TAIWAN

This case traces the evolution of Taiwan's high-speed railroad from project inception in the late 1980s until
its financial problems in 2009; describes the planning efforts, ridership projections, financial plans, and
cost-benefit analysis involved in the project, as well as the contracting process for the project. This project
was one of the largest infrastructure projects in the world and one of the largest infrastructure projects ever
built, using a "public-private partnership" (PPP) - a method for infrastructure development where the
private sector would build and operate a project for several decades and then transfer ownership to the
government. However, in 2009, after only two years of operation, Taiwan High-Speed Rail Corporation
(THSRC), the private consortium responsible for building and operating the high-speed rail system, was in
deep financial trouble due to low ridership and the worldwide economic crisis. Unable to pay back the
principal on its bank loans, the President of THSRC requested a meeting with Taiwan's Minister of
Transportation and Communications, asking to hand the railroad over to the government to run. THSRC
requested that compensation be set by an independent third party, as provided for in the event of a
government takeover in the government's original contract with the company. Readers are left with the
question of what Taiwan's Minister of Transportation and Communications should do in response to
THSRC's request.

What Happened
1. Harsh Environment
2. Volatile political Situation
3. Economically they are solid World; wide Economic crisis, they could not payback on the principal
loans
4. Migration Taipei grew Congestion invests in Road and Raid *-12Hrs
5. The feasibility Study concluded the High-Speed train was visible
6. Academics opposed the rail considering it not useful
7. 1992 CBA and final approval, Funding approved on the budget
8. Public finances were a mess resorted to a PPP, govt funded with PP to do a BOT
9. 1994 LAW in infrastructure development passed to engage PP and get land concession
10. 1996 – did an RFP for the concession to get the PPP consortium
11. NO secondary market value, promised to buy if the concessionaires went bank Taiwan High
Speed Rail Corp
12. 2 Concession bid on the contract
13. Major omissions in the contract the THSRC did not focus on
14. The government back-peddled on diversion of utility line substructure civil works this was the
start of conflict before construction began 2.5 year
15. Govt just wanted ot own the rail after 30 year
16. The PPP consortium needed government support but wasn’t getting
17. Negotiation risk was the Govt
18. Did arrive at an agreement, asking more than they had promised
19. Identified a list of 380 issues and the government threatened to award the 2 nd lowest bidder
20. Agreed and signed agreements with 24 banks
21. Bank were not comfortable with the relationship with the consortium
 22. Huge funds Regulatory limits consortium arguments
23. 1997 Asian financial crisis
24. Loan signed Feb 2000 from a Consortium of Taiwanese bank
25. March 2000 construction began
26. March 2007 Speed railway was inaugurated
27. Construction was a success, but it became clear that the project was a catastrophe as the project's
215K ridership per day scaled back to 125k per day after a year. The reality was 84k
28. Major fall in ridership was blamed on the Asian Economic Crisis
29. Pull out of the PP and get paid because they were defaulting on the back
30. The minister declined as it was ¼ of the entire annual govt budget
31. Nov 2009 Bankruptcy – the principal payments of the company debts were starting

What could have been done better?

Three parties’ government Consortium and the Bank (Creditors)
1. Environmental Assessment – Geography, Earthquakes, etc
2. Political – Unpredictable Govt
3. Economic – Asian Economic Crisis Massive project from
4. Social–Ambition Population Competition from China low wage
5. Legal - Laws for each stage of contract development – Govt did not understand its
role in the PPP. A better understanding of Govt of PPP
6. Tech -

Stakeholder Analysis
Better mapping and involvement of stakeholders to help understand their situation
Resource Allocation figuring out what they had strength in and here they could grow what
they needed to drop

Specialization – Delegation - get different people to do what they do best.

Over 600 PPPs had been signed. No public participation in the projects Land acquisition and
regulation. PPP was a fad without knowledge and far too ambitious without looking at the
viability of going PPP
Costing - They only had two bidders for the PPP, things were not factored, and when they
were needed, it ended up being too expensive ¼ for the Government budget
People still opted to go via the Road because the cost of rail transport was unattainable. The
Road was cheaper

La Alianza Hispana

How did we get into this situation

26-year-old single mum drug addict Clarabel Ventura Home 6 hungry Children Aged 9mths
to 7 years. Abandoned
Social services
A lightning rod for social causes

Issues
1. Drug Addiction
2. Family planning
3. Absentee fathers
4. Child Support
5. Welfare reforms
6. Welfare Dependency
7. Department of Social Services effectiveness and Eff
8. Child Protection Services

Agency La Allianza Hispana – NGO serving 5000 Latinos a year in Boston CB program running
10 prog
 Teen Preg,
 After school daycare,
 English as a 2nd Lang Employment
 placement
 Guidance and Counselling
 Regulation of the private sector
Dept of Social was not monitoring its agency – Qatar Saudi Cases failing in its regulatory
1994 Ed Lou Prado largest Latino org in Boston, running 25 different programs
The DSS approached La Alianza to provide Child protection services

PPP arrangement Partnership Agency services

Legal. – Laws changes 1960-1970 in response to changing federal laws
DSS was created in 1980 in response to a public outcry girl in 1078 murdered and dumped in
the trash can Knee Jerk

Protect children from abuse and neglect

Expand mandate to protect families from abuse
2/3rd of the DSS budget in 1980 was contracted to private providers
This became problematic

Why the PAS

1980 increased cases of sexual Crack cocaine child abuse and neglect cases, open cases govt
was struggling
Caseloads for social workers were high – Overworked Union protests and lawsuits
Social workers and the Government were resentful due to the overworked. Public 18 Private
6-8 Cases
Paid better Private sector paid better one case 4 social workers
Disparities brought conflict and unionization
Desis to go for PAS
The deficit in service to racial and ethnic minorities

Matava was a strong advocate for PAS

Advantages

1. A partnership made the system more flexible

2. Efficiency
3. Knowledge Transfer
4. Share Blame
5. Choice
6. Better Coordination
7. Better handling of Conflict of interest
8. Sexual Abuses cases were better investigated

Child protection services were increasingly becoming legal issues decided to go for
contracting
Because of the rapid caseload and diminishing state resources
The Governor agreed with DSS to focus on Primary child protection as the primary agenda.
And family preservation agenda secondary

Take it or leave it; we no longer have a funding-dropping focus on child protection. Deliver
direct protection and case management services
No oppty to negotiate
Controversies
No public Participation

What could be done better

Public Participation
Stakeholder Involvement
Consultation DSS and La Alianza poor
Legal Aspects not well-covered Litigation rules and reg DSS was overarching I. its
responsibility