Foreign firms fault awarding of projects

The decision by state-run Taiwan Power Co (Taipower, 台電) to award a NT$53.4 billion (US$1.5 billion) power-generator contract to Japan's Mitsubishi Heavy Industries Ltd does not indicate that it is getting easier for foreign companies to win major government contracts here, legal experts and foreign business representatives said yesterday.

Mitsubishi Heavy beat out the General Electric Co in the final round to supply six generators for the Tatan power plant in northern Taiwan, Taipower spokesman Lee Chun-lai (李傳來) said yesterday.

But Mitsubishi's success does not indicate that all Taipower projects are now up for grabs.

"Taipower may have opened up some select contracts to foreign bidders, but there are still seven turnkey substation projects that are only open to local bidders," said Tiffany Huang (黃台芬), senior partner at law firm Baker & McKenzie and chair of the European Chamber of Commerce in Taipei's (ECCT) Project and Procurement Committee.

"Government agencies can still decide whether to open contracts up to foreign bidders," she said.

Lee said it was up to local officials in the areas where the substations are to be built to decide whether or not to open them up to foreigners.

"These projects are domestic projects and will only be open to Taiwanese companies, but the bid winners may cooperate with foreign companies to complete the projects," he said.

The lack of transparency and a fair bidding procedure for major infrastructure projects has drawn criticism from foreign governments and business leaders based in Taiwan. It also goes against the spirit of WTO practices, critics say.

When Taiwan joined the WTO in January last year, it agreed to sign the Government Procurement Agreement (GPA), which binds all member governments to open up major infrastructure projects to bids from other member nations.

Taiwan is ready to sign the agreement, but has been prevented from doing so because Beijing has objected to the name Taiwan will use to sign the agreement.

"The agreement is on the agenda for the next WTO meeting in Brussels in November, but Beijing is arguing about Taiwan's name," Huang said. "This is now the only obstacle."

Government decisionmakers may be exploiting the delay in signing the GPA to place the sweet deals in the hands of local firms.

"The GPA has not been signed yet and some government agencies are using that as an excuse not to open contracts up to foreigners," Huang said. "This is discrimination."

"The government has room to improve in the area of attracting more international companies to do major projects here," said Chen Li-cheng (陳立誠), president of Gibson Engineers and a member of the American Chamber of Commerce in Taipei's (AmCham) Energy Committee.

"This will be good for the people of Taiwan ? For the supply of major projects there is no local capability that can produce on this scale," Chen said.

Not opening up major projects to foreign bids may also be giving the taxpayers a raw deal. Research by the ECCT's Project and Procurement Committee shows that infrastructure projects cost on average 20 percent more than similar projects in other countries.

A long history of closed doors for local government projects has driven away many foreign investors.

"A lot of our [committee] members have left, which is an indication that projects here are not that open to foreigners," said Ron McGhie, manager of Bovis Lend Lease in Taipei and co-chair of AmCham's Construction Committee.