Shortly before midnight on Friday, the Taiwan High Speed Rail Corp (THSRC,
Despite such good news, the row over the rail company's latest injection of funds from two government-funded organizations -- the China Technical Consultants Incorporated Foundation (
Critics argued that the government's financial intervention goes against a legislative resolution passed earlier to limit the government's stake in the rail company via state-owned enterprises to 12 percent, down from an original 20 percent ceiling. THSRC claims that after the injection of fresh funds, government and state-owned enterprises will still only have an 11.89 percent stake in the company, while its major shareholders will jointly hold a 28.52 percent. But it is well known that government investments are often made indirectly and hidden under the category of "private investments."
Critics are also concerned that the government's decision to pump more capital into the rail project conflicts with the spirit of the "build, operate and transfer" (BOT) model. In this model, the government is not supposed to interfere with the project, but rather let private investors build and operate the system for a certain period of time before transferring ownership to the government.
The critics have a point. The government's financial boost to the nation's first BOT project has raised doubts about the viability of that business model in Taiwan. Nevertheless, the project is now almost 90 percent complete, and no one wants to see it collapse. The government therefore has little choice but to aid the high-speed rail project in its hour of need. In fact, if the rail project is disrupted because of fund-raising difficulties, the government would have to make a compulsory buyout, which would cost an estimated NT$300 billion -- not to mention the job losses, legal disputes and economic fallout that would result.
And so, the government's decision should be viewed rationally. The Cabinet has decided to form a special task force of experts in transportation, financing and operational management to evaluate the rail project. Hopefully this special team will act to supervise the multi-billion dollar project. THSRC's major private shareholders -- whose affiliated companies make big profits by contracting construction work -- have been hesitant to inject more money into the project. The task force should also thoroughly review major shareholders' responsibilities and consider whether the board of directors should be adjusted after the high-speed railway begins service next October.
It is important to note that the THSRC's contracts with the government were finalized by the Chinese Nationalist Party (KMT) before the DPP took power. It is therefore unreasonable to blame the DPP for all the project's difficulties. For its part, the government should avoid pointing fingers, and work to review the its previous agreement with the THSRC and establish a new division of rights and responsibilities between the government and the private sector.
There were high hopes in the past about the high-speed rail project, and expectations that it would be completed in the fundamental spirit of the BOT model. The project's current crisis shows that the BOT experiment has failed. The government, private sector and the public should learn from this fiasco and avoid making the same mistakes with other BOT projects in the future.
As the new year dawns, Taiwan faces a range of external uncertainties that could impact the safety and prosperity of its people and reverberate in its politics. Here are a few key questions that could spill over into Taiwan in the year ahead. WILL THE AI BUBBLE POP? The global AI boom supported Taiwan’s significant economic expansion in 2025. Taiwan’s economy grew over 7 percent and set records for exports, imports, and trade surplus. There is a brewing debate among investors about whether the AI boom will carry forward into 2026. Skeptics warn that AI-led global equity markets are overvalued and overleveraged
An elderly mother and her daughter were found dead in Kaohsiung after having not been seen for several days, discovered only when a foul odor began to spread and drew neighbors’ attention. There have been many similar cases, but it is particularly troubling that some of the victims were excluded from the social welfare safety net because they did not meet eligibility criteria. According to media reports, the middle-aged daughter had sought help from the local borough warden. Although the warden did step in, many services were unavailable without out-of-pocket payments due to issues with eligibility, leaving the warden’s hands
Japanese Prime Minister Sanae Takaichi on Monday announced that she would dissolve parliament on Friday. Although the snap election on Feb. 8 might appear to be a domestic affair, it would have real implications for Taiwan and regional security. Whether the Takaichi-led coalition can advance a stronger security policy lies in not just gaining enough seats in parliament to pass legislation, but also in a public mandate to push forward reforms to upgrade the Japanese military. As one of Taiwan’s closest neighbors, a boost in Japan’s defense capabilities would serve as a strong deterrent to China in acting unilaterally in the
Taiwan last week finally reached a trade agreement with the US, reducing tariffs on Taiwanese goods to 15 percent, without stacking them on existing levies, from the 20 percent rate announced by US President Donald Trump’s administration in August last year. Taiwan also became the first country to secure most-favored-nation treatment for semiconductor and related suppliers under Section 232 of the US Trade Expansion Act. In return, Taiwanese chipmakers, electronics manufacturing service providers and other technology companies would invest US$250 billion in the US, while the government would provide credit guarantees of up to US$250 billion to support Taiwanese firms
RSS