

Wind power may have a positive image, but setting up offshore wind farms is complicated and energy-intensive. Because Siemens promises its customers and the authorities a high degree of transparency for the environmental performance of its giant turbines, it has reviewed the actual benefit of green power for the environment.

SUBSCRIPTION

Siemens’ Pictures of the Future magazinehttp://www.siemens.com/innovation/en/home/pictures-of-the-future/newsletter.html

風力發電給人的印象可能很好，但建造海上風電場不僅十分複雜，而且需耗用大量能源。西門子向客戶和有關當

局承諾，對其巨型風電機組的環保表現，做到高度透明，為此，西門子審視了這種綠色電力的實際環境效益。

9 Siemens advertorial.indd 42 2015/9/4 7:49:26 AM


Offshore wind has attracted support for its lack of CO2 emiss ions; i ts avoidance

of import dependency; the possibil-ity to install large-scale farms; strong public acceptance; and local economic stimulant effects. But until now, objec-tions against wind power have been raised based on cost grounds, given traditional narrow views of how to calculate such costs. Offshore wind is still a fledgling industry, but has grown steadily from around 2 mega-watts of capacity installed annually when the technology first appreared in the 1990s to around 3,000 mega-watts at present. The UK, Germany, and Denmark are the leading loca-tions, though significant investments are planned in the USA, China, and elsewhere. Typical turbine size has also steadily grown, from less than 0.5 megawatts in the 1990s to more than 6 megawatts today. At the same time, average wind farm (project) sizes have scaled up from around 6 megawatts to more than 300 megawatts. Ever-improving technology has also meant that these can be placed in 30-meter-deep water, rather than just 5 meters of depth as in the early days. It is a fast developing filed, and Siemens has been proud to play a leading techno-logical role.

a d v e r t o r i a l

SCALING UP: THE RISE OF OFFSHORE WIND

離岸風力發電之優勢包括可減碳、

避免仰賴進口能源、較可能建置

大型風場、大眾接受度較高、以

及刺激當地經濟的正面效用。然而迄今，

一般大眾提出基於風場建置基礎成本高昂

而反對之，此乃是傳統狹隘估算方式來計

算建置費用所造成的偏見。雖然離岸風力

發電仍屬羽翼未豐的行業，但已經從每

年約2兆瓦的裝機容量穩定成長，讓始於

一九九零年代首次的離岸風場技術發展至

今已達大約3000兆瓦。儘管重大投資計

畫在美國、中國和其他地方，然而英國、

德國和丹麥卻是處於領先的地位。典型的

風機葉片大小也穩步增加，從上世紀90

年代少於0.5兆瓦至今已超過6兆瓦。同

時，平均風場(專案)的規模已經從大約6

兆瓦擴大到了300兆瓦以上。再者，離岸

風力發電之技術不斷精進亦意味著，這些

風機可以放置在30米深的水，已不像早期

僅能限於5米的深度。離岸風力發電確實

是個發展迅速的領域，而我們西門子一直

很自豪地能扮演科技先驅主導者的要角。

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9 Siemens advertorial.indd 43 2015/9/4 7:49:27 AM


Earlier this year, the Buddhist Compassion Relief Tzu Chi Foundation, Taiwan’s largest

and arguably most revered charity orga-nization due to its efficient response at times of natural disasters, quite unex-pectedly found itself under heavy attack by the domestic media and neti-zens over the notion that donations go to meet the very secular objective of acquiring huge wealth.

Specifically, the reports claimed that Tzu Chi has become Taiwan’s largest owner of private land and questioned such deals as its proposed land develop-ment project in Taipei’s Neihu district, where Tzu Chi sought to establish a logistics center and disaster relief work-shop in a geologically sensitive protected area. Its less-than-transparent manage-ment practices dragged into the limelight as a result of the brouhaha, Tzu Chi

withdrew from the project and promised to make public its financial records.

