（Wu Ching-chin is an associate professor, chair of Aletheia University’s law department and director of Taiwan Forever Association）
Translated by Ethan Zhan
TAIPEI TIMES / Editorials 2015.04.25
Nowadays, there are increasing expectations on the government to undertake construction projects and provide more services. This, together with limited funds, has meant that outsourcing public construction projects to the private sector has become popular. Consequently, the Statute for Encouragement of Private Participation in Transportation Infrastructure Projects (獎勵民間參與交通建設條例) and the Act for Promotion of Private Participation in Infrastructure Projects (促進民間參與公共建設法) were enacted in 1994 and 2000 respectively.
There are many ways in which the private sector can take part in public construction projects, but the BOT model has proven to be the most common. In this model, private institutions invest in the building and operation of the infrastructure project, and upon expiration of the operation period, transfer the ownership of the infrastructure project to the government. Since the government can accomplish its objective of serving the public without spending any money, while collecting rent and commission from the contractors during its operation, the BOT model seems to have a lot of benefits.
Nonetheless, there is always a big discrepancy between the ideal and the reality, and the Taipei Dome project, which could end up costing tens of billions of New Taiwan dollars, is one such example of this.
Without a big enough incentive, the Dome is unlikely to attract much corporate investment. The Act for Promotion of Private Participation in Infrastructure Projects stipulates that the government should aid the contractors in financing and give them tax benefits. In addition, under Article 15 of the act, if the land required for the infrastructure project is government-owned, rentals may be extended on favorable terms.
If the land required for the infrastructure project is privately-owned, then according to Article 16, the authority in charge may then expropriate such land for the constructor to use. Hence it is delusional to believe that as long as it is a BOT project, the government does not need to spend any public money.
Take the Taipei Dome for example: Previous city governments exempted the contractor from having to pay commission, and even let the contractor do whatever it wanted on the site. As a result, the development, which was intended to be a sports park for public use, was turned into a profit-oriented mall.
Since the construction of the Dome has progressed this far, even though it is overwhelmingly problematic — and its defects could seriously endanger public safety — to annul the contract would surely result in long-term lawsuits, which might leave the Dome in ruins.
The government has no choice but to resort to offering improvement proposals to force the contractor to return to the negotiating table instead of seeing the contractor rashly annulling or terminating the contract. Otherwise, the city government will continue to find itself hijacked by the contractor, and the beautiful dream of creating a domed sports park through the BOT model is certain to remain nothing more than a dream.