ANALYSIS: Cabinet's urban renewal plan meets guarded response

A big-spending government urban renewal program has as much to do with politics ahead of next year's legislative and presidential polls as with a genuine plan to modernize Taiwan's cities.

The plan to redevelop 50 urban areas at a cost of NT$380 billion (US$11.58 billion) has attracted attention for its potential to give the property market a major boost, but many critics question the government's motives and its ability to implement it.

Such projects take a long time to complete and require careful planning and coordination, they say.

Earlier this month, the Cabinet approved the redevelopment of an initial four areas covering some 84 hectares, with one of the areas in central Taipei intended to become a new financial district dubbed "Taiwan's Wall Street." The others include harbor areas in Keelung and Kaohsiung.

The government plans a package of about 50 projects in all that will create some 105,000 jobs, with financing of NT$200 billion available to encourage private sector participation.

Observers agree that urban renewal is essential, but some say the redevelopment package is sketchy, and that regulations will have to be changed to encourage private participation.

"The first four projects announced fail to deliver construction details and real substance. I am not clear about how the government is going to carry it out," Chinese Nationalist Party (KMT) Legislator Lai Shyh-bao (賴士葆) said.

"The government can construct a lot of new buildings but that does not mean it can easily build a `Wall Street' without improving the economic fundamentals. To me, the urban renewal program is just politics," Lai said.

National Chengchi University land economics professor Chang Chin-oh (張金顎) said the plan was not a new idea and that the authorities had simply repackaged it at a time when earning political support is more important than anything else.

"Urban renewal needs long-term effort. The four pilot projects are not silver bullets [to solve problems], but may stir up short-term interest," Chang said.

An official at the Ministry of the Interior's construction and planning department, one of the program's planners, said all city and county governments were asked early last year to identify areas for redevelopment.

The ministry aimed to build environmentally friendly urban areas with more green space and use of more energy-efficient construction materials, the official said.

"The four pilot projects were the major ones ready to go ahead. We are hoping to attract foreign investors to participate in the four," said the official, who asked not to be identified.

He said neither large local developers nor foreign counterparts have approached the government so far.

Andrew Liu (劉學龍), managing director of property consulting firm Colliers International Taiwan, said it remained to be seen whether foreign investors would be interested.

"How to expropriate land from the private sector will be a major headache ... the process may take years to be done and I doubt foreign investors want to step in and get involved in the tedious process," he said.