“80 to 85 percent of total donations for religious groups in Taiwan that are declared in followers’ income tax dec-larations go to Tzu Chi, meaning an annual income of about NT$70 billion [US$2.3 billion],” says Bert Lim, pres-ident of the World Economics Society, a Taipei-based think tank. “There also is a huge amount in donations that are made without receipt, for example by tourists visiting Tzu Chi’s sites, as well as the revenue created by the 10 hospi-tals Tzu Chi operates around Taiwan.” Lim notes that he was once in charge of a research project commissioned by the Ministry of Interior (MOI) to look into Taiwan’s religious groups from an eco-nomic perspective.

Tzu Chi was founded in 1966 in Hualien where it remains based, but is now operating in 47 countries around the world. Among the organization’s many efforts are providing education and medical care for the disadvantaged and disaster relief. Tzu Chi is renowned in Taiwan for its disaster relief efforts in the wake of the September 21, 1999 (921) earthquake that killed over 2,000 Taiwanese, as well as its response to Typhoon Morakot in 2009. The foun-dation is currently engaged in assisting

WHEN FAITH AND moneY coLLiDe

BY JENS KASTNER

B E H I N D T H E N E W S

Proposed legislation would require religious foundations to establish internal financial auditing systems.

Tzu Chi volunteers arrive in Kathmandu with relief supplies to aid victims of a severe earthquake in Nepal this past April.

pHoTo: cNA

9 religious groups.indd 44 2015/9/4 9:36:55 AM



the families of burn victims of the New Taipei City waterpark explosion, and is also building schools and providing medical care in Nepal following the recent devastating earthquake. It recently opened a 500-bed hospital in Jakarta.

According to the MOI’s Department of Civil Affairs, the government bureau overseeing Taiwan’s religious organiza-tions, as of the end of 2013, there were 12,083 temples, 3,323 churches, 1,984 religious foundations, and 2,353 reli-gious civic groups registered in Taiwan, as well as 27 officially recognized reli-gions. While offical recognition is not mandatory under the secular Republic of China constitution, it brings the weighty advantage that adherents can deduct donations from their income tax. The organizations are also exempt from taxation and auditing.

“Different temples have different strategies to make money,” says Chiu Hei-yuan, a former research fellow at the Institute of Sociology at Academia Sinica. He notes that many, like the ones dedicated to the Tudi Gong [Earth God], rely on financial support from the nearby community, while “others draw donations with miracles and magic.”

Chiu cons iders a th ird type to include Tzu Chi and Foguangshan, Taiwan’s second-largest Buddhist orga-

nization, which have “developed into a modern industry with sightseeing, bookstores, and so forth.”

Expounding on the government’s hands-off approach, Chiu points to what he perceives as an alliance of con-venience between the political elite and the religious groups, as evidenced by politicians descending on the tem-ples whenever elections are looming or during the Lunar New Year holiday. “Local government heads, political party leaders, and even presidential can-didates often visit large temples and attend religious ceremonies, and they do so particularly frequently during elec-tion campaigns to attract votes,” Chiu says. “They are actually directly trading political power with religious power.”

B y c o n t r a s t , C h i u c o n t i n u e s , churches play but a minor deal in such activity, “because if the president goes to a Catholic church, he would just sit there without being given a micro-phone, whereas at a temple he can hold a campaign speech.”

In the United States, politicians are allowed to speak at tax-exempt churches provided that the church doesn’t specifically endorse the can-didate and that equal opportunity to speak before the congregation is extended to al l major candidates,

regardless of whether they accept or not. The tourism and food service indus-

tr ies are also benef ic iar ies of the religious devotions. Referring to the Tourism Bureau’s 2014 Annual Report, Huang Tzung-cheng, a professor at National Chiayi University’s Grad-uate Institute of Recreation, Tourism and Hospitality Management, notes that Taiwanese took 43.4 million trips to visit religious sites in other local-ities that year. With earlier surveys indicating that each person spends an average of NT$1,908 on such trips, it can be estimated that about NT$83.3 billion (US$2.7 billion] is spent annu-ally on religious tourism in Taiwan. He adds that yet another survey by the Tourism Bureau found that hotels and restaurants in the vicinity of the tem-ples receive 10.3% and 24.4% of that pie respectively. Tour operators also profit, while the bulk of the spending is in the form of tax-exempt donations to the temple, which are non-profit orga-nizations.

