Infrastructure Investment and “Cross-Field Value-Added Public Construction”
in Taiwan: Policies and Opportunities
Fei-Yu Kuo Acting Director General
Development of Urban and Housing Development Council for Economic Planning and Development
Executive Yuan
May 7, 2013
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3 Bolstering National Infrastructure, Strengthening Competitiveness
Taiwan’s new competitiveness platform
Cross-strait
peace
Global markets
• Free Economic Zones (1) Free movement of goods, people, money, information and knowledge (2) Promoting high value-added economic activities
intelligent logistics, international medical care, value-added agri-products, international industrial cooperation
• Innovation and R&D Center • High value-added manufacturing center
Deregulation
and tax reform Investment Infrastructure
Clean and efficient
governments
The Direction of Government Policies
Expanding spending of public works and speeding up implementation of the i-Taiwan 12 Projects
i-Taiwan 12 Projects Major National Infrastructure Investments
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i-Taiwan 12 Projects
Investments of Major Infrastructures
Transportation Network(1548.2 Bil)
- A Fast and Convenient Transportation
Network, NT$1,215.7Bil.
- Kaohsiung Port-City Regeneration
- Taoyuan International Airport City
Industrial Innovation(1245.7 Bil)
- Central Region New High-tech Industrial
Clusters Program
- Intelligent Taiwan
- Industrial Innovation Corridors
Urban and Rural Development(666.6 Bil)
- Urban and Industrial Park Regeneration
- Farm Village Regeneration
Environmental Protection(535.1 Bil)
- Coastal Regeneration
- Green Forestation
- Flood Prevention and Water Management
- Sewer Construction
Transport projects account for 48% of the government’s total public works spending, with rail projects accounting for 18% (2012).
Rail project investment is growing significantly.
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100Million
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Investments of Major Infrastructures
Investment in Rail Construction will continue to grow
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交通 48%
水利 7%
工商 5%
能源 0%
文教 10%
環境 5%
衛福 2%
都市 6%
農業 17%
Hydro. & Flood
Control 7%
Industry 5%
Energy 0%
Education 10%
Environment 5%
Social Welfare 2% Agriculture 17%
Urban & Housing
6%
Transportation 48%
農業建設
17%
公路
15%
軌道運輸
18%
住宅 0%
下水道 0%
都市開發 5%
航空 0%港埠 1%
通信資訊 4%
觀光 8%
水資源 4%
防洪 4%
工商 3%
油氣 0%
電力 0%教育 2%
文化 5%
體育 2% 垃圾 3%污染 2%國家公園2% 衛生醫療 1%
社會福利 1%
Tourism 8%
Telecom. 4%
Harbor 1% Aviation 0%
Railway
18%
Road
15%
Urban Dev.
5%
Sewage 0%
Housing 0%
Agriculture
17%
Social Welfare 1%
Heal Care 1% Nat. Park 2%
Pollution Pre. 2%
Waste Treat 3% Athlete 2%
Culture 5%
Education 2% Gas 0%
Electric Power 0%
Industry 3%
Flood Conl. 4%
Water Resource
4%
Climate change and energy efficiency and saving
high population density and urbanization
Rail transport offers relatively high comparative advantage, and is a suitable form of mass transport for a transport-oriented development (TOD) model.
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232
339
480
318 13
644
0
100
200
300
400
500
600
700
德國 日本 韓國 美國 俄羅斯 中國 臺灣
人/Km2
Germany and Japan boast top-drawer railway systems, with emphasis on raising service quality
The highest population density, yet with high
development potential
The USA is doing all it can to catch up
China and Russia are speeding up rail construction
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Investments of Major Infrastructures
Relatively High Development Potential of Rail Transport
People/KM²
Germany China Russia Taiwan USA Korean Japan
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Investments of Major Infrastructures
Germany vs. Taiwan
Public transportation usage rate: 30%
Railway density: 0.09km/km2
Public transportation usage rate: 14%
Railway density: 0.03km/km2
Germany Taiwan
There is still room for improvement for Taiwan to upgrade standards of services both in public transportation and railway density.
