After talking about making Taiwan a global logistics hub for years the government has finally taken some real steps to bring this about.
Following the passage of the Statute Governing the Establishment and Management of Free Trade Ports (
PHOTO: GEORGE TSORNG, TAIPEI TIMES
While Keelung Harbor and Kaohsiung Port have gained free-trade-port status and will start operation in September and next January respectively, the largest hope is pinned on the Taoyuan air-cargo zone -- named the Far Glory Free Trade Zone Air Cargo Park (
Like other free-trade ports, the 45-hectare air cargo park is within the nation's territory but outside the jurisdiction of Taiwan's customs authorities, which allows foreign imports, including those from China, to be stored or processed before being reshipped to a third country or area without going through the red tape of customs inspection. Businesses based there will be free from tariffs, commodity taxes, tobacco and alcohol tax and port service fees.
The air cargo park, a NT$21.3 billion build-operate-transfer (BOT) joint venture between the Far Glory Group (
"We are very confident that the air cargo park will bring huge advantages for the nation's industry and turn the nation into a logistics hub in the world," said Billy Chang (
With the first phase of the park, including two buildings within the value-added zone and cargo zone to be completed by November next year, the major task for Far Glory is to secure as many companies as it can to set up operation centers in the park, said Arnold Liu (劉文龍), division chief of the air cargo park's administration department.
Targeting the nation's strong high-tech manufacturing industry, Liu said the park is well designed for companies that manufacture high-value products with short life cycles. So far, computermakers Asustek Computer Inc (
Through a 600m special flyover, cargoes can be transported directly from CKS Airport to the park without passing through customs inspection. After processing, they can be shipped out via the same route.
"We can guarantee companies that all or 98 percent of their orders will be delivered within two days," Liu said. "In this era, time is money, and is the key to a company's competitiveness."
A Poor Precedent
Promising as this sounds, however, industry representatives generally consider the measure a belated effort.
Jeroen Rozendal, co-chair of the European Chamber of Commerce Taipei's logistics committee, said that the free-trade-port mechanism was good, but progress has been too slow. He also said that a far more important topic was the liberalization of direct transportation with China, given the close business ties between the two sides of the Taiwan Strait.
Local companies shared the same view.
"Direct traffic with China is the only way to push Taiwan toward the dream of being a global logistics center," said Hou Wen-ling (
China President Logistics run the Taisugar Logistics Park (
Hou said the park's demise was the result of the poor economy and unclear industrial policies. In the absence of progress on establishing direct links companies moved out.
Kaohsiung Port slid from the world's third largest container terminal in 1993 to the sixth position last year, while Shanghai and Shenzhen leapfrogged to the third and fourth place respectively. The top two positions still went to Singapore and Hong Kong, which have been free-trade zones for decades.
Will the Taoyuan air-cargo park share the same fate as Taisugar Logistics Park, being today's star and tomorrow's flameout?
Minister of Economic Affairs Ho Mei-yueh (
However, the appeal may not be strong enough to tempt companies.
Many manufacturers, including those based in the Hsinchu Science-based Industrial Park (
Limited Space
Take Rock Hsu (許勝雄), chairman of Kinpo Electronics Inc (金寶集團) and chairman of the Taiwan Electrical and Electronic Manufacturers Association (TEEMA, 電電公會), for example. Hsu said the concept of a free-trade port is helpful to turn the nation into a sourcing center and will save time for companies, but he has no plan to move his plant from his current site to the park.
Another problem is that with only 45 hectares of land, to be divided into five different zones, including warehouse and office buildings, a logistics center, a value-added industrial zone and a business center -- how big is the processing capacity the park can provide?
Not big enough, apparently, for some optoelectronics companies, yet the administration of the park has made the sector one of its target customers.
AU Optronics Corp (
If companies cannot be attracted to move part of their operations to the park, the delivery and express sector will stay on the sidelines as well.
"We go where our customers go," said Michael Hsu (
DHL early this month opened its new Central Asia Hub with investment of US$100 million at the Hong Kong International Airport, but in north Taiwan, DHL merely rents space from Evergreen Air Cargo Services Corp (
"Volume is the key, which is an advantage that Taiwan is losing," Hsu said.
Falling Volumes
Huang Kuan-cheng (
Companies are now moving their low-end production to China and the high-end part may soon follow to save costs and to be close to the market if the infrastructure and technology mature, Huang said. Foreseeing this prospect, the government has been encouraging local and multinational companies to set up R&D centers in Taiwan. But, the measure will not help stop the shipment volume from declining, he said.
As to the design of the park itself, Huang said the government needed to clearly distinguish the park from various export processing zones and bundling warehouses, which also enjoy tax breaks and allow certain processing works to be conducted in the areas.
Huang said, however, that the free-port initiative was nevertheless better late than never, and suggested the government set up supporting measures to cater to the industries' needs and the swiftly changing environment.
China President Logistics' Hou also said with a better geographic location, along with a developed air-cargo infrastructure and talent, Taiwan still had a comparative advantage over China in this sector, but the government needed to adjust industrial policy and resolve major cross-strait disputes before losing the last ray of hope to counter China's magnet effect.
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