According to MOI, the most pop-ular religious sites in Taiwan are the Nankunshen Daitianfu folk religion temple in Tainan; the Foguangshan (Buddha Light Mountain) monastery in Kaoshisung, and the Chaotian Mazu temple in Yulin County’s Beigang. The

Taoist celebrations and pilgrimages are a major part of religious life in Taiwan.

photos: tourism bureau




three sites annually attract about 10.7 million, 7.5 million, and 6.2 million visitors respectively. (In comparison, Taipei as a whole is estimated by the city government’s Department of Infor-mation and Tourism to have received 9 million visitors last year, according to local media.)

Animal dealers are also among the beneficiaries. By some accounts, the Taiwanese each year set free some 200 million fish, birds, reptiles, and mam-mals into the wild, in the belief that so-doing will accumulate good karma for themselves. A study carried out in 2004 by the Environment and Animal Society of Taiwan (EAST) showed that 24.1% of temples and religious institu-tions provided animal-releasing services, and that 60% of bird retailers sold birds specifically for the purpose.

The Taiwan media frequently reports on an unintended consequence of this practice: mountain communities ter-rorized by droves of poisonous snakes released in their vicinity as a part of Buddhist ceremonies. Even more prob-lematic is that some of these prayer animals are smuggled in from abroad and then invade Taiwan’s ecology. An example is the Red-whiskered Bulbul, a medium-sized songbird widespread on the Indian subcontinent and in South-east Asia but not naturally native to Taiwan. The Bulbuls, particularly pop-

ular with temple-goers for release during rel igious ceremonies, now threaten other species through competi-tion for food.

Reform measures

Some of the mainstream religious groups have been concerned that the government’s laissez-faire attitude toward religious organiations have made it easier for some charlatans or shady characters to take advantage of the public in the guise of providing spir-itual guidance. For example, the Taipei-based Taoism Society of the Republic of China – Taiwan’s oldest Daoist asso-ciation – has for years been lobbying the Legislative Yuan and the MOI to limit the scope of religious organiza-tions allowed to formally register so as to qualify to provide income tax deduc-tions to donors.

The Society has also been advo-cating the establishment of a licensing system for all clergy. “We would also like to see a law making financial audits obligatory,” says Chang Chao-heng, the Society’s secretary-general. Without such government oversight, “anybody can become a religious leader and get money to lead a wealthier life.”

The ROC I-Kuan Tao Associa-tion echoes these calls. (Also spelled Yi Guan Dao, the belief is often described

as a mixture of various world reli-gious with an emphasis on veganism.) “If there are no restrictions, people will seek to make business out of it,” says Lee Yu-chu, the Association’s president.

“Another problem is that religious groups want more land for temples and that many temples are already built ille-gally on unsafe land,” he adds. “If such temples collapse, it could kill hundreds of people.”

Chao Chien-chih, an officer with the MOI Department of Civic Affairs, points out that the draft of a new reli-g ious law is current ly before the Legislative Yuan. The most impor-tant provision is considered to be the stipulation that religious juristic per-sons establish an internal audit system, with the data made transparent to all followers and donors, although transparency to the public would be voluntary. But the bill has been stalled in the legislature for several years, Chao explains, mainly due to sustained oppo-sition by some large religious groups.

“Passage of that law is something our department has been pushing for some time, and there is now some reason to be optimistic,” says Chao. “That’s because the society is now more aware of the issue [due in part to the Tzu Chi contro-versy], so we think there is now a 50% chance of passing this year compared to 30% in previous years.”

