The number of people using the city’s increasingly popular public bike system YouBike has seen a significant boost since the Taipei City Government implemented a policy giving customers the first 30 minutes free in September last year. According to statistics from Taipei City’s Department of Transportation, the number of users has exponentially increased from around five or six thousand to more than a million every month. The city government estimates that the bicycle system’s operator, Giant Bicycles Co, will rake in a total of NT$120 million (about US$4.05 million) in revenue this year. Media investigations, however, found that the second contract the government signed with Giant in 2011 clearly stipulates that when annual revenue exceeds NT$70 million, the operator must pay a 15 percent royalty fee to the city government. Revenue estimates do not take into consideration the government’s first-30-minutes-free subsidy policy, which allows Giant to take away huge profits. The operator is not required to pay back the city government proportionately, which city councilors and academics say is unreasonable and is why they are asking that the government demand a higher royalty percentage from the operator.
Taipei City Councilor Yan Sheng-kuan says that when the city government signed the contract with Giant, subsidies were not included as part of revenue evaluations, so the royalty percentage is only 15 percent. According to department statistics, however, YouBike is expected to make as much as NT$120 million this year, including NT$90 million in government subsidies. It is unreasonable for the operator to merely pay a royalty fee of 15 percent (NT$18 million) and get to pocket the rest of the profits, Yan says.
Yan says that the city government has already shelled out NT$260 million for setup costs and is providing NT$90 million in subsidies this year just to allow customer’s the first 30 minutes free, a subsidy that is expected to increase to NT$180 million next year. The royalty fee of 15 percent is excessively low, Yan says, adding that signing one contract every seven years is also entirely unfair.
Taipei City councilor Yang Shih-chiu says that the increase in YouBike usage means that advertising has become more effective, and says that the royalty percentage should therefore be increased and that liberalizing sponsorship rights should be considered. “The Department of Transportation should think about how to make money instead of just spending it,” says Taipei City councilor Hsu Chia-ching.
Huang Tai-sheng, a city government consultant and a retired professor from National Chiao Tung University’s Institute of Traffic and Transportation, says that it looks like the subsidy policy giving customers the first 30 minutes free has greatly increased usage, so the government should mull increasing the royalty percentage that it requires Giant to pay, or add other beneficial conditions for the government.
Taipei City Department of Transportation Commissioner Wang Sheng-wei says that in order to get a better grip on the operator’s profits and costs, the department has commissioned the National Federation of Certified Public Accountant Associations of the Republic of China for the first time to audit the company’s working paper to ensure the accuracy of its financial statements. The federation will publish an annual financial report of the company’s operations, he says, adding that YouBike operates according to a public bid and that the contract is already signed, making it difficult for any changes to be made. Next year after all of the 178 rental stations are completed, the city government will try to obtain the most advantageous situation within the contact’s framework, Wang says.
(Liberty Times, Translated by Kyle Jeffcoat)