China Railway suffers first-quarter loss, bond sale prospectus shows

China Railway Corp, the spin-off from the now-defunct Chinese Ministry of Railways, suffered an after-tax loss of 6.88 billion yuan (HK$8.7 billion) in the first quarter, compared with an after-tax profit of 196 million yuan for the whole of 2012, according to its first bond prospectus.


Revenue amounted to 236.21 billion yuan in the first quarter, compared with 963.25 billion yuan for the whole of last year.


For its bond issue, the state-owned firm plans to issue 20 billion yuan of five-year bonds to finance rail construction, the purchase of rolling stock and for general working capital.


The company, established on March 14 with a registered capital of 1.04 trillion yuan, assumed the business operations of the Ministry of Railways after it was broken up.


"If the company sustains losses in the long term, it will be difficult for them to borrow, but if people think the government will continue to support the company, it can still get debt financing," said Ivan Chung of Moody's Investors Service, an international credit rating agency.


"In the past, people saw it as part of the government, so people did not care about the financial numbers, but now they care about the financial statement and profit and losses.


"Now it's no longer the Ministry of Railways, it's a new company. So is it still able to borrow at low cost as the Ministry of Railways had done, or will the market perceive it as risky so that its borrowing costs will go up?


"Now the company is testing the market to see if it can get financing from the market. What's interesting is how the market will respond to the bond issue and what the interest rate will be."


For this year, China Railway has budgeted fixed-asset investment of 650 billion yuan, more than the nation's fixed-asset investment in railway of 634 billion yuan last year, said its bond prospectus.


The fixed-asset investment of 650 billion yuan includes 520 billion yuan of rail construction spending. Some 5,200km of railway will be built this year, said the prospectus.


The company's gearing ratio rose from 57 per cent at the end of 2010 to 62 per cent on March 31. Its debt totalled 2.84 trillion yuan on March 31.






Trains return to northern Sri Lanka

AFTER a 23-year hiatus, trains returned to Sri Lanka's northern railway on May 14, when minister for economic development Mr Basil Rajapaksa and the high commissioner of India in Colombo Mr Ashok Kantha inaugurated the initial 43km Madawachchi – Madhu Road section of the 106km Madawachchi – Talaimannar line.


Services ceased completely in June 1990 due to the civil war, which ravaged the north of the island and resulted in extensive damage to the lines from Madawachchi to Talaimannar and Kankesanturai.


The reconstruction of both lines is being carried out by Ircon, India, and the project is being financed with the aid of a $US 800m loan from the Indian government, which has also been used to fund the acquisition of a fleet of six 120km/h dmus.


Full services are due to resume on the two lines by next March.







Alstom traction for Nanjing metro trains

Nanjing Metro Group has awarded Alstom and its Chinese joint venture Shanghai Alstom Transport Electrical Equipment (Satee) a contract worth around €28m to supply traction systems for the fleet of 174 vehicles it has ordered for metro Line 4.


Alstom will supply its Optonix modular traction package, which has been developed specifically for the Chinese Market. Satee will provide proulsion inverters, auxiliary converters, brake resistors, master controllers, and traction motors, with key components supplied by Alstom.


The initial 33.8km phase of the east-west Line 4 is due to open in October 2015. The line will have 18 stations, 17 of which will be underground.






Hitachi signs contract for British rolling stock plant

HITACHI has signed a turnkey contract with Merchant Place Developments for the construction and fitting out of its new £82m rolling stock assembly plant at Newton Aycliffe in northeast England.


Construction will begin at the end of this year, and production is due to start in 2016, when the plant will begin assembling the first batch of Super Express Train (SET) vehicles, which were ordered by the British government in July 2012 as part of the Intercity Express Programme (IEP).


Hitachi will deliver a total of 596 SET vehicles (92 trains), which will replace most of the 200km/h High Speed Trains (HSTs) used on the Great Western Main Line (phase 1) and East Coast Main Line (phase 2). The first four five-car trains will be assembled at Hitachi's Kasado plant in Japan before final assembly moves to Newton Aycliffe, where the remaining 349 phase 1 vehicles will be built.


