Inefficient Government Practices Have Caused Economic Cancer

Inefficient Management Practices Have Caused Economic Cancer
China Times editorial (Taipei, Taiwan, ROC)
A Translation
December 20, 2010

In classical economics, the government's role is to establish a system, enforce the law, build an infrastructure, and create a favorable environment for business and investment. Everything else is left to the market. It is now the twenty-first century, The government has been granted more authority. But its economic role has not changed that much. During the past year however, several major investment projects show that the government has exceeded its proper role. It has imposed unwarranted restrictions before the fact. It has imposed inefficient management after the fact. It has become a cancer afflicting the economy and industry.

Take the Kuokuang Petrochemical project, i.e., the Eighth Naphtha Cracking Plant, which is facing a life for death situation. The project was first proposed in 2005.
It was approved by the CEPD the following year. It then underwent environmental assessment. Construction was supposed to begin in 2008. But as of 2010, it is still being reviewed. If the Kuokuang Petrochemical project ought not to be approved at all, that is one thing. But frightening government in efficiency is another thing altogether. Such inefficiency dramatically increases business risks and investment costs. If government efficiency was increased, and ensured the survival of the Kuokuang Petrochemical project, a company such as Kuokuang would find it easier to survive. It would not be mired in a hopelessness morass, like everyone else.

The government has only just arrived at a decision. If it approves the investment,
the manufacturer will still face substantial cost increases. Its capital outlay will increase from 400 billion to 600 billion. It will also be battered by other petrochemical companies. If rejected, it will be forced to migrate to the Mainland.
Because the project has been subject to delays, other major petrochemical plants have made advance arrangements. Therefore it faces a dilemma, and is unsure whether to advance or retreat. The government may say that the EIA process is protracted because it requires approval by so many different government agencies, experts, and environmental groups. Therefore it "simply cannot be rushed." But let us examine several straightforward investment projects that required approval by only a few government agencies. Let us see how government delays undermined these companies.

Consider AIG, a US-owned company, and its sale of the Nan Shan Life Insurance Group. Bidding was opened in mid-2009. The bid was awarded in October of that year. China Strategic Holdings, a Hong Kong-owned company, and the Primus Group won the bid. The sale was then submitted to the government for review. The result? The review took nearly one full year. The review dragged on until August of this year. Only then did the government announce that the deal had been disapproved. We have no objections to the government rejecting a sale because a major shareholder was ineligible and fears that the insurance industry might be destabilized. But was such a long delay really necessary? During a long delay, a company's future could hang in the balance. A long delay could amount to a death sentence for Nan Shan Life Insurance.

Nan Shan was once an outstanding, blue chip, Taiwan-based insurance company.
But after AIG announced its sale, Nan Shan endured a period of uncertainty. The company's management and operations were virtually in limbo. Employees fretted over their futures. Old policyholders worried about their coverage. Potential policyholders became more difficult to sell. In 2007, before it was sold, Nan Shan Life Insurance's market share of First Year Premiums (FYP) was 9,6%. By 2009 it had plummeted to 3.7%. This year it could drop below 3%. It has already fallen out of the ranks of the top ten. The devastating impact of inefficient government management on business should be evident.

Taiwan Mobile is a subsidiary of the Fubon Group. Last September Taiwan Mobile bought kbro from the Carlyle Group. The total transaction involved 32.8 billion NT.
The Carlyle Group took on 24 billion in debt. The total investment amounted to nearly 57 billion. The investment project underwent "detailed review" by the National Communications Commission (NCC) for nearly one year. At the end of that year, it was rejected. It was rejected because the NCC completely misunderstood the clause prohibiting "political party, government, and military ownership of the media." Fubon was forced to purchase kbro in a private capacity. Less than a year later, the total cost of the M&A ballooned to 64 billion. Under NCC mismanagement
a Taiwan-based company was forced to pay an extra 20 billion NT. The NCC certainly handed a foreign corporation a windfall profit. Meanwhile, the FSC's "three financial laws" have bound the financial industry hand and foot. They have exacted unreasonable penalties from industry. All one sees is clueless bureaucrats imposing crippling restrictions and engaging in rampant mismanagement.

