Capital Management and Budgeting in Taiwan

Capital Management and Budgeting in Taiwan

Wei-Jie Liao (University of Nebraska at Omaha, USA) and Nai-Ling Kuo (National Taiwan University, Taiwan)
Copyright: © 2019 |Pages: 22
DOI: 10.4018/978-1-5225-7329-6.ch012

Abstract

In this chapter, the authors provide an overview of Taiwan's public infrastructure system using the recommended normative framework presented in Chapter 1. In general, most of Taiwan's practices fit the requirements suggested in Chapter 1. However, there are still rooms for improvements in prioritization, debt affordability analysis, and infrastructure maintenance. In addition, the build-operate-transfer (BOT) model and the so-called “Mosquito Buildings” also feature Taiwan's capital management and budgeting process and are discussed in this chapter. Nowadays, Taiwanese governments place much emphasis on disaster prevention, environmental protection, and renewable energy. These new trends may also affect Taiwan's capital management and budgeting process.
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Background

Taiwan is located in East Asia with a population of 23.56 million recorded at the end of 2017. It is one of the most densely populated places in the world — its population density is 651 people per square kilometer (1,686 people per square mile). Before the 19th century, Taiwan was ruled by the Dutch, the Spanish, and the Qing Dynasty of China. After the 1894 War of Jiawu, Taiwan was ceded to Japan by the Qing Dynasty. The Japanese Empire completed numerous important public infrastructure projects in Taiwan, such as the West Coast Railway Line and several hydroelectric power stations. After Japan’s surrender to the Allies ended World War II in 1945, the Republic of China (ROC) took control of Taiwan. In 1949, ROC’s ruling party, the Kuomintang (KMT), lost the Chinese Civil War to the Chinese Communist Party and retreated to Taiwan. Meanwhile, President Chiang Kai-shek declared martial law and started a one-party dictatorship in Taiwan. It was not until the 1980s that martial law was lifted and democratic reforms in Taiwan began. Currently, the two major political parties in Taiwan are the KMT (the major party of the Pan-Blue Coalition, which favors the Chinese nationalist identity) and the Democratic Progressive Party (DPP; the major party of the Pan-Green Coalition, which favors the Taiwanese identity). Taiwan has already experienced three governing party changes since the first direct presidential election in 1996.

During the second half of the 20th century, Taiwan experienced rapid economic growth and was known as one of the “Four Asian Tigers,” along with Hong Kong, Singapore, and South Korea. According to the International Monetary Fund (2017), Taiwan is currently one of the 25 largest economies in the world, measured by nominal gross domestic product (GDP) or purchasing power parity.

Taiwan lies in the Northwestern Pacific area, the western edge of the Pacific Ring of Fire. Due to its location, Taiwan usually experiences a few earthquakes and typhoons every year. In the past two decades, several catastrophic natural disasters (e.g., the 921 Earthquake in 1999 and Typhoon Morakot in 2009) have caused serious damage in Taiwan. Thus, Taiwanese governments have set high standards for public infrastructure systems (e.g., strict building codes for earthquake resistance and high flood protection standards) and have tried hard to improve the capacity for disaster management.

Transportation, energy, and water are three major types of public infrastructure in Taiwan. Transportation infrastructure in Taiwan is highly accessible and of high quality. There are 4 major international airports, 8 major domestic airports, and 4 major international ports. Among them, Taiwan Taoyuan International Airport is one of the 50 busiest airports in the world with 44.9 million passengers in 2017 (Port Authority of NY & NJ, 2018). Due to the high population density, rail transport in Taiwan is well-developed, including a conventional railway system circling the island, a high-speed rail along the west coast of Taiwan, and 4 rapid transit systems in the special municipalities. The highway system in Taiwan, including 8 national highways and 12 expressways, is also in good shape.

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