VZCZCXYZ0000
RR RUEHWEB

DE RUEHIN #1016/01 0860815
ZNR UUUUU ZZH
R 270815Z MAR 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 9338
INFO RUCPDOC/USDOC WASHDC
RUEHBJ/AMEMBASSY BEIJING 4963
RUEHGZ/AMCONSUL GUANGZHOU 9153
RUEHHK/AMCONSUL HONG KONG 6159
RUEHML/AMEMBASSY MANILA 9697
RUESLE/AMCONSUL SHANGHAI 8541
RUEHGP/AMEMBASSY SINGAPORE 6406
RUEHKO/AMEMBASSY TOKYO 7570
RUEHUL/AMEMBASSY SEOUL 7709
RULSDMK/DEPT OF TRANSPORTATION WASHDC

UNCLAS AIT TAIPEI 001016 
 
SIPDIS 
 
 
 
SIPDIS 
 
DEPT PASS AIT/WASHINGTON 
 
DEPT FOR EAP/RSP/TC, INR/EAP 
 
FROM AIT KAOHSIUNG BRANCH OFFICE 
 
E.O. 12958: N/A 
TAGS: EWWT ETRD ECON TW
SUBJECT: Officials Assert Kaohsiung's MRT Subway to Start Operation 
as Scheduled in late 2007 
 
REF: A) 05 Taipei 4815 B) 05 Taipei 3856 C) 05 Taipei 3525 
 
¶1.  Summary.  Besieged with scandals involving shady financing and a 
standstill of repeated cave-in incidents, officials responsible for 
the construction of Kaohsiung's mass rapid transit system (KMRT) 
remain optimistic, asserting that from a technical standpoint the 
construction of the subway can be completed and will start operation 
on schedule at the end of 2007.  The only concern is whether or not 
it will attract commuters.  An 8.6-kilometer section of the Red Line 
of KMRT, which connects Kaohsiung's Hsiaokang Airport and a major 
shopping mall in the downtown area, recently underwent test runs. 
It is this section that is scheduled to pioneer Kaohsiung's subway 
service in late October, 2006.  End Summary. 
 
¶2.  Backgound:  Kaohsiung's KMRT subway system began construction in 
October 2001.  The system, consisting of a 28-kilometer, north-south 
bound Red Line and a 14.4-kilometer, east-west bound Orange Line, is 
scheduled to start operation in late 2007.  The central Executive 
Yuan (EY) has promised to allocate 79% of the construction funds, 
which were estimated at approximately USD5.6 billion.  The local 
Kaohsiung City and County governments are to absorb the remaining 
21% of construction expenditures.  The Kaohsiung Rapid Transit 
Corporation (KRTC), selected to take responsibility for the KMRT 
project, is led by the China Steel Corporation with major 
shareholders including the EY's Development Fund, Germany Siemens, 
and several local engineering firms and banks. 
 
¶3.  Subway construction went smoothly in the beginning stages. 
However, when tunnel boring machines started digging, construction 
began to suffer repeated cave-ins.  Many of the cave-ins were 
salvaged promptly, but the repairs for the collapsed O1 and O7 
stations (see reftel A) may still need one more year to complete. 
These cave-in incidents have caused massive delays to the project 
and massive traffic snarls around the city.  A recent report posted 
on KRTC's website noted that as of January 2006 subway construction 
is only 77.29% complete, unable to meet the scheduled 78.16%. 
 
¶4.  Allegations of bidding rigging, poor construction and corruption 
have dogged almost every major public works project in Taiwan.  The 
Kaohsiung MRT subway project is no different.  The KRTC President, 
Fan Chen-po, attributed the cave-in incidents to Kaohsiung's weak 
geology, noting that in some areas that the subway transverses soil 
that is oversaturated with sand.  Fan, who previously had served at 
Taipei City Government's Department of Rapid Transit Systems, noted 
that Taipei's subway also met with water leakage from building 
continuous walls underground.  That leakage was always solved 
efficiently because the clay soil at these sites helped to 
effectively stop the leaks. 
 
¶5.  The KMRT project met additional setbacks on August 21, 2005, 
when a riot erupted by Thai laborers constructing the subway.  Local 
law enforcement agents investigating the incident found unusual 
money flows had occurred in the importation of foreign laborers. 
(see reftels B and C)  Local politicians, primarily KMT and PFP, 
then became dissatisfied with KRTC's performance as a contractor and 
demanded a halt to the construction.  These politicians also 
questioned former Kaohsiung Mayor Frank Hsieh's (DPP) role in the 
original construction project bidding process.  Local prosecutors 
continue to investigate these accusations. 
 
¶6.  According to Alex Cheng, Chief Secretary of Kaohsiung City 
Government's MRT Bureau, construction of 62 of the planned 66 
tunnels has been completed.  The remaining four tunnels, a total of 
only 400 meters in length, will be completed soon.  Cheng went on to 
say that construction of 26 of the planned 28 underground stations, 
except for the collapsed O1 and O7 stations, has also been 
completed.  The responsible KMRT officials noted that Kaohsiung's 
subway construction technically has passed already through its most 
critical stages.  As long as local politicians continue to approve 
the budget, Cheng noted, the subway construction will move towards 
its scheduled completion in 2007. 
 
¶7.  Cheng acknowledged that one challenge his office and the KRTC 
may face is the ability to attract the city's large group of 
motorbike drivers to use the subway.  Cheng suggested that using 
mid-sized buses to serve as feeder buses and adopting the same debit 
 
card ticketing system now used in Taipei may be feasible.  However, 
Fan noted that there is a concern that being a private concern, the 
KRTC will have to find a way to seek balance between the need for 
making profits and the requirement to provide a public service.  He 
worries that high priced subway tickets may lessen the interest of 
the large local blue-collar population. 
 
 
Thiele 
 
Young