Fast and convenient rail transport
Intercity
HSR
TRA railway system
Around-the-island railway system
Metropolitan
TRA transitization
MRT systems
Light rail and BRT
Building a Green, Fast and Convenient Transport Network 8
Investments of Major Infrastructures
High Speed Rail
TRA railway
MRT
Planning line
Bus
台中
Major Rail Construction Investment Plans
Type of project Name of project Period of
construction Total budget (NT Billion)
Metropolitan MRT systems in north, middle and south of Taiwan
Taipei MRT Xinzhuang-Luzhou Line 1998~2014 167.7
Taipei MRT Xinyi Line 2005~2014 33.9
Taipei MRT Songshan Line 2006~2013 49.9
Tucheng Line extension to Dingpu 2007~2013 7.6
Taipei MRT Circle Line Phase 1 2008~2015 40.1
Taipei MRT Xinyi Line eastward extension 2009~2017 12.5
Taipei MRT Wanda-Zhonghe-Shulin Line 2009~2017 45.7
Taoyuan Airport MRT Line 2004~2015 113.9
Taichung MRT Wuri-Wenxin-Beitun Line 2005~2016 51.4
Kaohsiung MRT Red and Orange Lines 1990~2017 184.0
Kaohsiung Light Rail 2009~2020 16.5
Elevation and transitization of urban railways
TRA metropolitan area transitization and regional railway follow-up projects (Keelung-Miaoli section)
2005~2013 8.5
TRA metropolitan area transitization Taoyuan section elevation 2009~2017 30.8
Taichung metropolitan area railway elevation and transitization 2006~2017 37.2
Yuanlin urban railway elevation 2006~2016 5.9
Kaohsiung downtown railway undergrounding 2006~2017 71.6
Kaohsiung downtown railway undergrounding extension to Zuoying 2009~2016 10.7
TRA Kaohsiung-Pingtung Chaozhou transitization 2005~2015 24.6
Tainan downtown railway undergrounding 2009~2017 29.4
TRA comprehensive purchase and replacement of rolling stock (2001-2014) 2009~2013 36.0
Electrification and double-tracking of Eastern railway line
Hualien-Taitung line bottleneck section double-tracking and whole line electrification
2008~2015 25.4
Hualien-Taitung overall service efficiency raising 2009~2014 6.1
Total 1009.4
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Investments of Major Infrastructures
Government budget demand for infrastructure
I-Taiwan 12 Projects NT$2.7 trillion and NT$350 billion per year
The MRT projects of Taipei metropolitan in the future NT$ 682 billion
Government budget for infrastructure
NT$200 billion annually for major public works on average
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With the limited government budget, the major challenges are
To integrate public work projects
To raise benefits and self-liquidation ratios (SLRs)
To generate private investment in public infrastructure
“Cross-Field Value-Added Public Construction”
New financing mechanism for
infrastructure investment is
highly needed
Challenges of Government Funding for Public Works
The Mechanism of “Cross-Field Value-Added Public Construction”
Approved by the Executive Yuan in 2012
Applied to all new public construction projects
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“Cross-Field Value-Added Public Construction”
“Cross-Field”
Cross sectors, such as
transportation and land development
transportation and tourism
flooding control and tourism
Cross regions
project areas and surrounding areas
Central and local partnership
Private and public partnership
The Financing Mechanism of “Cross-Field Value-Added Public Construction”
To internalize external benefits
To consider both efficiency and equity
To raise new funding sources into public construction
To expand the scale of public construction
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“Cross-Field Value-Added Public Construction”
Financial integration
Projects integration
Cooperative partnership
Timeframe integration
Sectors integration
To achieve five goals
Financial integration
Projects’ integration
Timeframe integration
Sectors’ integration
Partnership of the central and local governments
Delimiting the beneficial boundary of one specific project
Increasing properties’ value through reviewing land use plan
Diverting some revenues from properties into the project’s fund
Setting up finance- sharing Plan with local authorities
Fund financing for initial need
Financial risk estimation and rolling review
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“Cross-Field Value-Added Public Construction”
The Procedure of Project Integration
Define the impact areas
Evaluate and maximize external benefits
Internalize external benefits
Allocation of the benefit and cost
Funding the project
Risk management
Delimiting the beneficial boundary of one specific project
‧Comprehensively planning one specific public work with designated nearby areas
Beneficial boundary
‧Type I: Areas within a certain walking distance of a station (e.g., within 500 meters or 1 kilometer from one station).
‧Type II: Linear areas extending from both sides of a public works project (e.g., within the first street block).
