In March, the Legislative Yuan (“Legislature”) was focused on issues including virtual asset regulation, a NT$100 billion project to improve the electrical grid, an amendment to the Mental Health Act, the lifting of a ban on Fukushima-affected food imports, as well as an amendment to the Railway Act.
Amid the Russia-Ukraine war, the possibility that virtual assets could become instruments of fraud and money laundering has caught the attention of many on the Legislature’s Finance Committee. In response, Financial Supervisory Commission (FSC) Chairman Thomas Huang said that domestic financial institutions and virtual asset platforms have been instructed to comply with international financial sanctions, adding that the FSC has not excluded itself from the global pursuit of exploring virtual asset regulation. Aside from these remarks, it remains unclear as to what regulatory approaches the Taiwan government is prepared to take toward virtual assets.
Deputy Minister of Economic Affairs Vincent Tseng in a meeting with the Legislature’s Economics Committee spoke about the executive branch’s NT$100 billion project for improving the electrical grid by accelerating the development of a “distributed grid.” Lawmakers on the Economics Committee pressed the deputy minister for the project’s details and budgeting, to which the deputy minister said that the project is being discussed across different ministries and that project details hopefully can be presented by the end of April in time for review of the 2023 central government budget. The project in question is not only crucial to Taiwan’s electricity delivery but also to its energy transition.
The Legislature’s Health Committee in March was focused on an amendment to the Mental Health Act. Several legislators and civil society organizations voiced opposition to parts of the Executive Yuan’s draft amendment, arguing that the bill does not stipulate a scope nor a source of funding for “community support services” and that “mandatory community treatment,” which is separate from community support services, should not be funded by the National Health Insurance. Despite this, the amendment remains a priority for the Health Committee and is expected to undergo further review in the current session following revisions based on stakeholder input.
On March 4, the administrative directive lifting the ban on Fukushima-affected food imports was submitted to the Legislature by the Executive Yuan (“Cabinet”) for the Legislature’s reference in accordance with the law. Following cross-caucus negotiations, the Legislature resolved to have the administrative directive jointly reviewed by five of its standing committees including the Health Committee and Economics Committee. However, the joint review was delayed on March 16 after a boycott initiated by Kuomintang (KMT) lawmakers. A decision was subsequently made to hold public hearings prior to review. While the review process has been drawn out, the expectation is that the administrative directive will not be overturned.
The Legislature’s Transportation Committee on March 21 reviewed a draft amendment to the Railway Act, during which Taiwan Railway Administration (TRA) Director General Tu Wei emphasized that the TRA has no intention of taking advantage of the amendment by selling off land holdings for profit and that instead the TRA intends to more effectively utilize its real estate assets. With regard to several legislators’ recommendations to expand rail tourism, Minister of Transportation and Communications Wang Kwo-tsai said that following the amendment, the TRA will be better positioned to raise the quality of service and charge higher fares, which could lead to more than twofold growth in some revenue streams. Expectations are that once the amendment is passed, the TRA will be enabled to improve its asset utilization, such as by charging fees for the right of superficies at its train stations. In addition, under eased limitations, the TRA could be afforded more flexibility in expanding its rail tourism by forming partnerships with online travel platforms.
The following section contains more details about the above-mentioned developments at the four standing committees periodically tracked by Soundline, namely the Finance Committee, the Economics Committee, the Transportation Committee, and the Social Welfare and Environmental Hygiene Committee (Health Committee).
Virtual asset regulation
FSC Chairman Thomas Huang on March 9 gave a report before the Finance Committee on formulating policy responses to potential impacts of the Russian-Ukraine war on Taiwan’s financial markets. Citing a surge in virtual asset trading during the war, KMT Legislator Lee Guei-min asked what measures is the government prepared to take to prevent virtual assets from becoming a tool for fraud and money laundering. In response, the FSC chairman said that international organizations are still exploring regulatory approaches toward virtual assets and that the FSC has not excluded itself from these efforts. Democratic Progressive Party (DPP) Legislator Chiang Yung-chang said that despite the FSC’s notice for financial institutions and virtual asset platforms to comply with international financial sanctions, it is possible that some bad actors could use virtual assets to bypass said sanctions. It is clear that the FSC is unable to monitor virtual asset transactions, Legislator Chiang maintained, adding that tax rules on virtual assets have also yet to be finalized.
Separately, KMT Legislator Lee Guei-min on March 21 raised questions about the regulation of non-fungible tokens (NFTs). In response, the FSC chairman said that imposing regulations on emerging technologies may stifle development, adding that in the absence of international consensus on NFTs, the FSC’s view is that NFTs are essentially highly speculative artwork.
- Industry: virtual assets
- Takeaway: Currently, the FSC’s remit over virtual assets is centered on anti-money laundering. In the absence of a regulator, several cryptocurrency- and NFT-related issues have drawn the attention of lawmakers, including KMT Legislator Lee Guei-min, who have on multiple occasions pressed ministry heads to address the situation. While Premier Su Tseng-chang has promised to provide a written response addressing the regulation of virtual assets in one month’s time, it currently remains unclear as to what regulatory approaches the government is prepared to take toward virtual assets. Absent from the discussion has been the upcoming Ministry of Digital Development, which will likely play a role in NFT-relevant policymaking.
NT$100 billion power grid reinforcement project
In the wake of the March 3 blackouts, Deputy Minister of Economics Affairs Vincent Tseng on March 31 gave a report before the Legislature’s Economics Committee on a NT$100 billion project to upgrade Taiwan’s electrical grid, indicating that the focus will be on developing a “distributed grid.”
