Impact of Government Organizational Reform to Research Legal System and Response Thereto (2) – Observation of the Swiss Research Innovation System

3.Commission of Technology and Innovation (CTI)

  The CTI is also an institution dedicated to boosting innovation in Switzerland.  Established in 1943, it was known as the Commission for the Promotion of Scientific Research[1].  It was initially established for the purpose of boosting economy and raising the employment rate, and renamed after 1996.  The CTI and SNSF are two major entities dedicated to funding scientific research in Switzerland, and the difference between both resides in that the CTI is dedicated to funding R&D of the application technology and industrial technology helpful to Switzerland’s economic development.

  Upon enforcement of the amended RIPA 2011, the CTI was officially independent from the Federal Office for Professional Education and Technology (OEPT) and became an independent entity entitled to making decisions and subordinated to the Federal Department of Economic Affairs (FDEA) directly[2].  The CTI is subject to the council system, consisting of 65 professional members delegated from industrial, academic and research sectors.  The members assume the office as a part time job.  CTI members are entitled to making decisions on funding, utilization of resources and granting of CTI Start-up Label independently[3].

  The CTI primarily carries out the mission including promotion of R&D of industrial technology, enhancement of the market-orientation innovation process and delivery of R&D energy into the market to boost industrial innovation.  For innovation, the CTI's core mission is categorized into[4]:

(1)Funding technology R&D activities with market potential

  The CTI invests considerable funds and resources in boosting the R&D of application technology and industrial technology.  The CTI R&D Project is intended to fund private enterprises (particularly small-sized and medium-sized enterprises) to engage in R&D of innovation technology or product.  The enterprises may propose their innovative ideas freely, and the CTI will decide whether the funds should be granted after assessing whether the ideas are innovative and potentially marketable[5].

  CTI’s funding is conditioned on the industrial and academic cooperation.  Therefore, the enterprises must work with at least one research institution (including a university, university of science and technology, or ETH) in the R&D.  Considering that small-sized and medium-sized enterprises usually do not own enough working funds, technology and human resources to commercialize creative ideas, the CTI R&D Project is intended to resolve the problem about insufficient R&D energy and funds of small- and medium-sized enterprises by delivering the research institutions’ plentiful research energy and granting the private enterprises which work with research institutions (including university, university of science and technology, or ETH) the fund.  Notably, CTI’s funding is applicable to R&D expenses only, e.g., research personnel’s salary and expenditure in equipment & materials, and allocated to the research institutions directly.  Meanwhile, in order to enhance private enterprises' launch into R&D projects and make them liable for the R&D success or failure, CTI’s funding will be no more than 50% of the total R&D budget and, therefore, the enterprises are entitled to a high degree of control right in the process of R&D.

  The industrial types which the CTI R&D Project may apply to are not limited.  Any innovative ideas with commercial potential may be proposed.  For the time being, the key areas funded by CTI include the life science, engineering science, Nano technology and enabling sciences, etc.[6]  It intends to keep Switzerland in the lead in these areas.  As of 2011, in order to mitigate the impact of drastic CHF revaluation to the industries, the CTI launched its new R&D project, the CTI Voucher[7].  Given this, the CTI is not only an entity dedicated to funding but also plays an intermediary role in the industrial and academic sectors.  Enterprises may submit proposals before finding any academic research institution partner.  Upon preliminary examination of the proposals, the CTI will introduce competent academic research institutions to work with the enterprises in R&D, subject to the enterprises' R&D needs.  After the cooperative partner is confirmed, CTI will grant the fund amounting to no more than CHF3,500,000 per application[8], provided that the funding shall be no more than 50% of the R&D project expenditure.

  The CTI R&D Project not only boosts innovation but also raises private enterprises’ willingness to participate in the academic and industrial cooperation, thereby narrowing the gap between the supply & demand of innovation R&D in the industrial and academic sectors.  Notably, the Project has achieved remarkable effect in driving private enterprises’ investment in technology R&D.  According to statistical data, in 2011, the CTI solicited additional investment of CHF1.3 from a private enterprise by investing each CHF1[9].   This is also one of the important reasons why the Swiss innovation system always acts vigorously.

Table 1  2005-2011 Passing rate of application for R&D funding

Year

2011

2010

2009

2008

2007

2006

2005

Quantity of applications

590

780

637

444

493

407

522

Quantity of funded applications

293

343

319

250

277

227

251

Pass rate

56%

44%

50%

56%

56%

56%

48%

Data source: Prepared by the Study

(2)Guiding high-tech start-up

  Switzerland has learnt that high-tech start-ups are critical to the creation of high-quality employment and boosting of economic growth, and start-ups were able to commercialize the R&D results.  Therefore, as of 2001, Switzerland successively launched the CTI Entrepreneurship and CTI Startup to promote entrepreneurship and cultivate high-tech start-ups.

1.CTI Entrepreneurship

  The CTI Entrepreneurship was primarily implemented by the Venture Lab founded by CTI investment.  The Venture Lab launched a series of entrepreneurship promotion and training courses, covering day workshops, five-day entrepreneurship intensive courses, and entrepreneurship courses available in universities.   Each training course was reviewed by experts, and the experts would provide positive advice to attendants about innovative ideas and business models.

Data source: Venture Lab Site

Fig. 3  Venture Lab Startup Program

2.CTI Startup

  The CTI is dedicated to driving the economy by virtue of innovation as its priority mission.  In order to cultivate the domestic start-ups with high growth potential in Switzerland, the CTI Startup project was launched in 1996[10] in order to provide entrepreneurs with the relevant guidance services. The project selected young entrepreneurs who provided innovative ideas, and guided them in the process of business start to work their innovative ideas and incorporate competitive start-ups.

