A better use for Taiwan Goal funds

It is a shame that Minister of National Defense Lee Tien-yu (李天羽) resigned amid mounting controversy over the establishment of the arms firm Taiwan Goal.

The purpose of the Chung Shan Institute of Science and Technology (CSIST, 中科院) is no secret. During the Cold War, it was imperative that the government purchase various military weapons from countries like the US to ensure balanced cross-strait forces.

Yet because of military strategic concerns and opposition from China, the US government sometimes failed to sell its weapons to Taiwan, which made it necessary for Taiwan to develop its own. Accordingly, the Ministry of National Defense (MND) established the CSIST to preside over research and development (R&D) and manufacturing the necessary technology.

Since CSIST was founded, it has constantly brought in leading talent and conducted research resulting in the manufacture of state-of-the-art military weapons such as the Hsiung Feng and Tien Kung missiles, as well as other advanced weapons that have never been made public.

However, after the transition of political power in 2000, the budget for the CSIST was greatly reduced, possibly because the government's financial deficit worsened.

This forced many R&D projects to either be canceled, narrowed in scope or to compete for research projects commissioned by the Department of Industrial Technology under the Ministry of Economic Affairs (MEA).

The CSIST was downgraded from being directly under the command of the MND to becoming an organization under the Armaments Bureau.

All these developments drove away the top research personnel. This makes the CSIST much like the Industrial Technology Research Institute under the MEA. If the two institutes are the same in their nature and carry the same mission, the government should merge them or disband the CSIST.

All countries have strict restrictions and regulations on the manufacturing, R&D and the sale or procurement of weapons, so a rather careful assessment must be made before governments can establish arms companies.

When Taiwan Goal -- a company that claimed to be in charge of R&D, manufacturing and the sales and purchase of national defense arms -- was exposed in the media, it turned out that its president and general manager were two stalwarts of the now disbanded New Tide faction of the Democratic Progressive Party.

Just kind of company is this? From an economic perspective, there are three different types of companies -- first, a private company, whose capital completely comes from the public; second, a state-run company, which sources all of its capital from the government; and third, a company whose capital comes from both the government and the public.

Because Taiwan Goal was founded to manufacture, develop, sell and purchase national defense weapons, it naturally cannot be a private company with its capital completely from the public.

According to national regulations, a company that sources more than 50 percent of its capital from the government is regarded as a state-run company, and a company with less than 50 percent of its capital from the government is considered a private company. In developed Western countries, only a firm with all of its capital sourced from individuals can be considered a private company.

And Taiwan Goal were a state-run firm, it wouldn't even have had to be established. Instead, the funds or the budget for the firm could have been allotted to the CSIST, so that it could be under supervision of the legislature, and thus the public, or another government organization, such as the Ministry of Audit or the MND.

If Taiwan Goal belonged to the third category mentioned earlier, contention over directorate and supervisory positions and management rights would easily arise, and the company would come under the control of interest groups. If the company operated poorly and was mired in financial difficulties, it would either close down or only barely manage to operate, with subsidies allotted from the public's tax money. As a result, nothing would be accomplished and resources would be wasted.

If the expected political or economic policy goals cannot be carried out through the establishment of such a company, why make such a move in the first place?

The easiest and most ideal way to support arms manufacture would be for the government to use the budget or funds originally meant for Taiwan Goal to invest in the CSIST. As the CSIST has been around for years, it has many talented researchers and has an impressive list of accomplishments.

The CSIST could even transfer some of its research results to private enterprises. In addition, some components could be built by commissioned private enterprises or purchased abroad in accordance with the law.

Only this way can Taiwan's demands in national defense be met. The capacity for national defense would be improved, defense technology could be combined with private technology and weapons for national defense could still be purchased from other countries.

Tsay Tzong-shi is a professor at the Department of Economics at Chinese Culture University.

Translated by Ted Yang