Philippines in talks with MTR Corp over railway project
Planned railway will be part of 9,450-hectare 'smart, green and disaster-resilient metropolis'
MTR Corporation is in early talks over a railway project in the Philippines, where local authorities are planning a brand-new metropolis estimated to cost US$14 billion to ease congestion in the capital Manila, one of the most densely populated cities in the world.
Officials from the Philippines' Bases Conversion and Development Authority (BCDA) visited MTR Corp's office in Hong Kong on February 12 and presented the project to the city's sole rail operator, according to BCDA president and chief executive Arnel Paciano Casanova.
"We are exploring possible collaboration, but no commitment was made by either side," Casanova told the .
When contacted by the , MTR Corp said: "Many railways and cities from around the world have shown interest in our operating and financial model. However, we have no plans at present to invest in any projects in the Philippines."
Casanova said the government was looking for a partner in the private sector to take up a majority stake and drive the project. "We are looking for partners who can bring in technical and financial capabilities. We will only be there to ensure the infrastructure vision is achieved."
The planned railway will be one of the many infrastructure projects in Clark Green City, a 9,450-hectare development envisioned to be the Philippines' first "smart, green and disaster-resilient metropolis" and site of the former US Clark Airbase forced to shut down during the eruption of Mount Pinatubo volcano in 1991.
Casanova said the cost for the railway project was yet to be determined. "That's why we need a private partner who can help with the feasibility study and assess the costs," he added.
It was MTR Corp's "unique business model" of railway plus shopping malls and other property developments that drew interest from the BCDA, said a BCDA project officer who asked not to be named.
MTR Corp has been progressively expanding into mainland China and overseas markets, with footholds in Sweden, Britain and Australia as well as Beijing, Shenzhen and Hangzhou in the mainland. The firm, along with its consortium partners, won an A$3.7 billion (HK$22.48 billion) contract in September to deliver and operate Sydney's North West Rail Link. MTR Corp generated 33 per cent, or HK$6.4 billion in total revenue from outside Hong Kong in the first-half of last year.
However, it would be atypical for MTR Corp to make a considerable capital commitment to overseas projects, or in property-related investments, said Jonas Kan, an analyst at Daiwa Capital Markets.
"MTR has not made any property-related investments outside Hong Kong and [the mainland]. It is a fairly conservative company which tends to carry out investments step by step. It is not common for MTR to commit huge capital in one go in a new market.
"The company has a unique model, using Hong Kong property earnings to finance railway projects. As a result, Hong Kong has developed a world-class railway transport system without much financial support from the government," said Kan.
