The Committee appreciates the Tsai administration’s ambition regarding drivetrain electrification. The aim is for buses and government vehicles to be electric-only by 2030, while newly registered motorcycles and cars will be limited to electric vehicles (EVs) by 2035 and 2040 respectively.
The advantages of electric drivetrain technology in terms of environmental compatibility and customer-centric use are obvious. It also serves as a strategic enabler for future shared-economy and autonomous-drive technologies. These technological advantages have the potential to create growing market penetration and establish a vibrant product segment.
The rate of consumer adoption of passenger cars with alternative drivetrain technology depends on their price compared to comparable cars with internal combustion engines (ICEs). In turn, the cost of production for Battery Electric Vehicles (BEVs) still depends heavily on the cost of the battery and related components such as the electric engine and electric charging module, including converter.
The present state of technology for energy cell efficiency still requires manufacturers to build battery blocks of substantial weight and volume to provide consumers with the range they expect. That distance is often longer than necessary, overcompensating for consumer anxiety about limited range. Adding to the difficulty for manufacturers are the lack of economy of scale due to low production volumes, in combination with high initial investments.
Given the high price sensitivity of consumers and auto manufacturers’ already compromised margins, fiscal stimulus is needed to accelerate adoption of the technology.
Attention must also be given to establishment of the necessary electric charging infrastructure. Without a sufficient infrastructure in place, consumers are reluctant to buy EVs. But if the EV penetration rate is not high enough, private investors have no interest in building that infrastructure. We must put an end to this vicious circle, and government intervention is the key.
Another current area of concern is e-commerce. The rapid growth in volume in cross-border e-commerce and fast-evolving trading environment have presented numerous new challenges and opportunities for governments and all the stakeholders in the supply chain. The biggest impact over the past few years has been on the express delivery industry due to the regulatory changes in different countries in an effort to address border risks associated with e-commerce trade.
Although the World Customs Organization (WCO) developed a Cross-Border E-Commerce Framework of Standards in 2017, it serves only as guidelines. Each government still needs to determine a local solution based on its own national conditions. Border clearance is one of the critical components of last-mile delivery, and it takes effective collaboration between the public and private sectors to optimize clearance efficiency.
Suggestion 1: Expand the existing fiscal incentives for EV (including BEV and PHEV) buyers.
At present, BEVs enjoy zero commodity tax up to a taxable amount of NT$1.4 million and a 50% reduction on any additional commodity tax. However, the NT$1.4 million ceiling does not sufficiently reflect the high cost of production given current battery configuration, as well as consumers’ driving range expectations. We recommend raising the cap to a more reasonable level.
In addition, the pending expiration of the existing tax incentive on December 31, 2021, makes it difficult for industry to plan its future product offers. Since long planning cycles are needed in the automotive industry because of the complexity of the technology, we urge extension of the tax incentive until December 31, 2030, to provide the industry with more planning security. This proposed expiration date is still 10 years ahead of the governments’ goal to ban all first-time registration of passenger cars with ICE. Earlier expiration of the tax-incentive scheme would be acceptable if the EV adoption rate is great enough.
Plug-In Hybrid Electric Vehicles (PHEVs) constitute a viable alternative to BEVs. As the average daily driving cycle in urban areas typically does not exceed 40 kilometers per day, existing technology allows the use of these cars exclusively in electric-driving mode for the majority of cases. When used in electric mode, PHEV’s driving characteristics and environmental compatibility are identical to that of BEVs. Further, consumers have no range anxiety with PHEV, since conventional technology is available if needed.
PHEVs can therefore serve as a bridging technology until BEVs have become the new normal for individual mobility. In recognition of the fact that PHEVs contain all the major advantages of BEVs and allow for fully electrical driving, PHEV buyers should be eligible for the same commodity tax exemptions as apply to BEVs.
Suggestion 2: Create a user-friendly environment for EV owners.
The Ministry of the Interior recently made it mandatory for new buildings to allocate space for the installation of EV charging facilities. In existing buildings, however, residents still find it challenging to negotiate with the Housing Association for consent to install a charger. To support the accelerated growth of the charging infrastructure, more emphasis needs to be placed on “[email protected]” and “[email protected]” – making it compulsory for electric charging facilities to be installed and/or pre-installed in the parking lots of residential and office buildings.
