The Executive Yuan’s Forward-looking Infrastructure Development Program is to issue debt through a special budget in order to raise NT$882.49 billion (US$29.35 billion) over the next eight years. This money is to be spent on railway transportation (NT$424.1 billion), water infrastructure (NT$250.7 billion), renewable energy (NT$24.4 billion), digital infrastructure (NT$46 billion) and urban and rural infrastructure (NT$137.2 billion).
The government is hoping that the program could kick-start infrastructure construction and economic growth, and balance development between northern and southern Taiwan. The government should be praised for its good intentions, but the policy goals are unclear and a discussion of how “forward-looking” these plans truly are is required.
Perhaps government officials have been too conservative in the past, or perhaps the outlook of our legislators has been too narrow, but in the past few years Taiwan has missed out on many new economic opportunities.
The nation missed the transition from personal computers to mobile devices, and did not get in on social media, mobile payments, shared economy, electronic commercial services or the mobile game booms, leaving the nation in the economic doldrums.
In addition to outdated laws, this is because policymaking relies on traditional concepts and methods.
At this crucial time, when other nations are pushing hard to improve their economy, the government is planning to borrow NT$882.49 billion and spend it on railways and water infrastructure construction. If prudently used, this astronomical sum could indeed transform Taiwan, but if it is not put to good use, it will not only fail to have any effect — it will also add to the next generation’s debt mountain.
According to a Stanford University study published last year titled Artificial Intelligence and Life in 2030, artificial intelligence and big data technologies are destined to bring huge changes, such as in “smart” cars and traffic applications, “smart” healthcare, “smart” education, media and entertainment, and public safety and security over the next 20 years.
The White House Office of Science and Technology in December last year published a report titled Artificial Intelligence, Automation and the Economy, which called on the US government to prepare for developments in scientific research, industry and education.
Introducing these new technologies would improve industrial production efficiency, but at the same time, it would also dispense with many workers and it would have a major impact on both traditional and new industries. Taiwan’s program includes no measures for dealing with this coming economic change.
Nor does the program consider the impact new technology is already having on business. The rise of cloud computing is bringing more global opportunities to Taiwanese businesses, which can now use cloud-based solutions to invest in innovation and research and development with a limited workforce and investment.
This will not only greatly reduce operating costs, it also overcomes geographical restrictions; apart from being able to market products and services globally, it also increases the willingness of businesses to invest locally.
Unfortunately, total investment in digital infrastructure only accounts for 5 percent of the program’s overall budget.
In August last year, The Economist wrote that ineffective government stimulus is a major cause of policy failure. The real challenge is how to come up with the most effective plan for the use of this NT$882.49 billion and invest it in the training of talent for the new economy, creating and improve soft and hard power, and quickly integrating new technology potential in a wide range of sectors to be able to make use of business opportunities and truly raise living standards in Taiwan.
Academia Sinica academic Chu Yun-han (朱雲漢) said that if the government is to effectively overcome the risks brought by technology, it must create timely new mechanisms for supervision, control and social redistribution, as well as new market competition rules.
The first issue is the transformation and revitalization of technological research institutions.
Universities, the Industrial Technology Research Institute, the Institute for Information Industry and other research institutions can no longer continue to rely on limited government resources for their research to deal with the sudden onslaught of new technologies such as the Internet of Things, big data, artificial intelligence, robotics, “green” energy and biotech medicine.
The government should assist with the transformation and assign new duties to these organizations, which should include: Establishing platforms and networks and promoting cooperation; cooperating with domestic and overseas universities, research institutions and businesses; and even mergers and acquisitions.
As Academia Sinica President James Liao (廖俊智) has said, Taiwan will in the future have to rely on the export of new technologies and intellectual property.
Investing NT$20 billion in the development of local industrial parks centered on local educational and research institutions would be a better way to initiate the development of the knowledge economy and drive local economic growth.
The second issue that needs to be tackled is reorganizing educational resources, and improving facilities and staff.
