Taiwan to Go Slower on New Public Works : Economy: It is afraid that its $303-billion infrastructure program, if implemented in too short a time, will hurt private-sector growth.

The government has put the brakes on a $303-billion plan to catapult Taiwan into the 21st century, worried that the project could drain so much money that it would undermine the island’s miraculous economic growth.

With a scope unprecedented in Taiwan’s history, the Six Year Plan originally consisted of 775 projects ranging from highways and sewers to baseball diamonds and an amusement park rivaling Disney World.

But Premier Hau Pei-tsun recently called the plan just a “national guideline” and said individual projects must now be subject to each year’s budget review. Many officials say most of the projects may eventually be tackled but that it could take up to 15 years.

“We might end up having gorgeous highways . . . but our industries could be damaged in the process,” said Ma Kai, a prominent economist. “Industrialists were exhilarated at first, but they now have growing doubts about the plan’s feasibility.”

Postponing these projects could hurt foreign contractors. Between $50 billion and $70 billion of the contracts will be open to overseas bidders.

Robert Strotman, commercial officer of the American Institute in Taiwan, a U.S. government establishment that’s been the unofficial embassy since official ties to Taipei were severed in 1979, said American companies bidding for expressways and rapid-transit systems are wary of possible delays.

Lawmakers of the opposition Democratic Progressive Party say the plan, including many unfinished or long-delayed projects, was undertaken mainly to boost Hau’s standing, along with that of the Nationalist Party.

The Nationalists have ruled Taiwan since fleeing the Chinese mainland in 1949, when the Chinese Communist Party won a civil war. The Nationalists still consider themselves the legitimate rulers of all China.

Soon after it announced the program last year, the government erected billboards showing bullet trains and cars traversing Taiwan’s countryside. Television commercials depict a new island cleared of pollution and traffic jams.

To persuade skeptics, the government said the plan would help sustain a 7% annual economic growth rate and bring Taiwan’s annual per-capita income to $14,000 by 1996. Last year, per-capita income reached $8,800, fourth highest in Asia.

Officials also said that Taiwan, flush with $80 billion in foreign reserves and extensive domestic savings, could afford the project without having to raise taxes.

But a number of economists now contend that the Six Year Plan is unrealistic because it could exhaust those reserves and result in huge government debt.

A report from Academia Sinica, a top government research organization, estimated that government bonds to finance public works could reach $600 billion by the year 2000, or about 1.5 times the value of all Taiwan goods and services produced annually by then.

Ma, who works at the government Chunghua Institute for Economic Research, said the government could soon be forced to raise interest rates and taxes--a move that would hurt Taiwan’s labor-intensive industries.

These industries, the backbone of Taiwan’s economy, are already facing problems as they seek to turn out more sophisticated products while holding down expenses.

Cost overruns, soaring land prices, labor shortages, bureaucratic inefficiency and allegations of corruption also are plaguing the program.

A 52-mile subway line in Taipei, the capital, is now budgeted for $18 billion, 60% higher than estimated.

The mass-circulation United Daily News quoted presidential adviser Henry Kao as calling the subway line “a project of great waste rarely seen elsewhere in the world.”

Opposition lawmakers say some projects were designed to help boost Taiwan’s relations with the United States, France and other Western powers that quit recognizing the Nationalists as China’s legitimate ruling party many years ago.

Peng Pai-hsien, for example, contends that a $17-billion high-speed railway which will probably be built by Western firms is uneconomical on this small island, the size of West Virginia.

“Are we building the railway as an exchange for air links with Paris or for French consent to sell us navy vessels?” Peng asked in Parliament. “I am afraid the beautiful blueprint for Taiwan could turn into a nightmare of debts.”