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Rational debate on ETC needed

Some media outlets and legislators have looked at many major public investment projects through the lens of "corruption" or "political trickery" lately, only rarely affording these projects rational debate on a public policy or legal basis. The electronic toll collection (ETC) system is a case in point.

To be able to conduct a rational debate on the ETC project, we must first understand the background of the build-operate-transfer (BOT) policy. The Law for Promotion of Private Participation in Infrastructure Projects (促進民間參與公共建設法) is a product of the 1996 National Development Conference.

The first paragraph of Article 12 of the law clearly stipulates that "for matters not specified in the concession agreement, the relevant provisions under the Civil Code shall apply" in an attempt to use freedom to enter into contracts, the law and the market mechanism to attract private participation in major infrastructure projects in order to relieve the government of financial pressure and improve construction and operational efficiency.

The law also excludes regulations on expropriation in the Statute for Encouragement of Private Participation in Transportation Infrastructure Projects (獎勵民間參與交通建設條例). And, instead of having the government forcibly take over an operation's management for an unspecified period of time, the law simply transforms that measure into a temporary disciplinary measure. All of these are designed to eliminate any potential disincentives to private investment.

At the same time, in order to strengthen supervision via the market mechanism, the law specifically gives the financing institution intervention rights and requires that these rights be included in the concession agreement.

Nor does the law ignore the public nature of national infrastructure projects or the public responsibilities involved in such projects. The second paragraph of Article 12 clearly states that the concession agreement should protect the public interest and that it should be both fair and reasonable.

The implementation of the ETC system has been greeted by a wave of public complaints. The problem is that the tender documents and the concession agreement paid too little attention to the issues of public interest, fairness and equity which, once the Taipei High Administrative Court's verdict was issued and a criminal case was brought forward, forced the Cabinet to engage in crisis management in order to restore the government's credibility.

From the point of view of protecting public interest -- or perhaps in order to prevent the situation from deteriorating and further harming the public interest -- the Cabinet's intervention and decisions are legitimate, and both Paragraph 2 in Article 12 and Article 53 of the law provide sufficient legal basis for these decisions.

Despite all these positives, there are shortcomings in the way the Cabinet chose to follow public contract principles, by setting a deadline for Far Eastern Electronic Toll Collection Co to submit a revised plan that met public interest requirements or have its contract annulled.

Although the Cabinet's decision is supported by the Taipei High Administrative Court's verdict, it contradicts the first paragraph in Article 12 of the law. Fortunately, well-meaning doubts cast by outsiders compelled the Cabinet to abandon the road leading to unilateral abolition of the contract and instead move toward negotiating its annulment.

In addition to supporting an equal partnership between public and private participants as stipulated in Article 12 of the law, the Cabinet's "soft" handling of the issue also complies with the Democratic Progressive Party's principles of government. After all, be it the freedom to enter into contracts, the rule of the law or the market mechanism, these are all the result of major systems reforms that have accompanied Taiwan's move toward democratization and elimination of the authoritarian state.

The Cabinet's soft handling of the issue has also been helpful in consolidating the trust of investors. It has allayed concerns that the government bullies the private sector. It has also given the general public a fuller understanding of the advantages and shortcomings of the BOT policy, and how to maintain a balance between the principle of encouraging private investment while at the same time considering the public interest.

When there is a conflict over a specific case, the question of how negotiations based on equality are used to maintain a partner relationship is the touchstone for success.

Huang Yu-lin is an associate professor in the department of civil engineering at National Chiao Tung University.

Translated by Perry Svensson
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