Overseas investment in the advanced transport market has exceeded domestic investment in the sector for the first time, the Ministry of Communications announced yesterday.

Among 47 new projects approved by the ministry last year, overseas investment accounted for 51 per cent of the total registered capital.

In 2004 a total of 88 overseas funded projects were approved by the Ministry of Communication, an increase of 44 per cent over the previous year.

The increase is a result of huge road construction projects and the open passenger transport market which have bred vast business opportunities for overseas investors.

Rising since 2001

Overseas investment in the market has seen year-on-year rises since it was opened up at the end of 2001, said Xu Baoli from the communications ministry.

Thanks to the implementation of the Closer Economic Partnership Arrangement (CEPA) between Hong Kong and Macao special administrative regions and the mainland, investors can take advantage of preferential policies and put their money into the transport market, Xu said.

"The increasing demand for road cargo transport, propelled by rapid economic growth, has been a catalyst since the nation is short of competitive enterprises that offer third-party services to customers," he said.

Fully open logistics

"This year marks the first year of China's market being fully open to overseas capitals in logistics, road cargo transport and vehicle maintenance, and a new wave of overseas investment is expected to sweep in," he estimated.

According to its commitment to the World Trade Organization (WTO), China will permit WTO members to establish overseas-funded enterprises in the fields of road cargo transport and vehicle maintenance from this year.

Meantime, passenger transport companies from Hong Kong and Macao are allowed to operate businesses between the two special administrative regions and some mainland cities by building joint ventures, Xu said.

They will also be allowed to operate taxi or bus businesses in major cities, Xu said.

The nation plans to build an 85,000-kilometre expressway network within the coming 30 years to serve the country's rapid economic growth.

The nation's road construction has been mainly financed by domestic commercial loans and various government budgetary funds, which usually cover around 90 per cent of the total investment.

"Overseas investment has also entered the road construction sector and has played an important role," said Li Xinghua, deputy director of the ministry's Department of Comprehensive Planning.

Overseas investment includes loans from the World Bank, the Asian Development Bank, government loans from some countries and direct investment from overseas companies, the official added.