China Seeks Foreign Direct Investment for Railway Project

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Last updated at: (Beijing Time) Saturday, April 27, 2002

China Seeks Foreign Direct Investment for Railway Project

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Details of a project for a new railway ferry link between Yantai in east China and Dalian (YDRFP) in northeast China were presented in Beijing Friday in order to draw direct foreign investment. This is a dramatic change in China 's usual policy for financing railway construction projects.

According to the Chinese Ministry of Railways, the rail/ferry link begins in Dalian City at the south end of the Liaodong Peninsular and terminates in Yantai City in the north part of Shandong peninsular, crossing the Bohai Bay in a direct line for 79.4 nautical miles or 147 km and will shorten the traveling distance between Northeast China and Shandong province by 400 km, and Northeast China and the Yangtze delta by 1000 km.

With the authority of the Ministry of Railways, the Shangdong Provincial Government and Dalian City Government, Sinorail Bohai Train Ferry Co. Ltd (SBTFC), the Chinese sponsor, is now seeking direct foreign investment to establish a joint venture or cooperation company which will be fully responsible for financing, constructing, operating and maintaining the project.

Chi Baozhang, general manager of the SBTFC, said the project will be carried out by using the BOT (build, operate and transfer) method as traditionally used in joint ventures.

The total investment is estimated at 3.39 billion yuan (408.4 million U.S. dollars), of which approximately 2.43 billion yuan will be used for construction, said Chi, adding that investors' profit return is predicted to be above 12 percent.

According to Chi, to create a good investment environment, the Chinese Ministry of Railways, Shangdong province and Dalian City government have promised to ensure the completion and operation of relevant railways and roads as well as rear transport corridors.

Investors will also be given preferences for the use of land, water and power, communication facilities, roads and railways, he added, and favorable taxation policies will also be given to the company in accordance with the laws and regulations of the Chinese central government, Shangdong province and Dalian city government.

Wang Chunsheng, director of the Railway Cooperation Department under the MOR said that the examination of investment offers will start in May and hopefully to be completed by June.

The project is estimated to be completed in two and a half years and be operational by 2005.

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