Channel NewsAsia

Taiwan property development scandal threatens affordable housing

A high-profile bribery scandal involving a government official and the largest public housing project in Taiwan threatens the future availability of affordable housing on the island and the winning chances of the ruling Kuomintang (KMT) party in local elections.

TAIPEI: A high-profile bribery scandal involving a government official and the largest public housing project in Taiwan has put the spotlight on one of Taiwan's biggest land developers, the Farglory group.

The case threatens the future availability of affordable housing on the island and the winning chances of the ruling Kuomintang (KMT) party in November's local elections.

Arrested Farglory chairman Chao Teng Hsiung admitted giving US$533,000 in bribes to a Taoyuan county official to secure the multimillion-dollar project.

The money was used to secure the island's largest public housing contract in northwestern Taiwan.

The contract has since been terminated, and the 70-year-old billionaire could face up to seven years behind bars.

But analysts said the scandal is just the tip of the iceberg.

Peng Chien Wen, professor at National Taipei University’s real estate study, said: "Bribery cases like this isn't an isolated incident given the current ties between the government and businesses."

This new setback could seriously undermine President Ma Ying-jeou's efforts to solve existing housing problems by building accessible housing.

Opponents of the government's housing policy were concerned that subsidised units for sale would encourage price speculation, leading to an increase in already sky-high property prices.

The incident has already prompted Taoyuan county to adjust its housing policy.

It has promised to stop developing low-cost public housing for sale, but to offer social housing for rent only.

Analysts warned the latest scandal could trigger the fall of the island's property market.

Peng said: "In the past, Farglory bought large pieces of land in northern Taiwan for township development projects. So to a certain degree, its leading position would have some impact on the overall property market."

With the local elections in November, this case exposing corruption within its rank-and-file could hurt the ruling KMT's chances of winning.

Chang Ya Chung, political science professor at National Taiwan University, said: "Taoyuan is still considered a KMT stronghold. So the key is how the Taoyuan county magistrate handles the crisis. If he handles it well, then it's alright. If not, he and the KMT's performance would suffer."

KMT is already struggling to secure its power in Taichung, which is considered the last line of defence in the upcoming elections.

Analysts said if the KMT loses both Taichung and Taoyuan, it may bid the 2016 presidency goodbye. 

Tweet Photos, Videos and Update on this Story to  #cna