Recently Hon Hai chairman Terry Gou attracted considerable attention when he blasted the government for undermining the flat panel industry. This was yet another case of inappropriate and inefficient government management. In March of this year, AUO applied for permission to construct Generation 7.5 plants on the Mainland. It is now December. The Ministry of Economic Affairs is still "reviewing the application one line at a time." Fortunately Terry Gou raised a stink. Otherwise who knows how long the review process would have dragged on. Guo's attack forced Premier Wu to respond on behalf of the Ministry of Economic Affairs. Wu announced that "The application has already been approved. All that remains is the paperwork." The Ministry of Economic Affairs will grant its official approval as soon as possible. Because of the year long delay, vendor opportunities were lost. Local panel manufacturers on the Mainland have already begun constructing Generation 8.5 plants. Earlier this month, the South Korean government spoke out on behalf of South Korea's Samsung and LG. They too received official approval from the Mainland authorities. Only Taiwan's vendors have the misfortune of finding themselves trapped in the slow lane, behind the Ministry of Economic Affairs. All they can do is wring their hands as they run in place.

Frankly, the way the Ministry of Economic Affairs has handled Taiwan-based investments on the Mainland is unprofessional and unreasonable. The only plants it permits manufacturers to construct on the Mainland are those producing third-rate technology. The Ministry of Economic Affairs treats twelve-inch wafer fabs
and 90 nanometer technology as if they were national treasures. It prohibits their construction on the mainland. The Mainland, by contrast, treats them as if they were any other local or foreign enterprise. The Mainland has already constructed over a dozen twelve-inch wafer fabs. It has already adopted 90 nanometer manufacturing procedures. Mainland Chinese and South Korean panel makers have already adopted Generation 8.5 plants. AUO however, is only permitted to build Generation 7.5 plants. As a result its competitiveness suffers. Time delays make matters worse. AUO originally seized the initiative. Now it has been reduced to playing catch up. The Mainland has already transformed its global factory into a global market. Our own Ministry of Economic Affairs, on the other hand, still binds our own industries hand and foot. How can they possibly compete with major global companies on the Mainland market?

Such is our government. From the Ministry of Economic Affairs, to the FSC and the NCC. Every ministry is rife with inappropriate, unreasonable, inefficient management practices and restrictions. They have all negatively impacted industrial development, business investments, and Taiwan's competitiveness. We expect the government to improve its management efficiency, and avoid delays while reviewing investment projects. It must expedite these investments projects and help them succeed. If the projects should not be approved, they must be reviewed promptly,
We can no longer tolerate unprofessional and politically motivated restrictions and management practices.

無效管理與限制已成經濟之癌
2010-12-20 中國時報

古典經濟學中，對政府的定位是建立制度、執行法律、推動基礎建設，創造良好的經商與投資環境即可；其餘，就交給市場吧！到了廿一世紀，雖然政府已被賦予更多責任，但在經濟上扮演的角色，仍未改變太多。不過，由近一年的幾個重大投資案看出，政府己逾越該有的角色，不當限制在先，無效率管理在後，已成為經濟與產業之癌。

以最近即將「定生死」的國光石化（八輕）為例，二○○五年就提出計畫，隔年經建會審核通過，接著進入環評等程序，原訂二○○八年動工，但至今仍在審查中。國光石化該不該推動是一回事，但政府的效率實在低落得可怕，也讓企業投資風險與成本都大幅增高。如果政府效率提高，早點替國光石化「斷生死」，企業也容易另尋出路，不會大家一起耗在這看似有望又像無望的計畫中。

事實上，現在政府才作出決策，如果准許投資，廠商仍面臨成本大幅提高，投資經費由四千億增為六千億，同時錯失石化多頭的打擊；如果否決，則要移轉到大陸，也因時程延誤，大陸早被各大石化廠卡位，而面臨進退維谷的窘境。

