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TAIWAN ECONOMIC REPORT FOR OCTOBER 1993
ate of Exchange: 40 New Taiwan Dollars = L1
Economic Overview
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Jan-Oct trade surplus: US$6.4 billion, down 23 per cent year-on- year
Jan-Oct average CPI increase: 2.76 per cent
1. The month's exports were strong at 7.5 billion US dollars, a 7 per cent increase year on year. Imports were up 12 per cent to 6.8 billion. Continued fine weather and a month-end cut in government-controlled domestic petroleum product prices, kept rises in the consumer price index well within targets. However, the depreciation of the NT dollar continued to push up both import and export prices, which in the first ten months have risen by 4.7 per cent and 5.2 per cent respectively.
Privatisation
China Petrochemical Development Corporation decided to shed 8 per cent of its workforce, in preparation for privatisation next June. This was a precedent which may make privatisation more feasible. Not only are many state-run companies severely overstaffed, but the law requires that generous severance pay be paid to employees on privatisation, which in some cases will exceed the proceeds from the sale and thus cost the government money. This is the first time a company has dared to trim its bloated payroll before being sold off--"breaking the iron bowl" as one newspaper put it. CPDC has so far sold off 20 per cent of its shares, and aims to sell another 35 per cent next year.
Six Year Plan
An arbitration panel ruled that the Taipei City Government should pay compensation of NT$1 billion to the French contractor Matra Transport, which is building the medium capacity Mucha line of the Taipei Rapid Transit System. The City Government was found responsible for delays that had run up substantial unforeseen excess costs for Matra. The award was half what Matra had sought, but more than it had expected. The City Government subsequently said it would sue Matra for the delays caused by several fires on trains under test, but this was probably merely a face-saving
announcement.
At an average of NT$ 5.6 billion per kilometre, the heavy capacity lines of the Taipei MRT are easily the world's most expensive, according to a government study. Comparable lines recently built in Japan cost 5.2 billion, Hong Kong 3.3 billion, the USA 3.1 billion, and Singapore 1 billion. The government said Taiwan's high land acquisition costs were the main factor.
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