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China Daily Website

Protect private highway operators

Updated: 2012-08-10 21:28
( chinadaily.com.cn)

After the authority declared that highways will be free for small vehicles with seven or fewer seats during national statutory holidays, operators of many privately owned highways complained that the action will reduce their profits and aggravate their mortgage burdens, says an article in 21st Business Herald. Excerpts:

Statistics suggest that they will lose 5.6 percent profit. Considering many listed highway operators' average profit ratio, though many of them are state-owned, is 56.08 percent, this loss is acceptable.

But the decision-makers should also bear in mind that private operators have to carry some costs that do not exist for their state-owned counterparts in the monopoly market fields, such as railway, highway and oil, so they must pay attention to protect this private capital.

Even if these markets are eventually opened to private investors, the game rules are far from fair yet.

So decision-makers should differentiate private operators from the state-owned ones while making decisions. Otherwise, private investors will lose interests in these seemingly profitable yet actually meager markets.

Encouraging more private capital to enter the monopoly highway markets is conducive to promoting competition and reducing logistics costs. It is also a necessary step to stimulate healthy development of a private capital market and to boost economic structure transformation.

Thus, different operators should have different treatments to reduce the side effects of the policy.

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