A financial reform proposal for the Taiwan High Speed Rail Corp (THSRC) has been blocked in the legislature. The corporation is teetering on the brink of a crisis, with bankruptcy and the possibility of going into government administration looming. Former minister of transportation and communications Yeh Kuang-shih (葉匡時) resigned to take responsibility for the failure of the proposal to be passed, but what the public is worried about is whether the THSRC crisis will worsen, and whether the system will close.
Taiwanese have a very complex relationship with the High Speed Rail (HSR). On the one hand it has meant that people can travel anywhere down the west coast on a day trip, boarding a train in Taipei in the morning bound for Kaohsiung and returning that evening. The service has slashed travel times, and it is clean, comfortable and safe. It is not too much of a stretch to say that the HSR has changed the way many Taiwanese live their lives.
The convenience of the HSR, coupled with its expensive tickets, have meant a lot of people have been spending more on travel, although its speed and relatively inexpensive tickets compared with domestic flights really put the squeeze on domestic carriers. The Taiwan Railways Administration also found it very difficult to compete along the west coast, as have long-distance bus companies, which have had to lower their prices to attract passengers. The HSR completely changed Taiwan’s transportation sector.
The HSR was both Taiwan’s biggest build-operate-transfer (BOT) project and its biggest BOT experiment. The project team for the HSR also built the Chunnel, which connects England and France, and Hong Kong’s underground, while the management team came from Singapore. The engineering, technology, bidding and management all followed international standards. However, the financial planning and contractual mechanisms were flawed. With these problems, combined with Taiwan’s complicated political environment, the high-speed rail project moved forward slowly.
From the initial tender process through construction and on to operations, the high speed rail project was controversial and surrounded by constant turmoil. During the bidding process, the current five main shareholders defeated a group led by former China Development Financial Holding Corp chairman Liu Tai-ying (劉泰英) by stressing that the government would not have to spend a single dollar on the project.
Some people felt this amounted to a scam, and with the benefit of hindsight, we now know that those five shareholders put up too little capital and that the THSRC is mired in debt, which led to continuing losses.
One can only speculate on how much more expensive the project would have been — and how much longer construction would have taken — if the government had been in charge, as well as whether it would have been completed at all and if operations would have been smooth.
With the THSRC at risk of going bankrupt, the consortium has lost this round, but it may not yet be down and out. At this stage, it is useless to simply blame the government, the opposition parties or the THSRC itself for the crisis.
The bottom line must be that the HSR cannot be allowed to stop running, because it has become an indispensable part of daily life. Suspending service would be an economic and political disaster from which no one would profit.
Whether the THSRC will be able to rise from the ashes depends on whether the government, opposition parties and the THSRC are able to cast off emotional positions and political calculations and find a reasonable solution that is both fair and transparent. It is time that they sat down together and came up with a feasible way to address the system’s financial problems.
Monday was the 37th anniversary of former president Chiang Ching-kuo’s (蔣經國) death. Chiang — a son of former president Chiang Kai-shek (蔣介石), who had implemented party-state rule and martial law in Taiwan — has a complicated legacy. Whether one looks at his time in power in a positive or negative light depends very much on who they are, and what their relationship with the Chinese Nationalist Party (KMT) is. Although toward the end of his life Chiang Ching-kuo lifted martial law and steered Taiwan onto the path of democratization, these changes were forced upon him by internal and external pressures,
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