Abstract
Taiwan’s High Speed Rail Corp (HSR) was in July seeking to refinance its
existing loans of TWD390bn
(US$11.9bn) by the end of 2009, reported
Reuters. The deal would replace two loans and a convertible
bond. Ju Hsu,
HSR’s director-general has stated that the company aims to benefit from
the current lower
interest rates by refinancing, thus achieving huge
savings in the interest amount. The company has
blamed the high-interest
payments for its continuous losses. With interest rates plummeting globally
to
encourage credit offtake, refinancing of old high-cost loans for
present low-cost loans should certainly
help the company contain its
losses due to interest obligations on debts.
In BMI’s latest Taiwan
Freight Transport Report, we predict that despite a sharp recession this
year,
cross-Straits traffic will be an important factor contributing to
medium term freight transport traffic
growth, which should average 1.1%
over the 2009-2013 period. The rush of business towards the
mainland
affects all freight transport modes. The move is something of a mixed blessing
for air freight, as
we think Taiwan will, on the whole, lose business to
China’s emerging airport hubs. We thus forecast
Taiwan air freight
growth at a low 1.7% over the next five years. In the field of shipping,
competitive
pressures exist, and while we are predicting that because of
the recession sea freight carried will grow by
1.2% per annum over the
next five years we are optimistic about the longer term. In our view,
Taiwanbased
shipping lines are somewhat ahead of the game, having
established themselves as global players.
Road freight traffic on the
island will achieve average growth of 1.0%. In this area, Taiwan resembles
a
developed economy where traffic growth tends to trail, rather than lead,
GDP expansion. We are also
predicting rail cargo growth at around 1.0% per
annum.
BMI gives Taiwan a composite score of 50.2 (out of a potential
maximum of 100) in its Freight Ratings
Index. The country’s
strengths are quite evenly distributed across long-term economic and political
risk,
infrastructure growth, and the regulatory environment. Areas for
potential improvement include the
competitive environment, freight growth,
and the transport intensity index – a measure of the current and
future dynamism of foreign trade.
In view of the current global downturn
and the competitive challenge from the mainland, we project low
to
moderate growth for Taiwan’s freight transport industry. The total value
of transport and
communications GDP should rise to US$33.8bn in nominal
terms by 2013, representing 7.2% of
Taiwan’s GDP.
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