The government should have a clear timeline for the establishment of public charging infrastructure at strategic locations along the freeways or at popular destinations along the routes connecting major cities. EVs should receive priority in public parking lots, and parking spaces with a charger must be exclusively for EV use.
Additional fiscal incentives will be required to accelerate the growth of the electric charging network, because until the still limited BEV population reaches economies of scale, private investors will be unable to operate sustainably. The degree of success in providing the charging network will largely determine the adoption and usage rate for electric vehicles – and ultimately the feasibility of Taiwan’s goal of banning new cars with ICE by 2040.
Suggestion 3: Expedite new product development in Taiwan by extending the “ATA Carnet” temporary admission qualification criteria to R&D testing equipment.
In this era of globalization, MNCs and IT companies take strategic considerations into account when deciding where in the world to place their R&D and manufacturing facilities. For testing during the product-development process, R&D centers in Taiwan often need to import semi-finished products from manufacturing facilities in other locations. However, the process of applying to the Bureau of Standards, Metronics and Inspection and National Communications Commission for permission to import those products for testing can be extremely time-consuming. It often leads to delays in new product launches, seriously affecting Taiwan’s position in the supply chain.
To create a more friendly environment for R&D centers and to streamline the new product development process in Taiwan, we urge the authorities to consider the following suggestions:
Treat semi-finished products for R&D-center testing under the equivalent of the “ATA Carnet” temporary admission import system for products from countries for which Taiwan has bilateral agreements covering such arrangements.
Expedite “ATA Carnet” temporary admission applications and allow pre-arrival clearance for those products.
Suggestion 4: Relax regulations to provide more support to “Authorized Traders” certified by Taiwan’s Customs Administration.
On the basis of their economic contribution to Taiwan, the Customs Administration has recognized some companies here as “Authorized Traders,” enabling them to enjoy certain conveniences when going through import-export procedures. Currently, Taiwan’s IT industry is competing on the “supply chain battlefield” to deliver products to customers in the shortest amount of time. To strengthen Taiwan’s competitiveness in this regard, the Committee proposes providing qualified “Authorized Traders” with the following additional benefits:
Increase the percentage of C1 shipments (no document review or cargo examination required) and switch to annual audits to promote efficiency.
Decrease the examination sampling test percentage.
Support “Authorized Traders” through expedited determination of the HS code (Harmonized Commodity Description and Coding System) and building an up-to-date HS code database.
Allow “Authorized Traders” to apply for rush-order expedited customs clearance.
Suggestion 5: Reform the Multi-Purpose Taxi (MPT) system to improve the general taxi experience, increase drivers’ earnings, and further the government’s vision of digitizing the transportation sector.
Globally, governments, institutions, scientists, innovators, and entrepreneurs have come together to use evolving technological breakthroughs to redefine industries, paving the way for a sustainable future. A key development towards this goal is the growth of collaborative economies, sharing economies, digital economies, and e-commerce.
While other countries around the world are embracing this change and co-creating regulations with platform operators to better promote an embedded digital society, Taiwan maintains a conservative attitude towards change and takes only very incremental steps at policy reforms, especially when the situation involves incumbents in the industry.
A prime example is the recent revision to the “Automobile Transportation Management Regulations,” which allows MPTs to use apps as a meter with upfront pricing. While the government is pleased with the change, the actual provisions do little to rectify archaic restrictions and enable the taxi industry to benefit from digitization. Rather than utilizing the opportunity to truly renovate and digitize this industry, the government was extremely cautious. It appears to be keener on maintaining the status quo, or even making it more difficult for new entrants to penetrate the market.
Specifically, the Regulations restrict cross-regional operations, dictate inflexible rates, and limit the fee-charging options available to passenger-transportation service operators. These restrictions, in turn, will inhibit development of the passenger-transportation industry, curb earning opportunities for the Taiwanese people, reduce convenience for consumers, and limit the benefits that technology and digitization can provide.