Hitachi says the site will create 730 long-term jobs, including a research and development unit, and it hopes to win further orders from customers in Britain and mainland Europe to sustain the plant in the longer-term.


The facility will have a rail connection to the national network and an electrified test track, which will be built on land leased from Network Rail.





Istanbul launches train tender for new metro line

ISTANBUL Metropolitan Municipality's Rail Systems Directorate invites bids from individual companies by July 15 for a fleet of 21 six-car trains for operation on the new Line M6 which is being built as the second metro line on the Asian side of the city.


The driverless trains, which must be in service by 2015, will have wide inter-car gangways. There must be a minimum of 15% Turkish content apart from the first two trains.


The 20km Line M6, which will be entirely underground, is being built from Üsküdar, where it will connect with the Marmaray rail link under the Bosphorus, via Ümraniye to Çekmeköy and will have 16 stations. A €563.9m contract was awarded in March 2012 to Dogus Insaat ve Ticaret and work started on the project later that month. The line is scheduled to open in May 2015.






Indian railway minister steps down amidst corruption scandal

JUST six months after taking the job, India's railways minister Mr Pawan Bansal resigned on Friday amidst a bribery and corruption scandal brought about by the arrest of his nephew Mr Vijay Singla and Indian Railway board member, staff, Mr Mahesh Kumar on May 3.


Singla, and seven accomplices who have now been arrested, are accused of selling the political favours necessary to secure prominent jobs in the railway industry following a surveillance investigation by India's Central Bureau of Investigation (CBI). A preliminary CBI report states that up to eight positions have been sold, including the position of board member electrical to Kumar for around Rs 100m ($US 1.82m).


Kumar, who was appointed board member staff on May 2, is thought to have paid Rs 20m to acquire the coveted position of general manager (west) and signals and telecoms for Indian Railways while holding the board member, staff position, an appointment that would require the blessing of the railways minister.


In addition he is thought to have agreed to pay Rs 100m to become the next board member electrical where he would be responsible for granting electrical rolling stock and infrastructure contracts, Rs 50m of which would be payable in advance and Rs 50m when he assumed the position in July. The CBI is also said to be investigating whether Kumar's appointment as board member staff was legitimate.


Singla and middleman Mr Sandeep Goyal are also thought to have facilitated the appointment of Mr Dayal Arya as head of material management functions at Chittaranjan Locomotive Works and Mr Narrotam Das as chief electrical engineer at the Karpurthala Coach Factory. Das' appointment on December 17 2012 was preceded by 16 phone calls between him and Singla, and four to Bansal's private secretary, Mr Rahul Bhandain.


According to The Hindustan Times, the CBI initiated the investigation of bribery at the ministry following a tip-off from Kumar intended to throw the agency off course.


Surveillance of around 1000 phone calls, many of which were to Bansal's official residence, appear to implicate Singla, Goya and Kumar in the case, while Singla was found to be frequently present at the railway minister's residence and Indian Railways' Rail Bhavan headquarters during the investigation. Kumar is also reported to have met Bansal at a function in Mumbai just two weeks before he acquired the role of board member staff.


Singla, a director of eight prominent businesses, was arrested while reportedly receiving a payment of Rs 900,000 relating to Kumar's appointment in Chandigarh on May 3. Local media, citing Congressional sources, state that Singla has been close to his uncle throughout his political rise and would often facilitate meetings between Bansal and business leaders.


The CBI is also conducting an internal investigation of whether an insider tipped off Kumar's wife about a raid on their property on May 3 following his arrest at Mumbai airport. She was found to have moved jewellery and other items to the residence of a Railway Protection Force officer after a bag was discovered at the home of the officer's friend on May 6.


Bansal's resignation was accepted by Prime Minister Dr Manmohan Singh during a meeting in Delhi, and according to media reports, he is expected to be questioned over his knowledge and involvement in the scandal by Tuesday. He has pleaded his innocence since resigning and welcomed the CBI's investigation.


"I have given my statement on the first day itself and I have nothing to do with this incident," Bansal said. "I have welcomed the investigation by the CBI in the matter."




