Travellers aboard the new 1,142-kilometre Qinghai-Tibet Railway, which started operation on Saturday, are set for a visual treat of the picturesque landscape along the way.

But for investors, a far prettier picture is the tremendous opportunities arising from the government's ambitious target of adding 20 times more track around the country.

The Ministry of Railways has announced plans to expand the country's rail network from the current 73,000 kilometres to 100,000 kilometres within the next 15 years, at an estimated cost of 100 billion yuan (US$12.5 billion) annually.

Industry insiders say there is great potential for foreign and private investors to tap the government-controlled transport sector   from equipment procurement to construction and operation.

"As the government has announced its intention of freeing up the sector, more investors, especially  foreign, are likely to step in. Also, diversified investment will help speed up network construction," says Zhu Hongren, a senior official with the National Development and Reform Commission, China's top economic planning body.

Last July, the ministry released guidelines encouraging private and foreign capital in the building and operation of railways on a market-oriented basis.

Despite the welcome mat, insiders say, a lack of policy incentives mean non-State investors still have hurdles to clear before gaining a significant share of the business.

For instance, profitability cannot be ensured because the current State-controlled rail-fare system does not allow price fluctuations in line with market changes, says Wu Wenhua, division chief of the transport management research institute under the NDRC.

So for now, opportunities will be largely limited to equipment procurement orders from global manufacturing giants, as  the country lags behind in certain areas of rail technology.

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