  In order to enable the funding and resources to be utilized effectively, the CTI Startup project enrolled entrepreneurs under very strict procedure, which may be categorized into four stages[11]:

Data source: CTI Startup Site

Fig. 4  Startup Plan Flow Chart

  In the first stage, the CTI would preliminarily examine whether the applicant’s idea was innovative and whether it was technologically feasible, and help the applicant register with the CTI Startup project.  Upon registration, a more concrete professional examination would be conducted at the second stage.  The scope of examination included the technology, market, feasibility and management team’s competence.  After that, at the stage of professional guidance, each team would be assigned a professional “entrepreneurship mentor”, who would help the team develop further and optimize the enterprise’s strategy, flow and business model in the process of business start, and provide guidance and advice on the concrete business issues encountered by the start-up.  The stage of professional guidance was intended to guide start-ups to acquire the CTI Startup Label, as the CTI Startup Label was granted subject to very strict examination procedure.  For example, in 2012, the CTI Startup project accepted 78 applications for entrepreneurship guidance, but finally the CTI Startup Label was granted to 27 applications only[12]. Since 1996, a total of 296 start-ups have acquired the CTI Startup Label, and more than 86% thereof are still operating now[13].  Apparently, the CTI Startup Label represents the certification for innovation and on-going development competence; therefore, it is more favored by investors at the stage of fund raising.

Table 2  Execution of start-up plans for the latest three years

 

Quantity of application

Quantity of accepted application

Quantity of CTI Label granted

2012

177

78

27

2011

160

80

26

2010

141

61

24

Data source: CTI Annual Report, prepared by the Study

  Meanwhile, the “CTI Invest” platform was established to help start-up raise funds at the very beginning to help commercialize R&D results and cross the valley in the process of R&D innovation.  The platform is a private non-business-making organization, a high-tech start-up fund raising platform co-established by CTI and Swiss investors[14].  It is engaged in increasing exposure of the start-ups and contact with investors by organizing activities, in order to help the start-ups acquire investment funds.

(3)Facilitating transfer of knowledge and technology between the academic sector and industrial sector

  KTT Support (Knowledge & Technology Transfer (KTT Support) is identified as another policy instrument dedicated to boosting innovation by the CTI.  It is intended to facilitate the exchange of knowledge and technology between academic research institutions and private enterprises, in order to transfer and expand the innovation energy.

  As of 2013, the CTI has launched a brand new KTT Support project targeting at small-sized and medium-sized enterprises.  The new KTT Support project consisted of three factors, including National Thematic Networks (NTNs), Innovation Mentors, and Physical and web-based platforms.  Upon the CTI’s strict evaluation and consideration, a total of 8 cooperative innovation subjects were identified in 2012, namely, carbon fiber composite materials, design idea innovation, surface innovation, food study, Swiss biotechnology, wood innovation, photonics and logistics network, etc.[15]  One NTN would be established per subject.  The CTI would fund these NTNs to support the establishment of liaison channels and cooperative relations between academic research institutions and industries and provide small- and medium-sized enterprises in Switzerland with more rapid and easy channel to access technologies to promote the exchange of knowledge and technology between both parties.  Innovation Mentors were professionals retained by the CTI, primarily responsible for evaluating the small-sized and medium-sized enterprises’ need and chance for innovation R&D and helping the enterprises solicit competent academic research partners to engage in the transfer of technology.  The third factor of KTT Support, Physical and web-based platforms, is intended to help academic research institutions and private enterprises establish physical liaison channels through organization of activities and installation of network communication platforms, to enable the information about knowledge and technology transfer to be more transparent and communicable widely.

  In conclusion, the CTI has been dedicated to enhancing the link between scientific research and the industries and urging the industrial sector to involve and boost the R&D projects with market potential.  The CTI’s business lines are all equipped with corresponding policy instruments to achieve the industrial-academic cooperation target and mitigate the gap between the industry and academic sectors in the innovation chain.  The various CTI policy instruments may be applied in the following manner as identified in the following figure.

Data source: CTI Annual Report 2011

Fig. 5  Application of CTI Policy Instrument to Innovation Chain

III. Swiss Technology R&D Budget Management and Allocation

  The Swiss Federal Government has invested considerable expenditures in technology R&D.  According to statistic data provided by Swiss Federal Statistical Office (FSO) and OECD, the Swiss research expenditures accounted for 2.37% of the Federal Government’s total expenditures, following the U.S.A. and South Korea (see Fig. 6).  Meanwhile, the research expenditures of the Swiss Government grew from CHF2.777 billion in 2000 to CHF4.639 billion in 2010, an average yearly growth rate of 5.9% (see Fig. 7).  It is clear that Switzerland highly values its technology R&D.

Data source: FSO and OECD

Fig. 6 Percentage of Research Expenditures in Various Country Governments’ Total Expenditures (2008)

Data source: FSO and OECD

Fig. 7  Swiss Government Research Expenditures 2000-2010

1.Management of Swiss Technology R&D Budget

  Swiss research expenditures are primarily allocated to the education, R&D and innovation areas, and play an important role in the Swiss innovation system.  Therefore, a large part of the Swiss research expenditures are allocated to institutions of higher education, including ETH, universities, and UASs.  The Swiss research expenditures are utilized by three hierarchies[16] (see Fig. 8):

  1. Government R&D funding agencies: The Swiss research budget is primarily executed by three agencies, including SERI, Federal Department of Economic Affairs, Education and Research, and Swiss Agency for Development and Cooperation (SDC).
  2. Intermediary R&D funding agencies: Including SNSC and CTI.
  3. Funding of R&D performing institutions: Including private enterprises, institutions of higher education and private non-profit-making business, et al.

