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Free-trade air cargo zone inaugurated in Taoyuan

"The multifunctional facility will no doubt enhance Taiwan's competitiveness not only in the region but also in the world."

Chao Teng-hsiung, chairman of Farglory Group

The world's first and largest free-trade air cargo zone, the Farglory Free Trade Zone (遠雄自由貿易港區), was inaugurated yesterday, a stepping stone toward fulfilling the government's ambition to promote Taiwan as an operations hub in the Asia-Pacific region.

"The multifunctional facility will no doubt enhance Taiwan's competitiveness not only in the region but also in the world," Chao Teng-hsiung (趙藤雄), chairman of Farglory Group (遠雄企業集團), the contractor of the build-operate-transfer project, said at the launch ceremony yesterday in Taoyuan.

"Of the more than 600 cargo zones and free-trade ports in the world, Farglory is the only one that combines the functions of both, and more," Chao said.

The 45-hectare free trade zone, located near Chiang Kai-shek International Airport, will encompass five main facilities: an air cargo terminal, a building for forwarders, a value-added park, an international logistics center and a business operations center.

Farglory has completed the first phase of construction, having finished two buildings within the value-added zone and the cargo park, with an investment of NT$8.6 billion (US$259 million), Chao said.

The zone is expected to be completed within the next five years with a total investment of NT$24.5 billion, he added.

The zone is within Taiwan's territory but outside the jurisdiction of customs authorities, which allows imports to be stored or processed before being reshipped to a third country or region without going through a customs inspection.

The design allows customers to turn around 98 percent or even all goods to clients in two days.

As imports from China can enter the zone, local and foreign manufacturers can import cheaper semi-finished goods from China and process them in the zone to add value to them, Chao said.

To take advantage of this, about 40 companies, including United Airlines, will start operating in the zone, said Yeh Chun-yao (葉鈞耀), chairman of the Farglory Free Trade Zone.

When the zone is completed, it will be able to process 1.2 million tonnes of goods every year, creating an annual output value of NT$800 billion, and creating at least 25,000 jobs. Companies in the park can hire foreign laborers, but their number can't exceed 40 percent of staff.

Cargo volume is expected to quickly surpass those of Taiwan Air Cargo Terminal Ltd (華儲), a subsidiary of China Airlines (華航), and Evergreen Air Cargo Services Corp (長榮空運倉儲), a unit of EVA Airways (長榮航空), Yeh said.

But for the zone to be able to achieve the best result, Chao called on the government to amend policies to lure more companies to the facility.

Although businesses in the zone will be exempt from tariffs, commodity taxes, tobacco and alcohol taxes, and port service fees, the government will impose a 25 percent business income tax on them, and tax rates in China and South Korea are lower, Chao said.

A reasonable level for business income tax in the zone should be about 15 percent, he said.

The government has also stipulated that Aboriginal laborers should account for up to 5 percent of all the staff hired in the zone, which is considered too high, Yeh said.

Another major challenge is the absence of direct transportation with China, and the government should lift the ban to turn Taiwan into a regional hub, he said.
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