Invest in TaiwanDepartment of Investment Services, MOEA
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The New Ten Projects (also known as the New Ten Major Construction Projects) refers to the national development plan put forward by then-premier Yu Shyi-kun in November 2003, requesting NTD 500 billion to expand public construction investment over a period of five years. It was approved by the Legislative Yuan in June 2005. "New" has been added to the title of the projects to distinguish them from the Ten Major Construction Projects proposed by the former premier Chiang Ching-kuo during the 1970s.
Following an improving global economic situation after bringing the SARS outbreak under control, Taiwan's economy at the end of 2003 began to quickly rebound with growth primarily being led by exports. Domestic demand remained relatively weak, however, and the scaling back of public infrastructure investment during previous years was eroding the economic vitality. The infrastructure, both in terms of quality and quantity, was also insufficient and clearly an obstacle to Taiwan's continued standing in international competitiveness and quality of life.
Looking at the global environment, the timing and space in which Taiwan had to transform its economic structure and adjust its industrial policies had obviously been compressed. In this new era in which people, capital, and information move freely, a new economic reality had emerged, with knowledge and innovation as key drivers. To sustain Taiwan's competitive strengths, the government has shouldered full responsibility and played an active role in expanding the scale of public investments to enhance industrial production, life and livelihoods and the ecological environment.
The short-term goals for expanding Taiwan's public infrastructure were to improve the general investment environment, strengthen economic drivers, and resolving local business development and employment issues. Long-term objectives, on the other hand, were to boost Taiwan's overall development potential, balance regional development, and raise quality of life efficiencies. It could even be characterized as the cornerstone engineering plan for navigating Taiwan to a sustainable future. Especially as domestic interest rates had hit an all-time low and deflation concerns continued to exert influence, it was exactly the right time to actively promote public construction projects. The following further expands on the reasons for the New Ten Major Construction Projects.
In the run up to the current New Ten Projects Plan, the government had been implementing the “8100 Taiwan Kick-Off” and “Public Construction Expansion” plans to increase investment in the public sector. However, because of caps on public debt financing stipulated in the Public Debt Act, government options for expanded financing for public development projects were severely limited. At the same time, the Taiwan economy had begun to experience a downturn in 2001, which also reduced government revenues from taxes. Increased expenses for social welfare, educational subsidies, supports for local government and other mandated or obligatory expenditures gave rise to an inflexible structure hampering government investment in the public sector and the underfunding of government investment in public projects. Taken together, these obstacles in promoting public projects were not only weakening Taiwan's economic vitality, but also seriously undermining Taiwan's future economic growth potential. More specifically:
-- Fixed government investment expenditures had decreased every year since 2000, reaching a low of NTD 402.6 billion in 2003 from a high of NTD 517 billion in 1999, a decrease of NTD 114.4 billion. The government investment ratio (the percentage of GDP represented by fixed government investments) had also decreased every year, reaching a low of 3.8% in 2003 from a high of 7.3% in 1994, a contraction of 3.5%.
-- From 2001 to 2003 , the actual growth rate of fixed government investments were -6.42%, -12.71% and -1.26% respectively, which negatively contributed to the respective economic growth rates of -2.17%, 4.64% and 3.50% for those years, shaving off 0.31%, 0.59%, and 0.05% respectively, representing a significant drag factor on economic growth.
Recognizing that the state of a country's physical and non-physical infrastructure is commonly recognized as a clear indicator of the development status and future potential of any country, the government administration had been focusing on raising Taiwan's overall competitiveness, actively promoting economic and reform initiatives, which had already produced some positive effects. However, reports by many international competitiveness ranking organizations showed that insufficient infrastructural development would become a limiting factor in Taiwan's ability to raise its competitiveness in the future. In fact, Taiwan had very strong core competitiveness and if the government could further expand public infrastructure investment, it would strengthen related infrastructure development for industrial production as well as for projects to improve the quality of life and ecological environment in Taiwan. Specifically:
-- According to the 2003 World Competitiveness Yearbook published by the IMD Business School based in Lausanne, Switzerland, Taiwan was ranked seventh among nations and territories with a population of 20 million or more and sixth overall in terms of infrastructural development. However, subcategory rankings for telecommunications investment, wastewater processing facilities, and so forth were below par, reflecting insufficient development of domestic infrastructure facilities.
-- The Annual Global Competitiveness Report 2003-2004 published by the World Economic Forum (WEF) ranked Taiwan fifth in growth competitiveness, which was a notch up from the previous year's ranking. The report also pointed to a survey of business managers on issues related to local business operations in which infrastructural deficiencies were cited as the fifth biggest problem to doing business in Taiwan, highlighting the need for strengthening Taiwan's infrastructure.
According to figures from the Directorate-General of Budget, Accounting and Statistics (DGBAS), although economic growth rates were 3.50% in 2003 and 6.15% in 2004, analyses shows that this growth was export-driven and that domestic demand was relatively weak. From 2000 to 2003, domestic demand only contributed 0.12% to Taiwan's economic growth rate of 2.61%. Domestic investments included in this 0.12% were insufficient, resulting in a high level of accrued savings and serious growing economic imbalances, with the specter of domestic deflation threatening to undermine future economic growth. Specifically:
-- Resource utilization rates clearly needed to be raised: In 2003, Taiwan's domestic investment ratio (as a percentage of GDP) hit an all time low of 16.3%, resulting in a very high savings rate of 9.8%, up from 2.9% in 2000, the highest in fifteen years, reflecting growing internal imbalances and inadequate resource utilization.
-- Deflationary pressures needed to be addressed: In 2001, 2002, and 2003, Taiwan's consumer price index stood at -0.01%, -0.02% and -0.03% respectively, demonstrating a dire need to stimulate demand through expanding fiscal policies to remove deflationary pressures.
