The nation's industrial zones need an overhaul

When President Chen Shui-bian (陳水扁) was attending a symposium in Tainan County a few days ago, Tainan County Commissioner Su Huan-chih (蘇煥智) and a number of Tainan County councilors demanded that the central government approves the budget to speed up the construction of public works projects. In recent years, local governments have constantly urged the central government to build airports, set up industrial zones and establish academic and industrial exchanges.

It has now become a matter of urgency for the central government to put a stop to the unreasonable increase in public works spending by local governments.

The development of industrial zones is a typical example of how the the national resources have been misused. Under the Ministry of Economic Affairs alone, around 800 hectares of industrial zones across the nation remain vacant, which converts into an investment of NT$30 to NT$40 billion, which has not seen any return. Besides, the occupancy rate of industrial zones under the National Science Council is just 50 percent.

Over the past few years, the transformation of the nation's industrial structure, Taiwan's economic slump, and changes in the domestic and international commercial structure of other countries have challenged the development of the nation's industrial zones.

In the past, industrial zones developed by the Industrial Development Bureau (IDB) had been competitive and profitable as the price of the land used by industrial parks across the nation was only one-third or two-thirds of the market price.

However, the stagnant economic growth of the nation has made it difficult for the government to sell off these industrial zones, either through state-run or private enterprises. The compounding of interest on these properties has pushed prices up even further, so that land in industrial zones is no longer competitive with other areas.

The root of the problem lies with the provisions of government investment incentive programs and the Statute for Upgrading Industries (促進產業升級條例), which were over-optimistic about the economic cycles of the nation. The government has to consider if it is necessary to continue supporting such expansion without restraint.

On the technological and economic front, California's Silicon Valley is much stronger than Taiwan. Major chip-makers and optoelectronic component manufacturers are in the north of Silicon Valley and biotech companies are in the south. Using land for multiple purposes is becoming the mainstream idea, and each county or region can also have a distinctive industry. Clearly, this is something the government can learn from the US.

According to statistics, there are currently nearly 2,500 hectares of land that the government has approved or is in the process of approving for use as industrial zones. If we add the land already available for these purposes, there is sufficient land designated for industrial zones to meet the needs of the next five years. Quantity is clearly not a problem and we should now focus on quality.

Local governments should take careful account and plan for the future, rather than rushing ahead and then looking for support from the central government further down the track. The government should first seek to draw up an effective and comprehensive plan regarding public works projects, such as industrial zones, airports and harbors. It shouldn't give local governments a free hand to use such projects to pay/settle political debts, in total disregard for the needs of the market, for such political interference will ultimately harm the nation's economic development.