After Mao Chi-kuo assumed office as Minister of Transportation and
Communications (MOTC), and shouldered the heavy responsibility of upgrading the
operating performance of Taiwan’s international gateways, he proposed the idea
of “building ports into value-added hubs” and took over, from the Council for
Economic Planning and Development, the task of planning the island’s five free
trade zones (at four harbors and one airport). Mr Mao’s ambition is to boost
Taiwan’s seaports and airports, with brand-new concepts and strategies, to a
higher stage of development.
Repositioning Ports from Volume to Value
In earlier times Taiwan’s economy was based on manufacturing, and shipping at
its ports concentrated mainly on raw materials and labor-intensive processed
products. Import and export trade flourished, helping Kaohsiung to become the
world’s third-largest container harbor. When Taiwan began promoting the
formation of an Asia-Pacific Operations Center in 1995, Mr Mao recalls, mainland
China could boast not a single deep-water harbor from the Liaodong Peninsula in
the north to the Leizhou Peninsula in the south. At that time Panamax container
ships filled with 3,500 TEU (20-foot equivalent unit) could not sail from
Shanghai Harbor.
Today, 15 years later, harbors have been developed rapidly in China and
deep-water ports there are now too numerous to count. In Taiwan, because of the
outward migration and transformation of industries, shipments to, from, and
through Kaohsiung Harbor have weakened and its shipping volume has declined year
after year. Mr Mao notes that, if we compare Taiwan’s ports with other ports
around the world in terms of container throughput or raw power, Taiwan’s ports
have already become too “delicate,” while Kaohsiung has already bidden goodbye
to its status as the world’s third-largest container port.
So where does the future of Taiwan’s ports lie? Mr Mao says that from now on,
the development of the island’s ports will focus not on volume but on value.
Just as the MOTC was racking its brains about the future positioning of harbor
development, a revision of the law in 2009 transferred the promotion of free
trade zones (FTZs) to the ministry, giving it a tool for the creation of port
value.
Simple Processing to Create High Added Value: Business Opportunities in Reverse
Logistics
Mr Mao explains that the rules of the game are different for the creation of
volume and the creation of value. In the past harbors emphasized volume, and
were satisfied with finding shippers to increase volume. With value, however,
the emphasis is on the concept of logistics, and Taiwan’s harbors must seek out
opportunities to create high added value in global value chains and supply
chains. FTZs can help achieve that goal.
Turning on its head the common view that the emphasis should be on deep
processing, Mr Mao feels that the highest added value for FTZs should be created
through the use of “simple processing”—that is, processing at the final stage of
the production chain, such as product customization or unique or novel product
processing.
How can higher value be created by catering to customer needs? Mr Mao has
proposed the concept of “reverse logistics,” or taking advantage of the business
opportunities presented by returned products. Taiwan enjoys high-level human
resources, he explains, that can provide professional and timely value-added
services. The provision of after-sales support services for products in
international supply chains by employing the simplified customs procedures and
preferential tax conditions offered by FTZs can establish the FTZs as reverse
logistics bases for the return, exchange, and repair of products for
international businesses.
Building the Aerotropolis with the “Egg Yolk, Egg White” Theory
Mr Mao also has ideas for the development of the airport park area. He feels
that for passengers and cargo to access Taoyuan International Airport via
National Highway 2, bypassing other parts of Taoyuan as they do now, isolates
the airport from the rest of the greater Taoyuan area. His vision of the future
is for a “Taoyuan Aerotropolis” to stimulate development in other parts of
Taoyuan, with the airport park and free trade zone at the nucleus (the yolk of
the egg) and development spreading to surrounding areas (the white of the egg).
Mr Mao feels that in the future the airport can be integrated with neighboring
export-oriented farming areas producing high-value crops such as flowers for
shipment abroad. This will invigorate surrounding industries while creating new
economic value for the airport. In addition, the model of certain foreign
airports can be emulated by developing a large-scale shopping center, with
comprehensive bus and rapid-transit service links attracting neighboring
residents to shop, dine, and be entertained on weekends and holidays, bringing
greater prosperity to businesses.
Proactive Efforts to Attract Investment
To attract more enterprises to invest in FTZs and the airport park area, Mr Mao
has charged the MOTC with mounting a general effort to promote investment;
investment promotion has, in fact, become a focus of night-time classes at the
ministry. He wants MOTC personnel concerned to understand all customs matters
and tax preferences related to FTZs, and has set up a single window and project
manager to proactively explain to large enterprises the advantages of moving
into FTZs and the airport park, and to help them with issues related to such
investment.
Mr Mao reveals that the investment promotion effort is already showing results.
An international industry leader is expected to make Kaohsiung Harbor its Far
Eastern base soon, and a couple of other major enterprises are considering
moving into the Kaohsiung Free Trade Zone.
According to Mao, Taiwan has a better “soft” infrastructure than mainland China,
including a solid legal system and a more transparent, more efficient
environment—precisely the features that international enterprises are looking
for. In the future the MOTC will develop the island’s FTZs in the direction of
the high-value-added operations model, using the different positioning
characteristics of marine and air transport and pinpointing suitable target
industries for an all-out effort to promote investment. Mr Mao predicts that in
years to come the non-core income of Taiwan’s sea- and airports will surpass
their core income; he emphasizes, however, that the MOTC will not ignore their
core business, but will continue working to add more routes, bring more airlines
and shipping companies to Taiwan, and promote cross-Strait traffic rights
negotiations in the pursuit of greater business opportunities for the island.
The issue date：2010-04-09