Units: Contribution percentage points
| GDP growth rate (%) | Domestic demand |
| Overseas demand |
| |||
|---|---|---|---|---|---|---|---|
| Private consumption | Fixed private investment | Public expenditures | Commodity and service exports | ||||
| 1991-1995 (average) | 7.12 | 7.22 | 4.46 | 1.59 | 1.15 | -0.11 | 3.97 |
| 1996-1999 (average) | 5.69 | 5.57 | 3.82 | 1.15 | 0.48 | 0.13 | 3.58 |
| 2000-2003 (average) | 2.94 | 0.85 | 1.43 | -0.2 | -0.39 | 2.08 | 3.92 |
| 2000 | 5.77 | 3.82 | 2.8 | 2.36 | -1.34 | 1.95 | 8.96 |
| 2001 | -2.17 | -4.63 | 0.41 | -4.43 | -0.61 | 2.46 | -4.14 |
| 2002 | 4.64 | 2.5 | 1.62 | 0.82 | 0.06 | 2.13 | 5.35 |
| 2003 | 3.5 | 1.71 | 0.9 | 0.46 | 0.35 | 1.79 | 5.52 |
To resolve unemployment issues, the government actively implemented several initiatives to promote the engineering of Taiwan's overall employment situation to address the rising unemployment rate, which had reached a high of 5.35% in August 2002. Although by November 2003 the unemployment rate had dropped to 4.71%, this level was relatively higher than the average unemployment rate of the 1990s, indicating insufficient opportunities in the job market and the need to create more opportunities. Specifically:
-- An analysis of the sources of increased employment opportunities by industry indicate that overall employment growth had slowed and that slower growth was primarily related to the real estate bubble and dramatic decrease in the number of people employed in the construction industry.
-- Expansion of public construction projects could serve to revitalize the construction industry and have the immediate effect of creating new job opportunities.
The New Ten Projects Plan is focused on expediting the implementation of many of the Challenge 2008 National Development Plan projects, selecting key programs within the major development projects for earlier completion to facilitate the transformation and upgrading of Taiwan's economic structure. The short-term objectives were to continue the 2003 Public Construction Expansion Initiatives to revitalize the economy and reduce the impact of the SARS outbreak to stabilize the progress of Taiwan's economic recovery and check deflationary pressures.
According to the Oct. 30, 2003 WEF report on global competitiveness, Taiwan ranked fifth for growth competitiveness, just after Finland, the United States, Sweden and Denmark. Thus, the government set its sights on expediting investment in the New Ten Projects Plan as a means of securing its top ranking in Asia and climbing in the top three slots in terms of worldwide competitiveness.
No matter how well Taiwan's economy has performed, it could still be better. Thus, in addition to strengthening Taiwan's international competitiveness, the government, through the implementation of the New Ten Projects Plan, aims to realize a Taiwan that is economic powerhouse that embodies refinement, efficiency, technology and excellence.
Taiwan in 2008 will be a refined Taiwan. Breaking free of the notion that traditional and popular culture as peripheral government policies, Taiwan's unique cultural assets will take center stage and platforms for local and international cultural exchange will be established. At the same time, starting from the bottom up, the quality of the living environment in Taiwan will be improved through massive sewerage and artificial lake construction projects, restoring and protecting the beauty of our natural assets.
Taiwan in 2008 will be an efficient Taiwan. The rapid transit systems will be complete and transportation convenient. The railway system will be transformed into city-wide and commuter friendly light rail system providing a fast and green transportation networks. The third phase of highway construction projects will connect up the first and second highways and complete the eastern leg of the island-wide system. Kaohsiung harbor will be expanded to increase shipping capacity and strengthen Taiwan's role as an important link in global logistics.
Taiwan in 2008 will be a Taiwan that is a technology powerhouse. Mobile networks will cover the entire island, enabling mobile services, mobile living, and mobile learning. The Taiwan Expos plan will bring the world to Taiwan, allowing them to see first-hand Taiwan's technological achievements.
Taiwan in 2008 will be a Taiwan that demonstrates excellence. The Aim for the Top University Plan will allow Taiwan's higher education to mesh with international standards, thus providing top-flight training and education and cultivating outstanding talent.
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Goals: to have at least one of Taiwan's 15 major graduate schools to be ranked number one in Asia within 5 years; to have at least one university ranked one of the top 100 colleges of the world within 10 years.
Goal: to build a world-class internet service environment to drive the development of Taiwan's third trillion-dollar industry -- communications.
Goal: to exhibit Taiwan's creativity and vigor, and prompt the development of technology, tourism, and culture.
Goal: To transform TRA service into a city and commuter rapid transit system by connecting up with the high-speed rail, increasing the number of stations and frequency of trains, raising existing tracks or putting them underground, thus giving new life to the railway system and bringing about urban renewal.
Goals: to develop access to areas with tourist attraction such as Yilan, Hualien, Taitung, and Nantou; to facilitate the flow of north and south bound traffic; to expand the highway network to connect systems.
Goal: to construct a new intercontinental container port for 15,000 TEU container ships; improve the transport capabilities and capacity of the Kaohsiung port.
Goal: to construct three metro systems with a total route distance of 182 km to improve the rapid transit systems in the metropolitan areas of northern, central, and southern Taiwan.
Goals: to improve the living environment; to enhance water quality; to restore rivers and ocean to their natural beauty.
Goals: to construct lowland reservoirs to resolve water shortage issues and shift away from higher elevation reservoirs; to create artificial lakes and lakefront scenic areas for multiple uses including as a water resource, tourism attractions and ecological improvements; to construct desalination plants to resolve water shortage problems.
(Posted September 2007)
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