Fri, Aug 04, 2006 - Page 12 News List

Farglory may delay second stage of Free Trade Zone

By Jessie Ho  /  STAFF REPORTER

Farglory Free Trade Zone Investment Holding Co (遠雄自貿港投資控股), the operator of the Farglory Free Trade Zone near CKS International Airport, may delay investment in the second-stage of construction given the lukewarm interest among companies, a company official said yesterday.

The free trade zone, touted as the world's largest free-trade air cargo zone and aimed at making Taiwan an operations center in the Asia-Pacific region, was inaugurated at the end of last year.

However, it was not until seven months after the zone was opened that the company welcomed its first two tenants -- Power Quotient International Co (勁永國際) and A-Data Technology Co (威剛科技).

"The progress has been slower than we expected," Kevin Liao (廖友岳), president of Farglory Free Trade Zone Investment Holding, told the Taipei Times yesterday.

Farglory Free Trade Zone Investment Holding has signed contracts with another 26 companies that are planning to move into the value-added park, Liao said.

Companies operating in the park can process their products to add more value and reship them to a third destination without going through customs inspections. Businesses there are also exempt from tariffs, commodity taxes, tobacco and alcohol taxes, and port service fees.

The company originally planned to invest up to NT$12 billion (US$365.13 million) in the second stage of construction by the end of the year to accommodate more companies, but as the number of interested companies did not meet expectations, the project may be postponed, Liao said.

As a result, it will take Farglory longer to break even in the build-operate-transfer project, Liao said, without revealing the financial details.

Farglory has pumped NT$8.6 billion into the first phase of construction. The company planned to complete the multi-function facility within the next four years with a total investment of NT$24.5 billion.

Chao Teng-hsiung (趙藤雄), chairman of parent company Farglory Group (遠雄企業集團), urged the government to remove the obstacles hampering the development of the free trade zone when he attended the Conference on Sustaining Taiwan's Economic Development last week. Chao listed including the absence of direct links with China, the comparatively high rates of business income tax imposed in the zone and disputable labor regulations as obstacles.

The government imposes a 25 percent income tax in the zone, which is higher than the rates levied in China and South Korea. The government also stipulates that Aboriginal laborers must account for 5 percent of all the staff hired in the zone, a regulation which the companies are finding difficult to meet.

"We have been communicating with the government since the laws regulating free trade zones were passed in 2003, but obstacles remain," Liao said.

As companies operating in the zone are finding it hard to attract Aboriginal workers, they mostly keep their staff numbers below 20 to get around the regulation, he said.

The company said it was hoping the legislature will pass the direct cross-strait links bill, which is set to be reviewed during the next legislative session, to bring more business to keep the free trade zone ticking over, he said.

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