In a broad sense, infrastructure refers to projects whose investment and sustainable operation can provide for a country’s long-term livelihood and economic growth. This includes physical infrastructure such as power supply, and infrastructure that conserves water, as well as social infrastructure such as education, basic science, and medical care. Investment in these projects not only promotes economic growth during the construction, but also improves living standards when they are completed and put into operation, enhancing the competitiveness of an entire nation.

What kind of infrastructure does Taiwan need when to keep up with the global innovation competition? "Resilience and agility are the two key points," said Hank Huang, President of the Taiwan Academy of Banking and Finance (TABF).

Population structure and scientific progress

Taiwan has a longstanding misconception that infrastructure involves construction of big, grand projects. Today, however, “What we need is more resilient, diversified, flexible, and agile infrastructure,” said Huang. “After all, Taiwan’s population is on a continued decline. Infrastructure planning that stops at high-speed rail, highways, and skyscrapers is out of date.”

Huang suggested instead that the two perspectives should be used to replace the past development direction: population structure and scientific progress. In addition to their construction cost, infrastructure investments also future create maintenance costs. Rather than building an MRT system in a less-populated area or a city with a declining population, it is better to think about an unmanned smart bus network.

In other words, Taiwan’s future infrastructure must develop in a more agile and flexible direction, responding to environmental changes and future needs.

For example, smart busses are much more agile than an MRT system. In the middle of the MRT planning and design process until completion of construction, it is not only expensive to adjust a route or change the station, but doing so also affects the entire layout. A properly planned smart bus system, on the other hand, can use medium or small self-driving buses to make the network more flexible, flexibly responding to demand for 10 or even 20 years in the future.

Self-driving technology saves on labor

In contrast to Taiwan’s “MRT fever,” Japan has launched a smart unmanned bus system. In September 2021, the first commercial self-driving bus within JR East Group was successfully road-tested in Miyagi Prefecture. It traveled in the BRT lane at 60 kilometers per hour. In the future, JR East hopes that its self-driving buses will use ordinary roads.

JR East is a railway company. Why did it choose to move into self-driving buses? This has to do with Japan’s climate, terrain, and labor shortages. This test drive section used to be a local railway. After the tsunami caused by 2011 earthquake, JR East moved to the BRT model due to its assessment that rebuilding was too expensive.

JR East’s demonstration of self-driving technology also has major significance regarding future labor shortages. Japan’s population aging will disrupt human resources for railway and bus drivers.

If the self-driving technology is successful, it will become a new solution for transportation in remote areas. Many remote towns in Taiwan also need mass transportation, but their population is sparse, and they cannot afford railways or MRT systems. With self-driving busses, scheduling can be flexible, without requiring large-scale construction and hiring.

Huang said that another meaning of agility is to consider the changes in Taiwan’s demographic structure over the next 10-20 years. For example, multilingualism has spread in major cities in the UK and US. This trend is foreseeable in Taiwan as well, with its increasing immigrant population.

In addition, agile thinking can also manifest itself in healthcare infrastructure. Remote rural areas should build large hospitals, and should also make good use of telemedicine, so that rural residents can seek medical treatment online directly in their area, and can connect with professional doctors at National Taiwan University Hospital and Taipei Veterans General Hospital for telesurgery.

Resilience to quickly adapt

Resilience is the second consideration for Taiwan’s future infrastructure development. Suppose the government has a budget of NT$ 100 billion yuan for high-speed rail construction. Should it increase the speed of the rail by another 100 kilometers per hour, or should its earthquake resilience be improved? This is an issue that Taiwan needs to ponder carefully.

For now, domestic public opinion is still stuck in a very traditional way of thinking about infrastructure.

Huang asked how various infrastructure construction projects, such as high-speed rail and TRA, keep services uninterrupted and reduce the impact on people’s livelihood, transport and the economy when they encounter natural disasters such as typhoons and earthquakes. Due to climate change, extreme disasters have become more frequent around the world in recent years. How can Taiwan strengthen the resilience of its infrastructure to quickly adapt to such changes? And from the perspective of resilience, how can Taiwan deal with the issue of nuclear power, the positioning of the next generation of nuclear power plants in Taiwan, and other plans for when Taiwan cannot rely on renewable energy such as solar and wind power? These are key questions that the government must take into account.

Functional diversification

Taiwan is currently facing a 2050 net-zero emissions objective. In order to implement its 2025 non-nuclear homeland policy and achieve the long-term vision of net-zero transformation, the government has vigorously promoted renewable energy and built solar farms and offshore wind power stations.

However, a major problem with these sources is the unstable power supply. In order to stabilize the power system and move peak consumption into the valleys, large storage batteries and a smart grid must be used to store electricity. Huang recommends accelerating development of diverse green power sources, and building up a supporting environment to improve the resilience of the grid.

Resilient cities are also a necessary element in order to achieve 9th Sustainable Development Goal (SDG) of the United Nations: to “build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation.”

Taiwan is still contributing to various major past public construction projects, such as highways or airports, which have shown some degree of returns. Most of these projects are however derided as so-called “mosquito houses” – empty shells.

With technological advancement, meanwhile, multiple applications of drones and LEDs have flourished. “We should diversify away from the current logic of single venue and single-function infrastructure.” Huang gave an example: shopping malls could be turned into doctors’ offices.

Building a better Taiwan by 2050

In the face of the 2050 Net Zero goal, we should first be more imaginative and build the infrastructure that will be needed in the future. If we can make the most of the wealth held by boomers and Gen X, and guide their funds into infrastructure construction, we can create a better life for them, while also creating stable cash flows.

For example, some investors initially assumed the risks of offshore wind farms during their construction. After they are put into operation, can real estate securitization be used to offload the assets and allow more of the public to participate in their investment? The Taiwan Railways Administration (TRA) may also be thinking this way with its recent reforms.

Recall that on October 27, 2016, Taiwan High Speed Rail Corporation was listed on the stock exchange. Its price surged to a high of NT$ 24 on the first day, and foreign capital began to enter the market. Three years after the listing, the stock started a three-year long run, and hit a high of NT$ 47 in June 2019, and the foreign shareholding ratio increased from 1.8% to 15.5%. Although its revenue and share price have been hit hard more recently by the pandemic, Taiwan relies heavily on high-speed rail services.

Huang said that the listing provided the public with investment opportunities. The more people who take the rail, the more profit for investors. “Resilient, diversified, flexible, and agile infrastructure will not only make public construction an attractive investment target,” he concluded, “but also achieve the goal of a sustainable Taiwan.”