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官商勾結:Taiwan’s MO June 29, 2015

Posted by hslu in Economics, Taiwan.
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This is an example of how it works in Tiwan:

1.   The government wants to start a project around a location where it owns some land.

2.   The project has been proved to build a maintenance facility for the future metro system of the city.

3.   The government acquires parcels of land from land owners surrounding government’s property using eminent domain at current market price.

4.   Once enough land is in government’s procession, the government changes the zoning of the entire property from argruculture or manufacturing to residential and commercial use. Since the land is near a future metro station or a new city center, the value of the land is increased by 10 times or higher seemingly overnight.

5.   The small land owners whose properties were confiscated by the governmnet sue the government for more money but all cases are defeated in the court.

6.   The government auctions out the entire property and grants its development right to someone with inside information and special connections. Kickbacks were asked by government officials in return for insider bidding information. Negociations arranged by a middle man and money delivered after promises are made.

7.   The developer receives the land at favorite price because of ‘關係’ guanxi, special connections,’ and kickbacks to officials. It then negotiates with the government and retains the majority of the properties it builds. Government gets to keep very little which is a disgrace. Since there is little oversight or transparency, the deal is closed with few citizens noticing the irregularity. Government officials get rich from generous kickbacks. The developer gets rich because they received insider bidding information.

Use your imagination and apply the MO to other areas like the one below:

image

I remembered that this was the it worked before I left Taiwan 40 years ago. It is still the same now. The only difference is this: we used to hear dollar amount in the tens of thousands of dollars. Now, the dollar amount is in the hundreds of million of dollars.

There was some progress made over the past four decades in Taiwan after all.

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