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Key Economic Data 
  2003 2002 2001 Ranking(2002)
Millions of US $  406,000    
GNI per capita
 US $ 18,000
Ranking is given out of 208 nations - (data from the World Bank)

Books on Taiwan

Update No: 106 - (26/04/13)

Business as usual – or not
Western companies doing business in Asia often fall foul of differing cultural norms. What passes for a corrupt practice in the West may, in Asia, be seen as no more than a traditional way of doing business. But attitudes are slowly changing and while Asian societies may never agree to work by the same rules that apply in the West, nor indeed want to do so; in Taiwan a start appears to have been made on dealing with the more blatant offenders. For that, President Ma Ying-jeou deserves some credit.

When the KMT was returned to power in 2010, President-elect Ma Ying-jeou promised the nation a ‘new-look’ KMT. Ma promised to rid the party of the last vestiges of its martial-law inspired culture, dispose of party assets garnered during a period when party and government were treated as one and the same thing (and which, incidentally, had made the Kuomintang, the richest political party in the world) and usher in a new era of transparency and rule of law.

As is so often the case, the reality has fallen somewhat short of aspirations and while Taiwan would like to be seen as a bulwark of democracy in an otherwise authoritarian Asia, it is at best a ‘flawed democracy’; a work in progress if you will and whether it moves towards a more open society in the western tradition or steps back into a more traditional Asian democratic pattern (the so-called ‘Third Way’) may be beyond its own polity to control.

Two issues have been dominant in recent weeks: the first has been the ongoing debate over whether Taiwan should continue its reliance on nuclear power – and in particular, whether it should continue to build the Fourth Nuclear Power Plant and the second is an old favourite that never goes away – corruption in Taiwan’s political class and in particular the nexus between politics and business. The first issue is before the legislature at the present time with debate focusing on whether there should be referendum to decide whether Taiwan should continue to develop a nuclear future. Many politicians claim that until it has been determined whether the nuclear plants are safe, any referendum would be meaningless.

But it is the second issue that will provide the focus for this essay. Whether Taiwan is making inroads into corruption will to an extent depend on the time frame with which it is viewed and can be debated ad nauseum without a definitive result. Whether corruption is still too evident in Taiwanese politics – now that is another matter and most would believe that the answer to that one is in the affirmative. Taiwanese political life has a dark side and it seems that much of it remains in the shadows.

But it may belatedly be coming to light. By our count, no less than five senior officials have been indicted on corruption charges in recent months and there may be some that we have overlooked. While the majority are from the ruling KMT party, the DPP has its own share of corrupt officials. Neither side of politics is without its skeletons. Let’s look at those that have come out of the cupboard recently.

In the middle of last year, former Cabinet secretary-general Lin Yi-shih admitted to demanding bribes of NT$63 million (USD2.1m, GBP 1.4m) from a metal recycling company. Prosecutors have demanded imprisonment for life because at his trial he proved to be recalcitrant and refused to admit the charges against him. The verdict is to be handed down on April 30.

The severity of the sentence sought reflects the high profile Lin enjoyed before his arrest. He was within the inner sanctum of the KMT and close to President Ma Ying-jeou. That he has not been able to count on his association with the president to evade prosecution is one tick in Ma’s favour.

Last November another KMT official, Nantou County Commissioner Lee Chao-ching was arrested on suspicion of taking bribes in relation to public projects associated with reconstruction work in the aftermath of Typhoon Morokot. In total he has 117 charges against him and it is claimed he embezzled some NT$31.7 million (USD1.1m, GBP 0.7m). Reportedly he had demanded kickbacks on every bid for a county government project since taking office in 2008.

Lee has been released on bail of NT$20 million (USD668,000). He applied for reinstatement to his position pending the outcome of his trial but this was denied after the proposal to allow him to resume duties became widely known and sparked protests in Taipei. Furthermore, in a break from precedent, the interior minster has referred his case to the Control Yuan in advance of any verdict being handed down in the case. The decision marks the first time that a democratically elected local government head in Taiwan has been suspended from his post and put under investigation by the Control Yuan, the watchdog arm of the government. In addition to any verdict handed down by the court, Lee may face disciplinary charges under the Public Functionaries Discipline Act.

Then in January of this year, Changhua County Commissioner and KMT member Cho Po-yuan was questioned in relation to a corruption case involving a local golf course project. The golf club owner has submitted evidence claiming that Cho demanded bribes of NTD120 million to secure the permits needed for the development of the club. This matter is still under investigation.
As we said, the problem is not only with the KMT; the DPP also has its share of corruption scandals. Remember, former President Chen Shui-bian is serving a 20-year sentence for so-called corruption, although many observers claim the case against him was trumped up.

But now, Chang Hua-guan, the DPP chief of Chiayi County can be added to the list of those under investigation. It is alleged that she received at least NT$5.2 million from various companies seeking to obtain government contracts related to sanitation and to an industrial park project. Her sister, along with 20 officials, has also been indicted as an accomplice. Chang denies the charges.

There is one more case to mention and it has garnered the lion’s share of recent attention and it has caused the (hopefully, temporary) demise of Taipei’s latest landmark project – the Taipei Twin Towers. Earmarked for construction on land adjacent to Taipei Railway Station and with site works already underway, the multinational consortium given the contract for the project appears to have collapsed after if failed to produce the NT$1.89 billion performance bond demanded by the KMT-controlled Taipei City Government.

The NT$70 billion project is one of the most expensive development projects ever undertaken in Taiwan. The collapse of the consortium that successfully bid for the project came amid speculation that Taipei Gateway International Development, the successful bidder, is experiencing financial difficulties and may have forged some of the tender documents required to prequalify for the bid. In subsequent investigation, irregularities have come to light and a number of city government officials are now under investigation.

The Twin Towers fiasco has forced a review of government tender procedures before the project is rebid. Meanwhile it has been reported that the advance payment made by the failed consortium will not be returned despite the fact that the money actually came by way of advance payments from contractors hoping to secure work from the project rather than from the consortium itself. Yet, another irregularity it seems.

Dealing with corruption – and indeed, in some instances, even defining what is meant by corruption in the context of an Asian society, is no easy task. The problem in the case of Taiwan is that its roots are both cultural and systemic.

Asian societies are built on relationships and this applies as much to business as it does to families. Where western-eyes see a corrupt practice, an Asian pair of eyes sees relationship building.

Contractual law is applied much more flexibly in Asia than in the West and, despite the passage of laws by western governments such as the US Foreign Corrupt Practices Act and the UK Bribery Act, Asia is not going to change the way it does business. Drawing a line in the sand is not always easy, as many companies have discovered to their cost; but it seems that even from a Taiwanese viewpoint a line can be drawn and these errant officials and politicians have crossed it.

There is another dimension too to all this and it relates directly to Taiwan’s adoption of a democratic system of government. Election campaigns are expensive and for the most part, officials are left to raise the money by themselves. How else can they be voted into office other than by dispensing largesse into their communities? It is what is expected of them.

No matter whether we are dealing with a western or an Asian society, some values are absolute and unchangeable while others can be considered as being tempered by cultural factors, that change over time. It is the perennial problem of the shifting goalposts. Was Chen Shui-bian guilty of corruption or was he caught in such a shift – in this case a shift of convenience since Chen’s behaviour and his practices were no different to those of his predecessors. But Ma did shift the goal posts and now members of his own party have to live with it. So far we have only scratched the surface and it seems that only the most blatant of offenders have been called to account. But a start has been made and that should be acknowledged as progress.

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