New rail construction upsurge is on track


Local governments are boosting rail construction, according to the 21st Century Business Herald.


Guangzhou, in South China, has invested about 300 billion yuan ($48.3 billion) in railway construction in recent years, according to a report by the Guangdong government submitted to Sheng Guangzu, General Manager of China Railway Group Ltd. The group is a major infrastructure construction company that used to be affiliated to the now abolished Ministry of Railway in China.


One of the railway projects connecting two cities in Guangdong, Shenzhen and Maoming, will start operations by the end of 2013 with a total investment of up to 60.9 million yuan. The province is also going to launch another four railway projects, with investments ranging from 12 billion to 267 billion yuan, during 2013 and 2014.


Apart from new railways within the province, Guangdong also has the Inter-City Rapid Rail Traffic Network of the Pearl River Delta underway. This line covers 1,430 kilometers of track and costs about 400 billion yuan.


Large-scale railway projects are being kicked off nationally.


In the east, a coastal high-speed line, connecting Qingdao, Shandong and Lianyungang, Jiangsu, is about to be put in place. In central provinces, a number of passenger, freight and coal lines are underway, passing through provinces and regions such as Hubei, Henan and Chongqing. In the west, the Xinjiang Uygur Autonomous Region has a budget of 16.8 billion yuan for railway projects in 2013, far exceeding 11.6 billion yuan in 2011 and 12.9 billion yuan in 2012.


After the Ministry of Railway, which used to finance local railway construction, was abolished in March, local governments are raising funds on their own through issuing bonds or developing real estate alongside the railways.


In praise of China's high-speed trains

The 50-minute high-speed rail trip from Guangzhou South station to Shaoguan in northern Guangdong province isn't one of the world's great train journeys. Rice paddies blur by, tunnels are a blink from dark to day and the local colour so craved on those trips to elsewhere is obliterated by the squeaky-new, technological brilliance of it all.


Besides, most of the time is spent not looking out of the panoramic windows, but at the digital display above the carriage compartment door showing the speed as it pushes on to 310km/h. What velocity and comfort take away, though, is amply made up for by the mind-changing experience.


I admit to having been an objector to Hong Kong being connected to the national high-speed network through a line from Shenzhen to West Kowloon. Cost was part of the problem: using at least HK$66.9 billion of Hong Kong taxpayers' money for a project that, in all likelihood, would be operated and managed by mainland entities seemed excessively rich. The lack of public consultation and the way in which funding was pushed through the Legislative Council in January 2010, despite fierce opposition, left the sourest of tastes.


In the rush to start construction, vital questions seemed to have been ignored. What was wrong with the far less expensive and more practical idea of ending the line at Shenzhen and connecting it to the West Rail? Who would bother taking a high-speed rail trip to Guangzhou given that the train was going to stop 30 minutes' short of the city centre, or make the 10-hour ride to Beijing for a cost similar to the three-hour flight? Importantly, who was it going to serve - the people of Hong Kong or mainland shoppers?


A group tour last week to the Danxia red sandstone cliffs swept doubts aside. Only after getting off the ferry at Guangzhou's Panyu district did I learn that the trip north would be by high-speed rail. The Guangzhou South station made no impression; it was just like any other new mainland public building, bloated in size and lacking character. But after 10 minutes on the train, the enormity of it all hit home. This was rail travel better than Japanese can do it.


I'm not new to high-speed rail travel - I've ridden Japan's Shinkansen and France's TGV a number of times. There is little doubt that the pride of the mainland's rail fleet, the CRH380, owes substantially more to begging, borrowing and stealing than innovation. That said, in a mere decade, a system has been developed and built that is the world's most extensive, fastest and in all likelihood, the best. It is so impressive that governments seeking high-speed rail solutions are looking most to China.


Danxia's rock formations were truly worthy of their Unesco heritage listing, but were not the highlight of my trip; rather, it was the two high-speed rail journeys. Being able to get to second- and third-tier mainland cities quickly, with little fuss, opens up all manner of business and tourism opportunities.