  Therefore, the Swiss Government research expenditures may be utilized by the Federal Government directly, or assigned to intermediary agencies, which will allocate the same to the R&D performing institutions.  SERI will allocate the research expenditures to institutions of higher education and also hand a lot of the expenditures over to SNSF for consolidated funding to the basic science of R&D.

Data source: FSO

Fig. 8  Swiss Research Fund Utilization Mechanism

~to be continued~


[1] ORGANIZATION FOR ECONNOMIC CO-OPERATION AND DEVELOPMENT [OECD], OECD Reviews of Innovation Policy: Switzerland 27 (2006).

[2] As of January 1, 2013, the Federal Ministry of Economic Affairs was reorganized, and renamed into Federal Department of Economic Affairs, Education and Research (EAER).

[3] The Commission for Technology and Innovation CTI, THE COMMISSION FOR TECHOLOGY AND INNOVATION CTI, http://www.kti.admin.ch/org/00079/index.html?lang=en (last visited Jun. 3, 2013).

[4] Id.

[5] CTI INVEST, Swiss Venture Guide 2012 (2012), at 44, http://www.cti-invest.ch/getattachment/7f901c03-0fe6-43b5-be47-6d05b6b84133/Full-Version.aspx (last visited Jun. 4, 2013).

[7] CTI Voucher, THE COMMISSION FOR TECHOLOGY AND INNOVATION CTI, http://www.kti.admin.ch/projektfoerderung/00025/00135/index.html?lang=en (last visited Jun. 3, 2013).

[8] Id.

[10] CTI Start-up Brings Science to Market, THE COMMISSION FOR TECHOLOGY AND INNOVATION CTI, http://www.ctistartup.ch/en/about/cti-start-/cti-start-up/ (last visited Jun. 5, 2013).

[11] Id.

[12] Supra note 8, at 45.

[13] Id.

[14] CTI Invest, http://www.cti-invest.ch/About/CTI-Invest.aspx (last visited Jun. 5, 2013).

[15] KTT Support, CTI, http://www.kti.admin.ch/netzwerke/index.html?lang=en (last visited Jun.5, 2013).

[16] Swiss Federal Statistics Office (SFO), Public Funding of Research in Switzerland 2000–2010 (2012), available at http://www.bfs.admin.ch/bfs/portal/en/index/themen/04/22/publ.Document.163273.pdf (last visited Jun. 20, 2013).