Scenes at major Buddhist temples: Foguangshan in Kaohsiung, left, and the Chung Tai Chan Monastery in Nantou, right.

photos: tourism bureau



The 2015 AmCham Taipei Corpo-rate Social Responsibility (CSR) Forum, entitled “The Philan-

thropic Power and Influence of Taiwan’s Younger Generation,” was held at the Grand Hyatt Taipei on August 21 with an attendance of nearly 80 participants. This annual event introduces new CSR trends and innovative nonprofit organiza-tions (NPOs) and social enterprises, while providing an opportunity for the sharing of best business practices. Through these forums, the Chamber’s CSR Committee aims to stimulate new ideas for AmCham members, motivating them to increase their CSR activity.

Notable former speakers have included Stan Shih, founder of the Acer Group, speaking on creative and forward-thinking CSR ideas, and Professor Lee Ji-ren of National Taiwan University on creating shared value with social enterprises.

This year, Sara Wu, editor-in-chief of CommonWealth Magazine, was invited to be the guest of honor and moderator. She opened the event by noting that 2015 is an important year in Taiwan for CSR. On June 15, the Legislative Yuan passed the Greenhouse Gas Emission Reduction and Management Act, mandating busi-nesses to reduce their carbon emissions to a pre-assigned quota per year. Also starting this year, the Financial Supervi-sory Commission (FSC) is requiring large enterprises with paid-in capital of over NT$10 billion – as well as all companies in the financial services, food processing,

and chemical sectors – to publish an annual CSR report, making Taiwan the first market in Asia-Pacific to implement such mandatory reporting. A total of 202 enterprises will be obliged to compile CSR reports by the end of this year, and FSC Chairman Tseng Ming-chung has mentioned the possibility of extending the regulation in 2016 to cover companies with paid-in capital of over NT$5 billion.

In response to these recent trends, Commonwealth this year created an addi-tional category of “Small Giants” in the CSR Corporate Citizens Awards it has granted annually since 2007. This new category, Wu explained, encompasses companies with annual revenue of less than NT$5 billion. At the same time, the number of award winners has been dou-bled from the previous 50 to 100. Wu commended a number of AmCham Taipei member companies that have been rec-ognized under the “Foreign Enterprises” category, including Citibank, BASF, Bayer, Ford Lio Ho Motor Co., HSBC Bank, IBM, Intel, Kimberly-Clark, Mer-cedes-Benz, McDonald’s, Novartis, and Standard Chartered Bank.

The program also included presenta-tions by this year’s CSR Forum panelists: Light Lin, founder of Flying V; Anting Liu, founder of Teach for Taiwan (TFT); and Jason Hsu, curator of TedxTaipei.

L i n , w h o w a s a c o - f o u n d e r o f acclaimed Taiwanese blogging plat-form Wretch , founded F ly ing V, a crowd-sourcing platform, in 2012. His

2015 CSR Forum

Hearing from the Younger Generation

BY YING HAN GAN

a m c h a m e v e n t

Flying V Light Lin

Commonwealth MagazineSara Wu

Teach for Taiwan Anting Liu

TedxTaipei Jason Hsu

prime sponsor:

pr sponsor:

9 CSR.indd 47 2015/9/4 7:51:31 AM



presentation stressed the importance of using business mentality to “do good,” no matter what the business type or size or age of the company. Through Flying V, Lin seeks to help potential entrepre-neurs organize and implement their ideas. He aims to encourage innova-tion, while helping startups to find pilot customers, conduct market research, and engage in rapid prototyping. Since its inception, FlyingV has raised over NT$200 million to fund more than 430 projects.

Ant ing L iu founded Teach for Taiwan (TFT) after returning from the United States where she received her undergraduate education at Princ-eton University. Back in Taiwan, she was struck by the gap between urban schools and those located in rural and remote areas. Inspired by Teach for America, TFT recruits young adults to teach full-time for at least two years at underprivileged elementary schools, many of which previously had great dif-ficulty recruiting faculty.

In addi t ion to sending tra ined teachers to cooperating schools, TFT provides continuous training and sup-port systems, which Liu considers crucial to maintaining teachers’ motivation. Over the last two years, TFT has collab-orated with eight elementary schools in Tainan and Taitung counties, and plans are underway to expand the program to Yunlin and Pingtung counties.

