Fast Journeys

16 August 2013

High-Speed Train Transforms Taiwan

By Luo Xunzhi

We’re at Taipei railway station at the sales counter for the Taiwan High-Speed Train. Hsu Mei-ling, a well-dressed lady in her 50s, has just bought a ticket to Kaohsiung. “I use the train eight times a month, sometimes four times a week. My company has operations in both cities. I used to fly and drive, but not any longer. The train is better than both flying and driving.”

A couple in their 20s has bought a ticket to Taichong: “We go two or three times a month to visit our relatives there. Before the High-Speed Train, we didn’t go at all because of the time it took and the inconvenience. The train has changed Taiwan.”

Costing NT$400 billion, the train line is the biggest construction project in the history of the island and the largest Build, Operate and Transfer (BOT) scheme in the world.

It aims to turn the western half of the island, where 95 percent of its 23 million people live, into a ‘one-day circle’, i.e. enabling people to go anywhere on the line – to attend a meeting, do their shopping, meet a friend or a relative –  and be back home on the same day.

It takes just 96 minutes to cover the 345 kilometres between Taipei and Kaohsiung – the two largest cities on the island – and the two termini. “Before, it took two days to do business or visit relatives,” said Kenneth Wang, a senior specialist in the media relations department of the Public Affairs Office of the Taiwan High-Speed Rail Corporation (THSRC), the private company which operates the line. It has not received any government subsidies.

“The line has created many love stories and marriages. It has enabled couples in the north and south to meet often. They meet at our stations. Some have got married on the train because the line holds such good memories,” he said.

On 6 December 2011, the THSRC organised a ceremony at Taichong station for 11 couples, including one celebrating their 50th wedding anniversary.

But the THSRC carries a heavy debt of NT$67.7 billion, because of the large loans it took out to finance the construction work. The BOT contract covers a period of 35 years. Last year was the first in which it made a profit, of NT$5.78 billion.

“In 2010, the banks provided a new syndicated loan with a reasonable interest rate,” said Wang. “In the early days, the banks wanted a higher interest rate because they did not know how the line would turn out. Now the situation has stabilised and is going well.”

An idea long in the making

The idea of the line was born in the 1970s. Rapid economic growth from the 1960s caused a saturation of traffic, by road and rail, in the western half of the island. Informal planning began in the 1980s.

In 1987, the Executive Yuan (Cabinet) instructed the Ministry of Transport to conduct a feasibility study; it found that, compared to other solutions, a high-speed train offered the highest transit volume, lowest land use, highest energy savings and lowest pollution. In 1991, the route was selected and plans were approved by the government, who decided that a private company would build the line as a BOT.

The THSRC was established in May 1998, with private investment. The government owns a stake of about 10 percent.

The construction was an enormous undertaking on an island regularly hit by earthquakes, typhoons and rainstorms. The line had to pass through the most developed part of Taiwan, dense with houses, factories and intensive agriculture.

It took six years to complete, with the help of more than 2,000 professional engineers from 20 countries and over 20,000 foreign and domestic workers. The line has eight stations and an operating speed of 300 km per hour. About 251 km, or 73 percent of the line, runs on viaducts, mostly pre-cast, pre-stressed concrete girder spans; a section of 157 km from Changhua to Zuoying in Kaohsiung was the world’s longest elevated rail line section at the time of opening.

Viaducts were designed to be earthquake-resistant, to allow trains to stop safely during a seismic event. About 61 km, or 18 percent of the line, is in 48 tunnels, the longest of which stretches for 7.4 km. The dimensions inside each tunnel measure 90 square metres, with space for two tracks and safety walkways.

The line has a sophisticated warning system for earthquakes; drivers are warned in advance and can slow down or stop, according to the severity.

The environmental features include bridges over the line for animals to walk over, planting and re-planting of trees along the route to reduce the noise, and the purchase of farmland to create a preservation area for jacana birds.

Five of the eight stations were built on farmland without integration with existing transport systems. The THSRC was given a lease of 50 years on the land surrounding these stations and the right to develop it, as one way to recoup its enormous investment.

Three quarters of the funding for the construction came in syndicated loans from banks.

The company chose Japanese technology for its core operating system, using the 700T trains made by Kawasaki Heavy Industries. The line had its official opening on 5 January 2007; it became the sixth high-speed rail system in the world.