Google and Apple Inc have created a quick and complete platform for application development and operating systems. These platforms have made it easier for application developers to write new software. These two platforms provide more than 1 million apps that consumers around the world can download and use. In addition to receiving a commission from the platform operator, developers also earn income from online advertising.
This is a great opportunity for Taiwan to develop the software and digital content industry, which is non-polluting yet creates added value.
The government should work to reorganize educational resources and upgrade the workforce and facilities at schools at every level, promote workplace education and encourage more Taiwanese to write apps and engage in big data analysis, online marketing and fundraising in order to improve expertise among individual entrepreneurs.
The third issue that needs attention is building “smart” traffic, “smart” healthcare and “smart” housing in communities.
Thanks to the development of cloud technology and the new economy it is now much easier than it used to be to promote local, community infrastructure. If the government invested in “smart” healthcare, traffic and housing infrastructure so that people could find work, housing and healthcare as well as cultural, educational and entertainment facilities in their local communities, it would no longer be necessary to live in cities.
In terms of healthcare, the Ministry of Health and Welfare has established cloud-based care, medical, healthcare and epidemic prevention services, but the different systems are not integrated and they are not cooperating with the National Health Insurance system and private insurance companies to create a system of mobile healthcare services that would help patients with chronic diseases to manage their own health.
In fact, private businesses have already made use of Amazon’s cloud-based computing services to provide online health self-management to diabetes patients in Japan and elsewhere. Not only are such systems compliant with the safety standards of the US Health Insurance Portability and Accountability Act, but they protect the privacy of patients, while also bringing many other benefits.
The government should learn from the experience of other nations, ease restrictions and establish a sensible system of regulation to prevent Taiwan’s healthcare system from falling behind. By implementing a cloud-based healthcare platform, the government could help to reduce the disparity of access to healthcare resources between urban and rural areas.
Additionally, Taiwanese are fond of using scooters to get around. There are more than 13 million scooters in use across Taiwan. However, there is a lack of parking space and scooters contribute to air pollution.
Local governments provide subsidies for the purchase of electric scooters, but the amount varies from region to region. The central government should step in and design a universal national subsidy, but it should also establish an electric scooter rental network similar to Taipei’s Youbike bicycle rental service, which it could call “YouMotor.”
Not only would this dramatically reduce air pollution, an effective application of resources could also help Taiwan’s electric scooter companies to become more internationally competitive.
Through the use of advanced sensors, data management, automation and other technologies, the government should build an intelligent transport network with effective integrated management and control systems to intelligently synchronize interaction between humans, vehicles, roads and the environment.
Housing is another serious problem. More than 2.9 million residential buildings in Taiwan are more than 30 years old: this equates to 40 percent of the nation’s total housing stock. Some of these old buildings are of poor quality and crude construction, and would be unable to withstand a serious earthquake.
Additionally, there are about 5.8 million apartments nationwide in buildings that are under five stories high and without elevators; this equates to 70 percent of the nation’s total housing stock. As the population continues to age, there is an urgent need to improve these old-style residential buildings without elevators.
The legislature on Tuesday last week passed a bill that provides financial incentives for the reconstruction of dangerous and old urban buildings, which will use floor area ratios and tax incentives to incentivize renewal.
This approach is a step in the right direction, but there are still many Taiwanese who do not have sufficient funds to renovate their properties. If renovation of old housing stock were to be combined with the temporary provision of social housing and low-interest loans for residents with low incomes, this would be a more effective way to spur a process of urban renewal.
This administration has previously emphasized the importance of humility and diligence in government. Since the government plans to borrow an extremely large sum of money, this will have a significant impact upon the younger generation. The Cabinet should, therefore, collect the opinions of industrialists, officials and academics — both domestic and foreign — and convene an inter-departmental working group to discuss in detail how to most effectively spend the NT$882.49 billion.
It is only through careful planning that the government would be able to produce truly “forward-looking” construction projects, and it has a duty to all Taiwanese to get this right.
Jang Show-ling is a professor of economics at National Taiwan University.
Translated by Perry Svensson and Edward Jones
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