China stake in local port presents a major risk

By Martin Oei 黃世澤  / 

Sat, Sep 01, 2018 - Page 8

The Port of Kaohsiung is the nation’s most important container port. It would only be reasonable that a Chinese state-owned company should not be allowed to operate a container terminal there, as it would be a major threat to national security.

The government still has not paid attention to the purchase earlier this month of Hong Kong-based Orient Overseas Container Line’s (OOCL) Taiwanese subsidiary by Cosco Shipping Holdings Co (Cosco), China’s largest container shipping company.

The damage may have already been done, but officials must quickly take steps to remedy the situation.

That OOCL was allowed to lease berths at Kaohsiung Port and set up the OOCL Kaohsiung Container Terminal is part of the rotten legacy of the Chinese Nationalist Party’s (KMT) time in government.

At the time, the majority shareholders of OOCL’s parent company Orient Overseas Ltd, the Tung (董) family, had close connections to the KMT. Since the early 1970s, they have leased berths at the Port of Kaohsiung.

This issue should have been dealt with after Tung Chee-hwa (董建華) threw his lot in with the People’s Republic of China, or at least after he was selected as Hong Kong’s first chief executive in 1997.

However, the can was kicked down the road until Tung unexpectedly sold the company to the Chinese state-owned enterprise, cashing in on his many years of political investment. China’s decision to buy the company outright was probably a result of the company’s lease of berths at the Port of Kaohsiung and at the strategically important Port of Long Beach in New York.

Now that OOCL is taking over the Kaohsiung berth, the government must ramp up inspections of the company’s operations at the port to prevent its parent company, Cosco, from shipping goods that could endanger national security to Taiwan — and from Taiwan back to China.

These inspections must include personnel checks and the company must be prevented from using its facilities to gather information on military activities in the port.

In the longer term, Taiwan International Ports Corp should consider all options at its disposal, including terminating Cosco’s lease agreement at the Port of Kaohsiung, forcing OOCL to sell the OOCL Kaohsiung Container Terminal to Taiwanese investors, as domestic laws could be applied to restrict and control a Taiwanese investor.

However, Cosco would probably do all it can to obstruct the return of the container terminal to Taiwanese ownership. In such a scenario, the government must put in place plans to deal with the situation forcefully. Unfortunately, that would not be easy, as Cosco’s berths can now be used as a chess piece by Beijing to manipulate Taiwan-China relations.

Chinese ownership of the strategically important container terminal is a reflection of the Taiwanese government’s lackadaisical approach and lack of vigilance toward foreign investment.

The measures in place are insufficient. KMT-friendly Taiwanese corporations that used to receive favors from past administrations are now throwing in their lots with China, and the government’s failure to address this situation has now led to this result.

In the past, the KMT gave excessive perks and preferential treatment to a plethora of companies across different industries. Both from the perspective of transitional justice and national security, the situation can no longer be ignored and the government must conduct a thorough review of the situation.

Martin Oei is a political commentator based in Germany.

Translated by Edward Jones