Building up passengers

In the first year, the system carried 15.56 million passengers on journeys totaling 7.8 million kilometres. To attract people, it had to persuade them to change habits that had been built up over many years – driving down one of the island’s two North-South expressways or taking the 30-minute flight from Taipei to Kaohsiung. And it had to persuade them to make journeys they had not made before.

In 2008, the company nearly doubled the number of trains; passengers increased to 30.6 million. The figures have risen gradually since then, reaching 41.6 million on 15.78 million km last year. The punctuality rate is 99 percent.

“The average passenger load in the first four months of this year was 120,000 a day,” said Wang. “It rose to 140,000 at weekends, festivals and during the summer vacation. During the Lunar New Year in 2012, we had 1,872 trains running over nine days; the highest on a single day was 196.

“We have no passenger targets. We hope to have a better service and more passengers. We can always increase the number of trains,” he said.

The greatest pressure in the early years was financing the project. As a private company, THSRC relied largely on borrowed money. The banks were willing to back the project but were uncertain about how many people would use it; so they demanded a high rate of interest, at eight percent.

Normally, the depreciation period for a railway is up to 100 years; but the BOT contract for the line in Taiwan is short, at only 35 years, which has increased the cost of borrowing.

In 1986, the British and French governments initially awarded a concession of 55 years to private companies for the construction and operation of the tunnel beneath the English Channel; they later extended this to 100 years, in light of the financial difficulties the operators faced.

During the first three years, the average passenger load of the THSRC was about 90,000 – below the break-even level. Up to the end of May 2009, it had paid NT$6.55 billion in interest alone. As from last year, the company had turned the corner and now operates at a profit.

Income base

The company has income from two sources. One is sales of tickets to passengers; it operates no services for freight, which is carried on the 1,097-km network of the government-owned Taiwan Railway Administration, which was founded in 1887.

The other is money from development of the land around the stations, for which it has a 50-year lease. Three of the stations – Taipei, Panchiao and Zuoying (Kaohsiung) – have no spare land.

That leaves five stations – Taoyuan, Hsinchu, Taichong, Tainan and Chiayi. They were all deliberately built away from urban areas, to allow THSRC the opportunity to sell the land for commercial and residential development. It has a total of 30.14 hectares and a potential 1.2 million square feet of commercial space, for hotels, offices, travel, retail and other uses.

“We aim to attract more commercial investors,” said Wang. “We organise events around the stations, such as an orchid festival with the Tainan county government in March, a rock and roll festival in May in Taoyuan and a Lantern festival in Hsinchu lined up for next year. These events bring people and income.”

Four new stations are planned to open in July 2015. These are Miaoli, Yunlin, Changhwa and Nangang. The first three will have land for development.

The timing is not so favourable, however. The era of rapid economic growth has passed. Tens of thousands of factories have moved to Mainland China and Southeast Asia, shrinking the island’s industrial base.

Changing Taiwan

The line has changed Taiwan; it has changed the lives of ordinary people and the way companies do business.

There are now only a handful of flights per week between Taipei and Kaohsiung. During the typhoons and heavy rains of the summer, the aircraft are subject to delays and cancellations; this does not happen with the train.

Since the first year of operation in 2007, the number of passengers has more than doubled, and could even triple this year. Some are making journeys they would otherwise have made by air or road; many are ‘new’ journeys that people would not have taken without the speed and convenience of the train.

“I studied in Kaohsiung and have many friends there,” said Reed Hu, a specialist in the station relations department of the Public Affairs Office of the THSRC. “In the past, when friends there held a wedding, birthday or other celebration, I would send a card. Now I take the train after work at 17:00, attend the wedding or birthday banquet at 19:00 and return on the train at 22:00 and can report to work the next day.”

It has also changed the way companies work. “Before, business people took the plane or drove a car,” Hu said. “It was tiring and could be dangerous. Now they can work on the train, relax and be full of energy when they arrive. Companies with operations in the north and south arrange meetings in Taichong (in the centre).”

The train has enlarged the commuting area of Taipei. Commuters can live in Taoyuan and Hsinchu and take the train to the railway station in the centre of Taipei – a journey of less than 30 minutes – and return home in the evening.

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