Taiwan considers privatizing defense company AIDC
TSU lawmaker voices opposition over China concerns
Taiwan News, Staff Writer
2013-04-17 04:39 PM
TAIPEI (Taiwan News) – The government said Wednesday it was willing to consider the privatization of defense contractor Aerospace Industrial Development Corporation but the opposition warned of the national security implications.

The Taichung-based company was founded by Taiwan’s Air Force in 1969 and has been instrumental in the development of weapons systems for the country’s military, including the Indigenous Defense Fighter.

The company’s business has been turning positive for the past six years while the outlook for the next five years is also good, so now would be the right time to think about privatization, said Ho Hua-hsun, an official with the State-owned Enterprise Commission at the Ministry of Economic Affairs.

Last year, the defense contractor made a profit of NT$1.25 billion (US$42.1 million), so now would be the right time to move on privatization, Ho said, adding his department had filed a privatization planning report to the Cabinet on March 28.

Opposition Taiwan Solidarity Union lawmaker Hsu Chung-hsin warned that since AIDC was involved in key defense research and development projects, privatization might not be the best option to allow the company to take on a more international profile and to improve its competitiveness. He voiced concern that private shareholders might leak sensitive information about past and present defense projects.

AIDC Vice President Lin Nan-chu, who attended Hsu’s news conference Wednesday, said the company had measures in place to prevent leaks of confidential information. He added that he did not believe a change in the company’s shareholding structure would lead to employees becoming less conscientious about protecting sensitive data.

Nevertheless, Lin said he would work with the MOEA to research measures together to prevent privatization from harming the confidentiality of defense information.

Responding to Hsu’s argument that major corporate groups and eventually companies from China would try to take over AIDC, Lin said that because the company did not own significant amounts of land, big businesses would probably not be interested. Even if overseas capital was interested in investing in Taiwan, the MOEA would still have to review any deals, he said.

Hsu suggested that more problematic state-run companies like Taiwan Power Corporation, oil company CPC Corporation, Taiwan and the Taiwan Water Company should face privatization instead. Ho said that because utility rates for the public were linked to those companies, privatizing them might be more difficult.

The lawmaker wondered whether the government wanted to get rid of AIDC in order to let it compete in the Chinese aerospace market, where Taiwanese state-owned enterprises were not allowed for the time being.

The only result of such a move would be to allow China access to Taiwan’s defense secrets and know-how, Hsu said. As a result, China would be able to replicate AIDC outside of Taiwan, leaving the local company and its subcontractors without business and threatening the survival of the country’s entire aerospace sector, he said.

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