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Railways seeking overseas investment

www.chinanews.cn 2005-09-21 09:50:15

(Source: China Daily)

Sept. 21 - China's once-monopolized railway sector is riding the rails of
market-opening reform, as it strives to attract overseas capital
investment.
"Foreign enterprises are in talks with domestic railway companies on
investment," Huang Min, chief economist of the Ministry of Railways, told
China Daily yesterday.
The negotiations are expected to bear fruit soon, Huang said, but would
not reveal details of the parties involved, citing business
confidentiality.
According to industry insiders, this means the sector will open more
widely to foreign capital, though overseas investors will not be allowed
controlling interests on the operation of trunk lines.
In July, the Ministry of Railways released guidelines encouraging private
and foreign capital in railway construction and operation.
At least 100 billion yuan (US$12.3 billion) is needed annually to expand
the rail network from the current 73,000 kilometres to the planned
100,000 kilometres by 2020, according to the national plan.
Although the sector has been gradually opening to non-government funding,
investors have been slow in responding to the government's policies.
Only a very small amount of non-State capital has been injected into the
sector in recent years - less than 1 per cent of the total.
The central government's rail construction fund is the main source of
capital for expanding the network, accounting for more than 90 per cent
of the total. The rest comes from local governments and loans from the
China Development Bank.
One of the main reasons for the lukewarm response from private investors
is profit guarantees, said Wang Qingyun, director of the transport
department of the National Development and Reform Commission.
Wang made the remarks while addressing the two-day China Railway
Investment and Financing Reform Forum, which opened in Beijing yesterday.
"Favourable policies must be worked out to boost investor confidence,"
Wang said.
Meanwhile, a fair and transparent ticketing system must be set up to
allow investors to decide prices, he added. The existing fare system does
not allow for price fluctuations in line with market changes, which
raises investor concerns about adequate returns.

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