But I am not yet a 100-per-cent convert to the Hong Kong link. Unless fares are priced so that every Hong Kong citizen can afford a high-speed rail ticket, taxpayers' money will have been squandered. For our city to benefit, everyone has to be able to get a seat.







New railway bureau plan announced

The central government has published the main responsibilities and organizational structure of the newly established State Railways Administration (SRA), the Xinhua News Agency reported Friday.


The new SRA will be a vice-ministerial level department under the administration of the Ministry of Transport, according to a document released Thursday on the website of the State Commission Office for Public Sector Reform affiliated to the State Council.


According to the plan, the SRA's main duties will include drafting railway laws, regulating technology standards and supervising and managing work safety.


The new plan also removes 15 responsibilities of the former Ministry of Railways (MOR), including examining and approving the opening of railway lines, dealing with shipping military and special materials, approving major railway construction projects and purchasing supplies.


The State Council announced in March that the decades-old MOR would be dismantled and transformed into the SRA and the China Railway Corporation (CRC), which will take control of the former MOR's overall development strategy, policy-making functions and business functions.


Sun Zhang, a professor at the Institute of Railway and Urban Mass Transit at Tongji University, told the Global Times Friday that he believes the new plan weakens the monopoly position enjoyed by the MOR and makes it easier for other enterprises to enter the railway market in the future.


"The plan shows the SRA will focus on supervision of railway construction and service quality. It matches the intention of the reform, which aims to clarify the different responsibilities of the SRA and the CRC, and make them accountable," Sun said.


Jiang Hong, a public management professor at Shanghai University of Finance and Economics, said that there should be stronger supervision of safety of operation and construction as well as financial status.


"The legacy of the former MOR includes huge debts, as well as the world's biggest high-speed rail network," said Jiang.


Jiang said the key issues for the new bodies will be ensuring the safety of the daily operation of railway lines and finding out how to pay back billions of yuan in debts built up during construction of the high-speed rail network.







Iraq to rebuild rail system as reconstruction gathers pace

In a shabby, rusty train that had just left Baghdad for the southern city of Basra, Riyadh Saleh moved restlessly from carriage to carriage, searching for a comfortable, air-conditioned seat.


Saleh was one of about 200 passengers taking a 25-year-old diesel train to Basra last week; he was enticed by fares as low as 7,500 dinars (HK$43) for a seat on the 600 kilometre (375 mile) journey. But like many others, he felt the experience - especially the train’s top speed of 60-70 km/hour - left much to be desired.


“The train is not comfortable, it is rocking. I do not feel secure - I feel it will turn over at any moment. Besides, it is slow,” said the retired civil servant, who was travelling with 10 other family members to attend a relative’s wedding in Basra.


Iraq’s infrastructure is dilapidated after decades of war, sanctions and economic decline. In a country where piles of rubble and incomplete buildings are commonplace, almost every sector needs investment, including electricity and the sewage system.


But the country is laying plans to rebuild its historic railways and become a transit hub for goods that would be shipped from Asia to Iraq’s neighbours and beyond.


Iraq’s railways date back 100 years; the foundation of the first line was laid by the Germans under the Ottoman Empire in 1912. That line, connecting Baghdad with the town of Dujail, 60 km to the north, was completed in 1914.


The network has been neglected during the past several decades of political and economic turmoil. The country has only two working passenger trains at present, and officials in the state-run railway company admit that the volumes of passengers and freight which it carries do not generate enough income to cover employees’ salaries, let alone revamp the network.


That leaves Iraq with little public transport connecting regions of the fractious country. Most people rely on minibuses and taxis to make national journeys, which can be expensive and dangerous on poorly maintained roads.


“Our passengers have a right to complain because when they go abroad and see modern trains with new and developed technology, while our lines are the same old thing, they say ‘I want our trains to be like the rest of the world,’” said Hadi Ali, manager of the train station in central Baghdad.


Plans to revive the rail system are gaining pace along with the country’s oil boom and general reconstruction. If successful, this could not only have economic benefits by facilitating trade and domestic tourism, but by making travel easier, maybe even contribute to the country’s political unity.


