A Study on Private Participation in Development of Industrial Park Facing Development Issues and Response Strategies

Taiwan is an island, being short of natural resources. Economy and governmental finance heavily rely on export; thus, to concentrate on a specialized industry within a period is an important policy. We have seen Taiwan started from hand craft products, following by light industry, processed manufacturing, mechanical and fundamental industry, delicate mechanical manufacturing, high tech industry and bio-technology industry, accordingly. To match industrial specialization, government designs specialized industrial zone that first initiated on 1960, namely Keelung Liudu Industrial Zone. The regulations that relate to industrial zones include Statue for the Engagement of Investment, Statute for Upgrading Industry, and Statute for Industry Innovation. Industry Bureau, Ministry of Economic Affairs is the key authority. These regulations not only govern industrial zones but also provide incentive of development participation. State owned and private organizations can apply for developing an industrial zone. Based on an offered industrial zone space, the applied organization prepares a feasibility study in compliance with Statue for Urban Plan or Statute for Region Plan, an environmental assessment study, plus other required materials to apply for approvals. Government provides many incentive based on such industrial zone related regulations.
Land and capital are key factors of developing an industrial zone. Based on past statistics, costs of collecting necessary land count for 37%~43% of total developing costs. Government sets up a special governmental fund, entitled ‘Industrial Zone Developing Management Fund,’ mainly managed by Industry Bureau, Ministry of Economic Affairs, for industrial zone development purpose. However, some significant environmental changes have ever happened subsequently, for examples, energy crisis, financial crisis, and others, plus many factories has moved to mainland China. All industrial zones face recess difficulty. As a result, all industrial zones idle substantial amount of capitals. Although government has adapted to establish ‘Industrial Zone Development Regulation,’ attempting to attract private sector to participate development, private sector has been short of incentive. This study aims to develop a new approach for examining how private sector has sufficient incentive to be a main developer of industrial zone.
My study identifies the Taoyuan Technology Industrial Zone to be a new business model of industrial zone, established in 1999. Government and private sector have jointly developed 7 industrial zones and prepared 6 zones for jointly development in terms of this business model. This type of project has better incentive to attract private sector for mitigating financial burden of government, promoting employment, increasing taxation, and promoting specialized industry development. Thus, this is a real win-win business model. However, to promote efficiency of such a win-win project, some improvements are required. For example, government must simplify application procedure to facilitate participation of private sector; government has to well plan for classifying category of industrial zone land, and other efficiency requirement improvements. This study proposes and develops a Public Private Partnership (PPP) Approach under which government can continuously improve its regulation to induce better incentive of private sector for involving industrial zone development.