Taipei Times: Two major projects were recently awarded to foreign companies -- a quality control contract for the Neihu MRT line to Canada's Bombardier Inc and a generator contract for Taiwan Power Co (Taipower,
Goeffrey Spencer: In 1998, the government implemented their Government Procurement Law (GPL). This law is based on the Government Procurement Agreement (GPA) which Taiwan agreed to sign one year after their accession to the WTO. The purpose of this law is to ensure fairness and transparency in government procurement activities. It also gives the opportunity for recourse should anyone feel they have not been fairly treated. In those contracts you mentioned, I believe that the purchasing entities have complied completely with the GPL.
TT: Do you have any concerns about any of the projects just mentioned?
Spencer: Both the previous and the present government have announced their intentions to break-up existing monopolies and privatize the state-owned enterprises. This has taken place to some extent and we would encourage the government to continue with these activities. We have seen the introduction of independent power producers into the electricity generation market as important to this process. However, it requires a very clear electricity law to implement it fully and we would urge lawmakers to finalize this as quickly as possible. On the other hand, some deregulation has taken place on the energy side and the government has announced their intention to privatize Chinese Petroleum within the next year. Therefore, we are surprised about the anomaly in that Chinese Petroleum was allowed to enter the bidding for the Tatan gas supply contract. While we believe implicitly that Taipower followed the government procurement law without deviation, we are surprised that Chinese Petroleum should win this contract, which reinforces their monopoly position.
TT: As co-chairman of the European Chamber of Commerce's Procurement and Project Committee, you have often criticized the Taiwan government for not having a fair tendering system for infrastructure projects. What are your major complaints?
Spencer: The GPL is primarily an instrument to ensure that correct procedures are followed. Under the GPL, the purchasing entity is given a large amount of autonomy on how they structure their project. This leads to the three main areas of contention that we, at ECCT, have.
1. Some entities issue specifications that specifically exclude foreign bidders. Although this is not in contradiction of the GPL, it is against the spirit of Taiwan's WTO commitments and to the GPA.
2. For many of the large projects, the government has set as a condition that a particular percentage of the contract value (this is usually 20 to 30 percent) must be either spent in Taiwan or reinvested in Taiwan. While this is certainly understandable, it is in violation of the GPA.
3. In many procurement cases, the terms and conditions of a contract are strongly biased towards the purchasing entity. This means that the bidder must carry large risks for which he invariably increases his price. In some instances, companies, particularly foreign companies, do not bid. The disadvantage is that the technology and know-how which is available in the world market is not brought to Taiwan.
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