Last year the railway company finished building a 32-km line between Mussayab, south of Baghdad, and the holy city of Kerbala to transfer hundreds of thousands of pilgrims during Shi’ite religious festivals.


It is also building a new railway parallel to the old Baghdad-Basra line at a cost of about US$700 million (HK$5.4 billion); the line is due to be in service by the end of this year. Currently only around 250 passengers travel on Iraq’s railways on most days, but when the new Baghdad-Basra line is finished, the number could jump to between 2,000 and 3,000, officials say.


A line connecting Baghdad with the northern city of Mosul is still out of service, but transport officials hope to begin renovating it next year. Last year Iraq signed a deal to import ten trains from China, each carrying up to 450 passengers and running as fast as 140-160 km/hour, for US$115 million (HK$892.5 million).


Iraq currently has about 2,000 km of railway lines and hopes eventually to increase this to 10,000 km of dual-track railways, with electrified trains running at up to 200-250 km/hour that would connect all major Iraqi cities with neighbouring countries.


Mohammed Ali Hashem, manager of the projects department in the railway company, said the goal was to unload goods from Asia at southern Iraqi ports and transport them through the northern Iraqi city of Zakho into Europe via Turkey.


“So instead of a long trip to the Suez Canal and the Mediterranean Sea, through Iraq it will take 24 hours. Iraq will become a transit point for goods transfer.”


Hashem envisions around 25 million tonnes of goods passing through Iraq annually once the rail projects are completed at an estimated cost of more than US$60 billion (HK$465.6 billion)over five years.


For now, such visions face formidable obstacles. One is financing; just US$175 million (HK$1.4 billion) has been allocated by the government for projects by Iraq’s railway company this year.


Hashem said there were two options for financing projects: annual allocations from the government, and effectively borrowing money from companies hired to perform infrastructure work - the firms would be paid under a staggered schedule. The staggered payment model would require passage of an infrastructure law by Iraq’s parliament, however, and this has been delayed for several years by political wrangling. It is not clear when it might be passed.


Khudhair Abbas, deputy head of another transport projects company run by the transport ministry, said Iraqi railways were not yet attractive to foreign investors because they would not be profitable until the country’s southern port of Grand Faw was built, which would take years.


In the long term, Iraq may be able to find the money for its railways; the International Monetary Fund expects its oil exports to expand to US$152 billion (HK$1.2 trillion) in 2018 from US$94 billion (HK$729.5 billion) last year, swelling government coffers.


But there are other problems. Talib Kadhim, head of the operations and transport department in the railway company, said many traders preferred to move their goods via private motor transport firms, even though that was more expensive, because the firms offered door-to-door services and train stations were far from the city centres.


Security is still a concern. Recent talks with a foreign company to transfer crude oil by rail to Akashat, near the Jordanian border, for shipment abroad were scuppered by the increasingly volatile situation in the western province of Anbar, bordering Syria.


“When stability is achieved, transportation in general will increase in the country,” said Kadhim.


In the Baghdad station hall, ticket booths remain shut with the exception of the window for the Baghdad-Basra line, where a small whiteboard shows train times and ticket prices written in a red marker.


“I have a lot of memories of the trains in the 1960s when I was a kid,” said Emad Maki, 54, an unemployed man who was travelling to Basra with his wife and four children to offer condolences for the death of a relative.


“I wish our trains were like the ones in Europe. It is difficult to achieve but I am sure things will be better if there is determination. If we achieve 50 per cent of what others have, that will be good.”






Reports of 60 injured in US train accident

A rush-hour collision between two commuter trains in a suburb north of New York City Friday injured 60 passengers, five of them seriously.


A spokesman for the Metro North commuter train line said the incident involved a train headed into the city and one traveling in the opposite direction toward New Haven, Connecticut.


"Sixty people have been taken to the hospital," Connecticut governor Dan Malloy said on Twitter.


"There are five people in critical condition, one in very critical condition."


The accident happened at the Connecticut city of Bridgeport at around 6:00 pm (2200 GMT).


