Abstract
Taiwan has been hit hard by the global economic downturn because of its
reliance on export revenues.
This has fed through into all sectors of the
economy, including infrastructure. In BMI’s Q309 Taiwan
Infrastructure Report, we are now forecasting a 15% y-o-y contraction in the
real industry value in 2009,
to reach a nominal value of TWD228bn
(US$6.74bn).
There has been limited activity in the country’s
infrastructure sector, despite the government’s
TWD483bn (US$14.4bn)
stimulus package, which allocated a portion of funds to infrastructure
development. In the transport sector a number of large passenger transport
projects progressed. The
Taichung Metro project was approved in April,
with an increased budget of US$1.52bn, and construction
is due to start in
October 2009. Construction started in February 2009 on the US$3.5bn airport
express
train, which will link Taipei with Taoyuan International Airport.
The opening up of shipping lines
between Taiwan and China is proving
beneficial to Taiwan’s port sector, with three major Chinese
shipping companies – COSCO, China Shipping Container Lines and China
Merchants Group –
announcing plans in May 2009 to invest in
Kaohsiung port, which is one of Taiwan’s largest. However,
more
information on this has not been released.
In the utilities sector, the
lack of clear policy guidelines and limited incentives for private investors
in the
wind sector was highlighted by Germany’s Infravest Wind Power
which stated in April that it would
withdraw its additional investment
plans in Taiwan' s wind power sector for these reasons. Karl-Eugen
Feifel,
chairman of Infravest, has stated that the company is suspending plans for a
further investment of
more than EUR500mn (US$667.95mn) over the next five
years.
The limited activity recorded across the sector highlights the
decline in the construction industry over
2009 and is the reason for our
aggressive revision of our forecasts for the construction industry. BMI is
now forecasting a 15% contraction y-o-y, following a 4.2% contraction
estimated in 2008. This
contraction is attributable to a variety of
factors. Most pertinently, we have revised our forecasting
methodology,
bringing closer alignment with real capital investment; this is forecast to
contract by 15%
y-o-y in 2009, feeding into our downward revision. In
addition, limited investor appetite and ability
combined with reduced
demand for infrastructure as well as commercial and industrial property is
limiting the number of new projects. Finally the government, suffering from
reduced export revenues, a
contraction in real GDP and a forecast 4.8%
fiscal deficit in 2009, is unlikely to be able to prop up the
sector
beyond the existing stimulus package. Little evidence of these funds feeding
through to activity in
the sector has been measured thus far, so we
believe it is unlikely to boost the sector until 2010, when
growth will
reach 5.86% y-o-y.
| 
View Cart