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※Impact of Government Organizational Reform to Research Legal System and Response Thereto (2) – Observation of the Swiss Research Innovation System,STLI, https://stli.iii.org.tw/en/article-detail.aspx?no=105&tp=2&i=168&d=7701 (Date:2021/05/16)
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Based on a sound legal system, the government will establish institutionalized and long-term operation modes and plan appropriate organizational structures through the discussion of experts and scholars from all walks of life.   Third, formulating Information and Communication Safety Management Act and planning of the Fifth National Development Program for Information and Communication Security: The government is now actively promoting the Information and Communication Safety Management Act as the cornerstone for the development of the national digital security and information security industry. The main content of the Act provides that the applicable authorities should set up security protection plan at the core of risk management and the procedures of notification and contingency measures, and accept the relevant administrative check. Besides the vision of the Fifth National Development Program for Information and Communication Security which the government is planning now is to build a safe and reliable digital economy and establish a safe information and communication environment by completing the legal system of information and communication security environment, constructing joint defense system of the national Information and Communication security, pushing up the self-energy of the industries of information security and nurture high-quality human resources for elite talents for information security. 4. THE DIGITAL NATION AND INNOVATIVE ECONOMIC DEVELOPMENT PLAN   The Digital Nation and Innovative Economic Development Plan (2017-2025) known as “DIGI+” plan, approved by the Executive Yuan on November 24, 2016. The plan wants to grow nation’s digital economy to NT $ 6.5 trillion (US$205.9 billion), improve the digital lifestyle services penetration rate to 80 %, increase broadband connections to 2 Gbps, ensure citizens’ basic rights to have 25 Mbps broadband access, and put our nation among the top 10 information technology nations worldwide by 2025.   The plan contains several important development strategies: DIGI+ Infrastructure: Build infrastructure conducive to digital innovation. DIGI+ Talent: Cultivate digital innovation talent. DIGI+ Industry: Support cross-industry transformation through digital innovation. DIGI+ Rights: Make R.O.C. an advanced society that respects digital rights and supports open online communities. DIGI+ Cities: Build smart cities through cooperation among central and local governments and the industrial, academic and research sectors. DIGI+ Globalization: Boost nation’s standing in the global digital service economy.   The plan also highlights few efforts:   First is to enrich “soft” factors and workforce to create an innovative environment for digital development. To construct this environment, the government will construct an innovation-friendly legal framework, cultivate interdisciplinary digital talent, strengthen research and develop advanced digital technologies.   Second is to enhance digital economy development. The government will incentivize innovative applications and optimize the environment for digital commerce.   Third, the government will develop an open application programming interface for government data and create demand-oriented, one-stop smart government cloud services.   Fourth, the government will ensure broadband access for the disadvantaged and citizens of the rural area, implement the participatory process, enhance different kinds of international cooperation, and construct a comprehensive humanitarian legal framework with digital development.   Five is to build a sustainable smart country. The government will use smart network technology to build a better living environment, promote smart urban and rural area connective governance and construction and use on-site research and industries innovation ecosystem to assist local government plan and promote construction of the smart country.   In order to achieve the overall effectiveness of the DIGI + program, interdisciplinary, inter-ministerial, inter-departmental and inter-departmental efforts will be required to collaborate with the newly launched Digital National Innovation Economy (DIGI +) Promotion Team. 5. ARTIFICIAL INTELLIGENCE SCIENTIFIC RESEARCH STRATEGY   The Ministry of Science and Technology (MOST) reported strategy plan for artificial intelligence (AI) scientific research at Cabinet meeting on August 24, 2017. Artificial intelligence is a powerful and inevitable trend, and it will be critical to R.O.C.’s competitiveness for the next 30 years.   The ministry will devote NT$16 billion over the next five years to building an AI innovation ecosystem in R.O.C. According to MOST, the plan will promote five strategies:   1. Creating an AI platform to provide R&D services   MOST will devote NT$5 billion over the next four years to build a platform, integrating the resources, providing a shared high-speed computing environment and nurturing emerging AI industries and applications.   2. Establishing an AI innovative research center   MOST will four artificial intelligence innovation research centers across R.O.C. as part of government efforts to enhance the nation’s competitiveness in AI technology. The centers will support the development of new AI in the realms of financial technology, smart manufacturing, smart healthcare and intelligent transportation systems.   3. Setting up AI robot maker spaces   An NT$2 billion, four-year project assisting industry to develop the hardware-software integration of robots and innovative applications was announced by the Ministry of Science and Technology.   4. Subsidizing a semiconductor “moonshot” program to explore ambitious and groundbreaking smart technologies   This program will invest NT$4 billion from 2018 through 2021 into developing semiconductors and chip systems for edge devices as well as integrating the academic sector’s R&D capabilities and resources. the project encompasses cognitive computing and AI processor chips; next-generation memory designs; process technologies and materials for key components of sensing devices; unmanned vehicles, AR and VR; IoT systems and security.   5. Organizing Formosa Grand Challenge competitions   The program is held in competitions to engage young people in the development of AI applications.   The government hopes to extend R.O.C.’s industrial advantages and bolster the country’s international competitiveness, giving R.O.C. the confidence to usher in the era of AI applications. All of these efforts will weave people, technologies, facilities, and businesses into a broader AI innovation ecosystem. 6. INTELLIGENT TRANSPORTATION SYSTEM PLANS   Ministry of Transportation and Communications (MOTC) launched plans to develop intelligent transportation systems at March 7th in 2017. MOTC integrates transportation and information and communications technology through these plans to improve the convenience and reduce the congestion of the transportation. These plans combine traffic management systems for highways, freeways and urban roads, a multi-lane free-flow electronic toll collection system, bus information system that provides timely integrated traffic information services, and public transportation fare card readers to reduce transport accidence losses, inconvenience of rural area, congestion of main traffic arteries and improve accessibility of public transportation.   There are six plans are included: 1. Intelligent transportation safety plan; 2. Relieve congestion on major traffic arteries; 3. Make transportation more convenient in Eastern Taiwan and remote areas; 4. Integrate and share transportation resources; 5. Develop “internet-of-vehicles” technology applications; and 6. Fundamental R&D for smart transportation technology.   These plans promote research and development of smart vehicles and safety intersections, develop timely bus and traffic information tracking system, build a safe system of shared, safe and green-energy smart system, and subsidize the large vehicles to install the vision enhancement cameras to improve the safety of transportation. These plans also use eTag readers, vehicle sensors and info communication technologies to gather the traffic information and provide timely traffic guidance, reduce the congestion of the traffic flow. These plans try to use demand-responsive transit system with some measures such as combine public transportation and taxi, to improve the flexibility of the public traffic service and help the basic transportation needs of residents in eastern Taiwan and rural areas to be fulfilled. A mobile transport service interface and a platform that integrating booking and payment processes are also expected to be established to provide door-to-door transportation services and to integrate transportation resources. And develop demonstration projects of speed coordination of passenger coach fleets, vehicle-road interaction technology, and self-driving car to investigate and verify the issues in technological, operational, industrial, legal environments of internet-of-vehicles applications in our country. Last but not least, research and development on signal control systems that can be used in both two and four-wheeled vehicles, and deploy an internet-of-vehicles prototype platform and develop drones traffic applications.   These plans are expected to reduce 25% traffic congestion, 20% of motor vehicle incidence, leverage 10% using rate of public transportation, raise 20% public transportation service accessibility of rural area and create NT$30 billion production value. After accomplishing these targets, the government can establish a comprehensive transportation system and guide industry development of relating technology areas.   Through the aforementioned initiatives, programs, and plans, the government wants to construct the robust legal framework and policy environment for digital innovation development, and facilitate the quality of citizens in our society.