Alex Cohen, a passenger on the train headed to New York, said it pulled to a sudden halt and then suddenly jerked forward.


"There was smoke. People were screaming, people were really nervous. We were pretty shaken up. They had to smash a window to get us out," Cohen told NBC Connecticut.


Malloy told reporters the collision was a very serious incident but there was "no reason to believe that this was anything but accidental."


"We're most concerned about the injured and ultimately reopening the system," he added.


The New York Post newspaper reported that the accident occurred along a stretch of train track that was undergoing repairs.


Metro North, one of America's busiest commuter rail lines, which carries around 280,000 passengers each day, said it was not yet known what had caused the collision.









Two-car train derailment on HK's light railway leaves over 60 injured

HONG KONG -- Over 60 people were injured when a two-car train derailed on Hong Kong's light railway in the north of the city, throwing passengers onto the floor, police said Friday. Groups of passengers sat dazed on the pavement near where the train derailed, some bleeding and being treated by medics. Others were taken away on stretchers by dozens of paramedics and firefighters, television news footage showed.


“It was driving too fast,” a female passenger told Cable TV News adding that the train lost control when it was making a turn.


“It was very chaotic inside the train, there was some blood,” she said.


“All the passengers fell flat on the floor,” a young boy told the channel.


“It was like a ball game where everybody was bouncing around ... we didn't even know what happened and then we all fell onto the floor,” another passenger told the channel.


Footage showed the derailed train with its front car angled to one side with a smashed windscreen.


Police said the incident happened at 4.17 p.m. (0817 GMT) at the Tong Fong Tsuen stop in the rural Tin Shui Wai district of the city and said that 62 people had been injured.


The fire department said that four people had been seriously injured while most others suffered sprains and cuts from the collision.


“The car in the front was pushed upwards by the car at the back and both cars were derailed,” Fire Department spokesman Ng Tsz-yuen told media at the scene of the accident.


“In the first car's driver seat, the driver was stuck in the car, because the door to the driver's compartment was very damaged, so he couldn't get out,” Ng said, adding that he was later rescued with no serious injuries.


The Mass Transit Railway Corporation (MTR) which runs the light rail suspended the service on multiple lines due to the “serious incident.”


The Hong Kong Light Railway is part of the city's complex public transport system of trams, buses and underground metros.


The light rail links 68 stops along 36 kilometers (22 miles) of track in the northwestern New Territories, a semi-rural region in the north of Hong Kong.








For a more ‘friendly’ Japan

HIKONE, SHIGA PREF. – At an April 17 meeting of the government’s Industrial Competitiveness Council, professor Heizo Takenaka of Keio University and some other members representing the private sector proposed 23 concrete schemes as the initial step toward making Japan a nation with “the world’s most business-friendly environment.”


They specifically called for introducing bold deregulation in areas to be designated as “Abenomics special strategic zones,” named after economic policies of Prime Minister Shinzo Abe. Such deregulation is to be carried out on an experimental basis with a view to improving Japan’s industrial competitiveness.


It is said the idea stemmed from opinions exchanged among the Tokyo Metropolitan Government, the Aichi prefectural government and the governments of Osaka Prefecture and Osaka City. I would like to express my personal views on some of the proposed projects.


My first comment concerns the proposed round-the-clock operation of the Tokyo subway and bus services on regular routes. As the advantages of operating the subway and buses 24 hours a day, the proponents claim that the number of foreign visitors for both business and tourism would increase as they would be able to travel more easily to and from Haneda Airport, which is now open to international flights; that nighttime business activities would be stepped up; and that corporations would save on transportation allowances to night-shift workers if they can return home by subway.


This scheme is said to be based on tacit understanding of uniting the two existing subway systems in Tokyo — one run by the Tokyo Metropolitan Government and the other operated by private Tokyo Metro Co.


I don’t think that a round-the-clock subway service would serve to increase the number of foreign visitors to Japan because travelers with big, heavy suitcases would prefer taking shuttle buses or taxis to using the subway in order to move from the airport to their hotels.


