Beijing municipal government may launch an Olympic Industrial
Investment Fund next year to raise 50 billion yuan (US$6 billion)
for the construction of projects related to the
2008
Olympics.
The proposal has been put forward by a local government think tank
as the city aims to spend a total of US$34 billion on the Games.
Plans include the construction of 32 local venue projects for the
sports event.
But a lack of funding has caused enterprises and economists to
actively lobby the government for wider funding channels through
the capital market.
"The idea of setting up a special investment fund targeting
Olympic-related projects may be adopted next year if relative
policy obstacles can be cleared," said He Xiaofeng, who leads the
think tank for designing financial projects for the Games.
China still does not formally allow such industrial investment
funds to exist, though they flourished in the country a decade ago
before a nationwide rectification drive.
Yet the State Development Planning Centre is drafting a regulation
on industrial investment and venture capital funds, which would
legitimate and regulate the launch of such funds. Insiders said the
new rule would not come out until next year because of procedure
problems.
"We are pushing hard for the proposal. And things will be more
optimistic next year," said He.
The planned investment fund could be launched both in Beijing and
Hong Kong for investors at home and overseas, He said. The fund can
be first initiated by state-owned enterprises, which will be open
to individual investors. A dozen enterprises, including some
overseas companies, have shown their interest in developing the new
financing products together with He's team.
"The Beijing Olympics will create many lucrative business
opportunities," said He. "That will make it attractive not only to
project bidders, but also for industrial investors."
In
three major venue projects - the State Stadium, the State Gymnasium
and the State Aquatic Centre - Beijing would adopt public bidding
to decide on the project contractors.
The contractors will later choose their own sub-contractors through
multi-level biddings, according to an official with the Beijing
Planning Commission.
The practice is expected to break the State monopoly in such major
infrastructure constructions, giving a broader stage for private
investors.
He
said his team will work hard to enable a sound financial backup for
these investors.
When bank loans and fiscal input are not enough to support the
funding chain, building up the capital pool is crucial for many
private investors, experts said.
"If the financial problem cannot be solved, then the promise of
fair and open bidding would be out of the question," said He.
Apart from the investment fund, other funding measures proposed by
the think tank include the issuance of long-term corporate bonds,
and listing new companies.
(China
Daily July 17, 2002)