An Analysis of the Recusal Mechanism in the Latest Revision of the Government Procurement Act and Regulations Governing Procurements for Scientific and Technological Research and Development

An Analysis of the Recusal Mechanism in the Latest Revision of the Government Procurement Act and Regulations Governing Procurements for Scientific and Technological Research and Development 1. Introduction   Article 1 of the Government Procurement Act (hereinafter referred to as the Act) reveals that “This Act is enacted to establish a government procurement system that has fair and open procurement procedures, promotes the efficiency and effectiveness of government procurement operation, and ensures the quality of procurement.” Therefore, a recusal mechanism for reviewing qualification/disqualification of tenders and bidders is highly essential, for example, the head of the agency or its related persons should disclose the conflict of interests. After amended and promulgated on May 22, 2019 (Presidential Decree Hua-tzung-1 Yi No. 10800049691), the Act was revised with the identical legislative principle of the Act on Recusal of Public Servants Due to Conflicts of Interest. In other words, a more flexible and transparent mechanism has been adopted, which is more advanced and ideal for both procurement authority and external supervisors. 2. The New Recusal Mechanism of the Act Enhances the Flexibility and Transparency   The revision struck out the Paragraph 4, Article 15 of the Act, and the regulation related to the recusal mechanism shall be comply with the Act on Recusal of Public Servants Due to Conflicts of Interest, especially the qualification/disqualification provision of the “related persons.” The new government procurement procedure adopted a more flexible and transparent practice, “disclosure in advance and publication afterwards.” The detailed analysis is as follows. (1) Before the Act amended, the personnel of a procuring entity and its related persons shall withdraw themselves from the procurement.   Before the Act amended, the personnel of a procuring entity and its related persons shall withdraw themselves from the procurement. According to the previous Paragraph 4 of Article 15 (4), “Suppliers or persons in charge shall not participate in the procurement if they have connections with the agency’s head described in Paragraph 2. However, if the implementation of this paragraph is against fair competition or public interest, the exclusion can be exempted with the authority’s approval.” The Paragraph 2 mentioned specified, “The personnel of a procuring entity shall withdraw themselves from procurement and all related matters thereof if they or their spouses, relatives by blood or by marriage within three degrees, or family members living together with them have interests involved therein.” Simply put, legislators considered that suppliers or persons in charge shall not participate in an agency's procurement if they have conflict of interests with its head. For instance, the spouses, all the relatives within the third degree by consanguinity (blood) or by affinity (marriage), or family members living together with the head of the agency, cannot involve in the procurement of the agency. Furthermore, if a legal entity or an organization is directed by the relatives of the head of a government agency mentioned, it is disqualified from the procurement. (2) After the Act amended, the recusal of related persons substituted by self-disclosure and information publication norms   According to the Amendment, the Act was amended because the content of the article is existed in Article 9 of Act on Recusal of Public Servants Due to Conflicts of Interest; thus, Article 15 of the Act is hereby deleted. Recalling Article 9 of the previous Act on Recusal of Public Servants Due to Conflicts of Interest, “A public servant and his related persons shall not conduct transactions such as subsidizing, sales, lease, contracting, or other transactions conducted with consideration with the organ with which the public servant serves or the organs under his supervision.” For this reason, the amendment to Article 15 of Government Procurement Act is to regulate the mechanism of withdrawal of relevant parties by Article 14 of the existing Act on Recusal of Public Servants Due to Conflicts of Interest. However, the amendment of this article is greatly affected by the interpretation of judicial court no. 716, so it is necessary to briefly describe its key points as follows.   On the basis of the Judicial Yuan Justice Interpretation No. 716 [Transactions between public officials and their associates and service agencies shall be prohibited), adopting a constitutional interpretation of Article 9 of Act on Recusal of Public Servants Due to Conflicts of Interest, grand justice agreed this article does not contradict the proportion principle of article 23 of Constitution of the Republic of China (Taiwan), and it does not violate Article 15 “The right of existence, the right of work, and the right of property shall be guaranteed to the people” and Article 22 “All other freedoms and rights of the people that are not detrimental to social order or public welfare shall be guaranteed under the Constitution”, either. However, for public officials, if they are not allowed to participate in trading competition, it will result in the monopoly of other minority traders, which is not conducive to the public interest. Therefore, this interpretation holds that if the agency has conducted open and fair procedures in the transaction process, and there is sufficient anti-fraud regulation, whether there is still a risk of improper benefit transmission or conflict of interest, and it is necessary to prohibit the transaction of public officials' associates, the relevant authorities should make comprehensive review and improvement as soon as possible.   