Several lawmakers weighed in on the project, including DPP Legislators Chiu Chih-wei, Lai Jui-lung, Chen Ming-wen and Su Chih-fen; KMT Legislators Wu I-ding, Chen Chao-ming, Lu Yu-ling, Hsieh Yi-fong, Tseng Ming-chung; and New Power Party Legislator Chiu Hsien-chih. The legislators asked about the project’s funding sources and other details, to which the deputy minister said that the Cabinet is still deliberating the details and that the hope is to present the specifics by the end of April in time for the 2023 central government budget review.
- Industry: primarily manufacturing, electric power and natural gas supply, engineering and construction
- Takeaway: The NT$100 billion project is not only crucial in resolving issues with Taiwan’s electricity delivery, establishing a distributed grid is also a critical factor in determining the success of its energy transition, a long-standing priority for the Tsai administration. Given its importance, the expectation is that the project will continue to make progress.
Mental Health Act amendment and lifting of Fukushima food ban
In March, the Health Committee discussed an amendment to the Mental Health Act. During a question-and-answer session, Department of Mental and Oral Health Director General Chen Li-chung on March 9 said that Taiwan’s relatively small number of mandatory community treatment cases has to do with insufficient funding for visitations by health professionals. The director general said that with more funding, incentives can be increased for the provision of mandatory community treatment. During a public hearing, several civil society organizations (CSOs) on March 21 said that the Cabinet’s draft amendment does not stipulate a scope nor a source of funding for “community support services,” making the amendment little more than empty promises. In addition, the CSOs also voiced opposition to having mandatory treatments funded by the National Health Insurance, maintaining that funding should be drawn from the government budget instead.
Separately, on March 4, the administrative directive lifting the ban on Fukushima-affected food imports issued in February was submitted by the executive branch to the Legislature for the latter’s reference in accordance with the law. Following cross-caucus negotiations, however, the Legislature resolved to have the directive jointly reviewed by five legislative standing committees including the Health Committee and Economics Committee. The joint review was further delayed on March 16 after a boycott initiated by KMT lawmakers. Following a round of cross-caucus negotiations, legislators agreed to first hold public hearings on the matter before resuming joint review.
- Industry: healthcare, home care, food
- Takeaway: Although some legislators and CSOs are skeptical of the draft amendment to the Mental Health Act, the bill remains a priority of the Health Committee. Expectations are that the amendment will undergo revision according to stakeholder input and will be further reviewed in the current legislative session. Regarding the directive lifting the ban on Fukushima-affected food imports, while the legislative review process has been drawn out, the expectation is that the ban will not be reinstated.
Taiwan Railway asset revitalization, rail tourism
In the wake of the 2018 Puyuma express train derailment, amending the Railway Act has been part of efforts by the Ministry of Transportation and Communications (MOTC) to structurally reform the Taiwan Railways Administration (TRA). Apart from strengthening the capacity to respond to major rail accidents, improve safety management and clarify jurisdictions in accident investigation, the bill also aims to promote asset revitalization and rail tourism.
The Transportation Committee on March 21 reviewed the proposed amendment to the Railway Act. On asset revitalization, the newly added Article 21-1 stipulates that with the approval of the MOTC, the TRA will be allowed to dispose of or develop its real estate holdings to generate revenue, exempt from the limitations of the National Property Act. In response to questioning by KMT Legislator Lu Ming-che, TRA Director General Tu Wei said that the TRA has no intention of taking advantage of the amendment by selling off land holdings for profit; instead, the TRA intends to revitalize its assets, such as by creating the right of superficies.
The bill also newly adds Article 47-1, which states that with the approval of the MOTC, the TRA may charge fees based on the type of tourism services rendered to bolster its income. On this front, DPP Legislators Tsai Yi-yu, Hsu Chih-chieh, KMT Legislators Hsu Shu-Hua, Hung Meng-kai and Taiwan People’s Party Legislator Jang Chyi-lu urged the government to develop rail tourism. Minister of Transportation and Communications Wang Kwo-tsai said that with the amendment, the TRA will be free to develop tourist attractions leveraging the unique attributes of its 240 train stations, adding that the TRA has several branch lines with the potential to become major tourist attractions, such as the Pingxi Line, Neiwan Line, and Jiji Line. If higher fares can be charged in return for higher quality of service, tourism revenues have a chance of being doubled, according to Minister Wang.
- Industry: tourism, retail and department stores
- Takeaway: The government is aiming to corporatize TRA by 2024 and plans to reference the playbook of Japan’s JR Group and Hong Kong’s Mass Transit Railway Corp., both of which saw success in improving profitability through newfound non-operating income streams. The government is hoping that tourism income from revitalized Taiwan Railway real estate assets can help the railway operator return to the black. Expectations are that if the amendment is passed, Taiwan Railway will be able to generate income from its real estate holdings by selling rights of superficies at its real estate assets to hotels and retailers. In addition, while the TRA currently works with contractors in promoting its tourism-focused routes and packages, following the amendment, the TRA will have greater flexibility in managing its rail tourism operation, increasing the potential for partnerships with online travel platforms. However, the Taiwan Railway Labor Union has strongly opposed the corporatization plan and on March 23 mobilized nearly 1,500 workers to stage a protest in front of the legislature, saying that the corporatization plan will compromise the interest of TRA workers. As the union represents more than 15,000 TRA workers, resolving its dissent will be a major challenge in the government’s bid to corporatize the TRA.