Written by Steve Zito of Stock Market Direction
April 16, 2002

In Taiwan, Taiwan High Speed Rail Corporation (THSRC) had been taking competing bids for multi-billion dollar deals from Alstom-Siemens Eurotrain and Taiwan Shinkansen Consortium-Mitsubishi Heavy Industries (SKC). Both consortiums bid on a $12.5 billion project to build a new high speed rail line from Taipei in the north of Taiwan to Kaohsiung in the south. In 1997, THSRC chose Eurotrain as its "preferred bidder" to supply everything from rail cars and locomotives to maintenance and electronics. Surprisingly, then former Taiwan President Lee Teng-hui was allowed to visit Japan in 1999, sort of informal recognition by Japan of Taiwan's sovereignty. Shortly after that in Dec. 1999, THSRC changed its firm $2.7 billion contract award to Eurotrain and gave the contract to TSKC. Eurotrain sought an injunction in Taiwan's High Court and was rudely rejected. Eurotrain filed arbitration in Singapore seeking $800 million in damages, and just won. Business in Taiwan is different than in the U.S. where corruption, bribery, nepotism, and male chauvinism are illegal. The former Kuomintang government is a relic from Taiwan's break from the mainland in the Communist revolution. While the 1940's and 1950's may have called for strong arm tactics of Chiang Kai-shek, those days are gone. Hardly any nation formally recognizes Taiwan as an independent nation, and a state visit by Lee to Japan was a coveted press relations coup. Eurotrain believes the Kuomintang government changed awards for THSRC to SKC in return. Eurotrain went to international arbitration, winning a filing in Singapore on March 31, 2002 as reported by the United Daily News. Spokesman for THSRC Lin Tien-sung denounced this damages report as a premature leak. Both companies submitted bids for a 213 mile rail line in 1997, which is Taiwan's largest infrastructure project. The rail line construction began in 1999 and will be finished in 2005 hopefully able to carry 100 million passengers annually in Taiwan's cramped little island. Email me for a stock symbol, or funds names for investing in Taiwan, where the TAIEX has risen from 3800 to 6000 since Sept. 11.

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