Premier Lin Chuan held a press conference today to share more details about the government's proposed Forward-looking Infrastructure Development Program to stimulate the economy and drive industrial transformation.
The program includes green energy and digital infrastructure projects that will spur industrial transformation, urban-rural infrastructure and aquatic environment development projects to improve living environments and quality of life, and rail infrastructure projects that will promote green transportation, the premier said.
Over the next eight years, government investment in this large-scale infrastructure program will total NT$882.49 billion (US$28.56 billion), and is expected to spur public and private enterprise investment of NT$1.78 trillion (US$57.53 billion), add NT$975.9 billion (US$31.58 billion) to Taiwan's real gross domestic product (GDP), and create 40,000 to 50,000 jobs.
Since taking office last May, the administration has actively sought ways to boost the economy while keeping a keen eye on government spending, the premier said. When the economy is less than stellar, many people expect the government to employ stimulus measures, but expansionary fiscal policies will only really be effective if they both spur demand, and make Taiwan more competitive in the long run.
Transforming Taiwan's industrial sector is also among the program's goals, which includes developing green energy sources and the digital economy. In the green energy field, the focus will be on developing solar and wind energy, research and development capabilities, and setting up operational bases for long-term development. Projections also show that government investment totaling NT$24.32 billion (US$786.90 million) could generate NT$1.42 trillion (US$46.04 billion) in private sector investment.
In addition, the government hopes that setting up wind farms will support the sustainability of related industries. Infrastructure developments such as the Shalun Green Energy Science City, energy storage technology, and demo/test sites will also make Taiwan's green energy industry internationally competitive over the long run.
With the advent of the Industry 4.0 era, the premier expressed hope that Taiwan can play an active role, and stay one step ahead of other countries as digital technologies spread throughout the industrial sector, changing production patterns across the board.
Government investment of NT$46.07 billion (US$ 1.49 billion) in digital infrastructure development will generate NT$238.14 billion (US$7.71 billion) in private investment, and provide fast and safe internet access using broadband and ultra wideband connections that ensures users' rights. It will also funnel cultural creativity and high value products into the industrial sector, support smart urban-rural development, and provide a platform for digital learning environments.
As part of the overall infrastructure program, the government also plans to invest NT$250.77 billion (US$8.12 billion) in improving the environment and quality of everyday lives, including urban-rural and water resource development projects. Water infrastructure projects should stabilize water quality and availability, establish a strong supply network, resolve drainage problems to improve flood-prone areas, and make aquatic environments accessible to the general public.
Urban-rural infrastructure projects, backed by a budget of NT$137.20 billion (US$4.44 billion), will reflect local economic needs, promoting balanced national economic development by revitalizing local economies. Plans include creating additional industrial parks, cultural lifestyle circles, and public service outlets, and revitalizing indigenous peoples and Hakka communities along Provincial Highway No. 3. These efforts will also help local development, with projects awarded on a competitive basis to improve access to aquatic environments and urban-rural development.
To develop green transportation systems, the premier said the government will invest NT$424.13 billion (US$13.73 billion) to coordinate and synergize regular rail and high-speed rail network operations. Projects will include double-tracking railway lines in Eastern Taiwan, electrification of the South Link Line, speeding up the introduction of intelligent management systems for the Taiwan Railway Administration, and creating seamless connections between the regular rail, high-speed rail and mass rapid transit systems. The government will also expand the regular rail system to extend the benefits of cultural tourism to more areas. Examples include construction of tram-train systems for the Fangliao route in Pingtung, and optimizing the Alishan Line and the Jiji route in central Taiwan.
The premier emphasized that government efforts for this massive infrastructure program will be ongoing and unremitting, saying that whatever needs to be done should be done as soon as possible, so special budgets will be used to fast-track various projects. Approved projects currently account for NT$128.62 billion (US$4.16 billion), or 14.57 percent of the total budget of NT$882.49 billion (US$28.56 billion), but in the past, regulations prohibited using special budgets for programs that were over 30 percent completed.
For the forward-looking infrastructure program, however, the benchmark has been raised to 50 percent to help expedite projects and stimulate the economy. The remaining 85.43 percent of the total budget, or NT$753.87 billion (US$24.40 billion), will be used for new projects, assessing each project's feasibility, implementing them carefully, investing in the future to transform the future, and pursuing balanced urban-rural development.
The premier cited the Wuxi-Niaozuitan artificial lake as one approved project that will be fast-tracked. With a budget of NT$10.9 billion (US$352.75 million), the project was originally scheduled for implementation between 2015 and 2024. But by utilizing a special budget, it can be completed by 2023.
The government will also expand some projects, including plans to bring tap water to areas that currently don't have it. With an original budget of NT$4.15 billion (US$134.30 million), the original plan was designed to improve tap water access to 30,000 households between 2017 and 2020. The expanded project, now slated to run through 2024 with a budget of NT$11.7 billion (US$378.64 million), will benefit 90,000 households that currently lack tap water.
The premier then stated that the forward-looking infrastructure program budget is subject to strict fiscal discipline. So as required under the Public Debt Act, the central government will not exceed the 15 percent loan cap for the general and special budgets, and government debt will remain at the current 34.6 percent of average GDP, well under the stipulated limit. Keeping the annual budget at NT$2 trillion (US$64.73 billion), he said, the government will be able to maintain sound fiscal policy.
In terms of overall economic impact, over the next eight years the forward-looking infrastructure program is expected to add NT$975.9 billion (US$31.58 billion) to real GDP and NT$1.07 trillion (US$34.73 billion) to nominal GDP. The premier pointed out that many dynamic factors may influence future economic growth rates, so the above figures are conservative estimates, assuming that all other conditions remain unchanged. At the same time, this infrastructure program is expected to increase central government revenues by NT$95.8 billion (US$3.10 billion) and create 40,000 to 50,000 jobs.
The government's investment of NT$882.49 billion (US$28.56 billion) in this program could conservatively drive public and private enterprise investment of NT$1.78 trillion (US$57.53 billion), including NT$1.42 trillion (US$46.04 billion) in developing green energy and NT$238.14 billion (US$7.71 billion) in digital infrastructure. However, these figures only reflect the program's direct impact on investments. If indirect benefits such as improved quality of life, increased industrial competitiveness and enhanced infrastructure are included, the number of business opportunities will be much higher, the premier said.
As long as this infrastructure program can achieve its objectives, the NT$882.49 billion investment will be money well spent, providing an essential stimulus for national transformation and progress. Complementary measures will be a key factor in the program's success, the premier said, asking ministries and government agencies to send their budget proposals to the Executive Yuan by the end of April. The Directorate-General of Budget, Accounting and Statistics will then compile them into an integrated budget report, which will be submitted to the Legislative Yuan around mid-May for deliberations, along with the draft of a special act governing the Forward-looking Infrastructure Development Program.