Nation to invest more in rail network
By Mai Dou (China Daily)
Updated: 2006-07-03 11:18
Travellers aboard the new 1,142-kilometre Qinghai-Tibet Railway, which
started operation on Saturday, are set for a visual treat of the picturesque
landscape along the way.
But for investors, a far prettier picture is
the tremendous opportunities arising from the government's ambitious target of
adding 20 times more track around the country.
The Ministry of Railways
has announced plans to expand the country's rail network from the current 73,000
kilometres to 100,000 kilometres within the next 15 years, at an estimated cost
of 100 billion yuan (US$12.5 billion) annually.
Industry insiders say
there is great potential for foreign and private investors to tap the
government-controlled transport sector from equipment procurement to
construction and operation.
"As the government has announced its
intention of freeing up the sector, more investors, especially foreign,
are likely to step in. Also, diversified investment will help speed up network
construction," says Zhu Hongren, a senior official with the National Development
and Reform Commission, China's top economic planning body.
Last July,
the ministry released guidelines encouraging private and foreign capital in the
building and operation of railways on a market-oriented basis.
Despite
the welcome mat, insiders say, a lack of policy incentives mean non-State
investors still have hurdles to clear before gaining a significant share of the
business.
For instance, profitability cannot be ensured because the
current State-controlled rail-fare system does not allow price fluctuations in
line with market changes, says Wu Wenhua, division chief of the transport
management research institute under the NDRC.
So for now, opportunities
will be largely limited to equipment procurement orders from global
manufacturing giants, as the country lags behind in certain areas of rail
technology.
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