Asia news

Chinese hydro reaches new heights, Malaysian aviation receive double setback, Taiwanese UMC acquires Chinese He Jian Technology for US$285m and Indonesian state-owned rail look to improve their poor safety record with private investment.

Chinese hydro reaches new heights

China says it will build five hydropower stations along the Gez River in the Kirgiz autonomous prefecture of Kizilsu at a cost of US$332m.

Construction of the first station, located in the Pamir mountains, started at the end of April. It will not only be the largest such power station ever built by China but also the highest, at an altitude of 3,315m.

The station will have three generating power units with an installed capacity of 200MW, and is due to be operational in June 2012. It will help improve irrigation and prevent flooding in the north western Xinjiang Uygur region.

The historic Silk Route connecting China to the Mediterranean passes through the Pamirs. The mountainous area, which largely lies within Tajikistan, is one of the more inaccessible areas in the world.

Construction of the other four stations will start with one each in 2010, 2011 and the remaining two in 2012. Completion is scheduled for 2015.

A spokesman for the Energy Bureau in Beijing, Fu Zhu, told E&T that the four stations will gradually ease the power supply gridlock in Kizilsu and the neighbouring Kashi prefecture.

"It will also enhance irrigation and reduce the possibility of flooding in the lower areas of the two prefectures," Fu said.

MRO business faces setback

Sepang Aircraft Engineering (SAE) has failed to secure the certification from the European Aviation Safety Agency (EASA) to carry out maintenance on European-registered aircraft.

SAE, which is based at Kuala Lumpur International Airport, started operations in October 2008 with the hope of tapping the global maintenance repair and overhaul (MRO) market for Airbus A320, A330 and A340 aircraft. It is a joint venture between Syed Budriz Putra, a prominent Malaysian businessman and Malaysian low-cost carrier AirAsia.

Syed, who is also the managing director of SAE, holds 81 per cent of the shares while AirAsia has the remaining 19 per cent.

E&T has learned that SAE also failed to secure the approval of the Department of Civil Aviation to carry out maintenance on Malaysian-registered Airbus aircraft.

Requests for an interview with Syed drew a blank.

UMC to acquire Chinese foundry

Taiwanese semiconductor foundry United Micro-electronics Corp (UMC) has confirmed plans to acquire Chinese chipmaker He Jian Technology for US$285m.

The purchase will be made through acquiring the 85 per cent stake in He Jian which is owned by parent company Infoshine Technology Ltd. UMC, based at the Hsinchu Science Park, was given a 15 per cent stake by Infoshine in 2002 for helping set up the He Jian plant in Suzhou, China.

The acquisition, which is subject to shareholder and government approval, is expected to be sealed between August and October.

UMC is the world's second-largest contract chip manufacturer. In a statement the company said the acquisition of a production base in China was key to expanding its business, boosting overseas markets and increasing profitability.

He Jian's fab has an annual capacity of 480,000 200mm wafers

UMC's proposed purchase comes as a surprise as Taiwan limits investment in mainland China because of a belief that Chinese companies have a tendency to take business in the island or steal advanced technology.

Former UMC chairman Robert Tsao, who was implicated in helping He Jian set up its wafer fab in Suzhou in 2002, resigned in January 2006. Taiwan's Ministry for Economic Affairs (MEA) also imposed a heavy fine on UMC indicating that the Taiwanese company's investment in China was illegal.

A Taiwan District Court cleared Tsao of charges in October 2007 and overturned MEA's fine.

Indonesia splits wheel from rail

Indonesia plans to introduce a new policy by late 2011 to improve train services across the country.

Two new government agencies will be set up under the purview of the Ministry of Transport (MOT) to separately manage and maintain the railway network and oversee train services. The government also plans to allow private companies to venture into the sector either to manage the tracks or offer services on certain routes.

State-owned railway company PT Kereta Api (PTKA) will be restructured and new training programmes introduced for all levels of staff. PTKA is currently responsible for maintaining the infrastructure and also manages train services.

According to Tunjung Inderawan, director general of the MOT railways division, a draft of the proposed policy has been prepared and submitted to the government for evaluation and approval.

Tunjung said the decision to allow private investors to participate in the sector is to bring in additional money. "The government does not have the necessary funds to upgrade train services," he noted.

Over the next 12 years the government would need an average US$118m a year for the upgrade programme.

The poor condition of the railway tracks and trains in Indonesia has been implicated in more than 25 accidents over the last five years. Hundreds of people die in transport accidents across the country every year, many due to negligence.

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