Sat, May 17, 2003 - Page 8 News List

Link military buys to investment

By Chen Yao-chang 陳耀昌

The American weekly magazine Science recently published a report about Poland buying F-16 fighter jets from the US. We would do well to use it for reference, in particular since a couple of Taiwan's past large purchases of military equipment from the US have invited a lot of maneuvering behind the scenes. Future arms purchases are necessary for Taiwan's national defense, but there are financial difficulties and with hints that US prices are too high there is much cause for confusion.

I believe that the people of Taiwan would appreciate the Polish model for purchase of US weapons as described below.

According to the Science report, the Polish government purchased 48 F-16 fighter jets from Lockheed Martin on April 19, to replace its aging fleet of Soviet-made MiGs -- a deal worth US$3.5 billion.

According to Polish law, military purchases from foreign companies must be offset by a package of investments put together by the seller which is equivalent to the purchase price -- the equivalent of attracting the same amount of foreign investment. This foreign capital is invested in projects from which both the foreign investor and Poland stand to profit.

Lockheed Martin was able to outlast France, the UK and Sweden during the bidding process because it showed its willingness to invest US$7.5 billion, including investments in many Polish high-tech projects. It will therefore be of great help to Polish science.

Contracts for these investments in Polish high-tech projects will be signed within the next few weeks. These contracts will include some important biotech companies, such as Bioton, a company that produces recombinant insulin, and a business and technology center in Lodz, the country's second-largest city. The Bioton investment will be worth tens of millions of dollars, helping the company register its products in other countries and enabling it to export its products. The US$300 million Lodz technology accelerator project aims to give venture capital funding and business advice to high-tech entrepreneurs.

Based on these contracts, Poland will be able to attract large amounts of capital. When the Polish science ministry solicited proposals for suitable investments from scientists, however, the results were less than ideal. Seven hundred proposals were received, but half of those were research plans that had still not yielded any results and therefore were not ready for commercial development.

In the end, the science ministry managed to present 74 investment options to Lockheed Martin. Regardless, this is a great shot in the arm for Polish science. The conclusion of the science minister, Michal Kleiber, was that "In the past, everyone suffered from insufficient budgets. Now, with US$6 billion on the table, they're all beginning to move."

The Polish experience shows us that the people in three areas need to increase their efforts: the Legislative Yuan, the technology sector and the government.

First, legislators should hurry to pass legislation. Following the spirit of the Regulations for the Prevention and Treatment of SARS (SARS 防治條例), they should also pass a military purchases law stating that when purchasing foreign military equipment, the seller must, in the name of reciprocity, make an equivalent investment in this nation's industry.

Given the amount of military purchases, this would be very helpful for the nation's growth. At the same time, it could be enormously helpful to Taiwan if the military would increase the transparency of its purchases, remove restrictions and create foreign investment.

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