Accordingly, following interpretation no. 716, Act on Recusal of Public Servants Due to Conflicts of Interest was amended and published with 23 articles on 13 June, 2018. The withdrawal of interested parties is provided for in Article 14 and an additional six exceptions are provided, including: (1) The procurement carried out by public notice under the Government Procurement Act or pursuant to Article 105 of the same Act. (2) The property right in interest created for the procurement, sale by tender, lease by tender or tender solicitation carried out by public notice in a fair competitive manner pursuant to laws. (3) Subsidy requested in the legal capacity under laws; the subsidy to the public servant’s related person in an open and fair manner pursuant to laws, or the subsidy which might be against the public interest if it is prohibited and is granted subject to the competent authority’s approval. (4) The subject matter of the transaction is provided by the organ with which the public servant serves or the organs under his supervision, and traded at the official price. (5) The lease, acquisition, discretionary management, improvement and utilization of national non-public real estate requested by the state-owned enterprise in order to execute the national construction projects or public policies, or for the purpose of public welfare. (6) The subsidy and transaction under the specific amount.   The above amendments make the transactions between public officials and related parties that should be avoided in the past partially flexible now. In accordance with Paragraph 2 of the same article, in the case of the first three paragraphs of the proviso of Paragraph 1, the applicant or bidder shall voluntarily state his/her identity in the application or tender documents. After the subsidy or transaction is established, the agency shall disclose it together with its identity. That is to say, the self-disclosure is required beforehand and the information will go public afterwards to meet public expectations of transparency. This is also conducive to the supervision of all sectors, and conforms to the intention of the grand justice’s interpretation.   The reason why there is no need for government procurement to withdrawal is that the announcement process of the procurement is made in accordance with Government Procurement Act (including open tendering, selective tendering and restricted tendering through the announcement). There are strict procedures to follow and there is no conflict between the conflict of interest of public officials and the spirit of legislation. As to Paragraph 2 of other legal orders, the property right in interest created for the procurement, sale by tender, lease by tender or tender solicitation carried out by public notice in a fair competitive manner pursuant to laws. The legislative explanations are exemplified by the procurement (e.g. procurements for scientific and technological research and development) handled by the announcement in accordance with Fundamental Science and Technology Act. 3. Conclusion: It is suggested that relevant withdrawal regulations should be amended as soon as possible in procurements for scientific and technological research and development   The strike-out of the recusal provision of the Act does not mean that government procurement stoke out the recusal mechanism. The recusal mechanism is still stated in Article 14 of Act on Recusal of Public Servants Due to Conflicts of Interest. In addition to the advantages of the same regulations on the prohibition of transactions between related parties, it also enables the regulators with open and fair procedures and sufficient prevention of fraud, such as government procurement, to avoid evading so as not to harm the public interest. At the same time, supplemented by open and transparent disclosure, the amendment is a positive change of legislation.   Meanwhile, this paper believes that Government Procurement Act has adopted the mechanism of flexibility and transparency requirements for the procurement object avoidance regulations, and procurements for scientific and technological research and development should revise relevant withdrawal regulations as soon as possible. In accordance with Paragraph 4 of Article 6 of Fundamental Science and Technology Act and the authorization, Regulations Governing Procurements for Scientific and Technological Research and Development (hereinafter referred to as the regulatory regulations) is established. According to Article 8 (2) and (3) of the regulation, a responsible person, partner, or representative of the public school, public research institute (organization), or juristic person or entity performing the scientific research procurement may not serve as a responsible person, partner, or representative of the supplier. The supplier and the juristic person or entity performing the scientific research procurement may not at the same time be affiliated with each other, or affiliated to the same other enterprise. From the perspective of the article structure, the withdrawal regulation for scientific research procurement is within the norm of Article 15 of Government Procurement Act before the amendment, but it includes regulations for affiliated enterprises, which is not included in Article 15. The amendment to Article 14 of Act on Recusal of Public Servants Due to Conflicts of Interest also states that the proviso of Paragraph 1 of scientific research procurement “other procurements that are regulated by fair competition and by means of an announcement procedure” can also prove that the mechanism for scientific research procurement should adopt this provision. Therefore, it is recommended that the original procurements for scientific and technological research that is independent from Government Procurement Act should be amended by the competent authority as soon as possible in order to comply with the relevant provisions of Article 8 of Regulations Governing Procurements for Scientific and Technological Research and Development and to comply with the original intention of the Regulations Governing Procurements for Scientific and Technological Research and Development, and to avoid stricter regulations on scientific procurement than government procurement. Meanwhile, it is in accordance with the spirit of the grand justice’s interpretation No. 716.