Our specific recommendations:
Permit cross-regional taxi operations. Article 91, paragraph 1, sub-section 3 of the Regulations restrict taxi operations to a designated geographic region. While such restrictions may have been a “necessary evil” back in the non-digitized age to strengthen taxi governance and law enforcement, it is inefficient from the perspective of drivers, consumers, and the transportation industry as a whole. With the assistance of today’s digital technology, cross-regional taxi operations could automatically help remedy the unbalanced demand/supply situation across the country by means of the free market’s “invisible hand” without sacrificing the government’s ability to regulate the taxi industry in an efficient and effective manner.
Allow flexibility for minimum fares and permit yellow-cab taxis to charge via apps. Digital devices will eventually replace many the traditional tools, including taxi meters. The government should think ahead and deploy a better response plan in advance for traditional yellow-cab drivers. Although current regulations dictate that yellow cabs must charge fares only by the meter, they should be allowed to charge either by app or meter for digital dispatches. This change would maximize the efficiency of transportation operators and also provide consumers with more options, while conserving resources. Meanwhile, this could potentially encourage individual operators to associate with digital dispatchers (taxi fleets), enhancing the government’s management of the overall industry as well as increasing opportunities for drivers’ income.
Furthermore, existing regulations prohibit yellow cabs and MPTs from charging less than a minimum fare. In fact, the key factor for increasing drivers’ income and stimulating the industry is to grow the demand for taxis. Unlocking the price control could help achieve that objective, as well as help balance supply and demand through price adjustments. A higher willingness to pay in areas where supply is low (suburbs) will attract drivers, while lower price points will discourage an excess of supply, thus increasing efficiency.
As the volume of cross-border, e-commerce continues to increase, some new approaches to customs-clearance measures should be considered to improve efficiency. The Committee offers the following recommendations to the Customs Administration:
Revise the Real Name Authentication (RNA) process.
1.1. Adopt Stratified Account Management principles to govern e-commerce platform operators or their representative as the Customs client, relying on them to manage their customers (on-line shoppers) instead of Customs seeking to directly manage millions of individuals.
1.2. Reduce or eliminate RNA transmission charges.
1.3. Remove POA (payment on account) requirements for de minimis (X2) shipments.
Address concerns regarding informal entry supervision, such as significant amounts of false declarations resulting in duty/tax evasion.
2.1. Implement compliance management and establish compliance measurement for informal declarations.
2.2. Incentivize cross-border e-commerce operators to provide business transaction information for better visibility of the e-commerce flow.
Allow shipments to be abandoned to Customs as with normal cargo regulations. Under current regulations, when the importer cannot be identified after arrival of the shipment, the express operator must act as the importer and return the shipment to the sender within seven days.
Reconcile the return to Taiwan of informal e-commerce export shipments. Customs should set up specific data elements for informal declarations to be used for return reconciliation without duty/tax being imposed.
Adopt models for duty and VAT levies on de minimis shipments.
5.1. Remove the de minimis for VAT while increasing the threshold for duties. VAT for de minimis shipments should be collected by e-commerce operators and paid directly to the Inland Revenue agency.
5.2. Simplify classifications for X2/X3 declarations to 4 digits or fewer categories and exclude freight and insurance from the customs value for duty/tax calculation.
For licensing operations, allow goods for personal consumption with lower quantity/value to be declared under informal declarations. For a detailed item list and scope, please refer to the Chinese version.
Establish “Express Operator” as a new industry category for inclusion in Customs industry management. Develop a new partnership mechanism for better interaction and consultation.
Set up specific cross-border e-commerce clearance regulations. Designate e-commerce operator as a new industry and encourage collaboration with Customs for better data exchange.
Apply the concept of Customer Relationship Management in Customs’ e-commerce management and establish a close partnership with cross-border e-commerce operators.
Due to the complexity and volume of e-commerce business, adopt a new partnership model between Customs and all related stakeholders throughout the supply chain.
Include e-commerce operator in AEO (Authorized Economic Operators) 2.0.
Continue to explore more advanced technology and eliminate user fees to lower compliance costs if RNA continues to be implemented.
Apply Account Management in Customs governance. Transform from transaction-based management to account-based management to improve the foundation of compliance.