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Interior Minister Jiang Yi-huah

A Public Sector Prescription for Housing Ills

In an exclusive interview, Taiwan's Interior Minister contemplates the pressing concerns of the island's sky-high real estate market, and the policy options that can help make housing more affordable.

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A Public Sector Prescription for Housing Ills

By Rebecca Lin
From CommonWealth Magazine (vol. 467 )

On the day Interior Minister Jiang Yi-huah sat down for an interview with CommonWealth Magazine, he had only recently returned from a hectic visit to Japan.

Avoiding the media spotlight, the minister and five of his department heads set off on a low-key visit in search of enlightenment. Their objective was to learn more about how the Japanese had accomplished the urban renewal and aesthetic rejuvenation projects in Tokyo's Roppongi Hills and Midtown areas. The delegation also inspected Tokyo's Toei Jutaku (Tokyo Metropolitan Government-run public housing, similar in concept to Taiwan's "social housing") and observed absentee voting procedures.

Within just a few days, the Ministry of the Interior had not only completed a draft of a "Housing Act" that had been on hold for more than a decade, but had also completed a proposal for a Taiwanese "housing policy."

Amidst a blitz of media hype regarding the havoc the "luxury tax" had wrought within the property market, the ministry quietly released Taiwan's first "public housing policy."

The term "ant tribe," first coined in China, refers to poor, young adults living in cramped conditions, like a colony of ants, but by extension could apply to any of the millions of city dwellers who can't afford decent housing – many of them middle class people in their 40s and 50s. For Taiwan's own struggling "ant tribe," what does the future hold?

Following are highlights from the interview.


Q: What is your take on high housing prices?

A: Our housing-to-income ratio is one of the world's highest. Among the world's 100 major cities, we rank in the top five, so it's quite high. Even if you're a middle class assistant professor, it'll take 20 or more years to own your own home, so there's a fairly deep sense of frustration out there. And it goes without saying that there's a fear that for the average [recent] college graduate it may take even longer. I personally believe that this is an issue worthy of concern.

As I see it, this situation has only worsened during the more than two years of the Ma Administration. When governing a nation or society, it's crucial to make sure the people's minds are at rest, and the government needs to step up and get some things done.

Q: Hong Kong and Singapore both have a comprehensive housing policy. As the Ministry of the Interior sees it, what kind of housing policy should Taiwan have?

A: Overall, the first step for government agencies will be to monitor the market dynamics; we can't have unreasonable speculation. We can use tax controls, public transparency of financing information, prescribing construction regulations and standards to allow the market to develop reasonably. The second is to establish sound rules of the game within the rental market and related businesses. My ministry will formulate regulations and standards for the rental market and cooperate with the Ministry of Finance to turn the rental market into an above-board economy rather than an underground economy.

Third, the more open and transparent real estate information is, including transactions and vacant units, the better. I'm hopeful that this year we can use the power of the state to establish a comprehensive information platform to obtain pricing information from each actual transaction for publication on the Internet.

Fourth, there's urban renewal. If we are to raise the quality of housing, it's essential to give the city a facelift, to replace the old with the new. At the end of last year, we proposed an urban renewal business action plan; simply put, the government would invest NT$18.4 billion to subsidize urban renewal between 2011 and 2014.

Rent Subsidies Still Vital

In formulating housing policy, public agencies must first set "minimum livability standards," such as earthquake-proofing indices and fire safety equipment. Meanwhile, standards on construction quality must be prescribed so our citizens aren't living in ramshackle housing.

Next, we have to address the needs of middle and lower income citizens, those with household incomes below the 60th percentile, by offering public housing units, either for rent or for purchase, so they can have affordable housing.

The third area to address is social housing. This should not only be located in public transport-accessible areas of Greater Taipei or areas within the city center, it must also be of high-quality construction and mixed income housing to attract not only young couples, families and students, but also with about 5 percent of the units set aside for the disadvantaged, who would be scattered throughout the whole rather than simply concentrated in one area.

Fourth, any policy must deal with subsidization. Given that there will never be enough social housing, rent subsidies will continue to form the backbone of housing efforts. In 2012, rental subsidies will rise from the current NT$3,600 to NT$4,600. Finally, all currently existing public rental housing units will undergo top-to-bottom renovation.

Q: Does your proposed housing policy and methodology have a specific core value concept such as Singapore's "home ownership scheme"?

A: What we want to accomplish is to see that everybody has appropriate housing and enjoys respectable living conditions, not merely resolving that issue for the most disadvantaged among us. In the past, government agencies did not get overly involved; what we want to do now is get those agencies more involved in the effort and lay a high-quality foundation.

Q: Taiwan's housing market is dominated by the private sector, with extremely limited public-sector involvement. Will the new housing policy offer the public more choices?

A: The housing policy itself sets policy objectives to be attained but will be unable to resolve the issue of high housing prices. This cannot be a one-versus-the-other relationship, otherwise the pressure on our Construction and Planning Agency will be too great. Facing up to this issue will require concerted inter-ministerial effort and the employment of more policies to meet the challenge, including housing, taxation and transportation policies. It's a multifaceted issue.

But the authority of housing agencies within various government departments should be elevated and additional personnel brought on board. The past downsizing of these agencies was due to the notion that the government should not play too big a role after public housing projects had been discarded. But housing is just as vital as staple foodstuffs. I definitely feel that this is one area where we should move a little closer to socialist countries, but there is no need for as massive an effort as Singapore has undertaken.

Translated from the Chinese by Brian Kennedy

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Keywords:

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