Executive Yuan’s call to action:“Industrial Upgrading and Transformation Action Plan”

I.Introduction Having sustained the negative repercussions following the global financial crisis of 2008, Taiwan’s average economic growth rate decreased from 4.4 percent (during 2000-2007 years) to 3 percent (2008-2012). This phenomenon highlighted the intrinsic problems the Taiwanese economic growth paradigm was facing, seen from the perspective of its development momentum and industrial framework: sluggish growth of the manufacturing industries and the weakening productivity of the service sector. Moreover, the bleak investment climate of the post-2008 era discouraged domestic investors injecting capital into the local economy, rendering a prolonged negative investment growth rate. To further exacerbation, the European Debt Crisis of 2011 – 2012 has impacted to such detriment of private investors and enterprises, that confidence and willingness to invest in the private sector were utterly disfavored. It can be observed that as Taiwan’s industrial core strength is largely concentrated within the the manufacturing sector, the service sector, on the other hand, dwindles. Similarly, the country’s manufacturing efforts have been largely centered upon the Information & Communications Technology (ICT) industry, where the norm of production has been the fulfillment of international orders in components manufacturing and Original Equipment Manufacturing (OEM). Additionally, the raising-up of society’s ecological awareness has further halted the development of the upstream petrochemical and metal industry. Consumer goods manufacturing growth impetus too has been stagnated. Against the backdrop of the aforementioned factors at play as well as the competitive pressure exerted on Taiwan by force of the rapid global and regional economic integration developments, plans to upgrade and transform the existing industrial framework, consequently, arises out as an necessary course of action by the state. Accordingly, Taiwan’s Executive Yuan approved and launched the “Industrial Upgrading and Transformation Action Plan”, on the 13th of October 2014, aiming to reform traditional industries, reinforcing core manufacturing capacities and fostering innovative enterprises, through the implementation of four principal strategies: Upgrading of Product Grade and Value, Establishment of Complete Supply Chain, Setting-up of System Integration Solutions Capability, Acceleration of Growth in the Innovative Sector. II.Current challenges confronting Taiwanese industries 1.Effective apportionment of industrial development funds Despite that Research and Development (R&D) funds takes up 3.02% of Taiwan’s national GDP, there has been a decrease of the country’s investment in industrial and technology research. Currently Taiwan’s research efforts have been directed mostly into manufacturing process improvement, as well as into the high-tech sector, however, traditional and service industries on the other hand are lacking in investments. If research funds for the last decade could be more efficiently distributed, enterprises would be equally encouraged to likewise invest in innovation research. However, it should be noted that Taiwan’s Small and Medium Enterprises (SME) based on their traditional developmental models, do not place research as their top priority. Unlike practices in countries such as Germany and Korea, the research fund input by private enterprises into academic and research institutions is still a relatively unfamiliar exercise in Taiwan. With regards to investment focus, the over-concentration in ICTs should be redirected to accommodate growth possibilities for other industries as well. It has been observed that research investments in the pharmaceutical and electric equipment manufacturing sector has increased, yet in order to not fall into the race-to-the-bottom trap for lowest of costs, enterprises should be continually encouraged to develop high-quality and innovative products and services that would stand out. 2.Human talent and labor force issues Taiwan’s labor force, age 15 to 64, will have reached its peak in 2015, after which will slowly decline. It has been estimated that in 2011 the working population would amount to a meager 55.8%. If by mathematical deduction, based on an annual growth rate of 3%, 4% and 5%, in the year 2020 the labor scarcity would increase from 379,000, 580,000 to 780,000 accordingly. Therefore, it is crucial that productivity must increase, otherwise labor shortage of the future will inevitably stagnate economic growth. Notwithstanding that Taiwan’s demographical changes have lead to a decrease in labor force; the unfavorable working conditions so far has induced skilled professionals to seek employment abroad. The aging society along with decrease in birth rates has further exacerbated the existing cul-de-sac in securing a robust workforce. In 1995 the employment rate under the age of 34 was 46.35%, yet in 2010 it dropped to a daunting 37.6%. 3.Proportional land-use and environmental concerns Taiwan’s Environmental Impact Assessment (EIA) is a time-consuming and often unpredictable process that has substantially deterred investor’s confidence. Additionally, there exists a disproportionate use of land resources in Taiwan, given that demand for its use predominantly stems from the northern and middle region of the country. Should the government choose to balance out the utilization of land resources across Taiwan through labor and tax policies, the situation may be corrected accordingly. III.Industrial Upgrading and Transformation Strategies The current action plan commences its implementation from October 2014 to end of December 2024. The expected industrial development outcomes are as follows: (1) Total output value of the manufacturing sector starting from 2013 at NTD 13.93 trillion is expected to grow in 2020 to NTD 19.46 trillion. (2) Total GDP of the service sector, starting at 3.03 trillion from 2011 is expected to grow in 2020 to 4.75 trillion NTD. 1.Strategy No.1 : Upgrading of product grade and value Given that Taiwan’s manufacturing industry’s rate for added value has been declining year after year, the industry should strive to evolve itself to be more qualitative and value-added oriented, starting from the development of high-end products, including accordingly high-value research efforts in harnessing essential technologies, in the metallic materials, screws and nuts manufacturing sector, aviation, petrochemical, textile and food industries etc. (1) Furtherance of quality research Through the employment of Technology Development Program (TDP) Organizations, Industrial TDP and Academic TDP, theme-based and pro-active Research and Development programs, along with other related secondary assistance measures, the industrial research capability will be expanded. The key is in targeting research in high-end products so that critical technology can be reaped as a result. (2) Facilitating the formation of research alliances with upper-, mid- and downstream enterprises Through the formation of research and development alliances, the localization of material and equipment supply is secured; hence resulting in national autonomy in production capacity. Furthermore, supply chain between industrial component makers and end-product manufacturers are to be conjoined and maintained. National enterprises too are to be pushed forth towards industrial research development, materializing the technical evolution of mid- and downstream industries. (3) Integrative development assistance in Testing and Certification The government will support integrative development in testing and certification, in an effort to boost national competitive advantage thorough benefitting from industrial clusters as well as strengthening value-added logistics services, including collaboration in related value-added services. (4) Establishment of international logistics centre Projection of high-value product and industrial cluster image, through the establishment of an international logistics centre. 