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Taiwan left charred and red-faced after fire
May 18, 2001
TAIPEI - Headlines talking of a "towering inferno" in homage to the eponymous 1970s movie were too hard to resist. But the most dramatic thing about the fire last weekend at Taipei's Eastern Science Park - actually not a park at all but a 26-floor office complex in an eastern suburb of the city - is the size of the losses involved, which the Ministry of Finance estimates to be in the region of NT$13 billion (US$395 million).

There is also the matter of face: The science park was supposed to be representative of high-tech Taiwan at its most creative; the stupidity that led to the fire and the greed that resulted in its spreading has been highly embarrassing for Taiwan.

The science park complex, consisting of three connected tower blocks, was the home of some 236 high-tech companies including Taiwan's most important software developers and hardware design houses as well as offices of the island's leading brand-name hardware manufacturer Acer Inc.

The fire broke out at about 4 am on the third floor of the complex's A block, in an office being used as a Buddhist shrine. There has been speculation that burning incense might have started the blaze, although the shrine owners insist that incense was never burned in the office.

Firefighters rushed to the scene and believed that the fire had been extinguished by early evening, although their ability to check the building was hampered by its being locked up for the weekend. While the heavy security measures were an obstacle to firefighters, the fire itself had no such problems, leaping through stairwells and ventilation ducts to the upper floors of the building where it broke out again.

By 10 pm on Saturday night the upper floors of all three blocks were ablaze. To compound the Taipei County fire department's misery, while it claims to have Asia's highest reaching elevated platform truck, at 72 meters, this just wasn't tall enough to reach beyond the 20th story and there was little the fire department could do except watch the top of the complex burn itself out. Eventually the fire was pronounced out after 500 firefighters had worked 43 hours to extinguish it.

Those companies who had not experienced any fire damage nevertheless found that water damage had been almost as devastating among companies almost totally dependent on computer systems for everything from employment records to advanced research work.

The blaze has long-term ramifications, not only because of the crimp it has put in the plans of many of Taiwan's high-tech enterprises, but for two other reasons: its fallout provided a wonderful illustration of how the ball game is played in Taiwan, and investigations into the reason for the fire's spreading beautifully illustrate the impotence of local government authorities in the face of Taiwan's politically well-connected scofflaws.

Recrimination over the fire began before it was even out. The first in line was the Taipei County fire department which was accused of being slow off the mark, exercising poor judgment in believing the fire extinguished and negligent in allowing the fire to spread via air ducts from A block where it stated into the other two blocks of the complex.

What has added fuel to the rhetorical fire was that Taipei County has been controlled by the Democratic Progressive Party (DPP) which also controls the central government, despite its minority status in the legislature. With elections for both county government chiefs and the legislature at the end of the year, it is hardly surprising that the opposition Kuomintang (KMT) has done its best to paint the Taipei County government as inefficient and tried to color the central government the same way. High-level KMT officials such as spokesman Wang Chih-kang said that the fire was likely to push up unemployment in already bad economic times, thereby being able to utilize to snipe at the government's economic record.

There has been another reason for trying in some way to blame the government for what happened. Many of the companies whose offices were damaged were under-insured if they were insured at all, or had policies so highly restricted that they cannot get compensation for such things as water damage. Being able to pin the blame on the fire would enable them to claim from the government under the National Compensation Law, which provides compensation for loss resulting from government negligence.

But as the investigation into the fire has continued over the past few days, blame has shifted toward some of the KMT's powerful corporate cronies and the opposition party is trying to say as little as possible about the fire at all for fear of "blame by association".

While the building was still burning it was pointed out that tower blocks rely for their preservation not so much on the aid of fire department but on their own security systems, sprinklers, firewalls and doors and similar measures. It has been mandatory in Taiwan for 15 years that all buildings higher than 10 floors have sprinkler systems installed; the science park complex was built in 1996 to the fire safety standards of the day.

The problem is that taking advantage of imprecision in the law, the science park complex only had sprinklers installed above the 10th floor. They were, therefore, not available to cope with the initial blaze on the third floor and by the time the fire head leaped upward there was no electricity to the building and the sprinklers didn't work. On top of this the systems were known to be faulty and for this and other reasons the complex had not passed a fire inspection test in the past two years.

Tuntex not only built the complex but still owns it. The inadequacies of the sprinkler system are obviously to be laid at Tuntex's door. But the company has also been accused of making another contribution to the fire's spreading by removing firewalls from the upper stories of the building. A member of the building's management committee told local media that as soon as Tuntex received an occupancy permit for the complex in 1996 they moved into the top floors of all three blocks and pulled down the fire walls that separated them. Last Saturday this allowed the fire to jump from block to block.

Taipei County's Public Works Bureau claims that removal of firewalls was extensive throughout the complex and that it had asked Tuntex to fix the problem long ago, a request Tuntex ignored. This left the bureau with a quandary still unsolved at the time of the fire. because local governments have no way to force building owners to comply with fire regulations except to cut off their water and electricity supplies until standards are complied with and inspection passed. For the bureau, cutting off water and electricity to such a big-ticket facility as the science park complex controlled by as politically well-connected a group as Tuntex was more likely to result in "early retirement" for bureau officials than an improvement in the fire safety standards at the science park. And so the situation festered - until Saturday.

The problem is that even is Tuntex's scofflaw attitude to fire safety was found to be a contributor to the fire - and the company might argue that the Public Works Bureau's lack of zeal in chasing it up played as big a part - the company is in no position to fork out compensation. Even before the fire, the company, originally a textile manufacturer which expanded into chemicals and property development, was attempting to reschedule NT$58.1 billion worth of loans. Meanwhile its stock has fallen by 81 percent over the past year, twice as much as the Taiwan Stock Exchange index.

Given Tuntex's financial plight, it might be that the government will end up as a "compensator of last resort". This it will resist if only because it has already attracted criticism from within its own ranks for its zeal in persuading banks to roll over problem loans from companies such as Tuntex. This might have been common under the KMT's crony-ridden rule, the critics say, but the DPP should have a more robust attitude toward moral hazard. The problem the DPP faces is how to prevent that stepping in, wallet open, to get the science park up and running again as soon as possible might involve moral hazard, but it is the political hazard of not doing so that it really on its mind.

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