A struggle is brewing over regional disparities in funding. It seems that the central government's plan is to "stress the north, ignore the south" and southern politicians are deeply unhappy:Kaohsiung County Magistrate Yang Chiu-hsing proposed the central government Tuesday take into account each administrative district's size, in addition to their population, when allocating state funds for boosting the local economy and for promoting public construction projects.The total spending plan is worth US$3.7 billion. It is true that the areas receiving the most cash for public infrastructure projects are all in the north, and all predominantly Blue. Indeed, as A-gu reported the other day, the KMT briefed its own magistrates on the spending plans as early as February, while giving DPP magistrates just a day to prepare theirs once the KMT got into office. The message to the DPP-held areas is clear. But at the same time the idea of spending where the people are is not exactly irrational. Another issue is that Taoyuan is the fastest growing county in Taiwan, and high growth naturally demands more infrastructure spending.
Yang made the suggestion in a meeting with ranking county government officials after the Cabinet-level Council for Economic Planning and Development (CEPD) made public last Friday a list of the amounts that local governments will receive under the plan.
Taipei County in northern Taiwan would receive the largest share -- NT$9.6 billion from the NT$114.4 billion (US$3.74 billion) in state funds earmarked by the Executive Yuan.
Neighboring Taipei City would receive the second highest sum of NT$6.6 billion, followed by Taoyuan County at NT$4.9 billion. Taipei City and Taoyuan County are also in northern Taiwan.
One of Taiwan's most pervasive problems is the disparity between the north and the south, something that the DPP tried to ameliorate. Consequently, Kaohsiung mayor Chen Chu has organized a group of six southern city and county heads to oppose the new plan. Meanwhile out in the Penghu, officials are demanding that the government keep its promises to put in casinos.
Public infrastructure spending is supposed to save the construction firms with whom the local officials have such intimate political patronage connections. These are limping along, and many in the local construction industry are now asking whether China can save Taiwan's real estate industry. As the Taipei Times reports, construction isn't doing so well.
A report by Collier International, however, said office building prices had gone up so much that it had scared away potential buyers or office tenants, the Chinese-language Economic Daily News reported yesterday.
The report forecast the vacancy rate for the office building market could climb back up to exceed 10 percent this year from last year’s 9.47 percent, the paper said.
Meanwhile, statistics released by the central bank yesterday showed that the property market may be showing signs of weakening. Loans for construction have dropped for a second straight month to NT$1.018 trillion last month, tallies showed.
The NT$8.65 billion, or 0.85 percent, decline in such loans — which mostly include loans to construction companies for housing projects and land development — in April from the previous month has accelerated from a monthly decline of NT$2.07 billion, or 0.21 percent, in March, data showed.
The central bank’s latest data also indicated weakening consumer loans in other categories. Car loans presented a continual decline since July 2006 and fell to NT$81.21 billion last month, a reduction of NT$1.8 billion, or 2.18 percent, from the previous month.
The Taiwan Institution for Economic Research (TIER) observed that any boost from infrastructure spending this year will probably be offset by rising gas and food prices. Perhaps effects will show up next year, it said.
[Taiwan]
Hey Michael, good to see that you have a reference to TIER. The editorials from TIER and the Chunghwa Instititue of Economics Research are actually pretty reasonable are CIER was out in front talking about the problems with biofuels way before food prices started skyrocketing.
ReplyDeleteI disagree strongly with your "where the people are" point. The flow is an indication of an imbalance in infrastructure in first place and spending more speeds that up, not slows it down. If there were better job opportunities in big southern cities (including your home Taichung, which is growing rapidly, but not yet there in quality), then there wouldn't be this ridiculous 50-60 year old constant flow from the south to the north.
Why should people in the south remit income taxes to central government if the greater proportion of their remittance will be distributed to the counties in the north?
ReplyDeleteOne simple solution is to collect your own regional taxes and use them within.
It’s time for Taiwan to look elsewhere for other political systems that may work better such as higher degree of regional autonomy as described in Denmark’s government website http://www.denmark.dk/en/menu/AboutDenmark/GovernmentPolitics/
The huge difference in spending between the south and north doesn't just involve this round of construction. It also includes the 5 year 50 billion (NT) program to improve the top schools in Taiwan. The breakdown is 7 billion NT for schools in Hsinchu and north of Hsinchu, and 3 billion NT for schools south of Hsinchu. National Taiwan University received 3 billion NT ALL BY ITSELF. This money is huge. It is both helpful for the local city economy in that the school is spending money building and buying stuff and hiring professors that are buying stuff and bringing in more students that are buying stuff--in addition, it also is going to produce better students, many of whom are going to choose to stay around or near their school after they graduate.
ReplyDeleteIt's the same idea as with Stanford and Silicon Valley. The rise of both were closely tied to each other.
It's unfair, and I personally would like to see a lot more focus on Taichung, Tainan, and Kaohsiung (all of whom have awesome weather compared with the north).
Taichung: the true over-land logistics hub of Taiwan and a mix of the north and the south culturally. It has a twin city, Changhua just a few minutes to the south and is the big city of several countryside counties, the most of any city in Taiwan (Taichung County, Miaoli, Nantou, Changhua). Improving Taichung is indirectly improving the fortunes of all of these neighboring counties, and that is a lot of countries...
Tainan: even more awesome weather, the other top general university in Taiwan (really helpful for high quality city growth--jobs, businesses, cultural opportunities, etc.). Also now has a science park, plus part of ITER has moved down there. Great food, a lot of historical charm. For now, cheap--cheap housing, cheap prices. A public transportation investment here would make this city take off.
Kaohsiung: does anyone realize that you can fly into Kaoshiung's international airport, take the subway to the main railway station, or take it all the way to the high speed rail station, and from there go anywhere in Taiwan that you want?! An awesome waterfront, the same sunny weather as Tainan, the same critical mass of population as Taipei, a lot of potential here. The government spending more to speed up MRT construction, investments in pollution controls to help make the city even cleaner (it's improved dramatically), moving a university or two here, all would be excellent improvements here.
The fact is, the natural characteristics of these three cities are a ton better than Taoyuan and Hsinchu (they are much less livable and no one lives there except for job reasons), but there hasn't been in the past, and there isn't now, enough infrastructure spending on the south, so people don't have a choice to stay in the south or move to the south.
The bright side though is that now spending the deserved amounts in the south would be huge improvements since they are starting so disadvantaged compared to the north. It might even help Ma get to 6% one of these years he's in office...
Anon, what I really meant was that population proportion is not an unreasonable way to apportion the funds. But really, I agree with your point and your position.
ReplyDeleteMichael