Marubeni unlikely to invest in metro line
Japan trading powerhouse Marubeni Corp is unlikely to invest in the first phase development of the Guangzhou metro line, according to its deputy chief for China.
Kenichi Nishida, also chairman and managing director of Marubeni Hong Kong, said the Guangzhou government tried to entice the group's investment in the project but the expected low return made it unattractive to foreign investors.
The metro line investment would be huge but the tariff was strictly controlled by the Chinese government, he said. Also, the Guangzhou government would not provide a guarantee on the rate of returns.
Mainland figures put the cost of the first phase at 15 billion yuan (about HK$13.93 billion).
Foreign firms might be interested in financing metro projects in China but not in direct investment.
Noting that the tariff issue would be very difficult to solve, he said: 'The chance for us to invest in the [Guangzhou metro line] is not high but we haven't come to a final conclusion yet.' Up to March, the trading giant has pumped US$1.8 billion into China. About $300 million was direct investment in 110 joint ventures and wholly owned operations with the rest being financing.
Mr Nishida said the group had not earmarked a specific amount of money to be put into China. The figure depended on the deals it arranged.
Marubeni's diverse interests in China are concentrated in the coastal provinces and range from real estate, steel, food, chemical to energy sectors. Mr Nishida expected the China operations would begin to provide a meaningful contribution to the group towards the end of the century.
Agriculture and infrastructure sectors would be two important areas for the group's future investment.
Mr Nishida would not reveal details of a number of projects under negotiation, saying they were good projects sought after by other foreign firms.
'We have come to a very delicate time for projects in China as Beijing will approve a sizeable number of projects this year or next for the Ninth Five-Year Plan [1996-2000],' he said.
He said the group was eager to venture into power, oil exploration and development and oil refinery projects in China.
It was still waiting for Beijing approval for joint ventures in three major areas: a $1.3 billion Taishan power project in western Guangdong, a $5 billion project for oil exploration and development in Tarim Basin, and foreign trade companies with import and export rights to be set up in Shenzhen and Shanghai.
The proposal by a Japan consortium including Marubeni, Mitsui Corp, Mitsubishi Corp, Itochu and Sumitomo to invest in a $13.8 billion ethylene project in Liaoning was turned down by the Chinese government for unknown reasons, Mr Nishida said.
'I think there is a possibility that China will overtake Japan to become the number one economic power in southeast Asia in another five to 10 years.
As China turns more and more aggressive in luring foreign investment, we will become more and more aggressive in our investment in China.'