如果，政府說這是因為環評程序冗長，且涉及許多不同單位、學者專家、環保團體，因此一定「快不起來」，那麼，我們看看幾個單純政府單位就能決定的投資案，政府是如何拖延、作賤企業。

美國ＡＩＧ集團出售南山人壽案，在二○○九年中宣布後開始競標，十月決標，由港商中策集團與博智共組的團隊得標，接著就進入政府審查階段。結果政府一審查又是搞了快一年，一直到今年八月，才宣布駁回此案。我們對政府基於大股東適格性、保險經營穩定性等考量駁回此案沒意見，但需要拖這麼久嗎？拖延時間、懸而未決的結果，是坑死南山人壽。

這家過去台灣績優的保險公司，在ＡＩＧ宣布出售後就陷入動盪不安中，公司管理與經營幾乎陷入空窗期，員工難以安心工作，舊保戶提心吊膽，新保戶更難進來。出售前的二○○七年，南山人壽的初年度保費（ＦＹＰ）市佔率有九．六％，二○○九年跌到三．七％，今年則可能跌破三％，排名跌出十名之外。政府的低效率管理，對企業能造成的殺傷力，由此可見一斑。

富邦集團旗下的台哥大，去年九月從外資凱雷手上買下凱擘，總交易金額三二八億台幣，加上承接凱雷二四○億元的負債，總投資金額近五七○億元。這個投資案在國家通訊委員會（ＮＣＣ）「詳實審查」快一年後，也被打回票，原因是ＮＣＣ不當的拘泥於「黨政軍條款」。富邦只好以家族個人身分再買凱擘，不到一年時間，總併購金額暴漲到六四○億元。在ＮＣＣ的管理下，企業因此多出資一、二百億元，外資倒是受惠哩！其它如金管會以金融三法綁住業者腳步、以不合理的處罰對待業者，都是只見限制與不當管理的官僚作風。

近來因鴻海董事長郭台銘炮轟而引發社會關注的面板登陸投資案亦復如此，同樣是一個政府不當兼無效率管理的案例。友達今年三月遞件申請赴大陸投資面板七．五代廠，到十二月了，經濟部還在「逐條審查」。要不是郭台銘放炮，讓吳院長趕忙代經濟部宣布「已經核准，只差程序」，經濟部才儘快在日前正式通過，否則還不知會拖多久。年頭拖到年尾的結果，是廠商先機盡失。大陸幾個本地面板廠的八．五代廠已動工，本月初韓國三星與樂金，在韓國政府代為出面爭取下，也拿到大陸官方的批文。只有台灣廠商，碰上慢郎中的經濟部，只能原地踏步乾焦急。

不諱言，經濟部的大陸投資管制可說缺乏專業到無理的地步，只懂得掐住廠商拿三流技術去大陸投資設廠。事實上，當經濟部把十二吋晶圓廠、九○奈米技術當寶，不准赴大陸投資時，大陸當地的企業、或國外其它企業，早已在大陸設多座十二吋晶圓廠、製程也早已到九○奈米。當大陸及韓國面板廠都設八．五代廠時，友達只能拿七．五代廠去，競爭力就差一截；加上延誤時機，現在就算核准，友達已由掌握先機變為「在後苦追」。當大陸已由全球工廠轉為全球市場時，經濟部還是擺明綁住企業手腳，企業要如何在大陸市場與全球各大企業競爭？

這就是我們的政府，從經濟部、金管會到ＮＣＣ…，每個部會都充斥著不當、無理又無效率的管理與限制，嚴重影響著產業發展、企業投資，對台灣競爭力造成相當大的負面影響。對需要審查通過的各種投資案，我們期望政府能提升管理效率，避免拖延，就早點幫這些投資案「斷生死」吧。要不，就趕緊檢討那些不必要，只見政治考量，不見專業的限制與管制吧！