2.Strategy No.2 : Establishment of a Complete Supply Chain The establishing a robust and comprehensive supply chain is has at its aim transforming national production capabilities to be sovereign and self-sustaining, without having to resort to intervention of foreign corporations. This is attained through the securing of key materials, components and equipments manufacturing capabilities. This strategy finds its application in the field of machine tool controllers, flat panel display materials, semiconductor devices (3D1C), high-end applications processor AP, solar cell materials, special alloys for the aviation industry, panel equipment, electric vehicle motors, power batteries, bicycle electronic speed controller (ESC), electrical silicon steel, robotics, etc. The main measures listed are as follows: (1) Review of industry gaps After comprehensive review of existing technology gaps depicted by industry, research and academic institutions, government, strategies are to be devised, so that foreign technology can be introduced, such as by way of cooperative ventures, in order to promote domestic autonomous development models. (2) Coordination of Research and Development unions – building-up of autonomous supply chain. Integrating mid- and downstream research and development unions in order to set up a uniform standard in equipment, components and materials in its functional specifications. (3) Application-theme-based research programs Through the release of public notice, industries are invited to submit research proposals focusing on specific areas, so that businesses are aided in developing their own research capabilities in core technologies and products. (4) Promotion of cross-industry cooperation to expand fields of mutual application Continuously expanding field of technical application and facilitating cross-industry cooperation; Taking advantage of international platform to induce cross-border technical collaboration. 3.Strategy No.3 : Setting-up of System Integration Solutions capability Expanding turnkey-factory and turnkey-project system integration capabilities, in order to increase and stimulate export growth; Combination of smart automation systems to strengthen hardware and software integration, hence, boosting system integration solution capacity, allowing stand-alone machinery to evolve into a total solution plant, thus creating additional fields of application and services, effectively expanding the value-chain. These type of transitions are to be seen in the following areas: turnkey-factory and turnkey-project exports, intelligent automated manufacturing, cloud industry, lifestyle (key example: U-Bike in Taipei City) industry, solar factory, wood-working machinery, machine tools, food/paper mills, rubber and plastic machines sector. Specific implementation measure s includes: (1) Listing of national export capability – using domestic market as test bed for future global business opportunities Overall listing of all national system integration capabilities and gaps and further assistance in building domestic “test beds” for system integration projects, so that in the future system-integration solutions can be exported abroad, especially to the emerging economies (including ASEAN, Mainland China) where business opportunities should be fully explored. The current action plan should simultaneously assist these national enterprises in their marketing efforts. (2) Formation of System Integration business alliances and Strengthening of export capability through creation of flagship team Formation of system integration business alliances, through the use of national equipment and technology, with an aim to comply with global market’s needs. Promotion of export of turnkey-factory and turnkey-projects, in order to make an entrance to the global high-value system integration market. Bolstering of international exchanges, allowing European and Asian banking experts assist Taiwanese enterprises in enhancing bids efforts. (3) Establishing of financial assistance schemes to help national enterprises in their overseas bidding efforts Cooperation with financial institutes creating financial support schemes in syndicated loans for overseas bidding, in order to assist national businesses in exporting their turnkey-factories and turnkey-solutions abroad. 4. Strategy No.4 : Acceleration of growth in the innovative sectors Given Taiwan economy’s over-dependence on the growth of the electronics industry, a new mainstream industry replacement should be developed. Moreover, the blur distinction between the manufacturing, service and other industries, presses Taiwan to develop cross-fields of application markets, so that the market opportunities of the future can be fully explored. Examples of these markets include: Smart Campus, Intelligent Transportation System, Smart Health, Smart City, B4G/5G Communications, Strategic Service Industries, Next-Generation Semiconductors, Next-Generation Visual Display, 3D Printing, New Drugs and Medical Instruments, Smart Entertainment, Lifestyle industry (for instance the combination of plan factory and leisure tourism), offshore wind power plant, digital content (including digital learning), deep sea water. Concrete measures include: (1) Promotion of cooperation between enterprises and research institutions to increase efficiency in the functioning of the national innovation process Fostering of Industry-academic cooperation, combining pioneering academic research results with efficient production capability; Cultivation of key technology, accumulation of core intellectual property, strengthening integration of industrial technology and its market application, as well as, establishment of circulation integration platform and operational model for intellectual property. (2) Creating the ideal Ecosystem for innovation industries Strategic planning of demo site, constructing an ideal habitat for the flourishing of innovation industries, as well as the inland solution capability. Promotion of international-level testing environment, helping domestic industries to be integrated with overseas markets and urging the development of new business models through open competition. Encouraging international cooperation efforts, connecting domestic technological innovation capacities with industries abroad. (3) Integration of Cross-Branch Advisory Resources and Deregulation to further support Industrial Development Cross-administrations consultations further deregulation to support an ideal industrial development environment and overcoming traditional cross-branch developmental limitations in an effort to develop innovation industries. IV. Conclusion Taiwan is currently at a pivotal stage in upgrading its industry, the role of the government will be clearly evidenced by its efforts in promoting cross-branch/cross-fields cooperation, establishing a industrial-academic cooperation platform. Simultaneously, the implementation of land, human resources, fiscal, financial and environmental policies will be adopted to further improve the investment ambient, so that Taiwan’s businesses, research institutions and the government could all come together, endeavoring to help Taiwan breakthrough its currently economic impasse through a thorough industrial upgrading. Moreover, it can be argued that the real essence of the present action plan lies in the urge to transform Taiwan’s traditional industries into incubation centers for innovative products and services. With the rapid evolution of ICTs, accelerating development and popular use of Big Data and the Internet of Things, traditional industries can no longer afford to overlook its relation with these technologies and the emerging industries that are backed by them. It is only through the close and intimate interconnection between these two industries that Taiwan’s economy would eventually get the opportunity to discard its outdated growth model based on “quantity” and “cost”. It is believed that the aforementioned interaction is an imperative that would allow Taiwanese industries to redefine its own value amidst fierce global market competition. The principal efforts by the Taiwanese government are in nurturing such a dialogue to occur with the necessary platform, as well as financial and human resources. An illustration of the aforementioned vision can be seen from the “Industrie 4.0” project lead by Germany – the development of intelligent manufacturing, through close government, business and academic cooperation, combining the internet of things development, creating promising business opportunities of the Smart Manufacturing and Services market. This is the direction that Taiwan should be leading itself too. References 1.Executive Yuan, Republic of China http://www.ey.gov.tw/en/(last visited: 2015.02.06) 2.Industrial Development Bureau, Ministry of Economic Affairs http://www.moeaidb.gov.tw/(last visited: 2015.02.06) 3.Industrial Upgrading and Transformation Action Plan http://www.moeaidb.gov.tw/external/ctlr?PRO=filepath.DownloadFile&f=policy&t=f&id=4024(last visited: 2015.02.06)

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