Jason Hsu in t roduced TED to Taipei in 2009 in hope of make world-

changing ideas accessible to Taiwanese audiences. TED originally stands for Technology, Entertainment, and Design, but more recently Hsu has been pro-moting a TEDx 2.0, focusing on Talent, Education, and Development and seeking to foster conversation, commu-nication and collaboration.

What legacy do we wish to leave behind? What would you like to say if you had only 18 minutes left? These are questions that Hsu has asked every one of the over 300 speakers invited to TEDxTaipei over the past six years. TEDxTaipei now has 23 local chap-ters within universities, high schools, and corporations. Next year, it plans to go on the road, moving from indoors

to outdoors with a mobile stage, and reaching out to rural parts of Taiwan.

Collaboration was the common theme of the event, with all speakers urging companies and NPOs to uti-lize existing strengths to find new shared values. An example cited by Liu was Ford Lio Ho’s support to TFT by lending Ford vehicles to transport teachers to the schools in remote areas. Fellow panelist Hsu of TEDxTaipei quoted Henry Ford as saying: “Coming toge ther i s a beg inn ing ; keep ing together is progress; working together is success.”

JT Tobacco International Taiwan was the primary sponsor and Ogilvy PR the PR sponsor of the event.

The panelists pose with the event sponsor, the co-chairs of the AmCham Taipei CSR Committee, and Chamber Chairman Thomas Fann and President Andrea Wu.

Members of the panel shared their experiences and ideas regarding CSR.

9 CSR.indd 48 2015/9/4 7:51:32 AM


s e e i n g ta i w a n

When the summer rains cease a n d d a y t i m e t e m p e r a -tures sink from the 30-plus

degrees Celsius (86-plus degrees Fahr-enheit) that characterize its hot season, Taiwan enters what many consider to be the best time of year for traveling on the island.

The Tropic of Cancer crosses Taiwan just north of Tainan, the historic city that served as the political and admin-istrative center from the arrival of the Dutch East India Company in 1624 until 1885, by which time Taiwan had long been part of China’s Qing empire. South of that line, the weather is reli-ably dry and comfortably sunny from

October until at least March. For anyone who likes to be outdoors – whether in an urban setting or deep in the countryside – this region during this season is a perfect fit.

Tainan ( the place name s imply means “south Taiwan”) is already well known to tourists because of its fabu-lous temples, fascinating fortresses, and delicious street food. The pace of life here is far slower than in Taipei, and a great many visitors are happy to do little more than wander at random, on foot or with a hired bicycle. But of course those who explore with the assis-tance of a knowledgeable guide, or read up before setting out, will come away with a far better understanding of this ancient city and its many treasures.

To help visitors get the most out of their time in Taiwan, and peek into geographical and cultural corners they might not otherwise experience, Taiwan’s Tourism Bureau has devised the International Spotlight program. The program brings together dining suggestions, routes along which tourists can guide themselves, plus activi-ties such as walking tours and crafts demonstrations.

Tour descriptions and special offers can be found on the International Spot-light’s Chinese-Japanese-English website (http://intlspotlight.taiwan.net.tw). There are two nationwide routes and five regional programs. Of the latter, two focus on the Taipei area, one covers the central cities of Taichung and Chiayi, while another introduces spots in the eastern counties of Hualien and Taitung. The fifth covers the south, offering a selection of Greater Tainan’s scenic, culi-nary, and shopping highlights.

The International Spotlight Southern Region has its own trilingual website (www.nanspot.tw), where anyone considering a tr ip to the area can find theme routes and descriptions of historic neighborhoods. One such zone

is in the vicinity of Tainan’s Zhong-zheng Road and Hai’an Road. A must-see here is Shennong Street, perhaps Taiwan’s most traditional thoroughfare. As recently as the 19th century, before human land-reclamation efforts and natural sedimentation pushed the coast-line further west, this part of the city was a stone’s throw from the ocean. A few of the old two-story houses, built by merchants to serve as both homes and warehouses, have been turned into shops or bars.

