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Chinese ports look for private
piers
BEIJING - The sky is
the limit for Yong Xin Harbor Co Ltd, a
Ningbo-based private company engaged in a
multi-purpose pier project in the harbor city. "We
are busy building up the necessary facilities and
once that's done, we may need over 200 million
yuan [US$24.2 million] to expand our business,"
said a manager at the firm.
Companies such
as Yong Xin remain in the minority since the
threshold for investing in port facilities is
extremely high and much patience and time is
required to get a return. Xu Qiang, an official
from the Ningbo Reform and Development Commission,
said that until now, the major investors in local
port construction have been state-owned
enterprises (SOEs). "Even overseas companies are
showing little enthusiasm in funding harbor
construction, let alone smaller private investors.
Apart from some specialized piers, almost no
private capital has been involved in harbor
investment in Ningbo so far," Xu said.
The
situation is in sharp contrast to the scarce
harbor capacity confronting China as the nation's
economy continues to grow. Last year,
transportation demand at coastal harbors was 2.7
billion tons in terms of capacity, while the
actual figure was 2.2 billion tons, which means a
gap of 500 million tons, according to statistics
from the China Ports and Harbors Association. The
sector is also short of specialized port
infrastructure and facilities designed to handle
commodities such as coal, oil and raw mineral
materials.
Since market demand for more
harbor capacity will keep mounting, it's high time
authorities create a more favorable environment
for investors with different backgrounds to enter
the sector, say experts. "There are no more policy
obstacles against investing in port projects by
overseas and private capital. In fact, the
government has drawn up a number of industrial
policies and laws to attract money. But more
flexible implementation is required to put these
policies into practice and to diversify investment
sources," said Wang Yuanjing, deputy director of
the Policy Research Office under the Investment
Research Institute of the State Development and
Reform Commission.
According to investment
analysts, the scarcity of harbor capacity is not
as serious as the lack of an agile mechanism to
maintain long-term and sustainable development of
the harbor sector. Although the Harbor Law that
took effect on January 1, 2004, encourages the
entry of diverse investment, state capital still
plays a decisive role. Because of the high
investment threshold and various problems such as
the right of actual management and pricing of
daily business operations, diversified investment
sources remain hard to find.
"It is an
industrial sector featuring a 'natural monopoly'.
It is a must to introduce more investors from
different backgrounds and to make them really
responsible for the daily operation of the
projects they fund," Wang said. Harbor investment
and management are formally subject to the
government's willingness and mandate. Investment
in this sector has traditionally been financed
either through bank loans or state financial
subsidies. Changes to that situation are now being
sought so that more diversified investments can
come in. "Only in this way can the projects be
better financed," Wang added.
Zhang
Xiaowen, an official with the Planning Department
of the Ministry of Communications - the industrial
watchdog governing harbor planning - suggested
that instead of keeping a tight control over the
sector, the industrial authority should further
liberalize and leave more space for
market-oriented maneuvers. "The major
responsibility of the authorities lies in overall
industrial planning and layout and safeguarding a
full utility of the coastline resources. Specific
business operations, such as attracting investment
and harbor management, should be more
market-based," Zhang said.
To lend due
support to the Harbor Law, the ministry is gearing
up to draft industrial regulations to better cope
with a faster development of the country's harbor
construction. One proposed regulation is to
address the administration of coastline resources.
"The coastline is even more precious than land
resources since the amount of coastline suitable
for harbor construction is diminishing," said
Zhang.
The other proposed document is
about the overall planning and management of the
nation's harbors. "We are busy working out the
details regarding the two regulations. We hope
they will come out by the end of this year," Zhang
said. The infrastructure part of harbor projects,
such as fairways, anchorages and breakwaters,
usually falls within the government's domain.
Business facilities, such as logistics and storage
set-ups, will be more suitable for social
investment, Tu Deming, director of the China Ports
and Harbors Association, was recently quoted by
the media as saying.
"For this public
infrastructure, SOEs will remain major investors,
while foreign and private investors can get
involved with those business projects. Maybe the
authorities can offer them more management freedom
and preferential policies, such as the power to
decide the operation price by themselves," Tu told
China Daily. The central government used to
subsidize the operation of important harbors,
perhaps regional administrations could lower taxes
for loss-making ports, he suggested. Harbors in
China used to be under the direct control of the
central government. The situation changed about
three years ago. The regional governments now
monitor harbors' day-to-day operations.
Port investment
"Investing in
port construction is difficult. It requires
in-depth analysis, sound feasibility studies and
other supportive conditions," said Gao Hujun, a
senior researcher with the Water Transportation
Research Institute under the Ministry of
Communications. "Those interested in pouring money
into harbor-related businesses have to figure out
whether they can find experienced partners and
enough cargo business for shipping and also make
sure they know how to manage logistics," Gao
suggested.
Because coastline resources are
not renewable, the authorities have to do
everything to ensure the quality and economic
efficiency of the projects built there. That's
another reason why the threshold for funding
harbor projects is so high, said Gao. Despite
never being easy, investing in port projects
remains a promising business. "The market is just
there. And the capacity demand will keep mounting
for another five years, triggered by fast
development of the country's trade and economy,"
according to Tu.
For private investors,
small and medium-sized port projects may be a
better choice to start with. "Those small projects
are, in fact, in desperate need for transporting
particular commodities, such as building
materials," Tu said. The construction and
expansion of major coastal harbors will be
intensified around certain areas, including the
Yangtze River Delta, Pearl River Delta and Bohai
Bay, Ren Jianhua, vice director of the Planning
Department of the Ministry of Communications, has
said. According to the ministry's plan, the
loading capacity in the three major harbor groups
will be further enhanced, reaching 3.5 billion
tons by 2010.
(Asia
Pulse/XIC) |
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