Areas in beneficial boundary
Public works
Delimiting the beneficial boundary of one specific project
Increasing properties’ value through reviewing land use plan
Diverting some revenues from properties into the project’s fund
Setting up finance- sharing Plan with local authorities
Fund financing for initial need
Financial risk estimation and rolling review
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“Cross-Field Value-Added Public Construction”
The Procedure of Project Integration
Increasing properties’ value through reviewing and revising land use plan
‧Review the land-use plan within the beneficial boundary
‧Raise the average FAR (floor area ratio)
‧Estimate tax revenue added
‧Promote joint development between public works and nearby land
Delimiting the beneficial boundary of one specific project
Increasing properties’ value through reviewing land use plan
Diverting some revenues from properties into the project’s fund
Setting up finance- sharing Plan with local authorities
Fund financing for initial need
Financial risk estimation and rolling review
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“Cross-Field Value-Added Public Construction”
The Procedure of Project Integration
Diverting some revenues from properties into the project’s fund
‧Diverting the aforementioned revenue and external benefits back into the fund year by year to serve as part of the financial resources of the public work
‧The additional floor areas could be sold or reserved for public use
240% (Original Statutory
floor area)
Major public works
Sold totally or build affordable housing or student dormitories
Additional floor area 200%
Brought in Floor area bank
Sold (in part) Released to other areas
Co-construction with private land (in part)
Delimiting the beneficial boundary of one specific project
Increasing properties’ value through reviewing land use plan
Diverting some revenues from properties into the project’s fund
Setting up finance- sharing Plan with local authorities
Fund financing for initial need
Financial risk estimation and rolling review
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“Cross-Field Value-Added Public Construction”
The Procedure of Project Integration
‧Ministries set SLRs to serve as the important benchmark
‧Incentive mechanisms:
The higher the SLR,
the higher the prioritization for approval of the project
the higher the prioritization for budget allocation
the higher the ratio of central government subsidy for other parts of the project that are not self-liquidating
If the self-liquidation revenue is higher than expected, the amount of revenue allocated to the local government will be raised
Delimiting the beneficial boundary of one specific project
Increasing properties’ value through reviewing land use plan
Diverting some revenues from properties into the project’s fund
Setting up finance- sharing Plan with local authorities
Fund financing for initial need
Financial risk estimation and rolling review
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“Cross-Field Value-Added Public Construction”
The Procedure of Project Integration
(Investment first)
(Returns later)
‧ Set up a fund for each public work, with receipts and expenditures managed on an unified basis.
‧ The sources of the fund include financing, public budgets and fund revenues.
‧ Taking into account of individual project’s needs and the government’s fiscal condition, the funds will be flexibly used to support development.
Delimiting the beneficial boundary of one specific project
Increasing properties’ value through reviewing land use plan
Diverting some revenues from properties into the project’s fund
Setting up finance- sharing Plan with local authorities
Fund financing for initial need
Financial risk estimation and rolling review
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“Cross-Field Value-Added Public Construction”
The Procedure of Project Integration
‧ Risk management
the causes and responsibility should be analyzed
timely review of the project conducted
appropriate revisions should be made
adjustments should be made to support the payment
Delimiting the beneficial boundary of one specific project
Increasing properties’ value through reviewing land use plan
Diverting some revenues from properties into the project’s fund
Setting up finance- sharing Plan with local authorities
Fund financing for initial need
Financial risk estimation and rolling review
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“Cross-Field Value-Added Public Construction”
The Procedure of Project Integration
Budget 16.537 billion
Duration Completion in 2020
SLR 22.51% 39.64%
Kaohsiung Circular Light Rail Project 20
Project summary A 22.1 kilometer light rail line in Kaohsiung City, with 36 stations and 1 train depot, connecting with the existing Red and Orange Lines of the MRT and the TRA railway line, to create a rail transport network. MRT Red Line
MRT-Orange line
Light rail
TRA
HSR
Highway
HSR
airport
Industry park
Towntown
“Cross-Field Value-Added Public Construction”
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Budget NT 88.629 Billion
Duration Completion in 15 years from the date of comprehensive plan approved
SLR 2.96% 25.01%
A20
A7
A10
A21
A15G18
A8
A9
A11
A16
HSR Station(A17~A19)
Aeropark(A12~A14a)
桃園站
G7
G16
G17
G1
G13
G12
G10
G8
中正藝文特區
八德擴大
蘆竹行政園區
經國園區
都市更新
航空城
航空城產業園區
A20
A7
A10
A21
A15G18
A8
A9
A11
A16
HSR Station(A17~A19)
Aeropark(A12~A14a)
桃園站
G7
G16
G17
G1
G13
G12
G10
G8
中正藝文特區
八德擴大
蘆竹行政園區
經國園區
都市更新
航空城
航空城產業園區
Taoyuan MRT Green Line 21
Project Summary A 29.3 km line, with 20 stations and 2 depots (north and south), connecting the MRT Airport Line, Taoyuan Aerotropolis and Taoyuan Train Station, to form a medium-capacity MRT system.
“Cross-Field Value-Added Public Construction”
Concluding Remarks 22
Concluding Remarks
Taiwan has been continuously investing in public construction and speeding up
implementation of the 12 i-Taiwan Projects since 2008, so as to bolster national
infrastructure and strengthen national competitiveness.
Taiwan will continue and speed up investments in railway construction to build a
green, fast and convenient transport network.
We will internalize benefits and expand private investment opportunities to
enhance infrastructure investment through the mechanism of “Cross-field Value-
added Public Construction”.
We sincerely welcome you to join us in investing in major infrastructure projects.