Following allegations that former Taoyuan County deputy commissioner Yeh Shih-wen (葉世文) had solicited bribes from Farglory Group, the Taoyuan County Government immediately dismissed Yeh from his position and canceled its contract with the group to build an affordable housing project in Bade City (八德). It did so in the hope of stopping the corruption scandal from spreading further, but the case is still likely to have a massive impact on not only the government’s housing policy, but also on Taoyuan County, the Chinese Nationalist Party (KMT) and the year-end elections.
The affordable housing policy was initiated by Vice President Wu Den-yih (吳敦義) on March 3, 2010, when he was premier. It was intended to curb soaring housing prices, as the low and middle classes complained that they could not afford to buy a home. The Construction and Planning Agency therefore initiated a development project at the A7 Station of the Taiwan Taoyuan International Airport MRT line. It was the first time the government had used pre-sales for a development project in order to attract private capital to build affordable homes and an industrial district. Although the project was endorsed by the government, the initial price per ping (3.3m2) of about NT$180,000 (US$5,980) was not very attractive compared with prices for real estate nearby. Critics said the price was too high for affordable housing and the government responded by slashing it to NT$150,000 per ping.
When the government cut the price, the developer’s profit shrank and it had to rely on building materials, construction and the floor space it was allocated to make up for the difference. The quality of the housing suffered as well.
Eligibility for the houses was restricted to young people above the age of 20 who do not own a home and whose household income falls below 50 percent of the national average. A 40 ping apartment would cost about NT$6 million, or about NT$7 million fully decorated. According to the Directorate-General of Budget, Accounting and Statistics’ data for 2012, the lowest quintile of income earners have a disposable income of about NT$300,000, and the next quintile has about NT$560,000. Households in these two groups would still have to go without food and drink for 22 and 12 years respectively to be able to buy a unit of this “affordable housing,” making it an unattainable dream. In short, the government’s affordable housing policy has not solved the public housing problem.
Most importantly, when the Farglory bribery allegations surfaced, they exposed the network of contacts between officials and businesspeople. Affordable housing, which was supposed to be a cooperative project between the government and the public, has instead become a plot hatched by government officials and businesspeople to enrich themselves. This has struck a fatal blow to the credibility of affordable housing and the future prospects of other such projects. No one knows what will happen to the Bade City project now that the Taoyuan County Government has canceled the contract with Farglory Group.
The network of contacts between government officials and businesspeople exposed by the Farglory case involves many other construction projects, and it is very likely that the case will continue to expand. Coming in the wake of the corruption scandals involving former Cabinet secretary-general Lin Yi-shih (林益世) and former Taipei City councilor Lai Su-ju (賴素如), this is a major blow to President Ma Ying-jeou’s (馬英九) focus on clean politics and could have a negative impact on his and the KMT’s support ratings.
As for the year-end local elections, the KMT enjoys stable support in Taoyuan County and New Taipei City. The corruption scandal has thrown a spanner in the works for Taoyuan County Commissioner John Wu (吳志揚), and the KMT might come in for a tough fight as it faces an uphill battle in four of the five special municipalities.
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