It is true that London’s Heathrow Airport is conveniently served by a subway line linking it directly to the city center. Such convenience, however, can hardly be expected to an incentive for people from abroad to go to London.


It is not clear either what is meant by “nighttime business activities.” I presume that means eating and drinking places in neon-lit areas. The owners of those bars and restaurants would welcome the 24-hour subway services, but that would also create potential dangers of deterioration in public safety and moral standards.


Since most Tokyo subway lines are connected with private railway lines serving the suburbs, the latter would also be forced to keep their stations open for passengers throughout the wee hours. At present, maintenance work to ensure safety is being conducted during the few hours when the trains are not running.


If the trains were to run round the clock, both the subways and the suburban railways would have to construct four-track lines for inspection and repair, which would require huge sums of money. Who is going to bear such costs and how?


The second scheme I would like to comment on calls for creating within Tokyo specially designated medical districts, where non-Japanese physicians and nurses proficient in English would be allowed to engage in medical activities, which today are banned by law. This, it is said, would serve to promote “medical tourism” and encourage wealthy Russians, Chinese and Arabs, who are currently being examined and treated in countries like Thailand, Singapore, South Korea, Malaysia and India, to move over to Japan instead.


Japan has been left behind other countries in the field of “medical tourism” primarily for two reasons: medical expenses in Japan are far higher than in the Southeast Asian countries, and Japan has a limited number of doctors and nurses who can communicate in English with patients.


The number of wealthy foreigners seeking to receive medical treatment at Japanese hospitals cannot be expected to rise sharply unless Japan proves itself overwhelmingly superior to other countries in medical treatment and service to make up for the cost disadvantages.


Third, there is not much possibility, either, of top-ranking universities from other countries opening up campuses in Japan. During the 1980s, certain foreign universities, mostly American but not necessarily of the highest ranking, attempted to open their campuses in Japan. But those campuses were only given the status of “miscellaneous schools” and not that of “universities” because they did not meet the standards set by the School Education Law. Thus they could not grant students officially recognized university degrees and as a result, most of those campuses closed by the 1990s.


Because the School Education Law will not be applied in special zones, theoretically foreign universities can freely open campuses in such zones. But from the first, there is not enough incentive for top-level foreign academic institutions to establish new campuses in Japan because of high costs associated with such a project. Opening a new university would require huge initial investments and an annual pay of around ¥30 million must be offered to attract top teachers.


Unless several million yen is collected from each student as tuition annually, it is unlikely that such a university can be kept running. If the tuition is so high, it will be impossible to attract enough good students.


This August the National University of Singapore, in collaboration with Yale University, will open Yale-NUS College as a strategic interdisciplinary liberal arts institute with a view to educating future global leaders. The buildings of the new college are now being constructed within the huge NUS compound with the entire costs borne by the Singapore government.


The freshman class will have 150 students while the number of teachers, including those seconded from Yale, will top 100. In line with the British college traditions, all teachers and students will be housed in dormitories. A sales point of Yale-NUS College is that each class will consist of a small number of students. According to the Times of London, NUS ranked second in Asia in scholastic standings in 2013 behind top-ranked University of Tokyo. There is a good possibility that with the opening of Yale-NUS College, NUS will surpass the University of Tokyo in ranking.


Even if the Japanese government attempt to follow Singapore’s example and establish a collaborative relationship between a Japanese national university, which has a special corporate status, and a leading European or American university, it would be all but impossible to squeeze necessary funds out of the nation’s budget for higher education, which is small to start with.


The only feasible alternative would be for a major private university to open a Japanese version of Yale-NUS College by securing financial support from businesses and alumni. If its curricula are limited to liberal arts, large floor space would not be required. Each student would become a full-fledged intellectual after four years of undergraduate work, studying history, philosophy, art, literature, mathematics and social and natural sciences.


They would then find out what academic field they are good at and select subjects to be pursued at the postgraduate level that would be directly related to their future jobs. Existing graduate schools will only have to improve their quality.


Remuneration for teachers coming from the overseas partner school should match what they have been receiving or would have received before coming to Japan.






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