Pakistan to buy Korean locomotives

By Kim Da-ye

Lahore, the second largest city in Pakistan, could soon see Korean-made trains running on its railways.

Shahzad Ali Malik, president of the Lahore Chamber of Commerce & Industry, said Wednesday in an interview with The Korea Times that the city plans to import locomotives from Korea Railroad (Korail) and could sign a purchase agreement with the state-owned rail operator as early as in two months.

Lahore’s track gauge, the distance between the two rails, is wider than the standard adopted by Korail. The Korean company will modify the bottom of the train, and if a test run is successful, the Pakistani government could consider choosing Korail as the private railway operator, Malik said.

“The investment will be initially very small. If we get to purchase the locomotives, it would cost about $6 million. It will grow to a substantial amount.”

Malik was on a five-day visit to Korea ending Thursday as part of a tour to Korea, China and Vietnam. He visited Korail’s plant in Gyeonggi Province and met with company officials.

He said he was particularly impressed by Seoul Station, which he called “very neat, clean and efficient”, and by the control center of the railway system.

The railway deal would take some time to materialize as Malik and his Korean counterparts are currently only in discussions. Even if Lahore decides to buy Korean locomotives, it would first conduct a test run and Korail would need approval from the National Assembly for the potential investment into Pakistan’s infrastructure.

Aside from discussing the railway deal, another purpose of his trip was to promote more bilateral trade between Pakistan and Korea.

Malik said that the trading volume including imports and exports dropped to $755 million in 2010 from $865 million the previous year. The fiscal year the figure is based on ran from July 1, 2009, to June 30, 2010.

Pakistan exports to Korea are mainly cotton, oil seeds, leather, fruits and medical supplies while it imports machinery, plastics, steel and man-made fibers.

The top trade official, whose major business interest is rice, expressed his wish to export rice to Korea.

He said that the Korean government receives bids from rice exporters in September to allocate the rice import quota and that Lahore is willing to join the tender with its non-fragrant long grain rice.

Korea restricts rice imports through a non-tariff measure called the minimum market access (MMA) and limits the amount, the origin and the kinds of foreign-grown rice.

Pakistan’s well-known basmati rice, a fragrant long-grain type, isn’t allowed to be imported, and Malik said he asked a Korean company, a potential importer of Pakistani rice, to negotiate with the government to include basmati rice in the quota system.

Korea’s non-tariff measure will expire in 2014, and there will be more opportunities for the rice amid the fast growth of immigrant communities and international restaurants in Korea, Malik said.

Lahore is the capital of Punjab Province, the major producer of rice.

The top trade official added he is looking for direct investment from Korean companies into Lahore’s light engineering industry, the power sector and the food processing market. One example would be small-scale hydropower projects on the rivers in Punjab.

Pakistan recently sought more investments from and trade with Korea. A delegation from Sindh, the second largest province in Pakistan, visited Korea last month to encourage Korean companies to invest there.

The Sindh Board of Investment signed an agreement for cooperation with Korea Southern Power Co. (KOSPO), during the trip to build a wind turbine system in the province that would generate 2,000 megawatts of electricity.