More modern, yet still of consider-able historic interest, are the landmarks that date from Japan’s 1895-1945 occupation of Taiwan. What is now the Tainan Meteorological Observa-tory is likely the oldest Japanese-era

T T B A D交通部觀光局廣告

Southern Taiwan Basks in the International Spotlight

phoTo: wikipeDiA

photo: tourism bureau


9_SeeTW.indd 49 2015/9/4 7:52:26 AM


official building surviving in Taiwan. Locals have nicknamed this 1898 struc-ture “the pepper pot” on account of its circular shape. Among the items displayed inside are old seismographs.

The Old Union Hall (also known as the Former Tainan Meeting Hall), adjacent to Wu’s Garden, is a superb spot for a picnic. The Hall is a 1911 French-influenced structure that hosts occasional exhibitions, and the Garden dates from the 1820s and is named for Wu Shang-xin, a salt tycoon who owned the land and commissioned the garden’s creation.

Tainan residents are barely exag-gerating when they say their city “has a small shrine every three steps, and a major temple every five steps.” The Confucius Temple offers a sense of eter-nal tranquility, while the Wu Temple (also called the Martial Rites Temple or Official God of War Temple) is just as gorgeous yet always livelier. The contrast is possibly because the former is dedicated to the thoughtful sage now regarded as China’s greatest philoso-pher, while the latter honors Guan Di, a general who lived and fought in China more than 1,800 years ago and is now worshipped as the God of War.

To the delight of those who have several days to explore Tainan, the website nanspot.tw goes well beyond the usual tourist haunts. There are directions to Xi Hua Tang, an ancient Buddhist house of worship, Dananmen (“Great South Gate”), a holdover from

when Tainan was encircled by a protec-tive wall, and Bei Ji Temple, where the Lord of the North Pole is worshiped.

The majority of Tainan’s attrac-tions are within 20 minutes’ walk of the Taiwan Railway Administration (TRA) Station, which itself is linked to the high-speed railway by frequent shuttle trains. However, visitors should make at least one trip beyond the downtown area, to Anping.

Anping is where the Dutch estab-lished their trading colony in the early 17th century, and the bastion they called Fort Zeelandia is now a capti-vating ruin. This part of the city abuts the Taiwan Strait, so it is no surprise that oysters and shrimps feature in many of the dishes served up in the district’s restaurants.

Riding a bicycle from the Confucius Temple to Fort Zeelandia takes around 20 minutes. An alternative form of transportation is city bus number 2, which stops at the Tainan TRA Station, the National Museum of Taiwan Liter-ature, and Confucius Temple en route to Anping.

As part of their efforts to welcome tourists to the city, the Tainan City Government is sponsoring a series of free weekend live-music concerts at Fort Zeelandia, Confucius Temple, and Fort Provintia. Information about these and other local events can be found at www.tainan.gov.tw.

Having reached Anping, visitors may wish to further explore the nearby coast, parts of which have been incor-porated into Taijiang National Park (www.tjnp.gov.tw). Human tourists are not the only outsiders drawn to the park’s lagoons, mudflats, and mangrove swamps. Migrating birds also love Taiwan’s southwestern coast, and not only because of fall’s pleasant weather. The area has an abundance of crusta-ceans, snails, fish, and other creatures on which waterbirds feed. The best-known avian visitor is the Black-faced Spoonbill, an exceptionally handsome endangered species. At least half the global population of fewer than 3,000 spends the colder months within the national park or nearby in parts of the Southwest Coast National Scenic Area (www.swcoast-nsa.gov.tw).

Vis i tors seeking some unusual souvenirs would do wel l to look through the shopping pages found on nanspot.tw. Among the more unusual items available in Tainan are hand-crafted clogs like those often worn during the Japanese colonial period.

General travel information about Taiwan i s ava i lable on the Tour-ism Bureau’s website (www.taiwan.net.tw). Visitors with questions can call the 24-hour tourist information hotline 0800-011-765 (toll free within the country; English, Chinese, and Japanese spoken).

s e e i n g ta i w a n

phoTo: wikipeDiA


9_SeeTW.indd 50 2015/9/4 7:52:27 AM

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